Saturday, October 21, 2006

Reply to New Paper: Claim by Anthony Ng

18 October 2006

New Paper

I refer to your report entitled "Court sets aside attempt to make him bankrupt" (New Paper, 16th Oct 2006).

I wish to explain how a theft claim is settled by NTUC Income, and the reasons for our approach.

During the past 12 months, we settled a total of 250 theft claims representing 96% of all theft claims received by us. The remaining 4% of the claims were withdrawn due to the recovery of the vehicle. On average, it takes about 3.5 months for a theft claim to be settled.

The market value of the stolen vehicle is establised in accordance with our practice note, which is given to all claimants. This has worked well and has resulted in obtaining a fair value that is accepted by the claimants.

This is how we handle a theft claim.

We require the policyholder to furnish us a police report and complete a theft claim form. We wait for the police to complete its investigation into the theft, to ensure that it is a genuine theft. The police investigation usually takes about 3 months. During this time, we interview the owner on the circumstances relating to the theft and agree with the owner on a fair market value for the vehicle.

Here are the facts relating to Anthony Ng's case:

Mr Ng reported to the police that the car was lost on 28 June 2005. He did not notify us about the theft until 6 September 2005, i.e. a delay of 8 weeks. He had actually breached the policy condition for failure to notify us of the theft immediately, but we did not hold this breach against him.

We contacted Mr Ng on three occasions to discuss the circumstances of the claim, but he did not turn up. Subsequently, he was not contactable. Up to now, we not been able to made any offer to Mr Ng on the settlement of the theft claim, due to his lack of cooperation.

About two years ago, Mr Ng had taken a loan from our loan department for the purchase of the car. He failed to pay the loan instalments on time. Mr Ng had actually defaulted on the loan repayment prior to the theft of the car. A total of 7 installments were outstanding by the time our loan department appointed our lawyer to take legal action on 1 November 2005.

My loan department decided to take legal action as they were not satisfied with the non-payment of the loan instalments and his lack of cooperation in expediting the settlement of the theft claim.

In making the case for bankrupcy, the lawyer acting for our loan department used a value for the car as being the sum that the financial institution can recover in the event that the theft claims is not successful. This value comprises the value of the road tax, COE and the PARF value.

I wish to confirm that the amount to be settled for the theft case will be in accordance with our practice note, and will be significantly higher than the sum reported by the New Paper.

Tan Kin Lian
Chief Executive Officer
NTUC Income

Zaobao Interview: My Insurance Plans

How well have you been insured? what kind of policies you hold? What kind of protection you are giving to your family members?


When my children were young, I bought term insurance and whole life insurance. The total amount of my insurance was about five years of my annual income. I bought critidal illness insurance for my wife. I also bought insurance to my three children, to cover them against accidents, hospital expenses and to save for their education.

I invest in investment linked plans (ILP) to save for my retirement. Most of my investments are in the large, well diversified, low charge plan offered by NTUC Income. They earned a very attractive return during the past few years, ie more than 10% per annum. Over a longer period of 10 toi 20 years, I expect an average return of 5% to 6% per annum. I think that this is the most suitable type of investment for most ordinary people.

Tan Kin Lian

Zaobao Interview: Business Center

You set up business centres to allow consumers to seek free financial and insurance advice and having salaried agents to man the counters.

Some Income agents felt they have been undercut. Has Income indeed gotten such feedback from agents on this? If so, what's the nature of the feedback?

What about on the part of "walk-in" consumers, are they worried about the follow-up of their cases. What's the feedback of consumers on this thus far? Will appreciate that you give an overall picture on number of people who have visited the business centres and bought some policieis. How many such centres are there now?


This year, we introduced serveral sales promotions and marketing campaigns. They provide a lot of sale opportunities for our 700 full time insurance agents. We are able to generate 25,000 new sales leads each month. Most of our active agents are so busy following up on these sales leads that they have no time to worry about the business centers.

A small number of less active agents still complain about the business center, but this is diminishing. A small handful who were strongly against this concept have left us. The remaining agents are adjusting well and are benefitting from the new sales opportunities.

