Tan Kin Lian's Blog: Bonus restructure badly affected by the global crisis

Tuesday, February 03, 2009

Bonus restructure badly affected by the global crisis

Dear Mr, Tan Kin Lian,

I have two concerns about NTUC Income's bonus restructure enforced on policy holders effective last year, 2008.

First Concern
I have been paying about 11 years for an Income endowment policy. If I am not mistaken, my payout from NTUC Income at maturity date, 2011, will probably be badly affected by the recession. Had the bonus not been restructured in 2008, I would have a larger amount locked-in last year because the economy was bouyant in 2007 and the bonus for 2007 is distributed in 2008.

Second Concern
I think policyholders like me should have been allowed an opt out option last year when Income decided to restructure the bonus. This is because when I signed for my policy it was based on a different understanding of the bonus distribution. I have only two years more to pay my premiums so if I understood how my policy is affected by the bonus restructure, I should be allowed to opt out with no penalty. I find I cannot opt out now because of the financial penalty incurred, I have to continue my premium payments for this year and the next.

In conclusion, I expect my worst fears will be realised when I receive notification of downward revision on Income endowment policy after the end of Income's financial year.

I would like to hear from you. Thank you very much, your insights into these concerns I'm sure will be absolutely helpful.

REPLY
I agree with your views. I believe that NTUC Income should have allowed policyholders to make a choice to stay with the old bonus structure.

But the management and board was adament about their right to change the bonus structure and not to give this option. The chairman made a promise at last year's Annual General Meeting about the future bonuses. At that time, the promise was quite reasonable.

Subsequently, the global financial crisis came, and made the situation worse for policyholders - especially with the restructured bonus.

I suggest that you write to the chairman of the board of NTUC Income to express your views. You can also write to MAS.

31 comments:

Anonymous said...: I think your advice makes sense after Income policyholders receive their letters from Income. Then there is hard evidence. Policyholders should receive their letters sometime in April 2009 because the financial year closes on 31st March 2009.; February 03, 2009 3:42 PM
Anonymous said...: To spring a surprise and to allay your worst fear Income can 'smoothen' the bonus to look good by cooking the book.Then when the policyholders are lulled into complacency they release the bomb.
Even the mentally retarded knows that your special bonus got burned up last year.
Now in every body's mind is this burning question. Did the ntuc new management do the right thing? or it is a case of miss-judgment or incompetence?; February 03, 2009 4:41 PM
Anonymous said...: Your bonus went up in smoke last year. Some went to splurging on the agents, holidays, wine and dine in posh restuarants and others lost in the down turn. May have to dip into the 'reserve', policyholders' fund for a grand holiday at Gold Coast with the super duper or duping agents.This year's budget is a deficit budget to stimulate the agents to push harder their new product.; February 03, 2009 5:27 PM
Anonymous said...: Pure bloody incompetence. Mr Tan, when is your new insurance company coming up? We will all migrate there!; February 03, 2009 10:29 PM
Falcon said...: I have written to Lim Boon Heng and Lim Swee Say before on this. They merely referred the issue back to NTUC Income. The CEO did not even bother to reply, just arrow it to one of his deputies, who gave a standard reply. What we need is a strong political response, and it is not coming from the incumbent party. That is why I support Mr Tan Kin Lian to be our president as soon as possible.; February 04, 2009 2:50 AM
Anonymous said...: it has come out a new product called sail, again structured to confuse the the buyers.If you are appraoched , remember to scrutinise and cannibalise the product leaving no part unexamined. Most important to ask about the RISK, the BONUS and other conditions. It is NOT a low risk product in fact . Don't be caught by your manipulative agent.
If you have to take such high risk you are better off buying AXA's newly launched retirement product called GOLDEN SAVER for much higher return with guaranteed payouts.At least AXA's is transparent but not the SAIL. It is trying to disguise as low risk endowment but actually the risk is high. Ask a lot of questions on risk, guarantee, bonus, lock in at the accumulation and payout phases.
My conclusion is , the SAIL is NOT suitable for younger people below 50 years old. For young people go for GOLDEN SAVER.; February 04, 2009 9:20 AM
Anonymous said...: I was told NTUC lost more than $200m last year. Don't know how true it is.

