Saturday, April 28, 2007


Source: Wikipedia

Telemarketing is a method of direct marketing in which a salesperson uses the telephone to solicit prospective customers to buy products or services.

Telemarketing can also include recorded sales pitches programmed to be played over the phone via automatic dialing.

Different types of activities:
* Lead Generation, the gathering of information
* Sales, using persuasion to sell a product or service
* Outbound, proactive marketing to prospective and pre-existing customers
* Inbound, react to incoming orders and requests for information.

Telemarketing may be done from a company office, from a call centre, or from home. It may involve either a live operator or a recorded message.

An effective telemarketing process often involve two or more calls. The first call determines the customer’s needs. The final call motivates the customer to make a purchase.

Prospective customers are identified by various means, including past purchase history, previous requests for information, credit limit, competition entry forms, and application forms.

Telemarketing techniques are also applied to other forms of electronic marketing using e-mail or fax messages, in which case they are frequently considered spam.

Means test

Means test refers to an investigative process undertaken to determine whether or not an individual or family is eligible to receive certain types of benefits from the government.

The "test" can consist of quantifying the party's income, or assets, or a combination of both.

Examples of means testing in the healthcare sector include Medicaid (USA), Medifund (Singapore) and Medical Cards (Ireland) [1].


ElderShield is an insurance scheme introduced by the Ministry of Health (Singapore) to provide financial help to people with severe disabilities.

About 1 in 12 elderly persons suffer from disabilities as a result of aging and illness and are not able to do simple everyday activities.

They may need expensive, long term care. ElderShield provides $300 cash payout every month (for up to 60 months) to those who are not able to do 3 or more Activities of Daily Living. These activities are washing, feeding, dressing, toileting, mobility and transferring.

This sum of money will reduce the financial burden of patients and their families as it can be used to pay for nursing and medical care at home or in institutions.

The Eldershield scheme covers all CPF account holders who reached aged 40. They can opt out of the scheme.

The premiums can be paid out of the policyholder's Medisave account or the accounts of their spouse, parents, children or grandchildren. Premiums can also be paid in cash. They have the choice to pay a regular premium uo to age 65 years or a single premium.

Disability insurance

Disability insurance will provide you with 30 – 60% of your present income tax free if you are injured and unable to work. Some employers provide disability insurance as part of their benefits package, either covering the cost in full or in part.

If you are self-employed or not covered by your employer, you can purchase disability insurance from a number of insurance sources.

You can buy disability insurance to cover a percentage of your current income if you are injured. The percentage, and any cap on the amount you receive is generally dependent on the disability insurance company you purchase from, as well as the type of coverage you elect to carry.

Be sure to shop around and read the policy carefully. The cheapest premium rate may not be the best deal since there are wide variations in the terms of coverage between different insurance companies. Shopping around and comparing rates can often yield a significant savings.

A new computer system for the civil service

A friend told me.

The civil service plans to spend $2.5 billion on implementing a new computer system.

$1.5 billion is for the purchase of the personal compuers (including software) to be placed on the desktop of 60,000 civil servants. This works out to $25,000 per civil servant. It seems to be quite a large sum to spend for each person.

Loop system for bus service

Dear Mr Tan

Beside the hub system, how about loop system - say bus from AMK to the city area - we could have a bus that goes various stops around AMK then direct by expressway to the city and then it do various stop before returning by express way.

This can be done say during peak hours so that there will be capacity passengers to fill up the bus and the passenger can avoid the extra time transferring bus. The LOOP service can use the HUB as one of the stop in AMK.

I think this can easily be tried out at same time as the HUB system in running to see which is better.




Your system is worth trying. The advantage is that it avoids a change of bus.

Under the hub system, we will have a feeder service to pick up commuters within the estate and bring them to the hub.

We may have different feeder systems to bring the commuters from different sections of the estate, so that the travelling time is shorter. We can also use light buses so that the waiting time is shorter (as there are more buses providing the service).

The express bus can run at specified times, according to a schedule.

Although the hub system requires one or two change of bus, it will be acceptable when you get used to it. It is good to exercise anyway.

Driving under difficult conditions

I drove my wife to the bus station at 6 am this morning. It was dark and raining. The roads were poorly lit.

I used the GPS navigation system to guide me to my destination. It was very useful. The system could "see" in the dark, and gave instructions on the turns, ahead of time.

I use the Packard Bell system. It works well. You can buy it at Funan Center for less than $800 (special discount).

Hub and spokes

I am in favour of a feeder system to bring commuters to bus terminals and MRT stations. It operates like the hub and spoke system used in airlines. Details below.


Most of the 12 major U.S. passenger airlines use a hub-and-spoke network to route their plane traffic.

A hub is a central airport that flights are routed through, and spokes are the routes that planes take out of the hub airport.

Most major airlines have multiple hubs. It allow them to offer more flights for passengers.

Atlanta is a hub that serves many other cities throughout the U.S. and around the world.

The hub-and-spoke system became the norm for most major airlines after the U.S. federal government deregulated the airlines in 1978.

Under the direct-route, or point-to-point, system used prior to deregulation, airlines were forced by the federal government to fly directly between two small markets.

