Friday, June 16, 2006

Stockmarkets will recover

Compared to the peak a few weeks ago, the stockmarkets have fallen by 9% to 17% to the lows.

Peak Low %
Nikkei Japan 17291 14218 -17.8%
STI, Singapore 2660 2297 -13.6%
Nasdaq, USA 2345 2072 -11.6%
Dow Jones, USA 11642 10706 -8.0%

Many of these markets are now recovering. If you invest in the stockmarket now, you pay a much lower price than the recent peak.


Is there a chance that it may go lower?

Yes, but it is a small chance. The worse case scenario was during September 1987. The stockmarket crashed by 19% over 2 months. However, the crash was temporary. Within 11 months, it fully recovered to the level before the crash.

Money market fund earns good return

Here is the return on our money market fund, net of expenses, during the past 12 months:

3 months to:
31 Aug 05 0.47%
31 Nov 05 0.45%
31 Feb 06 0.67%
31 May 06 0.74%

The interest rate has been increasing during the past year. The interest for the latest period is 0.74% for 3 months, or 2.96% per year.

Interest rate is likely to increase over the next few months. The return from the money market fund is likely to exceed 3% (but not guaranteed).

Thursday, June 15, 2006

Bonus Cut and Restoration

A policyholder complained that his insurer (not NTUC Income) cut bonuses on all insurance policies in bad times but restored them selectively in good times.

He had two endowment policies outstanding with the company. The bonuses were cut in 1999 and have not been restored since then and the terminal bonus is still in suspension.

According to him, the insurer "was trigger happy to cut bonus rates on its policies during bad times, but during good or better times, restoration was applicable only to policies that matured in certain years. Why was restoration of bonus rates not accorded to all its policies in the same spirit as during the reduction exercise?"

Customer is happy with business center

A customer visited our Business Centre to ask about motor insurance. Our insurance consultant attended to her.

Our premiums are slightly lower than the current insurer. In particular, she liked our convenient operating hours which is until 6:30pm.

She was very pleased with our service. She SMS to say, "Many thanks. This is truly customer service!"

A buying opportunity?

The market correction has been more severe than I had expected.

The Japan market has dropped by 20% from its peak. The Singapore market dropped by about 15%. The US market dropped by about 10%.

The combined fund (growth) from NTUC Income probably dropped by about 7% to 10%. It dropped less than the other markets, due to a 30% component invested in bonds.

Here is the good news for long term investors. You have the chance to invest now, at a much lower price. And benefit from the long term appreciation of the investment funds.

I have an additional $100,000 to be invested. I shall be deciding within the next two weeks.

Tuesday, June 13, 2006

Additional cover for renting a car overseas

If you rent a car for driving overseas, you may be required to pay up an additional $20 a day for the additional third party cover (over and above the basic cover provided in the basic rental). This is quite high.

If you are insured with NTUC Income and have NCD of 20% or more, you can get this additional cover at a 50% discount from us. You can save $10 per day.

Call 6332 3456. More details can be found in our website.

Are pre-existing conditions excluded?


I am a civil servant. I have been covered under CPF Medishield since its introduction. I did not opt out from Medishield, even through I am covered for medical benefits by the civil service.

I attended your educational talk and wish to move to IncomeShield for better coverage. But I am afraid that any pre-existing illness will not be covered under IncomeShield. What is your advice


If you wish to know whether you can be covered under Incomeshield, all you have to do is put in an application. It cost you nothing.

If there is any exclusion for pre-existing conditions, we will ask for your agreement. The exclusion, if any, will be endorsed on your policy.

If your pre-existing conditions are properly disclosed to us and are not endorsed as exclusion, you will be covered.

When you opt for Incomeshield, you will continue to be covered by Medishield for all your pre-existing conditions.

Approved: 8 cases of reverse mortgage on HDB flats

We have approved 8 cases of reverse mortgage on HDB flats during the past 3 months for a total of $657,000. The average loan is $82,000, to be withdrawn in monthly installment over the loan period (of up to 20 years).

Another 4 cases are being processed.

We received many enquiries, but the number of applications is still small at this time.

Monday, June 12, 2006

Competitor's agent tell a blatant lie!

A customer ask a competitor's agent, "Is it true that the investment-linked plan from your company takes away 19 months of my savings, compared to 7 months by NTUC Income?"

