Saturday, September 02, 2006

2,600 policyholders benefited from their top up

In July, we sent letters with a FAQ to encourage policyholders to top up their existing investments in our funds. This was to take advantage of the recent decline in the stockmarket.

2,600 policyholders responded and invested $21 million.

Their top up investment earned 4.2% over sligly more than a month. They gained a total of $870,000.

Wow. We have 2,600 happy policyholders.

Friday, September 01, 2006

Trade union invested in Growth Fund and Flexi Cash

A trade union invested $1 million in our Growth Fund in June 06. They made a gain of $18,000 over 2 months. The committee is happy with the investment. They decided to make an additional additional of $1 million.

They have a regular revenue of about $300,000 a month. They are interested to keep the money in our FlexiCash instead of bank account.

Competitors scared of our competitive rates

We received a feedback from a new motor policyhoder. She called up about 10 insurers for a quote and finally decide to choose us, because of our lower price. She told us about a finding she found quite "unique".

She mentioned that whenever she told our competitor she is going to take up with NTUC Income, they told her not to do so. Reasons include: need to go IDAC, slow claims. They told the policyholder, "You can take up with another company but not NTUC Income."

This policyholder made the effort to call us and find out the truth. She was convinced about our service standard.

It seems that our competitors are not able to match our competitive rates and have to resort to scare away the customers with their false statements.

More customers are willing to visit business centers

A doctor walk into our Tampines Business Center and bought two education policies for his children, with a total premium of $10,000 per annum. He said that the center is a good alternative channel and is convenient to him. He and his wife will be coming back for financial planning.

Our new consulant handled a customer at the center with the advice of a senior consultant. The customer is convinced and bought five policies with a total single Premium of $80,000 and annual premium of $13,000.

Our business center is reaching out to a new segment of customers who are willng to visit us.

Thursday, August 31, 2006

Superior return from NTUC Income's Fund

Standard & Poors covered 17 global equity funds managed by life insurance companies.

During the 3 years from 2003 to 2005, the annualised returns are:

NTUC Income's Global Equity Fund 19.2%
Average of 17 funds 15.1%
Difference 4.1%

NTUC Income's fund earned a superior return of 19.2%, which is 4.1% higher than the average of 17 funds.


1. Our expense ratio is 1.3% compared to the average of 1.7%; the difference is 0.4%
2. Some of the other funds may have other charges and fees that are not explicitly disclosed.
3. Perhaps, the fund managers of NTUC Income have performed better.

We have chosen global equities for this comparision because there are a large number
of such funds, and performance is not easily distorted by differences in asset allocation.

What about the future?

Past performance is not an indication of future performance. But, it is clear that the lower charges of our fund, will continue to be a key factor in producing superior returns for our investors.

Conclusion: Choose NTUC Income funds for our low charges and superior return!

Support our Insurance Advisers

I wish to make this appeal to the general public. Support the insurance advisers from NTUC Income.

They earn a modest commission. It is about half of the commission paid to other company's agents. As they do not earn much, you should not make them spend too much time to close your business.

The lower commission allow us to reduce our expenses and give you a better return on your life insurance savings. In most cases, we give 10% to 20% more on the maturity of your policy. If the maturity amount is $100,000, you can get $10,000 to $20,000 more from NTUC Income.

Some companies (not NTUC Income) make unrealistic projections of their return. They pay high commission and incur high expenses. Many years later, they are not able to fulfil their projections. Their policyholders are disappointed, but it is too late.

You can trust NTUC Income. We keep our expenses low and give a better return to our policyholders. Please support my insurance advisers. Help us to help you.

Tan Kin Lian
Chief Executive Officer
NTUC Income

General public is surprised about the wastage

Dear Mr Tan,

Company 'P' and 'A' looks very familiar.

I have started distributing about 1 dozen FAQs to my visitors when I met them today –HP, MS, IDA and a reporter.

They (similar to the public) are really very ignorant on insurance and they are just shocked to learn the amount of wastage they can possibly incur if they choose the likes of ‘A’ and ‘P’.


NTUC Income offers the lowest premium for Term Insurance

Many Singaporeans are under-insured.

In the past, many people buy endowment and whole life policies. But the premium rate is too high. They are not able to get adequate insurance cover.