This resulted in many flights that were routinely half empty, which resulted in airlines losing money. Today, most airlines have at least one central airport that their flights have to go through. From that hub, the spoke flights take passengers to select destinations.

A good example of a hub-and-spoke system is that of Delta Airlines, which has its hub at Hartsfield Atlanta International Airport.

Let's say you are in Charleston, SC, and want to go to Memphis, TN. There's probably not a lot of demand for a Charleston-to-Memphis flight, so the airline flies you from Charleston to Atlanta, and then from Atlanta to Memphis via a connecting flight.

The purpose of the hub-and-spoke system is to save airlines money and give passengers better routes to destinations.

Airplanes are an airline's most valuable commodity, and every flight has certain set costs. Each seat on the plane represents a portion of the total flight cost.

For each seat that is filled by a passenger, an airline lowers its break-even price, which is the seat price at which an airline stops losing money and begins to show a profit on the flight.

Not all airlines use the hub-and-spoke approach. For example, Southwest Airlines is one of the exceptions to the hub-and-spoke network system. It uses the old-fashioned point-to-point system, hauling people short distances with few connecting flights.

However, Southwest offers very few non-stop flights on longer routes. At the end of 2000, Southwest served approximately 306 one-way, non-stop city pairs. It's point-to-point system provides a more direct route than a hub-and-spoke airline can offer.

Judge a person's character for a job

I suggested that the interviewers should judge the candidates' character, before selecting the candidate for a job. Here are some responses from others:


How do you assess character in the short span of an interview? That's not enough to have character, you need knowledge, skills, getting on with people skills as well. Character is important but not sufficient for a person to stay on a job.

If he has a good character but is a dunce, the company will stay where it is, no innovations...probably still using windows 3.1 and typewriters.Please comment


How long do you need to judge a person's character? Among other things, acadamic achievements meant something: attitude. Character is not Attitude.



In my opinion, it is easier to judge a person's character, than his competence, in an interview.

The interviewers can ask a few questions about the person's attitude towards life, values and his behaviour in past situations.

Many Singaporeans prefer to rely on paper record, rather than to make this judgement. This is why there are not comfortable about my suggestion.

I wish to clarify that the basic qualification is still important. For a technical job, the technical skills and knowledge are still required. But, they should not be the key factor in making the final selection of the suitable candidate.

Long Travelling Time on Buses

Commuters complained about the long waiting and travelling time on buses.

Reason? This is due mainly to the current system of bus services:

* there are nearly 300 bus services covering different combinations of travel
* each service has up to 60 stops
* it takes about 75 minutes (off-peak) or 2 hours (peak) to complete the full journey
* up to 10 services can pass by a particular stop
* the commuter has to wait up to 15 minutes for a particular bus

Here is how a different system can look like:

* 30 express services can cover the major roads in Singapore
* each express service can have about 5 stops
* feeder services using small buses can take passengers to the express or MRT stops
* waiting time for a feeder service is less than 3 minutes
* there are more stops for feeder service
* the total waiting and travelling time can reduce by about 30% (my estimate)

You can read my posting about a similar arrangement used in Kowloon, Hong Kong.

Asset allocation for your long term savings

Dear Mr Tan

I have invested my monthly savings in the NTUC combined fund (Growth). I am thinking of increasing my monthly savings. Should I invest it in the NTUC Global equity or in the Combined fund? What are your views about the NTUC Technology fund?



My preference is to invest my long term savings in the Combined Fund (Growth) or in Global Equity.

It is all right to have a small allocation, say 20%, of the total savings invested in the Technology fund, if you are interested in this sector.

A good plan for a young family

Dear Mr Tan

I am in my early 30s. I recently brought a 30 yrs decreasing term insurance covered $300K for myself & $100K for my wife. I have a standalone Critical Illness policy for myself & my wife. I have a Disability Income policy to cover myself only. We are both insured under NTUC Enhanced MediShield with Plus Rider.

I like to keep my saving in Money Market Fund for liquidity & invest the rest in ETF (eg. streetTrack STI).

What is your advice?



Your approach sounds like a great idea.

Which insurance company did you buy the decreasing term and critical illness cover from? I understand that NTUC Income has the lowest rates (according to a survey by Business Times).

Law of trusts

Source: Wikipedia

In common law, a trust is an arrangement whereby money or property is owned and managed by one person (or persons, or organizations) for the benefit of another.

A trust is created by a settlor, who entrusts some or all of his property to people of his choice (the trustees). The trustees are the legal owners of the trust property (or trust corpus), but they are obliged to hold the property for the benefit of one or more individuals or organizations (the beneficiary, a.k.a. cestui que use or cestui que trust), usually specified by the settlor.

The trustees owe a fiduciary duty to the beneficiaries, who are the "beneficial" owners of the trust property.

The trust is governed by the terms of the trust document, which is usually written and in deed form. It is also governed by local law.

In the United States, the settlor is also called the trustor, grantor, donor, or creator.



I know of a large trust, where the beneficiary wish to make a generous donation to a charity, but the trustees refused. The beneficiary is not able to get the trustee to change their mind.

Friday, April 27, 2007

Letter from my ex-colleague

Printed in Today paper on 26 April 2007.

Today Paper

I refer to Mr PN Balji's commentary, "Two good leaders who missed being great", (TODAY, 24 April 2007).

