Wednesday, December 20, 2006

Mental exercise is useful for seniors

Extracted from

Mental exercises help keep seniors agile: study

CHICAGO - Scientists have been preaching the benefits of mental exercise to seniors for years, but a new study may be the clincher that people in their golden years have been waiting for.

The study found that a little mental workout goes a long way, and that a sharper mind can make it easier to cope with everyday tasks such as driving, bookkeeping, shopping and cooking that get more challenging with age.

"Our findings clearly suggest that people who engage in an active program of mental training in late life can experience long-lasting gains from that training," said Michael Marsiske of the University of Florida.

The volunteers in the study did a modest amount of problem-solving and memory enhancing training, no more than 18 hours in any given case. But the pay-off was dramatic in the short-term.

Follow-up testing showed that the mental improvements were sufficient to counteract the cognitive declines seen over a seven-to-14-year period in older adults without dementia.


Suggestion: Practice Logic9 (Sudoku) for mental exercise. Keep your mind alert.

What is the cost of term assurance?

Customer: Mr Tan, I read your posting about low cost term insurance. How much does it cost to insure $100,000?

For Male, Non-smoker

Monthly Premium to insure $100,000 over 20 years

Entry Level Decreasing
25 $10.70 $4.40
30 $13.40 $5.50
35 $18.90 $7.80

If you are aged 25, you can insure for $100,000 on a decreasing term assureance for 20 years for only $4.40 per month. It is quite painless to provide a sum sum for the security of your dependents.

For a female, the cost is much lower. Maybe, up to 50% lower!

Under a decreasing term, the coverage reduces by $5,000 a year. Under the level term, the coverage remains at $100,000 throughout the period.

New product: No load saving plan?

As a consultant, I will be advising new clients (insurance companies) to introduce a "no load" insurance savings plan.

What are the features of this plan?

- can be an endowment or investment-linked plan
- 100% of the premium will be invested
- customers can buy this product directly
- advisers will be paid a salary plus a modest incentive
- a policy fee will be levied to cover the expenses

This product can offers a better return compared to bank deposits or unit trusts. Over a 20 year period, it should provide 10% to 30% more than similar products in the market.

How is this possible? The savings come from:

- higher productivity
- lower expenses
- less effort taken to market the product
- most customers will want to buy the product for their future financial planning
- existing customers will introduce their friends
- insurance advisers will be happy to earn a fixed salary plus incentives, i.e. the income is more predictable.

Consider an alternative to terminating your life insurance policy

If you terminate your life insurance policy, you get a cash value. This is usually quite low, and is less than the premiums that you have paid during the first 10 years.
The insurance company makes a profit on your terminated policy.

If you keep the policy for another 5 or 10 years, you may find that the cash value at the later date represents a good investment. In this case, it is better for you to take a loan and continue the policy (if the interest rate on the loan is low).

You have another option. You can sell your life insurance policy to a third party, who can offer you a higher value. The third party owns the policy and keeps it for another 5 or 10 years (or until the maturity date). They may find the return to be quite attractive.

You can study this arrangement, by asking your insurance company to quote:

- the cash value now
- the cash value in 5 or 10 years time
- the premium that you now pay
- you can calculate the yield for the next 5 to 10 years on this approach.

If the yield is 4% or better, it may be better to sell your insurance policy, rather than surrender it.

Video recordings of the family

Over the past 20 years, I have kept video recordings of some family and events, e.g. visits to places of interest or overseas visits.

Recently, I transferred these video recordings into DVD. My adult children appreciated the recordings which showed what they were like when they were young. My mother, who is now in her early 80s also liked the recordings. There were also recordings of my father (who passed away about 10 years ago).

Invitations to Wedding

I have a friend who used to keep the invitations to wedding in a separate box. Many years later, he can recall, from the invitation cards, the weddings that he attended, the venues, the couples, dates, etc. It is also a good record of the parents.

I wanted to follow this good practice, but I never got round to do it. 25 years have since passed.

Tuesday, December 19, 2006

Do not pay more than 6% on your loan

Are you paying too much interest on the loan taken under your life insurance policy? Some insurance companies charge as much as 8 percent per annum. More details at:
Policy loan

There is a bank willing to refinance your loan and to charge you only 6% per annum. If you are paying 8%, you can save 2% a year through this refinancing. If your loan is $10,000, you save $200 a year.

