Know Your Insurance - Topics

If you like to learn about any of the topics below, you can visit
www.KnowYourInsurance.com.sg

INSURANCE
Motor Insurance
iYoung
Investment Linked Plan
Personal Accident
Travel Insurance
Medical Insurance
Saving for Education
FAST (Financial Advice)
An insurance cooperative
Life Annuity
Home Insurance

GENERAL
Manage Your Money
Take a holiday in Sabah
Invest your CPF savings
Buying a new car
Estate Duty

Know Your Insurance website - Mandarin & Malay

NTUC Income is launching the Mandarin and Malays versions of the "Know Your Insurance" website.

We first launched the English version of this website on 21 December 2005. It received encouraging response. A total of 33,000 people have visited the website over the past five weeks, or an average of 1,000 visitors daily.

5,000 people have taken the test on the insurance topics and are eligible for a discount when they purchase NTUC Income's insurance products.

A recent survey of 200 visitors:

82 per cent find the website to be educational
94 per cent of the users will visit the website again
82 per cent will recommend their friends to visit the website
74 per cent will take advantage of the discounts to buy insurance

The top five popular topics are: Motor Insurance, Investment-Linked Plan, Life Annuity, Medical Insurance and iYoung.

My wish for budget 2006 - SRS

If I were the Finance Minister, I would ... Review the Supplementary Retirement Scheme and make it more effective in helping people to make additional savings for retirement.

I will increase the amount of contribution to a flat 15% of annual income, or $16,000 whichever is higher.

For non-residents who do not contribute to CPF, I will allow an additional contribution of 20% of earnings, subject to a cap of $9,600 (being 20% on $4,000 X 12).

The other features of the SRS can remain the same.

Annuity income is exempt from personal tax

If you buy an annuity, the income that you receive is fully exempt from personal tax.

Here is an example. Assume an annuitant invest $100,000 in an annuity and receive back a total of $150,000 during the lifetime. This comprise of a return of capital (ie $100,000) and the income earned on investing this sum, (ie $50,000).

The annuitant does not have to pay any personal tax on the full amount revieved as annuity.

If the annuitant had invested invested in other type of investment and earned an income of $50,000 over several years, this income will be taxed at the marginal rate. If this rate is an average of 10%, the tax payable is $5,000.

By investing in the life annuity, the annuitant enjoy this tax exemption and receives $5,000 more.

An annuity has a tax advantage. It is better to invest in an annuity, if the return given is competitive.

In the above example, if the total payout of $150,000 is received over 20 years, the annuity income for each year is $7,500. This represents an attractive return of 7.5% on the invested sum. However, this return comprise partly of the consumption of the capital and on the actual income earned.



NTUC Income offers an attractive return on our annuities. We now account for 60 percent of the market. The remaining 40% is shared by several life insurance companies.

Cancel your motor insurance and move to NTUC Income

NTUC Income charges a lower premium rate for motor insurance. The difference can be up to 25%.

If you have insured at a higher premium rate, you can cancel the existing policy, get the refund premium and move to NTUC Income now.

Your current insurer will normally charge 15% of the premium or $100 for administration charges for cancellation. The unused premium minus the cancellation charge is returned to the policyholder.

Here is an example.

Take the case of a policyholder who pays a premium of $1,200 and wish to cancel the policy after 6 months.

The refund premium is 1/2 of 85% of $1,200 = $510.

If our premium is $900 (ie 25% lower than $1,200), the policyholder pays only $450 for the 6 month of insurance with us.

He will benefit by cancelling the policy and moving to us now. The benefit is higher, if you cancel your policy within the first few months.

Advice: How to restructure your life insurance

QUESTION

Dear Mr Tan

In today's global market condition and removal of the iron rice bowl, job security are now being a thing of the past. Many Singaporean whom have bought numerous
life insurance policies found that they are not able to keep up with the long term payment.

This has resulted in cancellation after emptying accumulated bonuses to pay their insurance premium. It is no longer attractive to make a long term commitment.

I am a victim of multinational company relocated from Singapore to New Delhi.

REPLY

Dear

I will get someone to assist you on restructuring your insurance plans, as follows:

- surrender for the cash value
- NTUC Income gives generous values compared to other insurance companies
- invest the cash value in our combined fund (for flexibility and attractive return)
- make flexible savings under our Ideal plan
- take a decreassing term assurance for your coverage (it cost you much less)

Avoid Structured Deposit

QUESTION FROM A COLLEAGUE

In 2003, my father and I invested $5,000 in a 6-year capital guaranteed investment product called "Enrich Account".

It provides a 3.6% pay-out in the first year and subsequent pay-outs on the Bank's discretion. We received a payout of S$180 in 2003, S$90 in 2004 and no payout in 2005. The current value of the investment is S$4,300. We are tied up till 2009.

I suspect the poor performance is due to its bond investments which are affected by the rising interest rate environment. Although it is capital guaranteed, it ties up our money for 6 years and ultimately gives poor returns.

What is your advice?

LESSON:

This is a good example of structured deposits and the problems with them. I avoid them.

If you wish to invest in a structured product, you should understand how it works. You should also ask the Bank to disclose disclose the minimum and maximum return and the actual returns realised - for each of the structured products which have matured.

A new way to sell insurance

INSURANCE AGENTS

Tired of prospecting?
Tired of making cold calls?
Tired of running around to make presentations?
Tired of long working hours?

We are looking for qualified agents to join our expanding team of full-time Insurance Consultants

• Fixed salary of $1,500 to $2,500 with performance-based incentives
• Comprehensive training and career progression
• Office-based environment
• Attractive staff benefits and balanced work-life
• 5-day work week
• Get a sign-on bonus of $1,000 (subject to conditions)

Interested candidates, please apply via: www.income.coop/career