Mr Balji described Mr Tan Kin Lian's management style when he was the chief executive officer of NTUC Income. He stated that "Every press release, even an innocuous one-line statement, had to be approved by him. Every advertisement had to be vetted by him. It was central control all the way".

In my opinion, this statement is totally incorrect.

I have had the privilege to work with Mr Tan for more than 13 years in marketing, as well as in office support services. He believed in developing his managers, encouraging them to take responsibilities and make decisions within their job scopes. There was a system of escalation for higher-level decision making.

From my perspective, the officers and managers in NTUC Income were empowered to make and execute operational decisions. The functions I am familiar with, including advertising, do not function any differently.

Peter Ng Kee Choon
(I am writing in my personal capacity)

Reply to "Two Great Leaders Who Miss Being Great"

26 April 2007

Today Paper

I refer to your editorial by Mr P N Balji entitled "Two Great Leaders Who Miss Being Great".

Mr Balji made the following statement about me, "Every press release, even an innocuous one-line statement, had to be approved by him. Every advertisement had
to be vetted by him. It was central control all the way".

This statement is incorrect.

NTUC Income handled our media statements and advertisements in the following manner:

* The media relations manager was authorised to provide information to the media, without getting prior clearance from me. She was only required to get the facts approved by the relevant business manager.

* To ensure that the facts are correct and worded in the proper perspective, she sent a copy of their statement (at the time of release to the journalist) to a few key people, including me. This allowed the recipients to correct any mistakes before they are finally printed in the paper. It also met the tight deadline required by the

* The same arrangement was applied to our advertisements. In this case, there was usually no pressure of time.

In past years, many press statements from NTUC Income were issued in the name of the business managers. Some statements were issued without my prior knowledge, although an e-mail might have been sent for my information.

NTUC Income was able to get many of our views reported in the newspapers. It applied to all the media, including Today paper.

The approach adopted by NTUC Income was more open and relaxed that most other organisations. It could hardly be described as "central control all the way".

Mr Balji also made a statement about my unwillingness to find a successor. This is incorrect and did injustice to several general managers in NTUC Income who, in my opinion, are suitable to take over as the chief.

Tan Kin Lian

Plan with different charges


Dear Mr. Tan,

NTUC Income has several plans, such as IB1, IB2, IB4 and Flexi-cash with different policy charges? I was angry that the adviser from the business center did not tell me about IB1 which don't need to pay annual policy fee. I have a friend who signed for ID2 plan. He learned later from your blog that ID7 plan (no need to pay 45% fee) was available.

Many advisors from business center only talk about Life or Limited Life, but did not recommend Term or Decreasing Term.


Sometimes, the earlier plans are withdrawn by the company and are not available for the adviser to sell.

Generally, it is true that the adviser prefer to sell a plan that give higher commission to them - at the expense of the customer. Some "honest" advisers will recommend the plan that gives the best value to the customer.

The 45% fee under ID2 is low, compared to similar plans in the market (which takes away up to 150%). See

A Matter of the Mind

Dr Lee Kum Tatt is passionate and determined to do what he has decided to do. He has a strong mind of his own. This is needed to overcome obstacles in his life. Some people consider him to be a "stubborn" person.

You can read about his "stubborn" views in bis blog

I share some of his "stubborn" quality.

Feeder and express bus services

Many people expressed unhappiness with the long waiting and travelling times for buses.

A solution is to have an express bus that have just a few stops between the terminal points. Commuters will need to take a feeder bus to the terminal points on the selected stops. This means one or two change of buses. Is this acceptable?

I am now used to this mode of transport. I take the MRT to Yio Chu Kang station and change to a bus to reach my home. I have to walk part of the way, but the exercise does me good.

I encourage commuters to accept one or two change of buses. This is more efficient and will shorten the travelling time.

False resume to get a job

I saw on television that a prominent person in USA had to resign, as she had given a false resume in applying for a job.

A few weeks ago, a local newspaper also reported this situation in Singapore. It seems to be quite common for a person to give a false statement to get a job. The penalty is light.

In my view, a person who deliberately makes a false statement in a resume is committing a crime, and is really cheating. The culprit should be punished criminally.

In recruiting people, I do not give much weight to paper qualification or past working experience. I judge a person based on character, and look later at the actual performance in the job.

Thursday, April 26, 2007

Index funds

Hi Mr Tan,

For more investment help and questions, please visit It is a website set up by Bogleheads to help fellow investors.


Great websites

Most websites contained too much information.

I like websites that are simple, neat and have just a few pieces of relevant information.

My vote goes to the following websites:

* Google homepage (for search)
* Direct Line in the UK (ie insurance website)
* Aviva's website in Singapore (ie insurance website)
* NTUC Income's website
* Bedok Transport (surprise!)

I like websites that display a call center number in their homepage. They should encourage the customer to call and talk to a person.

Buy i-Term from NTUC Income?

Mr. Tan,

I've bought the SAF Group Term Insurance by Aviva (at that time it's by ICS) during my NS days and had gradually increased the sum assured from $20K to $150K over the years.

Recently I’m thinking of increasing it to $200K. If the term insurance from NTUC Income is cheaper, I might consider canceling it and take up a $200K term insurance with NTUC Income instead.

