Professional Documents
Culture Documents
Ammetlife - Ceilli (Eng) - Mas 2014
Ammetlife - Ceilli (Eng) - Mas 2014
Disclaimer:
All training materials which are produced by AmLife Business School in any forms/format are purely training tools for internal agency programmes of
AmLife Insurance Berhad. All or any part of the contents of these materials shall not be used directly or indirectly for soliciting of insurance businesses,
policy holder services and/or facilitating any form of communications with external party whatsoever. This information is correct as at 13st August 2014.
Investment-Linked Traditional Life
CONTENTS
CHAPTER 12 : Marketing & After Sales Service, Ethics and Code of Conduct
CHAPTER 1 : INTRODUCTION TO
INVESTMENT LINKED LIFE INSURANCE
2009 30.6%
2005 25.7%
5
CHAPTER 1 : INTRODUCTION TO
INVESTMENT LINKED LIFE INSURANCE
Allocated Premium
used to buy units from Unallocated
investment-linked Premium
funds at offer price
Surrender
Units which Life Office
Withdrawal belong to
policy owner (Marketing and
Set-up expenses)
Death claim
Cancel units
6
CHAPTER 1 : INTRODUCTION TO
INVESTMENT LINKED LIFE INSURANCE
Policyholder
pay premium
Investment Return
Sum Assured
Fund Managed
By Insurer
Protection Investment
CHAPTER 2 : KEY CONSIDERATION IN
INVESTMENT
2.8 Diversification
8
CHAPTER 2.1: INVESTMENT OBJECTIVE
Safety
3
Fundamental Characteristics
Income Growth
9
CHAPTER 2.1: INVESTMENT OBJECTIVE
RISK
RETURN
BONDS/FD EQUITY/
SHARES
12
CHAPTER 2.1: INVESTMENT OBJECTIVE
Achieving
A Comfortable Fund for Improvement
Financial
Standard Children On Financial
Freedom
of Living Position
Cash flow analysis: List down their income source and expenditure.
Net worth analysis: List down their assets and liabilities.
CHAPTER 2.3: RISK/SECURITY
The first thing about learning how to invest in the stock market
is to know what kind of investor risk profile you have.
Risk
Profiling
Test
Strength of Income Current Financial Picture
Def:
(i) The length of time a sum of money is expected to be invested.
16
CHAPTER 2.5: ACCESSIBILITY OF
FUNDS
COST OF ENTERING
CHAPTER 2.6: TAXATION TREATMENT
2 factors:
18
CHAPTER 2.7: PERFORMANCE OF THE
INVESTMENT
Country’s
Economic
Life Cycle of the Regional & Global
Investment Economic
THE
History of the SEVEN Competencies &
Invested FACTORS Capability of the
Company Management Team
19
CHAPTER 2.8: DIVERSIFICATION
20
CHAPTER 2: ASSESSMENT
Exercises:
1. Three fundamental characteristic for investment objectives are
safety
_________, income growth
________and_________.
21
CHAPTER 2: ASSESSMENT
Exercises:
country’s
4. The performance of an investment depends on economic factor
___________,
regional & global economic factor
______________________________and life cycle of the investment
__________________________.
22
CHAPTER 3: TYPES OF INVESTMENT
ASSETS
3.3 Shares
3.6 Properties
3.7 Derivatives
3.8 Commodities
23
CHAPTER 3: TYPES OF INVESTMENT
ASSETS
3.10 Annuities
24
CHAPTER 3.1: CASH & DEPOSITS
3.1.1 3.1.2
Treasury Bills Bank Accounts
CHAPTER 3.1: CASH & DEPOSITS
27
CHAPTER 3.1: CASH & DEPOSITS
Deposit Insurance
A system that protects depositors against the loss of their insured deposits,
placed with banks in the unlikely event of a bank failure.
