Damn, my first post and it has to be about insurance (Part I)

I finally started a blog. I have been meaning to start one as a memorandum of my daughter's life ever since she was born but procrastination always got the better of me. However, one cannot assume that it is easy to be a mother based on this. Most of my time is consumed taking care of the baby: feeding, changing diapers, soothing a crying machine, more feeding, more diapers, more crying and the list goes on. It can be very tiring indeed so I really cannot be blamed if I do steal a bit of shut eyes when I actually get a break from being the slave of my baby, right?

I wanted to write about how I think my baby is beginning to notice things around her but I'll save this for another day because there's a more pressing problem in my life now and that is nothing but the dreadful word INSURANCE. The current society has evolved to a point such that you are weird if you don't have an insurance policy yourself. Which means, it is imperative that one gets an insurance for oneself, if one has the brain to think. By such standards, I am weird and inadequately prepared for life because as of now, I do not have any decent insurance policy. However, the subject of insurance that landed me in a big fiasco was actually brought up because of my little baby. In a bid to make sure we have money to send her to university if she can make it, Desmond (my husband) bought an endowment plan, hoping to save some money and even better still, earn some money out of the policy. He also mentioned something about life insurance a couple of days later but I did not take it to heart since I was skeptical about life insurance. However, a week or 2 later, a financial planner friend of mine came over to visit and we started talking about insurance for the baby. If I didn't remember wrongly, my friend said it was a waste of money to start buying life insurance for the baby at such a young age as the rate of motility is very low, but his company, which is HSBC, offers a hybrid plan called Child Enrich combining endowment and life insurance if I really want to give a life insurance plan to my baby. Beats buying just a life insurance plan. (BTW, they have a similar plan for adults too, which is Life Enrich.)

At first, it really didn't sound like a bad idea to have some sort of hybrid plan for my baby. I mean, who doesn't like 2-in-1? 2-in-1 = express, less hassle, 2 for the price of 1, sounds great right? Except this time, 2-in-1 sounds too good to be true and Desmond's insurance agent decides to prove the point. Loads of comparisons were made between various plans from Prudential and HSBC's Child Enrich - which do we pay lesser premium, which has higher returns, what is the payment duration, what component of the returns is guaranteed and otherwise etc. I must say I have never read insurance policies in such detail before and have never ever asked so many questions before, which leads me to wonder: why haven't I?

Most humans are such that they want the easy way out and they simply look at the sum with the nice 5.75% projected non-guaranteed return at the end of the day, failing to understand what price that 5.75% comes with. What is the guaranteed amount at the end of the day if the non-guaranteed sum is high? What is the surrender value etc? Are all the riders, which is so-called to protect the policy, really needed? I have never questioned myself these before when I bought endowment plans the last time, which made me realised how stupid I was. I thought I was doing the right thing simply by buying a policy, not knowing exactly what the policy entails. The same thing goes for Desmond too. He has a policy that insures peanuts, and paid tons for a load of riders which I don't think is necessary, but he got it anyway. When I asked him why on earth he got the policy, the answer was, 'I didn't know what that guy was talking about.' That is such a good answer, isn't it?

So, what was the problem? It isn't that we can't calculate. All the calculation has been done for us on the Benefits Illustration. We can think, it isn't as if we are 2-month olds. The only conclusion I can come to is this: we most probably haven't been listening.

A Communication process is as follows:
Message ------> Decoding ------> Encoding by receiver -------> Message received

Errors are most likely to occur at the point of decoding and encoding, which is why, “To be attentive means to listen without any interpretation, without any judgment — just to listen. When you are so listening there is no boundary" But it is human nature to judge. We jump to judge whenever something is being told to us. E.g. in the case of insurance, we want to be able to quickly come to conclusion that we will make money so once we see the 'returns' portion, our minds are shut to the terms and conditions that comes with it. Also, we tend to hear only what we want to hear so interpretation of a message is skewed with reference to our mindset. If we look at insurance/endowment plans with the intention to make money (and has heard from someone briefly that insurance is a good way to make money), it's only natural that we jump at the opportunity if the agent says it's likely to make money. We won't even question that likelihood of making money.

It is only too late when we realised we missed the word 'likely' when the agent said 'it was likely to make money' and have no one but ourselves to blame when there is no profit but loss.

So, how do one make sure the right policy is purchased for oneself?

I think there are no complicated formulas and calculations, except to listen attentively.