The need for fact-find
Those who have bought any life insurance after 2001 would have filled in a form known as the Know Your Client (KYC) form. This form is meant for fact-finding and needs analysis to ensure product suitability in the financial advisers’ recommendations.
Sometimes you wonder: why is there such a requirement for insurance sales but there is no such requirement for things like property or vehicle purchases? You don’t have to know if that house or car is too costly for you, or you are actually fine with what you have now and there is no need to upgrade. Or for that matter of fact, do you actually need to get a car or condo? This applies to other ‘luxuries” as well. I am just using property and vehicle as examples.
Of course, filling up a KYC form is a regulatory requirement and there are no such requirements for property or vehicle purchase. But why is there such difference in the attitudes between getting insurance and things like property? This could be due to a few reasons.
Firstly, insurance not a Want. People NEED and not WANT insurance. On the other hand, people WANT fancy houses or vehicles. Getting that dream car or condo just feels so good.
Secondly, property and vehicles can be a sign of social status and a boost to the ego. People discuss about cars, renovations, districts,flat area, carat size. Its not often you hear people talk about how much insurance they have got or how much cash value they have accumulated.
Thirdly, insurance is not a tangible thing.. until there is a claim. You cannot feel and touch insurance other than the policy document or yearly update. However, you can touch and feel that car, that big LCD TV, that expensive wardrobe. It has been said that insurance is the hardest ‘thing’ to sell precisely for that reason.
Fourthly, there is a lack of interest in insurance. Possible reason is that it is complex and the policy wording is not that ‘user friendly’. The man in the street are easily confused by the technical jargons used. Whats the difference between Critical Illness and Terminal Illness? How can disability income and Total Permanent Disability is different?
Sometimes humans and the regulations they set are not that rational. Don’t you think so?
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