28
CHAPTER 3.1.1: TREASURY BILLS
issued at
discount rate
PIDM TO FURTHER
PENALTIES FOR EARLY STRENGTHEN THE
WITHDRAWAL CONFIDENCE LEVEL OF
DEPOSITORS
Funds
available for
investment
The duration
the funds
can remain
in the
account
Will there be Prevailing
emergency market
withdrawal conditions
CHAPTER 3.2: FIXED INCOME
SECURITIES
Pays fixed periodic interest income
Periodical fixed interest income
At maturity, repayment of principal
Companies or
government
Public
MONEY
MARKET
INSTRUMENTS
(as discussed under
Cash & Deposits)
PREFERENCE TYPES OF
SHARES FIXED GOVERNMENT
(discussed under
Shares later in this INCOME BONDS
chapter) SECURITIES
CORPORATE
BONDS
33
CHAPTER 3.2: FIXED INCOME SECURITIES
– GOVERNMENT BONDS
Advantages Disadvantage
• Easily marketable • In times of high inflation,
capital can be eroded
• Low risk
• Income for future years
guaranteed
34
CHAPTER 3.2: FIXED INCOME
SECURITIES – GOVERNMENT BONDS
MATURITY PERIOD
35
CHAPTER 3.2: FIXED INCOME
SECURITIES – CORPORATE BONDS
Convertible Stocks
Advantages Disadvantage
• Higher return than govt. bonds • More risky
• More marketable
• Potential for capital gains
36
CHAPTER 3.2: FIXED INCOME
SECURITIES – CORPORATE BONDS
CORPORATE BONDS
Debenture Stocks Loan Stocks Convertible Stocks
Secured loans to a Unsecured loans Can be converted
company. No collateral to ordinary shares
Collateral on Fixed interest rate
company’s assets. and term
Trustee to supervise Higher interest rate
performance.
37
CHAPTER 3.3: SHARES
ADVANTAGES DISADVANTAGES
• Investors participate directly in • High risk
the future of company
• Provides good dividends & capital
appreciation
• Very liquid
38
CHAPTER 3.3: SHARES
PRIORITY NO OWNERSHIP
RIGHT SECURE
OWNERSHIP INTEREST
PROFITS
HIGHER RETURN
39
CHAPTER 3.4: UNIT TRUSTS
Medium/Long term
investment Regulatory body :
Security Commission
(>3 years)
ADVANTAGES DISADVANTAGES
• Spread of investment. • Bewildering array of funds.
• Lower risk when compare to shares. • Extra cost or charges for switching
• Professional investment service. service.
40
CHAPTER 3.4: UNIT TRUSTS
Invest
Capital
INVESTORS
ADVANTAGES DISADVANTAGES
Investor can borrow to finance their Can borrow to finance investment – greater
purchase risk
42
CHAPTER 3.4: INVESTMENT TRUSTS
Pool of Funds
(Closed-ended)
Fund size fixed
Fund Manager
43
CHAPTER 3.4: INVESTMENT TRUSTS
LOSSES PROFITS
45
CHAPTER 3.5: PROPERTIES
– REAL ESTATE
PROPERTY AFFECTED BY
Agricultural Quality & profitability of crops, Location
and Value of Building
Commercial/Industry
Location & Types of building
Domestic
ADVANTAGES DISADVANTAGES
46
CHAPTER 3.5: PROPERTIES - REIT
47
CHAPTER 3.6: DERIVATIVES
48
CHAPTER 3.6: DERIVATIVES
Options
Futures
Call Put
Warrants
49
CHAPTER 3.6: DERIVATIVES
- OPTIONS
OPTIONS
• A right, not obligation
• Purchase or sell security within specified time
• Fixed price
• Duration 3, 6 or 9 months
Premium Premium
< Value of Shares in > Value of Shares in
+ +
the Market the Market
Fixed Price Fixed Price
Example: Example
Share Price = RM10,000 per lot Share Price = RM10,000 per lot
Price of Call Option = RM200 (expires after 6 Price of Put Option = RM300 (expires after 6
months) months)
January: Share Price = RM10,000 per lot January: Share Price = RM10,000 per lot
February: Share Price = RM11,000 per lot February: Share Price = RM9,000 per lot
50
Gain = RM1,000 - RM200 = RM800 Gain = RM1,000 - RM300 = RM700
CHAPTER 3.6: DERIVATIVES
- WARRANTS
Corporate-created options
Within a specified time
