Saturday, October 17, 2009

Dislike of CPF Life

I met a retiree. He expressed a strong dislike of CPF Life. He said that the four options are misleading. The Government said that there is a refund to the beneficiary on the death of the annuitant. He argued that if the annuitant lives long enough, there will be no further refund.

I disagree with his reasoning. He should not complain about the available of options or the fact that there is no refund, if the annuitant lives to an advanced age. But, he refuses to listen.

I am quite sad at the distrust of the Government expressed by this person. This distrust seems to be quite widespread. It is not justified in this particular instance about the CPF Life.

Tan Kin Lian

Wasteful reserving of parking spaces

It is wasteful to reserve parking spaces for season parking in HDB estates as many of the spaces are empty during the day time and visitors had a difficult time to find an empty space to park the car. Read here.

Confusing road names in Singapore

An American, who now lives in Singapore, found the road names to be confusing. Read her views here.

Financial planning - Practical Steps (draft 5a)

I have re-written the book to be more substantial in content. Draft 5a now contains 55 pages. It can be downloaded here.

Please give your feedback here.

Jobs in Life Insurance industry

Mr. Tan,
You have recommended people to buy Term insurance. If everyone takes your advice, will there be enough jobs for the people working in the life insurance industry?

Yes. There will be enough jobs - as many as there are now working in the industry. They will be providing a better quality of service to customers in financial planning and insurance. I shall talk about this matter in a separate article.

A confusing ILP product that gave poor yield

A policyholders send to me a benefit illustration of an investment linked policy. I was surprised to find the poor yield given to the policyholder. (Note: I have reduced the figures proportionately to below avoid the identification of the policyholder).

The policyholder pays $1,000 a month. At the end of 20 years, the accumulated premium (at the projected 9%) should have been $668,000. The projected non-guaranteed payout to the policyholder was only $280,000 (42% of $668,000). The effect of deduction was $388,000 (58%). More than half of the accumulated amount was taken away.

Based on the above figures, the actual yield to the policyholder was 1.5%. This is a reduction of 7.5% from the projected yield of 9%. Based on the lower projected yield of 5%, the net yield was 0.8% and the reduction was 4.2%. (I do not understand why the reduction in yield should be so far apart).

I asked the policyholder to call me, and to know what he understood about the product. He appeared to be quite confused about how it worked. He said that the adviser mentioned something about the saving component and the investment component which was not clear to him. He did not understand the effect of deduction.

He complained about the high distribution cost (of $24,000), which was not explained to him at the point of sale. I advised the policyholder to seek the assistance of FISCA ( to prepare a letter of complaint.

I cannot understand how such kind of product can be allowed to be sold to the public and how the insurance company can justify that it is offering "fair dealing outcome" to their customers, as required by MAS regulations.

Tan Kin Lian

Blow the whistle on hidden charges

Here is a letter by Su Kim Teck printed in the Strait Times.

I have written a reply to the Straits Times to address the key points in the letter. In this blog I will only touch on the point why I did not "blow the whistle" earlier on the hidden charges.

First, I wish to point out that this type of personal attack is not necessary for the debate. As the Straits Times found it appropriate to print it, I have to give my reply.

My explanation is:
a) I did raise this issue earlier, but they did not reach the public domain
b) It would not be appropriate for me to criticize the marketing methods of the other insurance companies openly
c) Perhaps NTUC Income was also involved in adopting some of the "market practice" at that time.

When NTUC Income introduced its investment linked policy during my time, it kept its upfront charges to a total of 45% of the annual premium (compared to 160% of most other insurance companies) and made it quite explicit. Another product was introduced that kept the charges to a fixed amount (at a rather modest level).

Tan Kin Lian

Understanding your benefit illustration

Here are the guides for consumers:
Investment-linked policy.
Participating policy

Trust in the Government

When governments state that certain events have not happened, and yet we have the victims before us to testify that they did, governments lose their and their credibility and authority.

We see before us today governments that lack the real authority that can only come from the support their people give them, and have to make up for that lack by the use of force.

They do not have the support of the people because they are not trusted by their own people. We hear many fine words seeking national unity, cooperation and harmony; yet, almost in the same breath orders are given to military units to shoot civilians, round up civilian protesters many of whom either simply disappear or are subject to inhumane torture.

Governments which govern by the use of force are able to remain in power by the use of force. And there is no going back because force begets force, and the perpetrators of crimes live in fear that they might become victims of their own evil deeds

Bishop Carlos Felipe Ximenes Belo
Reconciliation Speech of 24/2/99 at St Mary's Cathedral Hall, Sydney, NSW

Friday, October 16, 2009

Heavy penalty on single premium policy

I have seen the single premium whole life product issued by at least two large life insurance companies.

It is quite unfair for the insurance company to penalise the policyholder by 25% of the single premium on early termination and to take almost 10 years to reach the break-even point. The actual cost of the life insurance protection is quite low. There is no need for this heavy penalty.

I hope that the MAS will consider the fairness of this product. After all, they did ask the top management and board to be responsible for "fair dealing outcomes" for their policyholders.