If it is, then bonus cuts will continue. I was also told that the premiums for your Motor Insurance and Incomeshield insurance will be raised again.

Is that how they help their policyholders in time of crisis?
I wouldn't continue with them further.; February 04, 2009 9:30 AM
Anonymous said...: I hope they won't resort to Ponzi scheme to hide the losses.The increase in premium in motor only affect those with cars but majority if not all have incomeshield and the increase will see a mass exodus to CPF shield.
As cooperative under TKL we would be helped but as a social enterprise it will be a surprise; February 04, 2009 12:05 PM
Anonymous said...: My Problem is Exit with Minimal Loss to my endowment policy. I still have to pay premiums for 2009& 2010. Presently, what can I write to MAS about? I have no hard evidence. That is why I commented to wait for Income letter in April. If I write to MAS now, they will ask me how I heard Income lost $200 million last year, which I read in this Comments column? They want facts to investigate.; February 04, 2009 1:47 PM
Anonymous said...: Not surprised that it lost $200million. It could have saved some of the it if the bonus restructure was delayed or was not rushed in.
What the company can do is to smoothen this bad period with previous year's good performance and declare the bonus which it should and can because it is lower now. This will buy the company time to mull over and review the strategy.
Meantime. it is going to face a lot of demand for answers before the next AGM.; February 04, 2009 7:33 PM
Everlearning said...: In this economic environment, GIC spokesperson said that their investments are profitable. Then, why is the Government dipping into the reserves to save the economy? the public and private companies? with Jobs Credit Scheme!!! Reserves should go to the people and public projects!!!

Profits are untouchable but losses are just plainly paper losses! High risks get high returns but also high losses; but oftentimes the latter is not reiterated.