Holder has right to subscribe period
shares in the company: (Fixed at beginning)
CHAPTER 3.6: DERIVATIVES
- WARRANTS
Combination of both
CHAPTER 3.6: DERIVATIVES
- WARRANTS
ADVANTAGES DISADVANTAGES
Physical
commodities & Spot markets
financial instruments Current market price of item
available for immediate
delivery
Traded in cash
market Forward markets
Advantages
-Enable investors to protect their investments
(hedging)
-Shifts risk of price fluctuations to those who
are willing
-Price discovery – futures price reflects current
expectations
-Speculative trading – potential large gains
Disadvantages
High risk – may face huge losses if
wrongly speculated
CHAPTER 3.7: EXCHANGE TRADED
FUNDS (ETF)
Attractive:
Low cost EXCHANGE Traditionally an index
Tax efficiency TRADED FUNDS funds
Stock like features (ETF)
Combines the
An actively managed valuation feature of ETFs - USA since 1993
fund since 2008 mutual fund or unit - Europe since 1999
investment trust
57
CHAPTER 3.7: EXCHANGE TRADED
FUNDS (ETF)
Types of ETFs
• Index ETFs
• Commodity ETFs or ETCs
• Bond ETFs
• Currency ETFs or ETCs
• Actively managed ETFs
• Exchange-traded grantor trusts
• Leveraged ETFs
CHAPTER 3.8: SUKUK BONDS
59
CHAPTER 3.8: SUKUK BONDS
Based on hard
Investor receive a May be
assets that
Issued by pooled fee equal to the guaranteed or not
generate steady
funds income of the by their
income &
underlying assets originators
expectations
CHARACTERISTIC
14 types. Famous
Issued by Special
Most issued in Based on tangible is Sukuk Al Ijara &
Purpose Vehicles
dollars assets Sukuk Al
(SPVs)
Mucharaka
60
CHAPTER 3.9: CAPITAL GUARANTEED
FUND (CGF)
Features of CGF:
- High asset allocation in guaranteed investment instruments
- Benchmark comparison with Fixed Deposit Rate
- Investment horizon: Normally 3-5 years
- Normally are offered during offer period
- Normally the value per unit starts at RM1.00 for ease of return calculation
- Higher initial investment compared other unit trust fund (ie. RM5000)
- Average high entry fee. (Service charge in industry = 1.5%)
- Redemption fee before maturity (Range from 0.3-1.5% of NAV)
- Capital preservation feature – guaranteed
- No subscription after offer period
61
CHAPTER 3: ASSESSMENT
Exercises:
1. Loan stock is ____________
unsecured loan to a company, therefore carries a
____________
higher interest rate.
call
4. A ________ option gives the policy holder a right to purchase the security
at a future date.
62
CHAPTER 3: ASSESSMENT
Exercises:
Treasury bill
5. _______________ is a short term government funding vehicles.
fixed
7. The holder of a preference shares will receive ____________ dividend
provided enough profit has been made.
open-ended fund.
8. Unit trust is an ____________
63
CHAPTER 4: Investment-Linked Life
Insurance Products – A World Scenario
United Kingdom
Singapore
Malaysia
64
CHAPTER 4: Investment-Linked Life
Insurance Products – A World Scenario
United Kingdom
• Known as Unit-Linked.
Singapore
Malaysia
****************************************************************
Takaful Investment-Linked Life Insurance policies by Takaful companies
- Developed as a response to religious principles and practices of Muslims.
- Invest in stocks and other assets that comply with the requirement of Islamic
law & principles.
68
CHAPTER 4: Assessment
Exercises:
1. The first investment linked life insurance in United Kingdom is introduced
by___________________________________________________
London&Manchester Assurance Company Limited in 1957.
unit linked .