We set up the business centers to cater to a new market. There are customers who prefer to visit or telephone our business center to talk to a salaried consultant. As the consultant are not paid any commission, the customer feel that they are not being pushed to buy the product. The feedback from the customers who visit the business center is positive. The business centers see a steady increase of business.

We operate two business centers now, with 80 salaried consultants. We aim to open a total of four business centers with 200 salaried consultants by end of 2007.

Tan Kin Lian

Zaobao Interview: Motor Insurance

One big recent issue was that purchasers of cars cannot choose their insurance company - you have termed that anti-competitive. However, Income has also earlier insisted that repair work be done at its designated workshops. How do you reconcile this "irony"?

Many said Income is trying to salvage its diminishing market share in motor insurance. I am sure there are more reasons to this, perhaps you can enlighten us?


Under our motor insurance plan, we will arrange the repairs at our designated Quality workshop. This allows us to ensure the quality of repair and bring down the repair cost, by preventing inflated claims. We are able to bring down the cost of insurance by 10% to 15% for our customers.

A consumer who does not like our motor insurance product is free to insure his or her car with any of 30 insurance companies in the market. More than 30% choose NTUC Income to enjoy our service and lower premium rates.

This year, we suffer a temporary decline in market share as the distributors of new cars coerce their customers to take the insurance with their tied insurer. The customer is not given a free choice. As the distributor has a monopoly in the distribution of the car models, they are able to control the market for the purchase of insurance on new cars. As many people changed their cars during the past year, we lost out on this market.

We expect to regain our market share when the owners buy their own insurance for the second year.

Tan Kin Lian

Zaobao Interview: Supplementary Retirement Scheme

Not saving enough for retirement is now a common worry. You have earlier suggested that the government raise the cap on tax relief so that more can plan for their retirement (including buying insurance). Can you give more details on this proposal?

The current rate of contribution to Centeral Provident Fund is probably adequate for most people earning up to $4,000 a month, if they do not take out too much of their savings to pay for their home.

For people who earn more than $4,000 a month, the contribution to CPF is capped at this salary ceiling. They are not allowed to contribute beyond this ceiling and enjoy any tax relief.

The government has introduced a Supplementary Retirement Scheme to allow people to make additional contributions for their retirement. The amount allowed to be contributed to SRS is quite low, at current levels. This makes the SRS not attractive.

I suggest that the contribution to SRS should be increased to 20% of annual income, less contribution to the CPF. This will allow the higher income earners to make supplemnentary savings for their retirement.

Tan Kin Lian

Zaobao Interview: Life Insurance

There has often been complaints by consumers over different facets of insurance. They mainly pertain to grievances over buying products that do not deliver what's promised. What is your advice to consumers who wish to buy insurance or who have already bought insurance?

Life insurance is important. A breadwinner needs life insurance to provide a sum of money to the family, in the event of his or her premature death or permanent disability. The need is greater for families with young children.

Many insurance companies offer products to meet this need, but they bundled the insurance needs with compulsory savings. These are sold as endowment and whole life products. These products are sold by insurance agents who earn high commission. The company also incur expenses in their administration, provide for the cost of insurance and make a profit for their shareholders. These expenses take away about 2% to 3% on the investment yield.

In the past, when the investment yield was high, the insurance company can still provide a fairly attractive return to the policyholder. But, when the investment yield came down in recent years, the net yield was unattractive.

My advice to consumer is to find an insurance company that incurs low expenses and is able to give a better return to the policyholder. The difference can be as much as 15% to 25%, depending on the type of insurance plan and the period of insurance. If an insurance company with high expenses pays you $100,000 on maturity of the policy, another company with low expenses may be able to pay you $15,000 to $25,000 more.

Another option is to buy term insurance to protect your family. The cost is term insurance is less than 20% of the cost of a whole life policy. You can invest the remainder of your savings separately in an investment fund. You will be able to get a better return on your savings. This is usually much more than the cash value of your endowment or whole life policy.

Tan Kin Lian

Call 63 INCOME for service

Dear Mr Tan,

I am a policy holder for medical insurance. Recently I was hospitalised. Upon discharged I tried to contact my adviser KS. I called 3 times in 3 days and left message for her to return call but I did not get any response.

I am disappointed that the adviser did not respond to me. After the 3 days of disappointment, I manage to contact the claims department (63321133). I spoke to a gentleman, very pleasant, very helpful.