The agent said, "Oh, our 19 monhts is already built into the premium. The 9 months from NTUC Income is an additional charge."

It is a blatant lie. But, the agent knows how to tell it in a convincing way. The customer is too confused and afraid to ask for the agent to explain.

Lesson: The only way for the competitor's agent to get away with a high charge of 19 months is to tell a blatant lie. Do not trust this agent. He is only interested to earn a big commision on the sale.

Sunday, June 11, 2006

An idea - start the school year in 4 enrolment dates

I suggest that the school year should have 4 enrolment dates, ie in January, April, July and October.

This allows parents to send their child to a school immediately after the birthday, rather than to wait for up to 11 months.

We can divide the schools into 4 groups, to start at the various enrolment dates.

In the future, parents can plan to have their children born in the same time of the year, so that they can go to the same school.

If there are born at different months of the year, the parent can still find the enrolment date that is most convenient for both children.

This approach will also help to spread the school holdays throughout the year. As the school holidays are spread out, parents do not have to pay a higher price for air tickets and hotels.

It is time to move to a more flexible system.

High pressure sales by a bank?

My friend told me this story.

A bank advertised interest rate of 3% for a fixed deposit of more than $50,000. This is only available when you visit the branch.

If you wish to place the same fixed deposit through their internet website, the bank pays only 1.5% per annum.

When he visited the branch, he is advised by the bank's marketing officer to change to a investment fund or structured product.

My friend is knowledgeable. So, he knows how to resist the marketing pitch.

But he said that less educated people may be persuaded to invest in the risker product, without understanding the risk.

Perhaps, it is time for the bank's marketing practice to be reviewed?

Pay motor insurance and road tax in monthly installments?

Tentative (subject to change).

FAQ (frequently asked questions)
Motor Insurance Plan G

1. How do I save up to 15% on motor insurance?

NTUC Income offer competitive rates for motor insurance. For many models of cars, our rates are up to 15% lower than our competitors.

If you are now insured with another insurer and you move to us, you can enjoy a saving of up to 15%.

Just call us for a quotation. You can compare for yourself.

2. How do I pay my premium in 12 monthly installments, free of interest?

If you insure your car under this plan, we allow you to pay your premium in 12 monthly installments by GIRO. This will be free of interest.

Insurance premium: $600 a year
You can pay in 12 monthly installments of $50.

We require you to pay the installment 1 month in advance. At the start, you will pay 2 monthly installments. After that, we will collect the monthly instalments every month through GIRO.

3. How do I pay my road tax in 12 monthly installments?

You can also apply for an advance to pay your road tax. We will collect it from you in 12 monthly installments with a flat interest of 3%.

Road tax $1,200
You can pay in 12 monthly installments of $100 plus 3% = $103.
This will be combined with the monthly installment of the insurance premium.

4. How do I apply to join this plan?

Call 6788 1111 at least 2 months before the renewal date and sign an agreement and GIRO form. We will notify the Land Transport Authority and pay the road tax on your behalf.

If you already have a GIRO form with NTUC Income, we can use your existing GIRO. You do not need to sign the form again.

5. What happens if I fail to pay the instalment?

We will contact and remind you. You can pay within 14 days. There is a service charge of $3.

If you still do not pay the installment after our telephone reminder, and do not get our agreement for an extention, we will cancel your insurance policy and notify Land Transport Authority. Under the law, you will not be allowed to use your car.

We will also take legal action on you for the balance of the road tax that you have not paid. The legal cost will be charged on you.

In future, you will not be allowed to enjoy this privilege with NTUC Income.

6. What do I renew my insurance in the future?

We will send a letter to you 2 months before the renewal date and notify you about the premium and road tax for the next year. We will call you to get your confirmation to continue this arrangement.

7. Can I go through an agent?

You can go through an agent for the first year. In subsequent years, we will deal with you directly on the renewal and the road tax.

8. Can I cancel my insurance, if I find that another insurance company can offer a lower rate to me?

We believe that our premium rate will be lower than the market.

However, if you can find another insurance company willing to give you a better rate, and you wish to cancel your insurance with us, we will refund to you 85% of the proportionate premium. The 15% is used to cover our expenses.

If the premium is $600 and you cancel the insurance after 2 months, you will get a refund of 85% of $600 X 10/12 = $425.

End of FAQ

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