To get a higher cover for a low premium, you can buy a term insurance. It provides protection only and does not have any saving or cash value. It covers death and permanent total disablement.

NTUC Income has recently reduced the cost of term insurance. It now offers the most competitive rates for term insurance.

For example, a 35 year old man can insure for $500,000 for 20 years by paying only $760 a year to NTUC Income. The same policy cost $1220 at Great Eastern, $1045 at AIA, $955 at AXA Life, $832 at AVIVA. This comparison was recently reported in the Business Times.

If you wish to buy low cost term insurance to cover your family, call 62 INCOME ( 6246 2663).

Earn 14% more, by investing with NTUC Income

When you invest your CPF or cash savings for your retirement, you can get a higher return from NTUC Income.


We take away a smaller portion of your gains to cover our expenses.

Here is a comparison of the charges:

NTUC Similar
Income Fund
Initial spread 3.5% 6%
Annual fee 1% 1.5%

Assume that you invest $100,000 for 20 years to earn an average gross return of 7% per annum.

After deducting the initial spread and annual fee, you will get the following amount at the end of 20 years:

From NTUC Income $309,000
From similar fund $274,000
Difference $ 35,000

NTUC Income gives you 13% more than the similar fund.

Wait! Here are some more facts!

1. Be careful of other funds that have even higher charges, as they give even less to you.

2. During 2003 to 2005, the Global Equity fund of NTUC Income earn an average of 19.2% per annum, compared to an average of 15.1% for 17 similar funds tracked by Standard & Poors.

3. If you have already invested in a high charge fund, you can switch to NTUC Income now, and earn more for your remaining years!

Wednesday, August 30, 2006

Incomeshield covers terrorism

Dear Mr Tan,

My whole family members are insured with incomeshield.

I was surprised to learn that incomeshield does not cover hospitalisation due to injuries as a result of terrorism act that may occur in Singapore. In today's increased terrorist threats no matter how small, it is certainly a concern for me and I am sure a lot of forward looking Singaporeans.



Dear S C M

Our Incomeshield plans do NOT exclude terrorism. Hospitalisation arising from terrorism is claimable.

William Fong

Insurance customer choose to buy from business center

A customer walks in to the business center and enquires about our Flexilink. The insurance consultant explained our Combined Funds. He is keen to invest and is happy to get the promotion gifts. He signed up for $210,000.

The following day, he called the business center and asked to top up another $90,000. He changed his mind about the promotion gifts and opted for 2% bonus units, worth $6,000.

We asked him why he decided to transact directly at the business center. He replied that he went to our website regularly and read CEO's Blog. He was quite well informed on our products. He just needed to clarify a few things.

He felt that the business center is able to meet his need.

You can trust NTUC Income

A policyholder complained that she bought a 23 year endowment policy in 1997 with a projected yield of 6.5% from company P (not NTUC Income).

In 1997, our 23 year endowment had a projected yield of only 5.5%. With our lower commission, expenses and profit margin, we could only project 5.5%. This was realistic and fair.

Company P has to incur higher commission, expenses and profit margin. They made a bold projection of 6.5% p.a. Was it realistic? Was it fair? They managed to sell many policies to the public. Their agents earned a lot of commission.

The policyholder is now shocked that the projected yield of her policy has now dropped to 4.4% p.a. It is $150,000 LESS than originally projected.

One year ago, there was a similar complaint against company A. The policyholder took two identical poilcies from company A and from NTUC Income. On maturity, the policy from NTUC Income paid 15% more than company A.

I hope that the public in Singapore will learn from these two lessons. Trust NTUC Income. Place your long term savings with us. We will manage your funds carefully, and give you a fair return.

Our policies does not have a limit on critical illness claims

Dear Mr Tan

I read the Sunday Times article that there is a limit to the insurance payout on critical illnesses.

I have 5 policies with NTUC Income and covered for SGD 250,000. I also have term insurance with other companies total SGD 350,000, so total I am covered for SGD 600,000.

I would like to know if I ever need to claim on the insurance, is there a claimed limits from NTUC on the total claim I could get from all the issuers including NTUC?



Dear G Y

Our policies do not have a limit for the payment of Critical Illness claims. For Permanent Total Disability there is a limit of $ 2 million.