The SAF Group Term Insurance by Aviva covers both death and TPD. It also comes with a (optional) rider that covers the 30 major illnesses.

Does the NTUC Income term insurance come along with a rider that covers the 30 major illnessed? Is it cheaper compared to the SAF Group Term Insurance when considering both the main term insurance and the rider?



Dear Terence

You can get a quotation at NTUC Income's website,
i-Term and compare with your existing premium payable to Aviva.

You can also call NTUC Income's Business Center and talk to a consultant.

NTUC Income allows you to buy a Living Benefit plan, which covers death, permanent disability and 30 critical illness.

Avoid market timing

Hi Mr Tan,

While I appreciate your insights into many insurance issues (especially buying term insurance), your market timing posts are certainly not among them; in fact it could be detrimental to encourage market timing.

If an investor has an investment plan, stick to it. (If you don't have one, create one!) Market timing is not going to work.

Many writers have already documented that market timing does not work. Read up John Bogle's book in more detail if you must or ask him personally if you managed to get to meet him in future.




You are right about John Bogle's advice to avoid market timing. He advised to stay invested all the way. I generally follow this principle.

I wish to make an exception in this instance (when the market is irrationally exuberant). I have seen what happened when foreign funds move out of a small Singapore market. (This situation does not apply to America or the global market).

There is a difference between "market timing" and "strategic asset allocation". I shall write about it in a separate posting.

You are also right about "market timing". Half of the time, one will get it wrong.

You can get to read my views in my website, Ask Mr Tan. Look for point 7 in Investment Tips, April 2007.

Term insurance at Aviva's website

Hi Mr. Tan,

Thanks for your great and informative blog. I’ve learnt quite a lot from the regular reading of your blog…

For the term insurance from Aviva, are you referring to the SAF Group Term Insurance by Aviva? Or is it another term insurance for the general public?



I was referring to the term insurance offered to the general public, which is published in Aviva's website. You can use Google search to look for "Aviva". They have an advertisement.

I believe that Aviva offers a term insurance to soldiers in SAF at a much lower premium rate. It is a good deal for our soldiers. NTUC Income offers a similar attractive deal to public officers.

Wednesday, April 25, 2007

Improve public transport

Here is a comment posted in my blog:

I agree that more trains and buses are needed to facilitate public transportion. Not many people willing to take bus here for both the waiting time and traveling time are too long.

Currently the government hopes to solve the traffic problem through promotion of intelligent traffic information, establishment of a comprehensive information platform. It is a good idea. But, we do need a better and simple system, but maybe they need to do more which might cut off their profit.

How to encourage more people to take bus as daily transportation, and how to solve transportation problems of residents in HDB hubs of some towns?

I think the establishment of express bus service is an effective way. By withdrawing and merging some stops or across the Central Expressway, commuters spend less traveling time between office and home. Thus more people will choose bus services.

For example, there are more and more HDB flats in Sembawang now, however, there are not enough bus lines in this area.


Dance Appreciation at the Esplanade

Don't miss Singapore Dance Theatre's Dance Appreciation Series on 1 May, 4pm, at the Esplanade Concert Hall.

This May Day Special allows audience members to learn about contemporary dance expressions and to hear about the inspiration behind the new works within the main season of Impressions.

Tickets can be purchased at the amazingly low price of $11 (inclusive of $1 SISTIC fee), and are available from SISTIC 6348-5555 or

Sold too early?

Hi Mr Tan,

You have sold all your SGX ETF mid last year, at that time you were saying it was too high.

Since then the market is up abt 30+ %. Now that you said the market is too high and you sold half(and not all) your stock,prob you do not want to miss the uptrend totally in case you are wrong this time. The thing here is that, nobody can time the market correctly.

Though you may be right this time, but you were wrong the other time. A true investor buy/sell a company based on its valuation, company competitive chracteristics, managements and not whether the market is too high/low.

Just my 2 cents comments. I am worried your comments are influencing people, which may or may not be correct.



You are right.

When I sold the ETF, it had appreciated by 50% over my purchase price (bought two years earlier). I felt that it was adequate. (At that time, my ETF represented 20% of my total stock market investments).

At the current level of the Singapore stock market, I am reducing my other shares (bought more than 15 years ago) by 50%. I will wait for a lower level to re-invest in the ETF.

Under normal circumstances, I do not time the market. At the current level, I want to reduce my holdings.

Anyway, the reduction is being made in stages.

Term insurance - Income & Aviva

If you are male 20 years and you wish to insure $100,000 for 20 years:

NTUC Income: monthly premium of $13.40 fixed for 20 years. Total: $3,216

Aviva: monthly premium of $20 for first 10 years, and $30 for next 10 years. Total $$6600

Conclusion: the premium payable to Aviva is 2 times of NTUC Income. It is better to buy the term insurance from NTUC Income.

Hedge fund

Source: Wikipedia

A hedge fund is a private investment fund charging a performance fee and typically open to only a limited number of investors. Hedge funds are largely open to accredited investors only. They have grown in the public securities and private investment markets.

Hedge funds are not currently subject to any direct regulation by the SEC, the NASD, or other federal regulating commissions, unlike mutual funds, pension funds, and insurance companies. Some funds that trade commodity futures contracts are considered to be commodity pools, regulated by the Commodity Futures Trading Commission and National Futures Association.

