Friday, January 19, 2007

Troublesome immigration procedures

Japan has a troublesome immigration procedure.

I am required to complete three forms, with a lot of detail:

* health check
* immigration
* custom declaration

The officer require ALL the details to be filled in. Their form contain almost twice the detail required by other countries.

They require two copies of the custom declaration form to be completed. I don't understand why.

I wish that the Japanese authorities are more considerate to visitors to their country.

Low cost term insurance

Annual premium to insure $100,000 f0r 20 years:

Annual Premium
----- MALE ------- ----- FEMALE -----
Entry i- Term DTA i- Term DTA
25 $123.45 $ 50.75 $ 94.60 $33.45
30 $154.60 $ 64.60 $120.00 $42.70
35 $218.05 $102.70 $161.55 $65.75

You can give your family adequate protection, for such a low cost.

Thursday, January 18, 2007

Put all your eggs in one basket?

Dear Mr Tan,

Is it advisable to get insurance or investment policies from difference insurance company instead of "putting all eggs in a same basket.? I have brought a few policies as below.

(Details of 6 policies with AIA and Great Eastern).

What are the consideration when choosing an insurance plan and policy? What would you advise? I am 40 years old.



Dear WC

It is all right to keep all your investments with one insurance company, if is is a large and well rated insurance company.

Furthermore, if you are investing in a few funds, some of these funds are likely to be managed by external fund managers. They are not affected by the performance of the internal managers employed by the insurance company.

My "financial tips" are set out below:


You can also read some of the postings in my blog

Tan Kin Lian

Wednesday, January 17, 2007

Advisory fee of 45%

Hi Mr Tan,

I recently bought a policy in 2006 Ideal (ID2) whereby I contribute $100 every month.

As I got a insurance agent to review all my policies, I was being told that my policy has a advisory fee of 15% for the first 3 years which will eat into my investment-and I will not any return being the 15% is just too high. Any reason why the advisory fee is so high.?



Dear P

Please read this FAQ on the Ideal plan:


The advisory fee of 15% X 3 years is actually quite low, compared to similar plans in the market. So, you are getting quite good value for this plan.

The advisory fee is used to pay commission to the adviser (agent). Our agent earns a lower commission compared to other agents. That is why the advisory fee is much lower.

Most people invest for 10, 20 or 30 years. As a proportion of the total savings, the advisory fee is quite small.

I hope that you agree with me.

Tan Kin Lian

Should I get a return for my life insurance savings

Dear Mr Tan,

I read your blog about low cost term insurance. But, my agent said that this does not give any return to me. He advised me to buy a life insurance policy that gives me a return on maturity. What is your advice to me?



Dear CT

Many insurance agents like their customer to buy an endowment or whole life policy, as the agent can earn a high rate of commission on the premium.

But, this makes the insurance too expensive and is not good for the customer.

It is better to buy a low cost term insurance (even if there is no return on the premium) and to invest the savings in a fund. Here are my tips:


Here are the information on the suitable plans:

Low cost Term Insurance
Invest in a Fund

Advantages of Flexi-Cash

Mr Tan

Many banks are now offering 3.2% to 3.5% on their fixed deposit. The return is guaranteed. What is the advantage of investing in Flexi-Cash or the Money Market Fund?



Dear L

Our Flexi-Cash is invested in the money market. It pays a floating interest rate, that is based on the return from the short term investments in the money market. During the past few months, the average return is between 3% to 3.5%.

The advantage of Flexi Cash is its flexibility. You can withdraw your money at any time, without any penalty. There is no lock-in period.

I have invested most of my spare savings in Flexi Cash as I intend to withdraw it, without any penalty, to invest in the equity market later in 2007 (if it corrects from the current level).

If I put the money on 1 year fixed deposit, I have to wait for the maturity date (and may miss the market opportunity). If I withdraw earlier, I have to pay a penalty.

It is better to invest in a flexible fund, with no penalty on early withdrawal.

It is also easy to transfer from Flexi Cash to Flexi Link (to be invested in the Combined Fund), as they are both managed by NTUC Income.

Tuesday, January 16, 2007

NTUC Income's funds give top return!

S&P CPFIS report, average return for 2003 to 2005:

The average annual return for the 17 Equity Global funds is 15.1%. NTUC Income's fund is 2nd, with 19.2%. Our expense ratio of 1.32% is lower than the average of 1.67%

Average Expense
return rate
FOF Utd Int'l Growth 19.3 1.19
NTUC Global Equity Fund 19.2 1.32
GreatLink Glo Gr Trend 18.3 2.02
HSBC Glo D High Growth 17.7 2.04
UOB LifeLink Global 17.3 1.13
OAC Retire Wise Aggresive 17.3
GreatLink Lifestyle Dynamic 16.8 1.45
HSBC Global Leaders Fund 16.8 1.05
GreatLink Global Value Equities 16.3 1.56
Prulink Global Eqty 16.0 1.56
John Hancock Worldwide Eqty 14.0 1.85
OUBML Golden Worldwide 13.5 1.67
AIA Portfolio 100 13.9 1.79
GreatLink Global Intersection 13.9 1.58
GreatLink Glb Equity 12.5 1.80
HSBC Global Strategic 50 13.3 2.13
HSBC Glo Dynamic All-Weather 0.8 2.55
Average 15.1 1.67

Monday, January 15, 2007

Star rating for NTUC Income's funds


NTUC website has indicated that a few of your funds have won top4star ratings from S&P. I can't find these ratings on S&P website, perhaps you can help me to point to the appropriate link.



