Friday, January 20, 2006

Beware about the distribution charges under ILP

Beware about the distribution charges, when you buy a regular premuim investment linked product (ILP).

Some products take away nearly 2 years of your savings. If you annual savings is $3,000, you stand to lose up to $6,000. This is used to pay commission to the insurance agent.

If you buy the ILP from NTUC Income, 100% of your savings is invested from the first month.

What is the catch?

If you terminate your policy within 20 years, you are required to pay $40 a year for the remaining period. If you terminate on the 10th year, you have to pay a back end charge of $40 X 10 = $400. That is all.

This is, of course, much lower than $6,000.

The name of the ILP from NTUC Income is called Ideal plan (code: ID5). And here is another tip: you can save as much as you wish, say $500 a month, and you still pay the same back end charge. ID5 makes a lot of sense, if you save a large monthly sum.

Thursday, January 19, 2006

My wish for budget 2006

Here is my wish for budget 2006.

I wish that the finance minister will encourage people to make private savings for their retirement. This is to supplement the Central Provident Fund savings, which has been significantly reduced in recent years.

In many countries, there is an attractive tax relief to encourage private savings. The savings are deducted from taxable income. But, as most lower and middle income earns do not pay income rate in Singapore, this may not work.

In the USA, the investment earnings from the retirement funds are deferred till retirement. Again, this will only work when most people pay income tax.

In all cases, there is a recognition by the government to forego some tax revenue to encourage people to make supplementary savings.

In Singapore, I suggest two possible ways to encourage more people, especially from the lower and middle income, to save for their retirement:

- government to contribute $1 for every $4 of savings; this scheme is similar to the baby bonus, but at a lower rate

- government to issue long term bonds that pays an attractive return that can only be invested by retirement funds; the return can be 1% or 2% higher than the market rate.

We need to have an attractive scheme that will encourage people to save for retirement. It will cost money to the government, but it will benefit the government in the long run, as there is less need to take care of poor old people.

Singaporeans, grow up!

I reproduce the letter from Cheyenne Yee, that was printed in Today 19 January. I agree with the views expressed in the letter. We need to mature as a society.



Dear Mervyn Tan,

I pity you.

I pity you because you were born in a country where we would rather see you in jail than embrace your talent. Although you left the country and renounced your citizenship, we still want you to pay for an offence you commited almost 20 years ago.

You did not go through the same suffering as we did, and maybe we bear a grudge against people like you. We will not forgive you since we are not mature enough.

Maybe if you were a woman, it would be easier since women in Singapore do not serve National Service (NS). It is okay for them not to do it. But it is not okay for you. You have no choice.

The moment you are born male here, you have to serve NS even if your family decided to raise you elsewhere - even if you have few memories of this place, and no longer have a sense of belonging here. Sounds illogical, but this is how we work.

So, stay away. We really do not want you back. Even if you are world-famous. Come back ony when we grow up.

Cheyenne Yee

Reply to: Income agents quitting

19 January 2006

Forum Page
Straits Times

I refer to the article entitled "Income agents quitting over insurer's direct sales strategy" (St Times, 17 Jan).

Your article mentioned that 50 agents have left so far, angered by introduction of salaried team. This is not correct.

Each year, about 100 full time advisers leave us for a variety of reasons. Most of them leave for a change of career. This is also the experience in other life insurance companies. The decline of 50 full time advisers in 2005 was due primarily to a drop in the recruitment of new advisers.

We now have 700 full time advisers. They are doing quite well, and earned more than in previous years. They have benefitted from the sales promotions that accompany our new strategy.

We expect about 170 advisers to qualify for the prestigious Million Dollar Round Table based on their sales in 2005. This is an increase compared to 130 for the previous year.

To quality for the MDRT, the adviser has to earn at least $51,000 in commission on new insurance sales in each year. The actual earnings, including renewal commission, is much higher.

Our strategy is to serve our policyholders in the best possible way. We offer suitable insurance products that provide good value and best meet the needs of our policyholder. We will keep our expenses low, so that our policyholders will be able to enjoy the best possible return on their savings.

Our direct channel offers the chance for customers to enjoy the savings through a modest discount. To qualify for this discount, they have to visit our business center, and save on the time taken by our insurance advisers from visiting them in their home.

Our business center is now manned by salaried consultants. In the future, our insurance advisers may be able to offer the same modest discount to the customers, provided that the customers visit them in the office.

We also encourage customers to visit our educational website to learn about insurance on their own. The website now attracts 1,500 visitors each day.

