Johnny Chan

TIT - life insurance

Misconceptions about life insurance sold in Thailand


This is Thailand. Believe it or not, the way that Thai people think, their culture and their priorities, can often be considerably different from that of the Western culture we grew up in and the priorities that we were taught.

Many expats find themselves on the other side of the "looking glass" (mirror) when they come to Thailand. They become "strangers in a strange land." I get reminded of this constantly by some of the letters I receive and some of the questions expats ask me.

Recently, I was asked about life insurance in Thailand. I responded; and then got a reply back talking bad about life insurance here and how much more costly it is than in Europe.

I have since spotted a couple of expat forum threads that take the same approach. One writer even claimed that the Thai government was using a tax deduction to get people to buy life insurance that the Thai government knew was overpriced. Strangers in a strange land can really say some stupid things on these forums.

The truth is that this same kind of "high cost" life insurance is also available in Europe and the U.S.A. The kinds of life insurance that Thai people like to buy are called endowment plans - savings plans purchased through life insurance companies. As a rule, Thais don't buy life insurance to provide low-cost death protection; they buy it for building up savings.

The life insurance industry must have a pretty strong lobby; because now, the government offers a decent tax-break to buyers of life insurance. This is to encourage Thai people to build up savings. Life insurance billing is a way of forcing insureds to maintain their savings program.

Many, many years go, some life insurance companies tried to market "death benefit" life insurance in Thailand. They weren't successful and had to leave, because the idea of providing financial security for loved-ones, if the family financial provider should die, didn't appeal to Thais.

This is Asia. In Asia, the extended-family steps in to provide the care and financial support required for family members in need. Why then should anyone spend money to provide financial security for their family when their extended family will step-in and do that?

About 70 years ago, a company that had been successful promoting the savings plan aspect of life insurance to the Chinese ended up in Thailand after being asked to leave China by the Communists. Their focus on savings plan marketing, rather than death benefit, caught on here also. Now there are more than 26 life insurance companies here focusing their marketing efforts on the saving program aspect of life insurance, with little concern for low cost death benefits.

Yes, life insurance is more costly in Thailand. That is because the focus is on cash build-up, not death. Remember, this is Thailand, where cultural priorities and concerns are often quite different from those in the West.

Something else you should be aware of about life insurance in Thailand is that everyone seems to have a friend or relative selling it.

Thai Health Insurance (THI), the Ajarn Group insurer, is owned by Thai Life Insurance. But they are both totally different companies, offering totally different products and come under a totally different set of government regulations.

Thai Life Insurance also sells health insurance; but, like most life insurance companies, they can only sell it as a rider on a life insurance policy. Life insurance companies are regulated by the government differently because their focus is on offering a financial product. Non-life insurance companies are called general insurance companies.

Thai Health Insurance is regulated as a general insurance company. General insurance companies normally provide a wider range of health insurance coverages than life insurance companies do.




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