Dear H

The information on ILP performance is under CPF Webpage --"Investor Education".
The web link is as follows

Tan Kin Lian

Should I invest my CPF special account now?

Hi Mr Tan

1. Should I keep my money in the CPF Special Account, as it now gives me 4%, risk free. I have read He has done extensive research to show that the best investment is to invest in STI ETF, followed by CPF SA, and thirdly CPF OA.

He explained that it is simply not worth taking the high risk of selecting which funds or which ILP to invest in, and then the returns might not be worth the risk.......since CPF SA is giving us a risk free guaranteed ROR of 4%.

CPF SA can only be invested in Balanced fund, and the projected return is around 5 to 6%.

I have a living policy with NTUC since 1994 when I came out of university. I recently decided to buy another term policy of 500k.

I also invested $13,000 in the Growth Fund since Jan 06. I am considering to switch into the money market funds for the time being till the markets correct.



Dear HY

As the stockmarket is rather high now, it is better to wait for another time, before you invest in the STI ETF or in the Combined Fund (Growth) from NTUC Income.

Two years ago, I invested in the STI ETF and made a big gain of 60%. I sold off my investment in the STI ETF recently and invested the proceeds in the money market fund.

The Growth Fund has 70% invested in equities. The balanced fund has 50% in equities. The difference is quite small. So, it may not be worth the trouble to make a switch. In my case, I kept my investments in the Growth Fund.

I agree with your approach to buy a term policy for $500,000. You get a large protection at a very modest cost. But, you must make additional savings for your retirement.

If you are investing a monthly sum, it is all right to put the investments in the Growth fund or the Balanced fund. You will be averaging out your investment over many years, so it does not matter what is the level of the stockmarket at any point of time.

Best wishes for 2007.

Tan Kin Lian

Is it better to buy a life annuity now, or wait till age 62?

Dear Mr Tan,

I like to seek your advice if it is better for us to purchase annuity at 55-year (with deferred payment till 62) or at 62-year old with the following amounts:

1. Female:
Available fund at 55 = $115,000
Available fund at 62 = $150,000

2. Male:
Available fund at 55 = $120,000
Available fund at 62 = $160,000

In addition, we wonder what is the difference between Income's Classic Annuity and Guranteed Life Annuity Plans?



Dear N

I think that it is better to invest in the annuity now, rather than wait for age 62. Based on our current rate of bonus, you will get a slightly higher payout at age 62, if you buy the annuity earlier. (But, I must mention that the bonus rate depend on future investment return, and is not guaranteed.

You can read about the annuity from this FAQ:
Life Annuity

The Classic annuity is designed specifically for CPF minimum sum. You are only allowed to withdraw your money from age 62.

The Guaranteed Life Annuity can be taken at any time, and the payment commences immediately.

Tan Kin Lian

After 8 years, the investment is still negative

Hi Mr Tan,

I have 3 insurance policies - one investment-linked policy and 2 endowment policies.
I will keeping my endowment policies as they are my long-term savings.

As for the investment-linked policy, it is completed invested in Company P. I understand from this policy is that the mortality charges will go up as I grow older. My friend has told me that is is better to stop paying for this at age of 60.

Currently, I have kept this plan for eight years and owing to strong Singapore equity performance, the fund has performed above its benchmark. However, the value that I have accumulated in this account is still less than what I have paid in premiums.

Perhaps, the policy is still young and that part of the premiums go towards my insurance. Should I then terminate this policy and switch to a life insurance in which I only pay for 20 years and let the plan run? What do you think?



Dear EH

I am surprised that after saving for 8 years, the value of your investments is still below what you have paid in premiums. It seems that the charges (for agent's commission and mortality charges) are too high.

I am not sure if it make sense for you to make a switch now. I suggest that you visit our business center and talk to our consultant. Maybe, the consultant can give you our proposal for you to make a judgement.

Sunday, January 14, 2007

Avoid these insurance companies

Some life insurance companies condone the practice of their insurance agents in getting the customers to switch their old plans into new plans.

The unsuspecting customers have to incur the front end charge all over again. This is costly to the customers. The agents benefit, as they can earn a large commission all over again.

NTUC Income does not condone this practice. Our policyholders keep their policies with us for many years, much longer than other insurance companies.

Here is the proof.

Our market share in new business average about 12%. Our market share in in-force business is about 18%. Why is this possible?

The reason is simple. About one third of the business of other insurance companies are replaced by the insurance agents. These insurance agents tell their customers to switch to the new plans, which are supposed to be "better". In reality, the customer has to incur the front end charge all over again (up to two years of premiums) in making the switch. The agents earn the high commission again.

You should avoid insurance companies that have a high market share in new business, and a low market share in existing business. The insurance agents are likely to be replacing the old policies, at the expense of the customer.

Do not incur the front end charge again!

Most life insurance companies (other than NTUC Income) impose a charge of up to 2 years of the premium to pay commission to the agent and other expenses. This high charge makes life insurance unattractive for most policyholders.

To make matters worse, some insurance agents advice their customers to switch from a previous plan, into a new plan. They tell the customer that the new plan is "better" than the old plan. The unsuspecting customer will have to incur the front end charge all over again.

If your insurance agent advise you to switch your plan, you should be suspicious. Ask the agent if you have to incur a front end charge again, and how much will it cost you.

Usually, it is better to stay with the original plan, as you have already incurred the high cost. If you have to make a switch, ask the agent to refund the front end charge on the new policy, back to you. After all, you have already paid for it on the first policy.

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