MY FRIEND recently bought life insurance that provides coverage of up to $50,000 for five years, for which he paid a premium of $50,000 from the outset.

The policy offers nonguaranteed returns of 2 to 4 per cent per annum, and if it is surrendered after one year, the insured can get back only $45,000.

He will get back his full $50,000 only after the fourth year, or on maturity.

This is not really insurance as the coverage is the same as the premium.

Moreover, the promised returns are no better than a fixed deposit offered by banks.

Can the Monetary Authority of Singapore comment on this product?

Mr James Lam

For more my paper stories click here.