Stanley Jeremiah

eNN - electronic Neighbourhood News

90,000 people have subscribed for this free newspaper. It is sent to the subcriber twice a week, and covers news in their selected neighbourhood. They get offers from merchants in their neighbourhood.

There are 20 neighbourhoods in Singapore.

To subscribe:

Invest your CPF savings in a Growth policy

1. What is Growth policy?

The Growth policy is a single premium endowment plan. You invest a single premium and receives a guaranteed sum assured payable on the maturity date or on earlier death before maturity date.

The sum assured is capital guaranteed and provides an attractive return on your single premium investment.

You will get a bonus each year, based on the financial results of the participating life insurance fund. The bonus is added to the sum assured, and increases the return on your investment.

The amount of the bonus is not guaranteed and may fluctuate each year. The amount is calculated by the appointed actuary, who has to observe several principles to ensure that the distribution is fair to the policyholders.

2. What is the LP Series?

The LP series is the latest series of participating policies offered by NTUC Income. It has been offered since 1993.

All Growth policies under the LP series enjoy the same rate of bonus, which is calculated at a certain percentage of the sum assured and a certain percentage of the accumulated bonus.

The rates of bonus declared for the Growth LP in recent years (2003 TO 2005) are 1.2%, 1.5% and 1.6% of the sum assured. The accumulated bonus is compounded at 1.5%.

A special bonus of 25% of the accumulated bonus is added and payable on death or on the maturity date. Although this special bonus is discretionary, it has been implemented for the past 20 years or longer.

We expect to continue this practice in the future.

3. What is the expected rate of return?

The following table shows the expected return, based on the rate of bonus declared in 2005, and assuming that this rate of bonus is declared for all future years:

Age Term S/Premium SumAssd Bonus* Maturity* Yield*
30 20 $10,000 $15,400 $7,100 $22,500 4.14%
40 25 $10,000 $17,700 $10,100 $27,800 4.36%
50 10 $10,000 $12,500 $2,500 $14,500 3.82%
* non guaranteed

1. This is prepared for illustration only.
2. The actual rate of bonus may change in future years.
3. There may be no bonus in some future years.
4. Past performance is not a guarantee for future performance.

4. What amount is payable on death?

If death occurs during the term, the sum assured, accumulated bonus and special bonus is payable immediately. The average yield is higher, due to the earlier payment of the benefit. This is an advantage of a life insurance product that allows the total benefit to be payable immediately on death.

5. What amount is payable on permanent and total disability?

In the event of permanent and total disability, and subject to the terms of the policy, the sum assured, accumulated bonus and special bonus is payable immediately.

To qualify for this payment, the life assured has to be either

* Total and irrecoverable loss of at least two eyes or two limbs;
* Totally unable to engage in any business or occupation or perform any work of any kind for remuneration or profit.

6. Can I withdraw my investment before the maturity date?

You can withdraw the investment and get the cash value. The cash value is calculated using the appropriate actuarial factors, to represent the discounted value of the sum assured and the accumulated bonus.

During the earlier years, the cash value may represent a small loss on your investment or give you a low rate of return. This is due to the cost of issuing the policy, including the commision payable to the agent.

Generally, we do not advise earlier withdrawal of your investment, as it does not provide a satisfactory return. You should consider this option as a measure of last resort.

11. Can I invest my CPF savings?

You can invest your CPF savings in the Growth Policy. The following table shows the difference between the projected return on the Growth plan, compared with the accumulation of your savings at 2.5% per annum.

Assuming you invest $10,000 at age 35:

Term S-Premium Growth plan CPF at
Total(*) 2.5% p.a.
10 yrs $10,000 $14,800 $12,800 +15.6%
15 yrs $10,000 $18,400 $14,500 +26.9%
20 yrs $10,000 $22,500 $16,400 +37.2%

Note: The "total" return on the Growth plan includes projected bonus (based on current rates), and is not guaranteed. The future bonus may change.

Based on the above table, if you invest $10,000 in the CPF to earn 2.5% per annum, you will get $16,400 at the end of 20 years. However, if you invest this sum in our Growth policy, it will grow to $22,500. You can get $6,100 or 37% more, by investing to earn a higher return.

If you use your CPF savings, you are not allowed to take a loan under the Growth plan. On maturity, the maturity benefit has to be returned to our CPF account.