The term is not tightly defined, but is used to distinguish such funds from retail investment funds, such as mutual funds that are available to the general public.

Retail funds tend to be highly regulated, limited to holding a specific range of financial assets such as bonds, equities or money market instruments. Retail funds tend to have a restricted ability to borrow, leverage or hedge their investments, though they may have the ability to hedge via derivative contracts.

Hedge funds are limited only by the terms of the contracts governing the particular fund. Hedge funds may be either long or short assets and may enter into futures, swaps and other derivative contracts. In this way, hedge funds can follow more complex investment strategies.

The funds, often organized as limited partnerships, typically invest on behalf of high-net-worth individuals and institutions. Their primary objective is often to preserve investors' capital by taking positions whose returns are not closely correlated to those of the broader financial markets.

Because of the substantial risks involved in unregulated, complex, and leveraged investments, hedge funds are normally open only to professional, institutional or otherwise accredited investors. This restriction is often implemented through limits on participating investors or minimum investment amounts.

Return on NTUC Income's funds

I have just received a report showing the return on NTUC Income's funds:

Name of Fund 1 year 2 year
2006 2005/06
Combined Fund (Growth) 11.7% 22.8%
Combined Fund (Balanced) 8.8% 17.0%
Combined Fund (Conservative) 5.8% 11.1%
Singapore Equity 30.8% 51.0%
Global Equity 11.9% 25.8%
Technology -4.8% 0.0%

Most of the funds produced great returns, after fees. As the fees are quite low, most of the returns go to the policyholders. The Technology fund continues to disappoint. I hope that it will do better in 2007.

Sell Singapore shares?

Dear Mr Tan

I read that you are selling your Singapore shares. Can you tell us why?



I find the stock market to be too high. I have decided to sell 50% of my shares and re-invest the money in the money market fund to earn 3% interest. If the stock market corrects downwards by 20% (i.e. ST index at 2,700), I will re-invest in the market.

Lecture on insurance

I have been asked by a local university to teach a course on insurance. It comprises of 15 lessons of 3 hours. I have not accepted it yet.

I am now doing research on the topics to be covered in the course. I search Google to get the materials from Wikipedia, educational and corporate websites. It is an interesting exercise.

There is so much useful material that can be obtained from the internet.


What is liability in the insurance context? I found this definition in WiseGeek, obtained through Google search.

In legal terms, the word liability refers to fault. The person who is at fault is liable to another because of his or her actions or failure to act.

One example is in the case of a crime. The liability of the offending party may include providing restitution for damage to property or paying medical bills in the case of physical injury.

Another example of liability in the legal realm is an automobile accident. The person who caused the accident, through action or omission, is liable to the injured party.

Liability insurance exists for just such a purpose. It covers the expenses of the injured party, including damage to the vehicle or other property as well as a certain amount of medical expenses, and may reimburse the injured party for attorney's fees if civil action is required.


What is an accident? I found this definition from Wikipedia, obtained through Google search. It is important to understand this term, as it affects what is covered in an insurance policy.

An accident is a detrimental event that occurs unexpectedly and unintentionally. Physical examples include unintended collisions or falls, being injured by touching something sharp, hot, or electric, or ingesting poison.

Non-physical examples are unintentionally revealing a secret or otherwise saying something incorrectly, forgetting an appointment, etc.

50,425 people were killed in accidents (not including car accidents) in the U.S. in 1995, which is 19 people in 100,000.

Often, accidents are investigated so that we can learn how to avoid them in the future. This is sometimes called root cause analysis, but does not generally apply to accidents that cannot be predicted with any certainty. For example, a root cause of a purely random incident may never be identified, and thus future similar accidents remain "accidental."

The informal term "freak accident" may refer to an unfortunate event that may seem exceedingly unlikely to happen by chance. This term may be used to imply doubts about whether the event actually was an accident.

Reduce my holdings of Singapore shares

I sold off another 10% of my portfolio of Singapore shares. The total sales for this month is 37%. My target is to reduce my portfolio by 50% within the next few days. I have another 13% more to go.

I believe that the Singapore market is too high. I like to take profit and keep my money in the money market fund to earn 3% interest.

I am keeping my holdings in the combined funds with NTUC Income for the time being. They are largely invested in global equities and bonds, and are more diversified.

Estimated yield for next 10 years

Dear Mr Tan,

I saw your posting about the yield on your and your wife's life insurance policies for the next 10 years. How do you calculate the figures? How can I do the same calculation for my own policies?

Another question, why do the yields vary so much between 2% and 8%? Are they from the same insurance company?



All my policies are with NTUC Income.

I ask them to give me the following figures for my life insurance policies:

* what is the current cash value (if I terminate my policy now)
* what is the annual premium
* what is the projected cash value in 10 years time (including projected future bonus)

With these 3 figures, I can compute the yield.

These are the projected yield for the next 10 years. They are not the actual yield over the entire duration of the contract.

The difference in yield is due to the method used to calculate the cash value and distribute the bonus for different types of contracts. Sometimes, the methods are not consistent.

You can ask your insurer to give you the same 3 sets of figures. If you send the figures to me, I will be able to compute the yield for you, using my financial calcuator. It is quite easy.

