Thai Bank Insurance Products...anyone With Experience?

[OMGImInPattaya]

Related to my post on Thai banking products, I thought I would post a separate question re this banking/insurance product they all seem to offer. Basically, they are long term fixed deposit contracts (seem like annuities to me) of 15 years, wherein one make a set number of deposits during the first 6 years and receive a fixed interest rate each year for the duration of the contract. After about 8-9 years, one breaks even on the contract if one wants to take the money out early. There is a substantial penalty for early withdrawals.

For this question, the particulars of he interest rates are not important, I just want to know if such a product is a safe and dependable product? Currently, the interest rate is about 6 percent or double what is available on a fixed or savings account product. There is also a life insurance component of the product, that kicks in on day one. They also claim the interest paid is non-taxable.

To plug in some numbers, in the first year, one deposits B 850k and receives B50k at the end of the first year (6%). If one dies that year, there is a B2.5M benefit. However, if you cancel the contract, you only get back B 165k of your B 850 deposit. This goes on for 6years, with the insurance benefit increasing and the early withdrawal penalty decreasing to about year 8/9 when one breaks even. After 6 years of the 850k payments, these stop but you continue to received your now B 75k per year interest (years 7-14).

This seems like a pretty good deal, if one can assume the risk of not having to withdraw the money early. Am I missing something? Also, I assume these are products backed by only the bank in question and that there is no government guarantee (at least of principle), as there is on ordinary savings accounts. Has anyone out here ever purchased one of these products and what has been your experience? Any comments on these specific products or the product category in general would be most appreciated.

Edited December 19, 2012 by OMGImInPattaya

[rgs2001uk]

My honest opinion, piece of crap, wouldnt touch them with a barge pole.

What excatly do you want, life insurance or a savings plan, these are neither.

They are what is known as baccasurance, a combination of cheap ass insurance with an even more miserly return on capital investment.

If you want life insurance, buy it in your own country, way cheaper than here.

If you want to invest, suggest either Aberdeen or ING LTFs.

Edited December 19, 2012 by rgs2001uk

[NewlyMintedThai]

A good deal if you can use the payments as a tax write-off, as you can with many policies.

[OMGImInPattaya]

A good deal if you can use the payments as a tax write-off, as you can with many policies.

Yes, I think I saw something in the paper that these payments/premiums were tax deductible. Problem is I'm retired American and don't file Thai income tax returns. They do seem like rather expensive life insurance policies and must hive high profit and commission margins built in the way they bank personnel were pushing them.

Better to stick with a stringy fixed interest fund deposit or something like an Aberdeen fund.

[MobileContent]

I would stay away from those insurance products. I have been approached countless times in the past months from those companies and the sales people have sometimes no experience, except selling the product and make sure you pay one year upfront for the insurance (otherwise they have to wait for the commission of up to 1 year). We decided to go for fixed deposit within Thailand and have some funds saved up offshore in Euros/Dollars for the long-term (3-5 years)

[GreenSnapper]

My honest opinion, piece of crap, wouldnt touch them with a barge pole.

What excatly do you want, life insurance or a savings plan, these are neither.

They are what is known as baccasurance, a combination of cheap ass insurance with an even more miserly return on capital investment.

If you want life insurance, buy it in your own country, way cheaper than here.

If you want to invest, suggest either Aberdeen or ING LTFs.

Correct.

I cannot understand that some people take such offers in Thailand serious. With all the scams, lies and lack of any customer protection.

[meatboy]

my wf.saw right through these so called products when she was looking for some critical life cover,the rep kept coming back with diff.plans that even a philedephia lawyer would find them difficult to understand,in the end the wf.told the rep.to stop coming.so we would not touch them with a barge pole.

[BrianCR]

I don't know about all banks but KBank is pushing insurance at everyone whether, you want it or not! Last week I opened a new account and needed a visa electron ATM, My local branch would not issue one unless I bought insurance, I refused and after arriving home phoned their call centre who, after phoning around other branches sent me to one that issued the card without the insurance, The worst part is the girl working at the first bank must think that we all all stupid as she never mentioned that the extra payment was insurance but that it was just the bank policy...... stinks of commission to me!!!

Edited December 20, 2012 by BrianCR

[NewlyMintedThai]

And what makes it a "scam", exactly?

