QUOTE(rayragu89 @ Jul 8 2018, 06:38 PM)
Hi guys, in need of some expert advice here.
I've been a traditional policy holder for the past 11yrs, recently I requested to be changed to an investment linked policy.
However, I was told that in order to proceed with this, I will have to continue paying my existing traditional policy for the next 1yr before I could cancel/surrender.
So my question here is, why do I need to pay for 1yr, by right I could surrender my old policy once new policy activated upon reaching 120days, right?
*PS I've contacted my service provider Hq yet they couldn't give me a convincing answer for this 'mysterious' 1yr term.
If I can chime in, based on my somewhat limited knowledge in the insurance industry, I have a few assumptions and theories as to why you need to wait for the 1 year period
1. the 11-year traditional policy is most likely taken from a different agent, may be wrong about this though
2. the company for that 11-year policy is the same as the one you are applying to change to
3. It was the agent for the new policy that told you about continuing paying for the old policy for 1 year
1. The agent wants to avoid "replacement of policy"
Again, based on my somewhat limited knowledge on this, the new agent (or could be same agent, but for the new policy) wants to avoid being penalized through ROP. ROP is triggered when you surrender a policy within 1 year of taking a new policy; in this case, the commission
that is due to the agent for the new old policy is directed to the agent for the 11-year policy. As far as I can tell, this is the reason why the agent for the new policy wants you to continue paying the old policy for 1-year. The insurance industry is taking care of themselves, they do not want agents cari makan by destroying other people's rice bowl.
If I am not mistaken though, the ROP is not fully enforced between different companies. So for example if the 11-year policy was taken with GAGAK, and you replace it with a policy from KUCING, then the ROP may not even be detected. it is when the replacement is done between the same company that ROP is triggered.
I may be wrong, if I am, feel free to correct me.This post has been edited by wild_card_my: Jul 8 2018, 10:03 PM