Potential Research Project Topics

What are the ethical issues behind the insurance industries? Are projected returns of insurance policies realistic?

Ethical issues embedded in the insurance industries are my potential research project topic. You may have come across the news regarding the recent bonus reduction carried by NTUC Income (Singapore’s largest life insurance company). Existing policyholders are given no choice but to accept the reduced allocation of bonus to their policies. It begs one to think about the fairness of such a corporate practice. That recent article triggered my interests towards the ethical issues of the insurance industries. Basically to narrow down the scope of my research, my approach would be to compare between 2 insurance products:

1) Life insurances – one of the most commonly sold products by insurance agents
2) Term insurances – an uncommon product

From the comparison of products, various ethical issues regarding selling, unrealistic projected returns, and unfair business practices within the insurance industry will be deeply explored.

The target audience for this research project will be the NUS undergraduates who are potential insurance buyers as they are about to enter the work force and will have purchasing power. Since buying life insurance is a long term investment, potential insurance buyers such as the NUS students should learn some basic insurance knowledge and hence equip themselves against rogue insurance agents.

Insurance agents like to sell endowment and whole life policies, including variations of these policies, to consumers as a way to plan for their future. This is simply because life insurance provides one of the highest commissions to the agents. Hence, life insurance is one of the most highly marketed products. These policies offer poor value to the consumer.

High costs of life insurance policy

a) Upfront marketing cost = 1%
b) Expense ratio and mortality = 1.5%
c) Guarantee penalty = 2%
Total = 4.5%

Potential surveys would be conducted on 2 distinct populations - current insurance policyholders and the insurance agents from various companies. From the policyholders, we would like to learn about their experiences with insurance companies. From the insurance agents, we would like to get their opinion on whether the life insurance policy offers a fair return to the policyholder.