Personal accident policy

A financial firm offers an unsecured loan at a high interest rate. They also offer a rider as follows:

For an additional amount of 1.25% of your monthly outstanding, your outstanding loan amount will be covered in case of your accidental death, accidental total and permanent disability and terminal illness.

For a loan of $10,000 the annual premium is $125. This is more than 10 times of the normal rate.

If you pay $125 for a personal accident policy, you can be insured for $125,000 a year (not $10,000).

Search Google for "personal accident" and find out what is being offered in Singapore.

Tuesday, April 24, 2007

Claim review committee

Thomas Phua posted this comment in my blog.


Many home theft insurance must be followed by forcible entry. This is a little outdated as thief today are quite skillful and well trained.

I had a case that came in from window and no sign of forcible entry. Then NTUC Income rejected the claim and I appealled.

Then CEO, Mr Tan agreed with me on the way thief enters by the window, though no forcible entry, paid on ex-gratia. I believe no insurer will pay based on Mr Tan's understanding then. Mr Tan's reason was, there is actual lost due to theft.

Thomas Phua


I wish to explain how the decision was made.

NTUC Income has a claims review committee chaired by a general manager. I am not involved in the committee. The appeal was submitted to the committee. They decided, based on its merits.

I do provide some of my personal views on appeal cases. Sometimes, the committee agrees with me. Sometimes, they politely take a different view. I believe that the committee has acted fairly.

Fixed deposit interest rate

An elderly person has $50,000 of fixed deposit that is maturing soon. He asked for my advice on how to invest this sum.

I asked him to read my Invesment Tips, April 2007

My preference is to invest in the Money Market Fund under NTUC Income, which yields a money market rate of about 3% to 3.5%. It has very low risk. During the past few months, I have invested most of my savings in this fund.

I searched for "fixed deposit" under Google, and found the following interest rate offered by DBS Bank and UOB bank for deposit above $50,000:

3 month: 1.7%
12 month: 1.8%

I am not sure if they offer a higher interest rate for seniors, say 0.25%. Perhaps, you can call them to find out, if you are interested to invest in them.

Comfortable SMRT train ride

I took the SMRT train from Raffles City to Yio Chu Kang at 4 pm today. To my surprise and delight, I was able to get a seat. It is the first time in many train rides that I have this comfort.

I hope that SMRT will put more trains during the peak and off peak hours. It will give more comfort to the commuters and get more people to take the train (instead of driving their cars on the congested roads).

Shopping for Travel Insurance

I search an internet portal for travel insurance. They offered the most competitive rates extracted from many insurance companies in the United Kingdom.

Here are my findings:

* the difference between the lowest and highest in the top 20 quotes can be as much as three times

* the plans indicate coverage of GBP 10 million, but this applies only to emergency evacuation.

* the actual payouts for accident injury and hospital stay is quite modest, and close to the level offered in Singapore.

Conclusion: it pays to shop for your travel insurance. Do not pay more than SGD 4 for each day of coverage. Look at the amount that you are covered for accident, medical expenses and loss of baggage, as they represent the key payouts.

Get the right assumptions

Dear Mr Tan,

I am 37 years old. If I save $20,000 a year for next 18 years at 5% return, I would accummulate about $500,000 when I reach 55 years old.

With this amount being place in an annuity for next 25 years at 3%, I would only be getting about $2,000 a month from 55 to 80 years old.

With inflation, the real value of the annuity will be less than $2,000 and may not be sufficient for life beyond 55 years old.

How realistic is the return of 5%? Many funds have mentioned returns of higher than 5%, but there are possibilities that the funds may not generate such a return, as there are always up's and down's.



I suggest that you re-calculate the figures on the following assumptions:

* the retirement age should be 65 (instead of 55)
* the investment return can be increased to 6% per annum

With the revised assumptions, you will be able to get a higher annuity payment on your retirement. Even after deducting for the effect of inflation (say at 2% per annum), your annuity income should be quite adequate.

You can read about the annuity in this FAQ

Travel Insurance from the Portal

I searched Google for Travel Insurance. I found a product that covers medical, emergency evacuation, baggage and several adventurous sports. The premium is USD14 for 7 days.

The advertisement claimed a saving of 50% from a similar product offered through a travel agent.

Their coverage is written in clear language. It explained the sports that are covered, and those that are excluded.

A similar coverage from NTUC Income cost SGD 20 (deluxe plan) or SGD 15 (classic plan), plus a loading of 25% or 50% for some specified hazardous sports.

Travel agent sells travel insurance

When I booked for my travel package to Gold Coast, the travel agent offered a travel insurance to me. I declined.


I find the premium to be too high. The travel agent usually receives a high commission (maybe 30% or more of the premium).

The travel agent has to compete to offer an attractive price for the travel package (as other travel agents offer similar products). They make a big profit on the travel insurance.

It is better to shop for your travel insurance separately. If not, at least you can find out what is offered directly by the insurance company. Try Google search.

Invest the settlement in an annuity

I read an article about receiving a monthly payment, instead of a lump sum, in the case of an injury settlement.


If a person is involved in an accident at work (workers compensation claim), or a automobile accident, the injured person would usually receive a lump sum as a settlement.

