Lapsing Of AXA Insurance Sold By Finexis

It was reported in the Straits Times today that AXA is trying to claw back $7 million from Finexis. Because, last year, Finexis had a promotion where they were giving away free 1 year term insurance (FutureProtector) to its customers and potential customers.

Being from the industry, I had met clients who claimed this. I did not know the mechanics of how this was possible, but through the explanation in the article, all has become clear.

It takes 2 to clap.
1. AXA was silly enough to give 117% commission! Where are they supposed to get the extra 17% from? It is a losing contract no matter how you look at it. No wonder the CEO resigned.
2. Finexis being a MAS licensed firm did not carry out proper needs based selling professionally and objectively as per their code of ethics as financial planners required.

Well, from a purely sales point of view, if they are giving 117% commission, everyone would call up everyone in his phone book to just sign up for the MAXIMUM free coverage and pocket the 17% FREE MONEY from AXA. THIS IS AN ABSOLUTE FREE LUNCH DEAL!

I wonder on average how much did each agent pocket from the free $7 million. In fact, I puzzled why they managed to lose only $7 million.