3. In the United Kingdom, investment linked plan is known as ___________
69
CHAPTER 5: Types of Investment-Linked
Life Insurance Products
70
CHAPTER 5: Types of Investment-Linked
Life Insurance Products
Introduction
Investment-Linked Insurance
A major portion of premium used to
purchase units in investment-linked Part of the premium will be
fund at unit price prevailing on allocated for mortality protection.
each investment date.
71
CHAPTER 5: Types of Investment-Linked
Life Insurance Products
Characteristics
72
CHAPTER 5.1: How do Investment-Linked
Life Insurance Policies Work
73
CHAPTER 5.1: How do Investment-Linked
Life Insurance Policies Work
Investment
Used to purchase units in fund Mortality
managed by life office Protection
PREMIUMS
74
CHAPTER 5.1: How do Investment-Linked
Life Insurance Policies Work
Premium
Withdrawals
Death Claim
Cancel units
Mortality charge
& policy fee
75
CHAPTER 5: Types of Investment-Linked
Life Insurance Products
Traditional With-Profit Investment-Linked
Life Policies Life Insurance Policies
Similarity
Premium allocation 1) To provide insurance protection against death
2) To cover expenses & sales cost
3) To be invested
Differences
Investment strategy Produce steady return by Potential for higher returns but at
smoothening out market the expense of market volatility
fluctuation
Investment funds Limited Offer more choices
Flexibility - May or may not be more flexible
than traditional with-profit life
insurance policies
Transparency Charges are not specifically Investment element is made known
detailed in policy terms to policy owner at the outset
Charges are stipulated openly
76
CHAPTER 5.2: Comparing Investment-Linked
and Traditional With - Profit Life Insurance
Traditional With-
Investment-linked
Profit Life Insurance
Potential for higher returns Produce steady return by smoothing
but higher risk (equity funds) out short term market fluctuation
Policy charges and investment content Charges not specifically detailed in the
are more identifiable policy
Value of policy fluctuate depends on Never reduce in value provided life office is
value of units held solvent
77
CHAPTER 5.3: Definitions
REDUCTION IN
ANNUAL FUND BID-OFFER ALLOCATION OF
POLICY FEES
MANAGEMENT FEE SPREAD UNITS –
UNALLOCATED
PREMIUMS
CHARGES LEVIED ON
INVESTEMENT-LINKED LIFE
INSURANCE POLICIES
MORTALITY SURRENDER
INITIAL UNITS
CHARGES CHARGES
78
CHAPTER 5.3: Definitions
POLICY FEE
79
CHAPTER 5.3: Definitions
OFFER PRICE
BID PRICE
• Price at which the units are cashed when the policy matures, or
surrendered, or used to pay charges
• Bid price is always lower than offer price at the published date
80
CHAPTER 5.3: Definitions
Bid-Offer Spread
Bid-Offer Spread
81
CHAPTER 5.3: Definitions
82
CHAPTER 5.3: Definitions
INITIAL UNITS
83
CHAPTER 5.3: Definitions
MORTALITY CHARGES
• Dependent on age
• Covers mortality cost of the policy
• Can be a recurrent charge (e.g. monthly) – funded by cancellation of units on a regular
basis
• Allows policyowner to vary sum assured over time
84
CHAPTER 5.3: Definitions
SURRENDER CHARGES
85
CHAPTER 5.4: Characteristics of
Investment-Linked Life Insurance Policies
Cash Value
Protection Benefits
Affects
Affects
Prices of the units
Reflects
86
CHAPTER 5.4: Characteristics of
Investment-Linked Life Insurance Policies
87
CHAPTER 5.4: Characteristics of
Investment-Linked Life Insurance Policies
88
CHAPTER 5.5: Types of Investment-Linked
Life Insurance Policies
Features Descriptions
Main Purpose Long term savings and Investment with nominal life
protection.
Minimum Single Premium RM3,000 with Top-Ups.
Insurance Protection As percentage of single premium (125%) at minimum of
RM5,000.
Investment Management 0.5% - 2%
Fee
Surrender Part or whole of the units for liquidity.