Will I buy another insurance from NTUC Income. Definitely not.

Best regards,



Dear LWK

We have contacted our insurance adviser, KS. This is her explanation. In view of her explanation, I hope you will forgive this lapse in service.

Tan Li Leng
Head - Field Department


Dear LWK

I am sorry about this lapse of service.

We encourage our policyholders to call our hotline 63INCOME (6346 2663) which provides 24 hour service.

It will avoid the occasional lack of follow up by the agent (which may be due to reasons beyond our control).

Tan Kin Lian
CEO, NTUC Income

Buy term and invest the difference

Hi Mr Tan,

I write to seek your advice on the likely returns on my endowment policy and to switch out of P to NTUC.

I am 34 years old. I am also now 6 years into a 25 year life/critical illness endowment policy with P (100K as life sum insured).

I read in the papers about low term rates and why it is unwise to mix endowment policy with term.

I enquired from my adviser the rates of a P policy on the same scope as my current endowment policy but without the "endowment" elements.

The rates are $255 versus $50. This difference is significant as this P endowment policy has a guaranteed amount plus a non-guaranteed amount. Despite the projected yield of about 4%, I have no confidence the non-G portion pay-out will be met.

I may be better off switching out of the endowment policy now, but a term for $50 till I am say 55, and investing the difference of $200 into some kind of scheme that earns better returns than the projected yield. Is my thinking correct?

Warm Regards,



Dear UTY

I will ask my business center manager to get a consultant to look into your case. We will offer an alternative plan for you.

However, I suspect that as you have aleady incurred the high charges under your P policy, it may not be possible for us to offer a better alternative for you under our similar Living policy

One possibility is for you to swtich to our Ideal plan (ie an investment linked plan) and buy the critial illness separately under a rider. My consultant will give you the figures to see if it is to your advantage.

Tan Kin Lian
CEO, NTUC Income

Do not allow the workshop to make inflated claims

Dear Mr Tan

I have an accident at woodland Innova JC entry. My car was hit by another car which trying to reverse out of the JC entry

A 3rd party claim was make on my car insurance and the car driver accident report provide in correct statement, that my car collided into his car.

I strongly beleive that the claim was submitted by the workshop. Can you help implement a warning cause in all accident report that the vehicle owner / driver is reposnsible for the statment, so that the owner and diver will not be signing blank form for the workshop to make claim without the owner's knowledge.



Dear NL,

I will alert my manager in charge of motor insurance, and his general manager. In the past, we do give warning to third party on incorrect statement. Some people are angry at our warning.

Tan Kin Lian

Buy low cost term insurance for your protection

Insurance advisers (agents) are trained to convince you on the value of life insurance in providing financial security to your family, in the event of premature or unexpected death, disability or critical illness.

They are right. It is important to take care of your family.

The advisers prefer to sell you a whole life or endowemnt plan, because you pay a high monthly premium. They commission is based on the amount of the premium.

It is better for you to buy term insurance to cover these risks. Although you do not get a return on the premium, the cost is less than 15% of the normal premium. You can invest the remainder of your savings in a large, well diversifed, low charge fund (also available from NTUC Income) and get an attractive return.

Visit our business center or call 62 462663 (62 INCOME.)


Here are some comparison:

Monthly premium for $100,000 sum assured

Age 20 25 30 35
Whole life $121.50 $140.50 $165.50 $196.50
20 yrs term $ 9.70 $ 10.70 $ 13.40 $ 18.90
20 yrs decreasing term $ 6.70 $ 6.90 $ 8.10 $ 11.40

Living (critial illness) $149.50 $176.50 $210.50 $255.50
20 yrs living benefit $ 15.20 $ 20.10 $ 29.90 $ 46.90

Age 20 25 30 35
Whole life $111.50 $128.50 $150.50 $176.50
20 yrs term $ 7.00 $ 8.20 $ 10.40 $ 14.00
20 yrs decreasing term $ 5.20 $ 5.40 $ 6.20 $ 8.40

Living (critical illness) $136.50 $159.50 $189.50 $227.50
20 yrs living benefit $ 14.30 $ 18.40 $ 27.60 $ 45.20

Thursday, October 19, 2006

Advice to a retiree on investing your savings

1. What is the best way to invest my savings, after my retirement?

You should use a capital sum to buy a life annuity of about 30% to 40% of your income prior to retirement. You should find this sum to be adequate, if you own a home which is fully paid. If you are still paying for the education of your children, it should be funded separately.