[OMGImInPattaya]

And what makes it a "scam", exactly?

Not sure who called is a "scam," but they sure try to sell you a policy when all you want is an ATM or Thai credit card. I know there is a language barrier and it's not the bank staffs' fault but they sure can't explain what these products are very well to a non-Thai and they do try to make it the only way to get whatever other basic banking product one is looking for. Now, if one really does need life insurance, with a little bit of a savings kicker built-in then maybe it's okay. One would have to run the numbers but to try to flog these off on customers who just want a credit card seems a bit much.

[NewlyMintedThai]

Meatboy said he "saw right through" it, suggesting it was some kind of con job.

Greensnapper asked why anyone would take it seriously in view if "all the scams" in Thailand.

That's what I was questioning -- these guys who obviously think someone is trying to hoodwink them.

In fact, these insurance policies are good in many cases as they force people to put aside a certain amount as savings/investment every month, which few would have the discipline to do otherwise.

I've never heard of a bank requiring the purchase of a policy in order to get an ATM card. I have cards from Bangkok Bank, Kasikorn, Krungthai, and Bank of Ayudhaya, but maybe it's something new.

[OMGImInPattaya]

Meatboy said he "saw right through" it, suggesting it was some kind of con job.

Greensnapper asked why anyone would take it seriously in view if "all the scams" in Thailand.

That's what I was questioning -- these guys who obviously think someone is trying to hoodwink them.

In fact, these insurance policies are good in many cases as they force people to put aside a certain amount as savings/investment every month, which few would have the discipline to do otherwise.

I've never heard of a bank requiring the purchase of a policy in order to get an ATM card. I have cards from Bangkok Bank, Kasikorn, Krungthai, and Bank of Ayudhaya, but maybe it's something new.

It was basically for a credit card...not a vanilla ATM card. And in my case, these were not cheap policies...premiums/payments starting at B 200k per year. Agree, life insurance can be a part of financial plan if one has a family...especially if one dies unexpectedly during the early years of the policy and they can be a form of forced savings. However, for someone already cashed-up, they are a poor way to grow one's capital.

[rgs2001uk]

Meatboy said he "saw right through" it, suggesting it was some kind of con job.

Greensnapper asked why anyone would take it seriously in view if "all the scams" in Thailand.

That's what I was questioning -- these guys who obviously think someone is trying to hoodwink them.

In fact, these insurance policies are good in many cases as they force people to put aside a certain amount as savings/investment every month, which few would have the discipline to do otherwise.

I've never heard of a bank requiring the purchase of a policy in order to get an ATM card. I have cards from Bangkok Bank, Kasikorn, Krungthai, and Bank of Ayudhaya, but maybe it's something new.

That's what I was questioning -- these guys who obviously think someone is trying to hoodwink them.

Well hoodwink is one way of putting it, miss selling or false advertising may be another.

I am one of the refugees from the HSBC (as a poster on another thread refered to us).

I went to the local BAY to open an account, the manager seemed only interested in trying to sell me one of these worthless, and I chose the word worthless carefully, because thats exactly what it is, worthless policies.

After I asked her for a pen and paper and a calculator, I started working out the percentages each year, this women knew exactly what I was doing and started the usual Thai saving face excuses, no problem come back when you are finished I told her, needless to say she didnt re appear.

In fact, these insurance policies are good in many cases as they force people to put aside a certain amount as savings/investment every month, which few would have the discipline to do otherwise.

How many do you have?

You know as well as I do, they are useless as an investment vehicle.

How many rich people have them as part of their portfolio?

They are being sold to the poor uneducated masses and financially illeterate.

Personally I see parallels with the UK banking industry of 20 years ago, worthless endownment policies being sold to suckers.

[TommoPhysicist]

They are a scam aimed at poor ignorant peasants.

[NewlyMintedThai]

I think I have six of them, in order to get the maximum tax write-off in recent years.

Please share with us what your calculator told you, not forgetting that the insured is also getting death, injury, and often health care benefits.

[NewlyMintedThai]

They are a scam aimed at poor ignorant peasants.

Thanks for joining the chorus, but so far no one has been able to articulate in what way they are a "scam".

[TommoPhysicist]

They are a scam aimed at poor ignorant peasants.