Charges Includes policy fee, other admin charges & mortality
charges.
90
CHAPTER 5: Types of Investment-Linked
Life Insurance Products
Features Descriptions
Main Purpose Life protection and investment
Premium Regular premium
Characteristics Premium holidays
Top ups
SA can be varied
* The higher the level of coverage, the more the mortality charges
* Consequently, the cash values will be lower and vice-versa
Withdrawals & Surrender (after a few years)
91
CHAPTER 5: Types of Investment-Linked
Life Insurance Products
92
CHAPTER 5: Types of Investment-Linked
Life Insurance Products
93
CHAPTER 5: Types of Investment-Linked
Life Insurance Products
Takaful Concept:
Takaful Fund
(‘Tabarru’) – Participative contribution
Aqad
Participants (contract)
Purchase investment-linked units
•
* By agreeing to mutually help each other
* No claims – entitled to share the surplus in the Takaful fund at pre-agreed ratio
* Surplus – purchase additional investment linked units
• Takaful Operator
- Acts as manager, to oversee the management of investment fund
- Receives fee (ujrah)
94
CHAPTER 5: Types of Investment-Linked
Life Insurance Products
Loans
95
CHAPTER 5: Types of Investment-Linked
Life Insurance Products
• Aims :
To better align the regulatory capital requirements with the underlying
risk exposure of each individual insurer.
To improve the transparency of prudential buffers.
Allow greater flexibility for insurers to operate at different risk level.
96
CHAPTER 5: Types of Investment-Linked
Life Insurance Products
Requirements :
97
CHAPTER 5: Types of Investment-Linked
Life Insurance Products
98
CHAPTER 5: Types of Investment-Linked
Life Insurance Products
99
Chapter 5:Conclusion
CONTRACTS EASIER TO
CHARGES MORE TRANSPARENT
UNDERSTAND
100
CHAPTER 5: Assessment
Exercises:
Policy fee
1. ____________ is administrative expenses of setting up a policy.
Bid price
2. ____________ is the price that investors sell their units.
Offer price
4. ____________: the price that investors buy the units.
101
CHAPTER 6: Structure of Investment-Linked
Funds
Accumulation Units
Distribution Units
Risk-Return Profile
Switching
102
CHAPTER 6: Structure of
Investment-Linked Funds
Accumulation Units
Distribution Units
Risk-Return Profile
• The risk and return graph below shows that higher return
normally comes with higher risk.
Risk
Managed Funds
Equity Funds
Bond Funds
Balanced Funds
Cash Funds
Return
105
CHAPTER 6: Structure of Investment-Linked
Funds
Switching
• Allows the policy owner to switch part or all of his investment from
one fund to another.
• Switching between funds may:
(i) be offered free of charge
(ii) be offered free of charge for a limited number of switches within a
given period (normally a year) and charges imposed for subsequent
switches
(iii) Incur a specific charges
• Switching facility is very useful for the purpose of financial planning.
106
CHAPTER 6: Assessment
Exercises:
financial planning
1. Switching facility is very useful for the purpose of __________________.
Equity
2. _________fund invests in equity assets such as shares or stocks.
4. Specialized
__________ fund segmented based on geographical regions or particular
industries.
107
CHAPTER 7: How Investment-Linked
Insurance Products Work
Withdrawal
Death Benefit
108
CHAPTER 7: How Investment-Linked
Insurance Products Work
109
CHAPTER 7: How Investment-Linked
Insurance Products Work
• The difference between offer price and bid price is called bid-offer spread.
110
CHAPTER 7: How Investment-Linked
Insurance Products Work
• There are two methods to calculate the number of units and cash value
of an investment:
(1) SINGLE PRICING METHOD
Offer Price = Bid Price
Single Premium = RM 4,000
Unit Price = RM 1.00
Charges = 5%
Policy Fee = RM 100
Mortality Charge = 1%
Balance Premium = RM 4,000 – ( RM 4,000 x 5% )
= RM 3,800 / RM 1.00
Number of Units = 3,800 units
111
CHAPTER 7: How Investment-Linked
Insurance Products Work
= RM 3,800 – RM 138
= RM 3,662.