It was felt that the injured person would wisely invest that money so they would have an income for the rest of their lives. As it turns out that was not the case in most situations.

Therefore, in some countries, it was decided that the large sum would be distributed on a periodic basis; monthly, quarterly or annually.

An agreement was made between the injured party, the lawyers (for both sides) a financial advisor and the defendant. The defendant would purchase an annuity for the distribution of funds through an Insurance Company. This distribution allows the injured person to live off the proceeds for a specified duration or the duration of recovery.

The injured party already has the challenge to deal with the after effects and worries of an accident and has to adjust to a new lifestyle. The annuity frees the injury person from the worry of investing the settlement.

Monday, April 23, 2007

Home content insurance

Extracted from a website:

A home contents insurance policy should cover everything you would take with you if you moved home.

This would typically include all your furniture, household goods, food and drink, televisions, videos, computers, stereo equipment, clothing and valuables, usually up to a stated limit.

Often insurers will put an uppermost limit on the amount that they will pay out for certain items or groups of items. Whilst this is typically less than the total sum insured, be aware of any maximum sums payable for these individual items.

Boats, caravans and motors are normally insured separately.

Claims are usually made after a burglary or a fire but a policy should also pay if your possessions are damaged or lost as a result of an explosion, water leaks or if your home is vandalised. Always check to make sure these events are covered.

Many policies will also cover your legal liability in the home. You should check whether you are covered if you accidentally injure another person or damage their property. Most policies pay damages for which you are legally liable up to a certain limit.

Life Insurance Settlement

I saw an advertisement entitled "life insurance settlement". The advertiser may be able to offer a higher surrender value for your life insurance policy.

Here is an abstract from the website:


A Life Settlement allows an individual 70 and older to turn their non-performing or unnecessary asset, a life insurance policy, into cash.

A life settlement may be considered when maintaining premium expense becomes prohibitive, a more affordable policy is being considered, there are changes in trust, tax or estate planning, a key-man policy is no longer required, beneficiaries are self sufficient and for a myriad of other financial reasons.

Quite often, utilizing a life settlement option may be the wisest and most ideal financial option.


You can find more details by clicking on the advertisement or searching Google for "life insurance settlement" or "cash your policy".

Home content insurance

In the past, most owners take up fire insurance on their property to meet the requirements of the financing body.

Singapore is relatively safe from natural disasters and crime.

The situation is changing, as follows:

* people now have more valuables in their home
* there are more foreigners, especially from poorer countries, working here
* even the Singaporeans may be forced by circumstances into crime

In other countries, insurance on home content is quite popular. The coverage is more comprehensive than similar products in Singapore.

We need to develop better products to meet the expanding needs. I shall be making some research into this area.

If you are interested, you can search for "content insurance" to see what is being covered.

Have a lower yield target of 6%

Dear Mr.Tan

I am now 30 years old, and have just started investing. Currently, I hold the following:

Fixed Income: 100k in Fixed deposits @ 2.8%
Unit trust: 100k worth in 5 products, expecting 8% p.a. or more

I am aiming for 10-15% returns, yet unwilling to risk, thus 50% in the FD. I have opened an account in Australia and invested some funds as FD @ 6.5%p.a.

How would you go ahead to invest and have a safe yet higher returns?



I suggest that you read my FAQ on "Financial Tips for the Young". It gives some information that is relevant to your situation.

Your target of 10% to 15% is too high. Over the long term, equities earn an average of 6% to 8% per annum.

If you target 8% on the risky portion of your portfolio (say 50%) and 3% on the safe portion (say 50%), your average yield will be 5.5%. This is a reasonable expectation.

Personally, I wanted to invest in Aus$ and NZ$ but an expert told me that the current level of these currencies is too high. So, I backed down. Do be careful when you invest in foreign currency.

Generally, I prefer to invest in a large, well diversified low cost fund, such as the combined fund of NTUC Income (see or in the STI tracker fund in the SGX.

Anticipated endowment sold badly

Thomas Phua posted this comment in my blog. I have edited it.



The sales pitch by the bancassurance agent is "Auntie, you put $4000 a year and every 3 years you receive $3000, this is better than interest.

Sounds good and logical.

The auntie who fell for the sales pitch is 53 years old. For the next 21 years, each year she has to pay $4000 and every 3 years gets $3000. At the end of 21 years, the maturity will be much less than the total premium. Can she continue to pay the premium until age 74?

I hope the bancassurance agent will have some consideration for old folks who walked into the bank. These are hard earned money of old folks. Bear a thought for them. There are other ways for you to make your sales and earn your commission.

Thomas Phua

Balance profit and service

When public transport is privatised, the operators find ways to increase their profits. They decide to buy long buses (actually two buses joined together ) to save on manpower cost.

The long bus means occupies the space of two buses. They are difficult to manouver and congest the road. As they have twice the capacity, the waiting time for a bus is doubled (compared to single bus).

Is Singapore short of manpower? No! The excess manpower is used less productively, to drive taxis or to operate small retail outlets.

The outcome? Poor public transport service. Congested roads.

We need a better way to use the manpower in the economy. In this instance, the free market and the profit motive do not produce the desired outcome. The regulators have to step in, to ensure that there is a proper balance between profit and service.

The interest of the wider community has to be safeguarded.