Stolen vehicles

Information provided by Freddy Neo, General Manager NTUC Income.

1. NTUC Income received 300 claims for stolen vehicles in 2004, 387 claims in 2005, and 200 claims for 6 months of 2006. The number is increasing each year.

2. In general, the theft rate for Toyota RAV4, Toyota Harrier, Lexus and motorcycles are higher than other models.

3. We have settled about 95% of the claim, after the police has completed its investigation that it is a genuine theft case. We will settle the claim within 7 working days from the police investigation report.

4. We compensate the owner based on the market value of the vehicle at the time of loss. We have a practice note to explain how this is computed. We arrive at a fair market value which is usually accepted by the owner.

5. If the vehicle is recovered prior to settlement, we will pay for the repair of the damages. If it is recovered after the vehicle has been de-registered, we will sell the wreck to a dealers. Usually, the value is quite low.

6. The number of cars stolen in Singapore is comparatively small, and is done by individuals. In Malaysia, most vehicles are stolen by organised criminal syndicates. Most stolen vehicles are smuggled overseas. Some are driven in Malaysian with a fake chassis number.

Website visitors like Logic9 (Sudoku)

We have a Logic9 (Sudoku) game at our website, It is getting popular.

We receive about 80 visitors every day. The visitors in August has doubled, compared to July.

The visitor can play the game at level 1 to 4, and have a selection of games to choose. They can play with other symbols, besides numbers.

Tuesday, August 29, 2006

Survey on Parallel Imported Cars

We did a survey of 30 motorists on their interest in parallel imported cars. Here are the findings.

1. There is a strong interest in the motoring public to buy a parallel import car. About 50% of the respondents were interested. They look for a $5k - $10k price differential compared to other similar models sold by the regular dealers.

2. They find the following to be important:

* servicing support after purchase (76%)
* availability of spare parts (74%)
* warranty to be provided by NTUC Income (70%)
* good re-sale value of the car (65%)

3. The findings indicate that there is a potentially large market for parallel import cars. Motorists are price sensitive. NTUC Income will play a major role in assuring the motoring public on the reliability of the parallel importer in providing after-sales support. We can accredit the parallel importers and provide warranty cover and arrange block purchase.

4. A website will be created soon.

Law on contract - offer and acceptance

Dear Mr.Tan,

I read your blog and find that you have very professional advices for the general public. In view of your professionalism and expertise in the insurance industry, I like to seek your advice for the following :

Under the Singapore Law, if an insurance company accepted a policy holder payment and clear his cheque payment, is the policy consider as contract binding and the company have no right to reject the policy.



Dear S T

This depends on the facts of the case. It is based on the law of contract. If the insurer has made a specific offer, and the customer has accepted it in good faith, then the contract is binding.

However, if there is a mistake, and the customer is aware about the mistake, then the contract can be voided (I think).

There was a case where the advertiser made a mistake in showing the price of the printer in the website. The customer sent in a payment to buy a large quantity of printers at that price. The court held that the advertiser was not bound by the mistake. I believe that the court acted fairly in this decision.

I will ask my colleague, who is a lawyer, to give his opinion.

Tan Kin Lian


Dear S T

For a contract to be binding there should be an offer and an acceptance and more importantly a meeting of minds, there must be an intention to engage into a contract.

Usually the proposal sent out by the insurer is only regarded as an invitation and the application by the insured is the ‘offer’ which the insurer is free to accept or reject.

By implication, in life insurance contracts especially, the contract is accepted only when the policy is issued.

The clearing of a cheque sent with the application is merely administrative. There is no acceptance until the acceptance is communicated by the insurer to the applicant by issuing the policy.

Even if there was an offer that was accepted, either party may be able to get out of it by demonstrating that there was a genuine mistake.

The example quoted by Mr Tan involved HP and there were similar incidents involving Dell where they wrongly quoted a very low price on their web site. Dell and HP were not obliged to accept the orders although the customer had ordered the items based on the advertised price and the credit card payment was processed.

Stanley Jeremiah

Commission to Agents

Most insurance companies pay about 160% of the annual premium as commission to their agents (including overriding commission to the agency managers) for a long term life insurance policy.

If you save $100 a month, the annual premium is $1,200. At 160%, your savings of almost $2,000 goes to pay the commission. That is a lot of money.