You have to pay between 200 to 250 times of your monthly annuity, depending on your age and the type of annuity that you buy. For example, if you want an annuity of $1,000 a month, you should be paying between $200,000 to $250,000.

If you buy a capital protected annuity (which refunds the balance of your capital sum, without interest, on early death), you have to pay about 20% more than a non-protected annuity. Most people prefer the capital protected annuity, but this trend may change in the future.

Let me explain why 30% to 40% is adequate for a retiree. When we are working, we have to spend about 50% of our earnings to pay for a home, raise a family, tax and expenses of working. We have to set aside 10% to 20% for our savings. These items are usually not necessary after retirement, i.e. the home is fully paid and the children have grown up.

The annuity guarantees a payment for life. If you buy a participating annuity, you will enjoy an annual bonus (added to the annuity) that depends on the investment yield in each year. This will help to offset the increase in cost of living.

2. How should I invest the remainder of my savings

I recommend that it be invested in a large, well-diversified, low charge fund. You should select a fund with 50% to 100% invested in equity. This investment is likely to give you an attractive return, 5% or more, over a period of 10 to 30 years (but this is not guaranteed).

Although equity has risk, you can minimise it by investing for the long term (ie average out the good and bad years) and choosing a large fund (to reduce the risk of loss of a few individual investments).

You must choose a fund that have an annual charge of 1% or less. You should avoid a fund that has an expense ratio of 2% or more, as it takes away too much of your yield.

3. Is it better for a young person to save at an early age?

A young person should save 10% to 20% of the earnings for their retirement. You should invest in a large, well diversified, low charge fund that can give an average return of 5% or more over 10 to 30 years.

You should avoid taking an investment plan that have a high upfront charge that is used to pay the distributor (ie the insurance or financial adviser). The current upfront charges in the market (about 18 months of savings) are too high. NTUC Income charges about 6 months only.

By investing in a fund, you will get a higher yield compared to a traditional endowment or whole life policy. The difference in yield can be between 1% to 2% per year. Over a saving period of 30 years, the difference can be 50% or more. If you get $100,000 from a traditional product, you can get an additional $50,000 from a good investment.

It is important to choose the right type of investment for the future.

Note: The figures quoted above are estimates and do not represent any guarantee of the actual return for the future. Investment has risk. But, if you manage the risk well, you can get a better yield.

Talk to our consultant at the business center

Dear Mr Tan,

Having heard so much about your Blog, I decided to visit it today. It is interesting to note how you responded to the people who wrote regarding their problems and enquiries.

Your warm and caring attitude, coupled with your sound and practical advice, promote good rapport and great PR for INCOME on the whole.

You represent a rare breed of CEOs who are approachable, humble, having time for people, willing to listen and render assistance. However, I have encountered some CEOs who are too aloft even to take a call or talk to the man in the street.

I note you are travelling in China and will wait for your return next week to discuss my Income Policy.

Best Regards,



Dear AL

I try to give some brief general advice by e-mail.

If you wish to have a more specific advice, I suggest that you visit our business center and talk to our consultant. They should be able to advice you. They are paid a salary and do not earn any commission. The center is located at 75 Bras Basah Road. Hope it is okay.

Tan Kin Lian

Wednesday, October 18, 2006

Low cost insurance to protect the family

Dear Mr. Tan,

For the past 16 years, I was running a business, but it failed. In recent years, I have been struggling to pay the debts to the banks and other institutions.

I put my feet firmly on the ground, cleared the hurdles and wish to start all over again.

My greatest worry was my family's well being, as I don't have any insurance coverage for them.

I want my family members to be protected and insured. I am able to put aside S$50 per month just to set my family insured and protected. What is your advice?

I am aged X and have two children. My monthly average earning is about $Y.

Many agents are keen to work on "high" premium potentials and not wasting time on me.



