A new colleague at Shenlan Insurance, Lily, recently completed her onboarding training on insurance knowledge. She decided to review her family’s insurance policies to see if they had fallen into any traps. To her shock, she discovered that her mother had been sold a policy by an old acquaintance, promising ‘all-in-one coverage with cash returns.’ The policy turned out to be riddled with pitfalls, covering almost every common red flag in the industry.
Many people have fallen victim to such schemes. Today, Lily dissects the flaws in her family’s policy one by one. Grab your own policy and check if you’re facing similar issues. Lily’s mother said, ‘This policy was purchased 8 years ago. Initially, it cost over 2,000 yuan annually, but now it’s risen to over 3,000 yuan. Although the premiums are high, it promises a payout of 100,000 yuan in case of an incident.’ However, when Lily opened the policy, she was stunned. ‘It says 10,000 yuan, not 100,000!’ Her mother insisted, ‘I bought the 100,000 yuan coverage!’ Lily pointed to the policy, ‘Count the zeros yourself.’ After putting on her reading glasses, her mother counted three times and exclaimed, ‘How is this possible? Is my life worth only 10,000 yuan?’ Further inspection revealed the policy was a ‘bundled package.’ The so-called ‘all-in-one coverage’ combined four basic insurance types: endowment insurance, critical illness insurance, accident insurance, and medical insurance. The total sum insured added up to 100,000 yuan, but payouts were split by category. For example, in case of death, only the endowment insurance’s 30,000 yuan would be paid. Medical expenses were reimbursed up to a limit, with surgeries capped at 3,000 yuan. Lily’s mother muttered, ‘The agent said it would pay 100,000 yuan if something happened.’ Frustrated, Lily tossed the policy aside, calling it ‘outright fraud.’ Many have been misled by such bundled packages. Always clarify whether the coverage is standalone or cumulative. When asked why she bought the policy, Lily’s mother replied, ‘I was afraid of falling ill without income or savings.’ She had intended to buy critical illness insurance, but the agent convinced her this bundle was ‘the best deal.’ The catch? The critical illness coverage was tied to the main endowment insurance.The two policies share the same sum insured, which is not easily noticeable without carefully reviewing the terms.
Source: Screenshot of mother’s policy. At first glance, this additional critical illness insurance seems like a good deal: an annual premium of 357 yuan for a sum insured of 30,000 yuan. Source: Screenshot of mother’s policy. However, in reality, it is calculated together with the main policy, requiring an annual premium of 1,448 yuan for the same shared sum insured of 30,000 yuan, making it far less cost-effective. Source: Internet. Such pitfalls involving shared sums insured are quite common, relying on the assumption that policyholders won’t scrutinize the terms during purchase. Many only realize the issue when making a claim. For those unsure about potential hidden clauses in their policies, professional planners can assist with policy diagnostics. Lily raised a critical question: “If you wanted critical illness insurance, why were you persuaded to buy an endowment policy?” In Lily’s view, her mother, then 49 and a year away from retirement, had no financial dependents and didn’t need to spend unnecessarily on an endowment policy. Her mother explained, “They said it would return money.” Source: Screenshot of mother’s policy. The idea of getting money back sounded appealing, but Lily warned, “Wake up, Mom! Believing this will cost you dearly.” Source: Internet. For example, this endowment policy required an annual premium of 1,091 yuan starting at age 49, paid over 20 years for a 20-year term, totaling 21,000 yuan in premiums. The benefits included receiving 20,000 yuan if living to 69 or a death benefit of 30,000 yuan. In contrast, a standard term life insurance policy could provide 100,000 yuan in coverage for just 256 yuan annually, totaling around 5,000 yuan in premiums (*based on Dinghaizhu No. 6 term life insurance for a 49-year-old woman with 100,000 yuan coverage until age 70, paid over 20 years). Investing the remaining 835 yuan annually at a 2% interest rate would yield 20,000 yuan in principal and interest over 20 years, equivalent to receiving 20,000 yuan at age 69 or a death benefit of 100,000 yuan. “The better choice is obvious,” Lily remarked. Her mother admitted, “Who would calculate this in such detail?” Lily summarized two key points: 1. Near retirement age and no longer the family’s primary breadwinner, focus on health insurance rather than unnecessary life insurance. 2. If life insurance is desired, opt for term life insurance, which is cheaper and offers higher coverage. These “bundled packages” often have another major flaw: they appear comprehensive but provide inadequate coverage for each aspect. Lily reviewed the medical insurance section of the policy and found it cost 1,700 yuan annually when purchased separately, yet only covered 80% of expenses with low limits per item. Source: Screenshot of mother’s policy. For ordinary hospitalization, the maximum reimbursement was only 5,200 yuan.The attached hospitalization insurance offers limited coverage and is not guaranteed renewable.
Switching to a million-yuan medical insurance policy provides better coverage at the same price. (*Based on the calculation for Golden Medical Insurance No. 3, a 57-year-old female would pay a premium of 1,736 yuan.) It not only guarantees renewal for 20 years but also has high reimbursement limits. – For common illnesses: maximum coverage of 2 million yuan, 100% reimbursement. – For serious illnesses: maximum coverage of 4 million yuan, with zero deductible. – It also covers externally purchased medical devices and specific anti-cancer drugs. This is truly spending money where it matters most! After Lily’s analysis, her mother felt very discouraged. “Several of my close friends bought policies from the same agent. Did she deceive all of us?” “Let’s focus on solutions. Since we’ve already overpaid, can we still cancel the policy?” Lily thought for a while and outlined a few considerations: Whether to cancel the policy depends on three factors: 1. Given your current health status, can you qualify for a better policy? 2. Which option incurs greater losses: canceling or continuing payments? 3. Do you urgently need the money? Is continuing payments financially burdensome? First, her mother’s health has significantly declined in recent years. Reapplying for a new policy would likely result in rejection. Second, canceling now would lead to substantial losses, with only 6,000 yuan refunded. It’s better to wait until the policy matures to recover 20,000 yuan. After thorough analysis, they decided to retain the main policy, cancel the attached hospitalization insurance, and supplement it with a million-yuan medical insurance or cancer medical insurance that requires no health declaration. Once these new policies are in place, the attached medical insurance can be canceled. That night, Lily’s mother shared this in her “close friends group chat.” For those who want to analyze whether their policies are problematic or need advice on whether to cancel or optimize, click here to have a professional planner diagnose your family’s policies. Feel free to like this article. The more people see it, the fewer will be misled.