We will continue to offer to customers the choice of being served by insurance advisers who visit their homes or workplaces. The customers will find our insurance products to be attractive, as the commissions paid to our insurance advisers are at a modest level, compared to the market. This channel continues to be an important pillar of our sales strategy.

Contrary to the impression given in your article, our insurance advisers will continue to have a bright future, as they will benefit from the business growth that is generated by our strategy to look after the best interest of policyholders.

Tan Kin Lian
Chief Executive Officer
NTUC Income

Monday, January 16, 2006

Work together to promote car sharing

NTUC Income operates the largest car sharing scheme in Singapore. We have 5,600 members sharing 200 cars located in 70 locations.

There are three other operators, namely CitySpeed, WhizzCar and Honda. Together, they have 5,400 members sharing 160 cars.

NTUC Income cooperates with the other operators to develop the car sharing market in Singapore. Each serves a different market segment. We meet regularly to share
experiences to improve the standard of carsharing service.

For example, NTUC Income shares our technology and call center facility with one of the operator.

I want to quote this example as another way for business to work in Singapore. We do not need to compete aggressively. We can cooperate to improve efficiency (and bring down cost) and quality of service.

Sunday, January 15, 2006

Buying a new car?


Take your insurance from NTUC Income and enjoy these excellent benefits:

- potential saving of $400 yearly on your insurance premium
- protection against loss of manufacturer warranty for 3 years **
- no extra loading on your premium, even if you had a bad accident **
- replacement with a new car, if it is stolen or total loss during the first year **
- repairs at manufacturer's workshops for engine and proprietary repairs **
- attractive terms for your car loan

** subject to conditions

Call 6477 7722

Stay with Incomeshield

Taken from NTUC Income's website

If you have been approached to switch from Incomeshield to another Shield product, you should consider your decision carefully. Here are some key advantages of Incomeshield:

- Our premium rates are more affordable than other Shield plans
- We provide adequate coverage to meet most medical treatments
- You can buy a rider to cover the deductible and co-insurance
- You can buy a rider to cover the major illnesses (for only 15% more)
- You can enjoy unlimited lifetime coverage

Here is a brief comparison of the total premium payable over 40 years (from age 41 to 80 years) between Incomeshield and similar Shield plans offered by other insurers:

Plan NTUC Income Other insurers
A $30,525 $34,071 to $42,263
B $18,338 $21,609 to $28,403

The coverages provided by the various plans are quite similar, except for some diffferences in the limits. The difference in premium can be as much as 60%. You can save up to $12,000 over 40 years, by insuring with NTUC Income.

These premiums shown above are based on current rates. They are expected to increase in future years, due to higher medical costs. It is important that you choose an affordable plan from NTUC Income.

The insurance agent or broker who advise you to switch away from Incomeshield may have earned an attractive commission from the other insurer. The agent is required to tell you about the commisison that they will earn now and in the future.

If you wish to attend a dialogue session, you can call 6877-3366.

Tan Kin Lian
Chief Executive Officer

Customers want to buy insurance directly


Dear Mr Tan

I read your blog with great interest; it provides a lot of informative material with real life case studies.

I have been looking around for insurance policies to save for children and own retirement. I realise the amount of commissions that go to the adviser is quite high. Up to two years of premiums go towards their commissions.

I know that more professionals are now turning to financial advisers simply because they want to buy policies for themselves and their families without having to pay high commissions to agents.

NTUC has gone through a positive revolutionary changes under your stewardship. I look forward to a day when you become a one-stop shop for insurance. You should allow customers to buy insurance directly, without having to pay high commission.

People like me can read and understand the insurance products. All we want is to buy the product and not pay for the service of the agent.

For now, we do not seem to have a choice but to have to go through an agent. Every insurance company I have gone to has the same system.

Mr Tan, I sincerely implore that you kindly look into this revolutionary way of selling insurance. I can assure you there will be a lot of buyers who are interested to buy insurance in this way.

When that day comes, I will certainly be one of your first customers at the service counter. I hope that you will provide several counters, to service those who walked in, and those who made an appointment. I shall hold my breath and reserve my funds for now.




We do have a business center that operates in the way that you wish for. It is is staffed by salaried consultants, who are able to provide advice and also to help you to find the right insurance policy to buy. We provide a modest discount to a customer who come to us directly.

Call 6788 1111 if you wish to make an appointment to see a consultant at our business center.

We also have an interactive and educational website for you to learn about the various insurance products. You can visit

Tan Kin Lian
Chief Executive Officer

Blog Archive