112
CHAPTER 7: How Investment-Linked
Insurance Products Work
113
CHAPTER 7: How Investment-Linked
Insurance Products Work
Calculation of Single Premium Policies
114
CHAPTER 7: How Investment-Linked
Insurance Products Work
115
CHAPTER 7: How Investment-Linked
Insurance Products Work
117
CHAPTER 7: How Investment-Linked
Insurance Products Work
Calculation of Single Premium Policies
118
CHAPTER 7: How Investment-Linked
Insurance Products Work
Two methods:
1. Number of Units
119
CHAPTER 7: How Investment-Linked
Insurance Products Work
Death Benefits
Death Benefits
×c Value of Units
× 1
c0
b1
b0
Death Cover
Time t0 a0 Time t1 a0
Value of Units
c×
a b
Time t0
× Time t1
× Time t2
Death Cover
Exercises:
Single
1. ________ pricing method is only one price quoted whether the
policyholder is buying or selling the units.
2. Under dual pricing method, the difference between offer price and bid
price is called ________________.
bid offer spread
value of unit
3. The policy value is depends on two factors, namely _______________
and _________________.
number of units
121
CHAPTER 8: Benefits & Risks of Investing
Investment-Linked Funds
Benefits
Risks
122
CHAPTER 8: Benefits & Risks of Investing
Investment-Linked Funds
Benefits
123
CHAPTER 8: Benefits & Risks of Investing
Investment-Linked Funds
Benefits
124
CHAPTER 8: Benefits & Risks of Investing
Investment-Linked Funds
Risks
125
CHAPTER 8: Assessment
Exercises:
1. List out the benefits of purchasing investment linked policy.
i. _______________
Pooling & diversification
ii. _______________
Flexibility
iii. _______________
Expertise
iv. _______________
Access
v. _______________
Administration
126
CHAPTER 9: Comparison Between Investment-
Linked Life Insurance & Traditional with Profit Life
Insurance Product
1. Investment Returns
and Risk
Traditional With-Profit Life Insurance 2. Premium Computation
3. Death Benefit
4. Surrender Value
5. Option to Top-up
Investment-Linked Life Insurance
127
CHAPTER 9: Comparison Between Investment-
Linked Life Insurance & Traditional with Profit Life
Insurance Product
TRADITIONAL LIFE INSURANCE PRODUCTS INVESTMENT-LINKED
LIFE INSURANCE
Without Profit With Profit PRODUCTS
Guarantee a fixed rate
of return. Part of company’s surplus is
allocated to policy owners Returns vary according
Does not depend on the in the form of bonus from to the asset value of
investment performance its reserve fund every year. individual funds.
Investment of company.
Return and Three types of bonuses: Risk and returns are
Risk No investment risk. - Cash bonus transferred to policy
- Reversionary bonus owner.
Risk of insolvency of - Terminal bonus
insurance company.
Premium payments
Premium is fixed at
Premium is fixed at are flexible.
inception based on sum
inception based on
assured and expected
sum assured. Premium holiday, top-
Premium bonus(es) payable.
up are allowable.
Computation
Sum-assured driven.
Sum-assured driven. 128
Account driven.
CHAPTER 9: Comparison Between Investment-
Linked Life Insurance & Traditional with Profit Life
Insurance Product
TRADITIONAL LIFE INSURANCE PRODUCTS INVESTMENT-LINKED
LIFE INSURANCE
Without Profit With Profit PRODUCTS
Exercises:
death
3. Reversionary bonus will be paid upon _________ maturity of the
or _________
policy.