Travel insurance - emergency evacuation

When you buy travel insurance, check if they provide emergency evacuation.

Why is this important?

If you meet with an accident, and you need to be flown back immediately to your home country for treatment, the cost of arranging an air ambulance can be as much as SGD 100,000.

This will be covered by the travel insurance (if it is included as part of the standard package).

When I was with NTUC Income, there were more claims under this item, compared to death or injury caused by accidents. This is an important benefit.

Travel Portal - Zuji, Priceline

I enter "Budget Airlines" in Google Search and found the ad by Priceline.

I tested it for my trip to Brussels. It gave the same best deal (ie the same price) from British Air.

Two other airlines also advertise their special offers. I checked on the European airline, as they cover Brussels. Their best price is 50% higher than British Air.

Conclusion: It is better to try a portal, such as Zuji or Priceline. They can give the best deal. You can approach your favourite airline directly and see if they can match.

Booking an air ticket through the internet

I started to learn how to book an air ticket through the internet.

I found Zuji in Google Search. I asked to book a return air ticket from Singapore to Brussels in September. They searched all the airlines and come back with the best offer from British Air. It cost less than SGD 2,000 for an economy class ticket.

For the same trip on Singapore Air, the ticket will cost SGD 8,000. Singapore Air is not competitive for this sector.

I did another search for a return ticket for Tokyo in August. The cheapest ticket is from Philippines Air. I decided to fly by Singapore Air, although the price is about 50% higher.

I could buy the ticket directly from Singapore Air slightly cheaper than Zuji. The difference is the service fee from Zuji.

If you want a cheap ticket, you can try Zuji. I find it to be a very convenient way to get first level information about what is available. I can decide later, if I prefer another airline. At least I know how much is the difference.

Sunday, April 22, 2007

Money market fund

I have a large amount of my personal savings invested in the Money Market Fund under NTUC Income.

I just checked the website and found the following:

* unit price as at 1 April was 1.059
* unit price appreciated by 0.86% over past 3 months, or 3.4% annualised
* unit price appreciated by 1.8% over past 6 months, or 3.6% annualised

Although interest rate in the money market softened recently, the yield on the money market fund continue to be above 3%.

I am satisified with this yield.

Is Gold a good investment?

A knowledgeable person in the Gold trade told me that the price of gold is "not high" compared to Oil. There is potential for Gold to appreciate. I do not know if this is correct.

Anyway, I asked Dr Money for his views. He wrote an article about it previously. He sent an updated article to me, which now applies in his blog.

I shall be monitoring this asset class for the next few months. According to Dr Money, the best way to invest in gold is through an exchange traded fund (ETF). Another alternative is paper gold.

Road Safety

Thomas Phua asked me to write something about road safety in my blog. I have edited his message. You can see his own posting in his blog


Mr Tan,

I am on the road every day, on a motorcycle. I observe that many drivers lack concern for other motorists. I often met with a close shave with other drivers due to their poor judgement or disregard for the safety of others.

My brother was involved in an accident last year. He was lucky to survive. I am helping him to claim against third party.

I am surprised that the taxi driver reported that my brother hit his taxi instead.
This is really absurd. The taxi driver that nearly killed a motorcyclist. Yet, he made a false report. The police found him to be guilty, based on the physical evidence of the accident. I hope that the driver will at least admit their fault, when someone is injured.

I feel that many motorcyclists died because of the poor judgement and careless attitude of motorists.

Thomas Phua

Buy motor insurance direct

Hi Mr Tan,

When I was overseas, I could buy motor insurance directly through a call center and get a 10% discount. Why is this not available in Singapore?



If you call the insurance company directly, they will give the discount to you. But, they do not advertise this discount, as it may upset their insurance agents.

You can get a quotation from their website beforehand. When you call them, you already know what is the normal premium. You can ask for the discount. See if they give it to you.

You can enter "motor insurance" in Google search and see if you can locate any of these websites in Singapore.

Cost of investing

John Bogle said in his book, that an individual investing on his own incurs an average trading cost of 1.5% per year.

If he invests in a mutual fund, the total "all in" costs comes to 3% to 3.5% per year. This comprise of management fee, operating expenses, sales charges, brokerage commissions, spreads and market impact costs.

He advocates investing in an index fund, and holding it "forever". The cost reduces to less than 0.5% per annum.

The difference is very big, over a period of 10 or 20 years.

You can read his speeches in Bogle speeches

Planning a holiday at Gold Coast

I use Google search to look for "Gold Coast". It gave me a good idea about the different types of accommodation that are available and the prices. It also showed me the photos of the facilities. I will probably choose a high rise apartment with a view of the sea.

Success factors for NTUC Income

I have been invited by the Australian Friendly Society Association to speak at their conference and share the success factors of NTUC Income. The conference is in June.

They asked me to discuss the following:

* what sort of competition has NTUC Income faced?
* how does NTUC Income distinguish itself from its competitors?
* what are the primary values that drive NTUC Income's business?
* are these values important in driving the success of its business?
* how does NTUC Income engage its members (customers)?
* what part does the customers' involvement play in the success of NTUC Income?

I shall be covering some of these points in my blog.

The conference is held at the Gold Coast. I shall take a holiday there as well. It will be my first vacation in this wonderful part of the world.

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