NTUC Income pays a modest commission to our insurance advisers. Our total cost is about half of the market. This allows us to give a better return to our policyholders.

Since our advisers earns a lower commission, you should try to reduce the work for them. Do not ask them to make many visits to your home to close a sale. Try to see them in our office.

Help our advisers to improve their productivity. This will allow us to reduce our expenses and pass the savings back to you.

How to invest the CPF savings

Dear Mr Tan,

I am 59 and have about $150,000 in my CPF Ordinary Account which I can withdraw anytime and earning an interest of 2.5% per annum. At present Citibank offers 3.2% and HSBC about 3.4% per annum.

May I know base on the same basis, what NTUC income can offer.



I suggest that you invest in our Flexi Cash or Flexi Link. You can read the FAQs on these products

Our Flexi Cash now earns about 3.5% per annum. The interest rate changes with the money market. There is no lock-in period. You have to incur a very small spread of 0.1% on your investment.

Most of my savings (I am 58 years old) are invested in the Flexi Link (to be invested in the Combined Fund). If you expect to invest for 10 years or longer, this is a better choice.

I will ask my product expert to contact you.

Tan Kin Lian
CEO, NTUC Income

Better to invest in a diversified portolio of equity and bonds

A reader wrote to the Business Times.

In 1997, she bought a 23-year endowment policy from a major insurance company, to fund my eventual retirement. The illustration showed a projected maturity benefit of $590,000, ie an investment yield to maturity of almost 6.5 per cent.

In December 2002, she asked the insurance company for an updated illustration, and was surprised to discover that the projected maturity benefit and yield had shrunk to $532,000 and 5.7 per cent, respectively.

Three weeks ago, she asked for a new estimate. This time, she was truly concerned. The projected maturity benefit and yield had shrunk even further to $444,000 and 4.36 per cent.

She asked if an endowment policy is suitable for retirement planning? Is it better to invest in a diversified portfolio of equity and bond funds, as she does not need the life insurance protection (as she is single)?


Here are my views.

Prior to the Asian crisis in 1997, many life insurance companies made a high projection of their maturity benefit based on their prevailing bonus rates at that time.

Subsequently, the investment yield dropped. Interest rate on bonds dropped to a low level. The return on equity was also lower. The bonus rates were reduced accordingly.

Based on today's investment return, a net return of 4.36% per annum seemed to be reasonable. It is higher than the interest rate earned on bank deposits and bonds.

Note: This case does not belong to NTUC Income. In 1997, the projected yield on our 23 year endowment plan was 5.5% p.a. We act responsibily in projecting our return. Even so, we have to reduce the bonus rate and the projected yield.

For people who wish to get a better return over 10 years or longer, I recommend that they should invest in a large, well-diversified fund with low expense charge. This is likely to give a better return than an endowment policy.

There is investment risk, but the risk is reduced if one invest for a long term, and has the flexibility to withdraw the investments at a good time.

More details can be found in our FAQ:

Advice for a mother to save for a child's education

Dear Mr Tan,

I'm looking at buying two policies for our almost one year old girl.

I've decided to get a Living policy for protection purpose, but not sure what to do for her education, savings etc.

I've looked at Harvest, Education, Foundation policy, but not too sure which best suit our needs. I suppose the policy I'll choose should be least expensive and still able to meet our needs to provide a good sum of money for our girl's education.

Any advise from you, Mr Tan is greatly appreciated.



I suggest that you take an Ideal policy. Here is the FAQ for the Ideal plan:

We have a separate FAQ for the "Ideal plan for your Child". It is not in the website yet. My colleague will put it up and send to you separately.

The education plan is also suitable, but the return is not as good as the Ideal plan.

Although the Ideal plan has some investment risk, the risk is largely mitgated when you invest for more than 10 years and have the option to realise your investment at the right time.

I will ask a product expert to call you.

Tan Kin Lian
CEO, NTUC Income

Monday, August 28, 2006

Profile of investors in Growth plan

Here is the profile of policyholders who invested in our Growth plan (single premium endowment).

75% entered at age 30 to 50. Typical single premium is $15,000 to $20,000. The averge is close to $25,000. Most of the policies have a term of 10 or 15 years. The yield (not guaratneed) is 3.9% to 4.5% p.a.