130
CHAPTER 10: Taxation & Law Covering
Investment-Linked Life Insurance Products
Taxation of
Investment-Linked Life Insurance
131
CHAPTER 10: Taxation & Law Covering
Investment-Linked Life Insurance Products
Taxation
132
CHAPTER 10: Taxation & Law Covering
Investment-Linked Life Insurance Products
Taxation
On Company
On Policy owner
TAX-FREE on:
• Disposal of units
• Policy matures
• The occurrence of an insured event
• Cancellation / surrendering the policy
133
CHAPTER 10: Taxation & Law Covering
Investment-Linked Life Insurance Products
134
CHAPTER 10: Taxation & Law Covering
Investment-Linked Life Insurance Products
BNM Guidelines
Applicable to insurance companies based on the Insurance Act 1996:
135
CHAPTER 10: Taxation & Law Covering
Investment-Linked Life Insurance Products
BNM Guidelines
3. Investment Limits
BNM Guidelines
3. Investment Limits
5% total value of fund’s asset
8. Minimum Death Benefits
Securities
RM
5% 5,000 company’s paid up capital
investee
The higher of:-
125% of single premium
Loans and Debentures 5% total value of the fund’s assets
137
CHAPTER 10: Taxation & Law Covering
Investment-Linked Life Insurance Products
BNM Guidelines
138
CHAPTER 10: Assessment
Exercises:
1. The minimum entry age for policy holder under investment linked life
18
insurance is ______ years old.
139
CHAPTER 11: Identifying & Establishing
Customer Needs
142
CHAPTER 11: Assessment
Exercises:
143
CHAPTER 12: Marketing & After-Sales
Services, Ethics & Code of Conduct
Marketing
Sales Oriented
Market Oriented
Marketing
Sales Oriented
145
CHAPTER 12: Marketing & After-Sales
Services, Ethics & Code of Conduct
Market Oriented
146
CHAPTER 12: Marketing & After-Sales
Services, Ethics & Code of Conduct
1. Problem recognition
2. Information search
3. Evaluation of alternative policies
4. Purchase
5. Post-purchase evaluation
Selling Process
• Follow-up stage helps ensure that the customers remain satisfied with
the purchase.
• Also helps in reducing customers’ cognitive dissonance.
• Cognitive Dissonance?
A psychological state in which customers feel uncertain and often
question whether:
- They should have purchased a product at all.
- They should have purchased an alternative brand or another product.
• Delivery of a policy can dispel customer’s cognitive dissonance by reassuring
policy owner and the family members about their decision to buy the policy.
149
CHAPTER 12: Marketing & After-Sales
Services, Ethics & Code of Conduct
Complying with the Law and with the Best Principles and Practice
v
relating to Financial Advice
v
Observing and Applying the Relevant Codes of Good Practices
150
CHAPTER 12: Marketing & After-Sales
Services, Ethics & Code of Conduct
152
CHAPTER 12: Marketing & After-Sales
Services, Ethics & Code of Conduct
153
CHAPTER 12: Marketing & After-Sales
Services, Ethics & Code of Conduct
154
CHAPTER 12: Marketing & After-Sales
Services, Ethics & Code of Conduct
• Proposal forms
- Statement on disclosure of material fact and consequences
of non-disclosure
- Intermediary to have a copy of the proposal form
• Policy and accompanying documents
• Sales materials / Advertisements
155
CHAPTER 12: Assessment
Exercises:
1. List out the steps of consumer buying decision process:
i. Problem recognition
_____________________
ii. Information search
_____________________
iii. Evaluation of alternative policies
_____________________
Purchase
iv. _____________________
v. Post purchase evaluation
_____________________
Twisting
2. _____________ is a form of misrepresentation in which a policy owner is
induced to discontinue an insurance policy or made paid-up in order to
purchase a new policy to earn income for the agent.
156
157
• Number of question = 60
• Time = 1 hour 30 minutes
• Passing mark = 80%
THANK YOU
Disclaimer:
All training materials which are produced by AmLife Business School in any forms/format are purely training tools for internal agency programmes of
AmLife Insurance Berhad. All or any part of the contents of these materials shall not be used directly or indirectly for soliciting of insurance businesses,
policy holder services and/or facilitating any form of communications with external party whatsoever. This information is correct as at 13st August 2014