I have lost trust in NTUC Income. A better insurance company, to my experience is Manulife. Their approach is less aggressive and conservative.; February 05, 2009 7:39 AM
Anonymous said...: If people migrate to CPF shield, there is 100% chance CPF shield also increase premiums. In fact, please note how often Medishield premiums are revised. Some friends tell me they never benefit from paying their Medishield premiums. This is because co-insurance kicks in; so after faithfully paying Medishield premiums year after year, they still pay their hospital bills using own money.; February 05, 2009 12:14 PM
Anonymous said...: 12.14pm,
So, you are getting refund from your private shield?
Which shield has no co-insurance?
Get it right about insurance and co-insurance. It is people like you who want refund, claim every cent, no out of the pocket payment, are responsible for the premium increase.
If you want total claim of the bill , go buy one H&S private medical without co-insurance and pay 5 times your shield cost. Then this time you will be complaining about expensiveness. Cannot satisfy people like you..To avoid this try to be rich.; February 05, 2009 7:11 PM
Anonymous said...: Stop buying ntuc products to avoid the low bonus. The new product SAIL has no bonus after the 10th year.
Soon there will be no annual bonus for all their products and only special bonus which gives the company a free hand to do whatever they like, to splurge, to gamble, to pay themselves high salary and high bonus, to incentivize themselves , to dine and wine and pamper themselves with overseas trips etc etc.; February 05, 2009 8:29 PM
Anonymous said...: Why has NTUC degenerate to this level? I feel so sad for the people's choice of insurer :(; February 06, 2009 6:01 AM
Anonymous said...: The answer is ask the new management. It is social enterprise now and not a cooperative. Cooperative means thrifty; social enterprise means spendthrifty. So they started spending the moment they took over, from chairs to image and of course salaries.
Where does the money come from?
From own pockets?
Silly, you. It is from you!!!!
That is why they cut corners for your whole life , endowment and other scam products.. What happened to these products?? low protection.. low return... but high premium.
Do you know what you have bought?
I bet many if not none, do not know. It is because you trusted your agent glib tongue salesman that you have been taken a ride.
Don't believe you have taken a ride? See a qualified financial planner and you will be shocked by what they have sold you and you have been walking around with a bomb ticking. These people whom you bought are SALESMEN and not what the title they carry in their name card. They don't fit the title, very far...What do salesmen do? They sell anyhting under the sun; say and do anyhting under the sun with one aim in mind and that is top make money from you as much as possible. Whether the products are suitable to you is NEVER in their mind....
These are some of the reasons why the company and their agents are short changing you by covering up with a lot of rubbish additional benefits you see in their products.
You are right , their product SAIL has no more bonus or guarantee after the 10 years.After the 10 years it is up to them say anything, they can suka suka declare.; February 06, 2009 12:31 PM
Anonymous said...: it is not surprising that surrender of insurance policies has gone up in the last quarter. This is the just tip of the iceberg.The worst is yet to come this year.
Why is this happening? Could this be averted?
During bad time those who overly committed to insurance policies because they had been sold as saving plan and the insurance agents didn't do financial planning.
If there was financial planning this would not have happened because crisis like this would been provided for. On the hand if the agents did financial planning then these agents would not have made a lot of money because a responsible planner would put the interest of the cleints first and not salesmen or insurance agents.
The LIA spokesman who urged policyholders not to terminate is NOT addressing the real root cause.
In the first place if LIA members had correctly done proper training for their agents and have its own correct core values then in a downturn like this LIA has the moral credibility to advise policyholders to consider their own and family interest. Alas, the members and their agents are bunch of cheats and suffer from conflict of interest and both see the policyholders as providers of wealth and source of their greed.
This industry has indirectly contributed to the downturn.; February 06, 2009 7:35 PM
Anonymous said...: Many will be terminating their revosave this year. I propose that they demand a refund from the company for mis-selling before taking the agents to MAS. This is definitely a case of mis-selling and misrepresentation. Hong Lim Park will be buzzing soon; February 06, 2009 10:53 PM
Anonymous said...: I really dont understand why you people are so sour abt agents going for incentive trips given by the companies. Which insurances doesn't ?? There are some companies fly their agents and spouses on Business class and definitely not from NTUC Income.; February 08, 2009 12:25 PM
Anonymous said...: Any idea why people are terminating Revosave this year?; February 08, 2009 1:02 PM
Anonymous said...: Here's somethg abt health insurance. Some time ago I received flyer from a bank about health insurance with rebates if policyholder does not make any claims. This was followed up by a phone call explaining the policy. If policyholder can also use medisave to pay premium, I think it could be good. As I already have health insurance, I did not take up policy at that time. Those of you in pink of health might want to compare such a policy with other health insurance on market. I like this plan because it rewards people for staying healthy. Just use google search to do your preliminary investigation before you decide.; February 08, 2009 5:44 PM