Dear MS

I congratulate you on your perseverence and success in recovering from a setback in your financial circumstances. As your current income is still quite modest, I suggest that you should buy a low cost term insurance to protect your
family. You can find more details at this webpage:

This is a pure insurance cover, and does not have any savings element. I think that it is most suitable for you.

If you wish to save for the future, I suggest the Ideal plan. More details are
available at:

If you like my suggestion, you can come to the business center at 75 Bras Basah Road and talk to our insurance consultant. They can give you the best advice. They do not earn any commission on the sale.

Tan Kin Lian

Policyholder wants to switch to NTUC Income now

Dear Sir,

What is your suggestion for someone already bought the cover from other insurance company? Should the policy be terminated and switched to NTUC Income? I am not able to get another policy now. Like to hear your adivice.



Dear KS,

I will get my product specialist to find out more about your circumstances and give you the proper advice.

Usually, as you have already incurred the high charges for the critical illness policy taken from the other insurance company, it is not beneficial for you to make a change now. Let us take a look at the actual numbers and make a decision after that.

Tan Kin Lian

Reply to Zaobao: Discounting of bonus

18 October 2006

Lianhe Zaobao

I refer to the letter, "Can NTUC Income's policy be more transparent?", by Madam Wei Qi Ying (Zaobao, Oct 13).

Mdm Wei purchased a Foundation Policy in 1988. This is a long-term endowment plan, with maturity in year 2042.

This policy pays the sum assured plus accumulated bonus on the maturity date, or on earlier death or permanent total disability of the life assured. This is a standard endowment policy which is bought by large numbers of people over the years.

The Foundation policy allows the policyholder to encash the bonus at its discounted value. The discounting factor takes into account the number of years to the maturity date. The effect of the discounting is shown clearly in the illustration given to the policyholder at the time of purchase.

The Foundation policy actually gives a special benefit to the policyholder. If the bonus is encashed for the purpose of the tertiary education of the life assured (child), we pay an additional 25% on top of the discounted value of the bonus.

If Mdm Wei compares the premiums that she has paid for the Foundation policy and the cash value today, she will realise that she is getting a reasonable return, compared to similar policies issued by other insurance companies.

I wish to encourage all policyholders to make the effort to understand the key terms of the contract at the time of purchase of the policy. The insurance company is required to provide this information in a standard illustration of benefits. It is the duty of the insurance adviser to explain the terms to you.

More information on NTUC Income's Foundation Policy can be obtained from our website,

Peh Chee Keong
Head, Life Insurance Dept
NTUC Income

Tuesday, October 17, 2006

Tianjin is congested

I travelled by road from Beijing Airport to Tianjin City. Normally, the journey takes 2 hours. On this occasion, it took more than 3 hours, due to congestion on the trunk road and on entering into the city.

My local friend said the air pollution is bad.

Tianjin City was much better 10 years ago, when it was less developed. Development does have its negative aspect on the quality of life.

Luggage arrived promptly at Beijing Airport

I arrived at Beijing Airport on a full flight from Singapore. The clearance through health, immigration and customs was smooth and fast. When I came down the escalator to the luggage collection center, a big sign (which was clearly seen) announced the conveyor belf for my flight.

My luggage already arrived. They were taken off the conveyor belt earlier and stacked neatby by the side.

This is the most impressive experience in my whole life of air travel. It beats the great experience in Singapore.

Beijing Airport is ready for Olympics 2008.

Sunday, October 15, 2006

Get the Right Financial Healthcheck

Your most important action, after getting a healthcheck, is to get the right treatment.

If you carry out a financial healthcheck, you must select the right product to make your investment.

Many advisers offer you the wrong product that give you a poor return. This is due to the high commission that is paid to the adviser. The typical cost of the advice is 18 months of your savings. That is a lot of money to give away.

If you select a comparable product from a low cost provider, such as NTUC Income, you can about 15% more on the maturity of your savings over 20 years. If the maturity amount is $100,000, you can get $15,000 extra.

If you save for 30 years, the difference is larger. You can get 25% from a low cost provider.

This is based on a difference in yield of 1.2% per annum.

When you save for your future, make sure that you get the right product. Choose a product that offers you a better yield (from a low cost provider). Take care of your own financial future.

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