Positive features of Growth plan

The Growth plan is a single premium endowment plan. It provides a modest return, which is supplemented by bonuses. The total return is quite attractive.

We carried out a survey with 584 policyholders who invested recently in our Growth plan. Here are the key reasons which attracted them:

* 43% like the attractive return
* 39% like the capital guarantee
* 76% act on the recommenation of the adviser
* 66% are willing to recommend this plan to their friends or relatives

Fair and honest views

I give my views on financial and insurance matters. My purpose is to educate people on these important matters. If they are able to make the right choice, they can save several tens thousand dollars.

I give fair and honest advice. Each day, about 250 people read my blog. Some people sent an e-mail to me personally, to seek my advice on how to manage their affairs. I will try my best to help them.

Some competitor agents and financial advisers read my blog. They feel that my views are "biased". They want to challenge my views and to post quite rude remarks. I suggest that they can express their views in their own blogs or in their personal interaction with their customers.

I will let the other readers judge for yourselves. If you find my views to be biased, you can ignore my blog. If you find my views to be useful, please ask your friends to visit my blog. I will continue to do my best to provide useful and honest views.

Reason to invest in Flexi Cash

We survey 115 policyholders who bought Flexi-Cash. Key findings:

- 49% learned from advertisement; 23% buy through adviser.
- they like our reputation, no lock-in period, attractive returns, low risk ..
- 73% says they will recommend their friends to invest.

Sunday, August 27, 2006

Insurance agents knocking on doors of residential homes


I have received feedback that insurance agents are now soliciting for customers by knocking on the doors of HDB flats. I have personally encountered agents on the street, particularly close to MRT stations in the past, but this is the first time ive heard of agents doing it at people's homes.

1. What are yr views on this? Will Income condone your agents prospecting by knocking on residential doors?

Reply. There is no need for our insurance agents to knock on the doors of residential homes. There are better ways to reach out to potential customers.

We have 1,800,000 existing customers. Many of them have only 1 insurance policy with us.

We are reaching out to these policyholders to increase their coverage of life, motor, home, accident and medical insurance and to increase their savings with us. The contacts are made by our customer relation officers.

We generate 25,000 sales leads each month to be followed up by our agents. These customers are willing to discuss their insurance and financial needs with our agents. Our agents do not have time to go knocking on doors, as they are busy following up on these leads.

2. Does such an avenue of getting sales "lower'' the image of the profession?

Reply: I agree. This approach lowers the image of the profession.

If you want to see a doctor, you visit the doctor's clinic. You do not have a trained doctor knocking on your door.

I wish to see insurance agents operating from offices, and they can contaclt the customer by telephone. IF the customer is intersted, the customer can visit the agent in the office. This is more productive. It will also allow the insurance company to reduce the cost of the insurance to the consumer, as the agent does not need to earn a high commission rate, if the sales effort can be reduced.

The insurance agents of NTUC Income are adjusting to this new concept. They sell through the telephone and earn a lower commission for the reduced effort. The consumer benefit from the lower cost of insurnce. The agents earn a higher income through a larger volume of sales.

3. What about soliciting for biz on the streets/outside MRT stations etc?

Reply: We discourage our agents from soliciting for business at MRT stations and public places. The consumers are busy and do not wish to be disturbed or interrupeted. It is not fair for them to be disturbed by a pushy sales person.

We like to use this point of contact to distribute an educational material. It takes the form of a FAQ leaflet. It contains 5 to 10 frequently asked questions about an important matter, such as financial planning for your future.

We ask our agent to give 3 key points to the consumer within 1 minute, when handing over the FAQ. This will create an interest of the consumer to learn more about the product. By being educated, they can make the right choice.

4. Any other comments

Reply. NTUC Income is actibve in educating consumers about making the right choice in their financial planning, investment and insurance products. By making the right choice, they can earn an additional sum, say more than $100,000, for themselves during their working life. They should make the effort to know about the product, rather than trust an agent who earns a commision on the sale.

We provide FAQs on our products at our website, They are easy to understand and fun to read. By making the right choice, the consumer pays a lower premium (maybe 10% saving) or earn a higher return on their investments (maybe$100,000 or more). These are explained in our FAQs.

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