Anonymous said...: 1.02PM,
people discovered that they had mis-sold and misrepresnted and that the product is screwed up product which doesn't help in bad time and in good time. Imagine you have to pay first before you can get back your own money and only after a year. What a stupid dumb idea is this? People need money now; some retrenched and this is the product must go first, right?; February 09, 2009 9:36 AM
Anonymous said...: February 08, 2009 12:25 PM,
incentives mean cost to the customers.They pay for your trips. The cost is added to the policy they buy and cost dilutes the protection and return. Insurance agents are driven by incentives and not by their desire to add value to the customers, instead they erode the value of the policies they buy. NTUC agents are no different. In fact they are worse. They drain and sour the value . These agents were not like this. They were not greedy. They have changed and have become greedy and adopted many of the 'market bad practices' like malpractices mis-selling and misrepresentation just for the trips. They become sales super dupers.; February 09, 2009 10:02 AM
Anonymous said...: 12.25PM,
but your production to qualify is done at the expense of your policyholders too, anyhow type. Why can't you be motivated by your passion to help your clients. Instead all of you are motivated by the money and trips and resulting in any oh how sales that border on mis-selling and misrepresentation. This is sad , The agents are getting greedy and unethical like the RMs of the banks motivated by the sight of huge amount of money that they disregard the interest of old folks . In ntuc the hard earned saving of the old folks was put into revosave misleading them into belief that they will receive a stream of decent income at miserable return. If the SAIL was around this should have been the product and not revosave. Why? commission from revosave is much higher. You dare to deny that there are no such malpractice? Did the management bother? No!!!... they care less, it is a sale to bolster the chance to capture the market share of #1.The company and the agents are in cahoot to fleece the cleints.; February 09, 2009 1:48 PM
Anonymous said...: 1.48PM,
even with the SAIL around you think they will recommend it? I doubt it very much. The commission for SAIL is low compared to Revosave.
The commission for SAIL is 1.5% of the single premium but the commission for REvosave is 40% of the annual regular premium. Imagine they managed to convince an old auntie or old uncle to pay regularly for Revosave with his the lump sum he has the commission is so much more .Example with a $150K broken up into 15 years ,each year pay $10K, the commission is $4000 compared to SAIL the commission is $1500.
Who suffers? the old uncle only gets 1.5% return whereas if he puts into SAIL the return is far more better.
You see how creative ntuc agents are . They know how to create opportunities for themselves.; February 09, 2009 7:58 PM
Anonymous said...: It is good time to take them to court for all these misselling and misrepresentation, both the company and the salesmen. I bet there will be lapses. Hope the buyers are awaken to the rubbish they bought.
Ntuc should be given the publicity they deserve although wrong doings.; February 10, 2009 8:55 AM
Anonymous said...: If motor insurance offers incentives to policyholders who are accident-free during their policy year, why can't health insurance give the same incentives to policyholders who are not hospitalised during their policy year? Many of you probably heard from friends who prefer to pay out of their own pocket for minor car expenses rather than put in claim to insurance company. They say insurance incentives give more money if they are accident-free. Therefore they are happy to pay our of their own pocket.; February 10, 2009 4:22 PM
Anonymous said...: During Mr. TanKL's time incomeshield offered no claim discount but not now with the new management.Probably, the discount goes to agents as commission to sell more. NTuc agents didn't want sell because of low commission although this product is so important to people but of course NOT important to agents. From this you can infer whether ntuc agents are greedy or not. They only sell you products that give them high commission and products that are good for you but not good for them they won't sell or recommend to you. This tells you how caring ntuc agents are. The truth is they care very much about your money.They will do anyhting, eat shit even, if they can sell you something that will earn them high commission.I am getting disgusting with them. They are not taught good values like Mr. TanKL's time.
No good upbringing.Poorly bred.; February 10, 2009 5:38 PM
Anonymous said...: all the good values gone when Mr. Tan Kin Lian left. Like the cooperative values, ethics, caring, sincerity, honesty,put clients' interest first, all the virtues also left . Now the values are all the means and ways to make more money, whatever ways and means agents can think of so long they bring in the sales. The management will close both eyes. The culture and values are make more money. Any way that brings in the sale is the right way.This is the belief statement; February 11, 2009 11:15 AM
Anonymous said...: cheating the client into buying revosave is also alright?
Whalow!!!cheating old folks and aunties of their life saving to buy revosave is considered helping them if not other insurance agents from other companies will cheat them too, must as well cheat them.; February 11, 2009 7:20 PM
Anonymous said...: which insurance company is not cutting on bonus? Your Bonus is smoothed every year to balance you throughout. You have guranteed $ and bonus return. Insurance is medium to long term investment after working so many years as some top...what are you talking about. Just sour about some loss??; July 03, 2009 12:05 PM

Tuesday, February 03, 2009

Bonus restructure badly affected by the global crisis

31 comments:

Blog Archive