Thanks for joining the chorus, but so far no one has been able to articulate in what way they are a "scam".

One reason

If you miss a payment, you lose everything, which is what the company is hoping.

Another reason

They are very reluctant to pay out, either on death or maturity.

And another

You get a better interest rate just paying the money into a bank savings account.

Edited December 20, 2012 by TommoPhysicist

[rgs2001uk]

I think I have six of them, in order to get the maximum tax write-off in recent years.

Please share with us what your calculator told you, not forgetting that the insured is also getting death, injury, and often health care benefits.

How many of these suckers who are sold these policies actually pay tax/

Memeber samran did the numbers a while back, saves me the time and effort,

for other comments on the same subject,

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The fact that you use them as a tax avoidance measure doesnt make them a worthwhile investment choice for the masses.

Needless to say the Thai education system has a lot to answer for, people who are unable to convert a fraction to a decimal to a percent may well be whats leading to these being sold, throw in some of the old face and pee nong status that exists here, eg dont question your betters, just accept what they (miss)sell you as gospel.

[NewlyMintedThai]

It's a FANTASTIC investment vehicle if it forces you to save when you'd otherwise spend every last baht you make every month. And also provides a sum to your loved ones if you died inexpectedly.

No?

[OMGImInPattaya]

They are a scam aimed at poor ignorant peasants.

Thanks for joining the chorus, but so far no one has been able to articulate in what way they are a "scam".

One reason

If you miss a payment, you lose everything, which is what the company is hoping.

Another reason

They are very reluctant to pay out, either on death or maturity.

And another

You get a better interest rate just paying the money into a bank savings account.

Wouldn't that be illegal, even in Thailand...not paying on death or policy maturity!

Ordinary savings accounts may pay higher interest but have no death benefit.

The death benefit has to be factored into the equation. If one is young, without much other way of assets, and has a family to protect, term life insurance at least can be a good product. The policies in question are more akin to whole-life policies, which are generally not the best buys.

And of course the rich don't need these policies, they can self-insure or by definition already have plenty of assets to pass along to their heirs when they die.

Edited December 20, 2012 by OMGImInPattaya

[NewlyMintedThai]

They are a scam aimed at poor ignorant peasants.

Thanks for joining the chorus, but so far no one has been able to articulate in what way they are a "scam".

One reason

If you miss a payment, you lose everything, which is what the company is hoping.

Another reason

They are very reluctant to pay out, either on death or maturity.

BS.

Edited December 20, 2012 by NewlyMintedThai

[rgs2001uk]

It's a FANTASTIC investment vehicle if it forces you to save when you'd otherwise spend every last baht you make every month. And also provides a sum to your loved ones if you died inexpectedly.

No?

Personally I would rather invest in property by spending every last baht and save nothing.

Lets compare results in say 20 years shall we?

Everyones situation differs, if you choose to use them as a tax offset, I have no problem with that.

For others investing in their childrens education may well yield a better return.

Why would my loved ones need a sum if I die unexpectedly?

My loved ones will recieve a bigger and better lump sum for FREE from previous employers pension schemes.

Not to mention trusts set up in my home country that will also provide.

Yeah you can fool some of the people .......... etc etc, but you aint fooling me.

[NewlyMintedThai]

Glad you have trusts in your home country and fat pension funds coming to your family on your demise.

Your family's situation is far from typical, though.

No one is trying to "fool" you. If it makes sense to your situation, you take it. Otherwise, you don't.

Edited December 20, 2012 by NewlyMintedThai

[meatboy]

I think I have six of them, in order to get the maximum tax write-off in recent years.

Please share with us what your calculator told you, not forgetting that the insured is also getting death, injury, and often health care benefits.

if you have 6 of them what are the benefits if you pop your clogs or have an accident and have to go into a hospice i bet they wont put you in say bkk.hospice.yes there are savings to be had but if your incapacidated you will soon find out what cover they will give you.please enlighten us to the good ones you have.

[NewlyMintedThai]

Bangkok Life, Thai Life, Krungthai-AXA, AIA.

No problem with any of them, although I have not died yet.

[Pib]

Bangkok Life, Thai Life, Krungthai-AXA, AIA.

No problem with any of them, although I have not died yet.

And you will not have any problems with them after you die either.