New way to buy insurance

In 2007, I will be helping two insurance companies (in Algeria and Indonesia) to allow their customers to buy insurance through new channels.

The customer can get information on low cost, good value products from the FAQ posted in the website. These products will also be actively promoted through the traditional channels, i.e. advertisements, point of sale promotions, promoters.

The potential customer can buy the products as follows:

- directly through the internet
- call the call center
- through an insurance adviser

The insurance adviser and call center will transact through the internet on behalf of the customer.

These products will be available at 5% to 15% lower than similar products in the market. The lower cost is possible, due to greater efficiency.

The customer service will also be greatly improved, i.e. convenient, transparent, prompt. Most transactions will be confirmed by SMS.

Find out more from:

Should employer pay more CPF?

There is some discussion in the newspaper on the need for the employer to increase the contribution rate to the Central Provident Fund.

The final outcome is not significant in financial planning. It is clear that the CPF is no longer the sole source of funds for retirement.

Each person must have personal savings to ensure an adequate retirement. The CPF contribution can make an important portion of the total savings, but it has to be supplemented by personal savings.

I recommend that each person should have personal savings in a flexible investment account, such as the Flexi-Link that is offered by NTUC Income. We will make it easy for our policyholders to top up their savings in the Flexi-Link and enjoy bonus units of 2% (to reduce the upfront cost).

We will also make it easy for topping up. Just call our hotline, and make your payment within 14 days. If you invest with CPF, we will arrange for deduction from CPF.

Monday, December 18, 2006

167,000 tax payers claim tax relief on life insurance premiums

167,000 tax-payers claimed relief on their life insurance premiums. If their CPF contribution is less than $5,000, they can claim life insurance premium for the difference up to $5,000.

The total amount of relief claimed is $313 million. The average is $1,900.

Groups who might be claiming this relief are:

1) Foreigners working in Singapore. They don't have CPF contributions so they can claim up to $5,000 in insurance premiums paid (subject to a cap of 7% of sum assured).

2) Self-employed persons.

3) Older (retired or semi-retired) persons who have low or no CPF contributions.

4) Permanent residents in their 1st and 2nd year, when they pay less than the normal rate of contribution.

Faster settlement of Incomeshield claims

In July, the Ministry of Health published statistics about the speed of settlement of our Incomeshield claims. Only 1% was settled within 7 days. It took an average of 28 days to settle the claims.

This was at a difficult time. We were overwhelmed with the large volume. We were in the midst of migrating a system.

The situation has improved considerably. For the latest month, i.e. November, we settle 73% of the claims within 1 week. The average time taken to settle all claims is 4 days. This makes us better than the industry average.

We were able to settle the claims promptly, as most of them are processed automatically. We only need to examine the large claims in more detail.

Sales of i-Gift trebled during the latest week

i-Gift is our annuity plan that offers a fixed income for a specific term (10 to 15 years). The yield is about 3.5% or higher, and is guaranteed.

During the previous weeks, the average sales is 100 policies for $6 million. For the latest week, ending 16 December, the sales increased by 3 times. A total of 350 policies were sold for $18 million.

Why? The current tranche of i-Gift will be withdrawn soon. The next tranche will have a slightly lower return, due to the recent decline in interest rate.

Our astute policyholders are rushing to catch this great offer before its withdrawal.

Special incentive for family members

Some policyholders have asked me to give special incentives for their family members to take insurance from NTUC Income.

In principle, this is possible. The special incentive depends on the type of insurance plan that is being purchased.

If you are a policyholder for many years, and now wish to introduce your adult children to insure with NTUC Income, send an e-mail to me. I shall ask my insurance adviser or consultant to follow up with you.

Income Tax Relief

A tax payer is allowed to deduct up to $5,000 of life insurance premium (less CPF contribution) from taxable income in a year.

For foreigners and self employed who do not contribute to CPF, they can enjoy this tax relief. I understand that 150,000 people take advantage of it each year.

If you are in this category, you should invest in a plan to enjoy the relief, before 31 December.

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