I cannot stretch my imagination to believe that such terms can be considered to be fair. It may be legal, i.e. written in the contract under "caveat emptor", but it is not fair to impose such terms on unwary customers.

Tan Kin Lian

Illustration for my financial planning book

I need someone to put in some illustration for my financial planning book. I hope to get some voluntary service (which will be acknowledged) but I am also willing to pay a modest fee. Interested? Please send email to

Avoid defamation

I like to ask commenters to avoid statements that can be considered to be defamatory. Please avoid using specific names against commercial or government entities.

Be positive in your postings. Identify what is right, rather than focus on what is wrong. Avoid putting any person or organisation in a bad light.


From Wikipedia

Bullying is repeated acts over time that involves a real or perceived imbalance of power with the more powerful child or group attacking those who are less powerful. (U.S. Dept. of Justice, Fact Sheet #FS-200127)

Bullying can be verbal harassment, physical assault, or other more subtle methods of coercion such as manipulation. Bullying can be defined in many different ways.

Although the UK currently has no legal definition of bullying, some US states have laws against it. Bullying is usually done to coerce others by fear or threat. Bullying can be prevented when children are taught social skills to successfully interact with people. This will help them to be productive adults when interacting with bothersome people. Bullying in school and the workplace is also referred to as peer abuse.

In colloquial speech, bullying often describes a form of harassment perpetrated by an abuser who possesses more physical and/or social power and dominance than the victim. The victim of bullying is sometimes referred to as a target. The harassment can be verbal, physical and/or emotional.

Sometimes bullies will pick on people bigger or smaller than their size. Bullies hurt people verbally and physically.

Article about Profitable Group

Hi Mr. Tan
Why did you withdraw your blog? Are you a coward?
What are you going to do with the defamatory statements in the Profitable Group website that are attacking you personally? Will you sue them?
Did you do any research before you post the article?

My blog article was extracted from the Guardian website. Someone, presumably an investor, sent the article to me, requesting for it to be posted. I checked against the link and found that it was posted in the Guardian website.

Several of the statements refer to land banking in general and not specifically to Profitable Group. There were a few statements referring directly to Profitable Group but they looked quite factual to me. So, I posted the article in my blog.

When Profitable Group said that the article contained untruths, I removed it from my blog immediately. I also offered to post any correction that they wish to send to me. In particular, I asked for any correction that they sent to the Guardian article to be sent to me.

It is not a matter of cowardice. It is a matter of being fair. I do not hold any malice towards Profitable Group or any of its directors and do not wish to damage their reputation through any unintended mistake.

I have seen the statements made by Profitable Group in their website that do appear to attack me personally. I do not intend to take legal action against them for these statements. I will let the public make their own judgement about my character. Let the truth prevails. Let the facts speak for themselves.

Tan Kin Lian

Benefit Illustration - Single Premium Whole Life policy

A customer sent me a Benefit Illustration for a Single premium Whole Life policy. My analysis is shown here. It shows the key points that you need to see in the Benefit Illustration.

Hi Mr Tan,

Thanks you so much for the detailed analysis. I think a lot of people who bought insurance policy did not look deep into the details and think it through. I think your analysis is very detailed, step by step and easy to understand. I hope more readers can benefit from your experience and make informed decisions on their future financial planning.


I searched for the definition of "scam" in the internet. I was directed to this article on "fraud" in Wikipedia. Fraud is a criminal offense, and has to be prosecuted by the state. It is not a matter of "buyer's beware".

Fair treatment to all

I heard that some investors who were active in organising the class action on the credit linked notes had been offered more attractive terms of compensation than other investors in similar situations. They accepted the compensation and discontinued taking the lead in the class action.

I do not have the chance to verify the truth of this statement, as the terms of the settlement are covered under "non disclosure agreements". If this is true, then we have a situation where people are treated differently "for commercial reasons", according to their special position. Is this a new form of corruption?

In some countries, these allegations will be invested by the authority to ensure that there is fair treatment to all affected parties. I hope that our regulators in Singapore will be willing to take this step.

Tan Kin Lian

Thursday, October 15, 2009

Profitable Group

Here is a news posted by the Profitable Group under the title "Mr. Tan Kin Lian".

The source of my posting is from the Guardian website: Don't bank on this land for making a profit

I asked the lawyer of Profitable Group if they had written to the Guardian to correct the untruths. They have not replied to me.

Here are more information on this subject matter. You can make your own judgement.

Ponzi scheme

Some unregulated investment products promised a high return to the investors. The promoters pay the attractive return to the early investors by using the money invested by the subsequent investors.

The news spread about the attractive return. New investors joined in. The earlier investors rolled over their investments.

This is a classic ponzi scheme. It is being practiced now under various types of products - land plots, oil seeds, wine and other exotic products. As these investments are not regulated, the investors were not aware about the nature of the operations.

All ponzi schemes will collapse, sooner or later. Apart from the loss due to the attractive return paid to the earlier investors, the promoters of a ponzi scheme will siphon off a large part of the invested money. The accounts will be falsified to show a healthy position.

When the company is investigated and closed down, they will set up a new company with a new name, and find a new place to operate.

Singapore is an attractive place fro these promoters, due to the lack of regulatory control, and the gullibility of the small investors.

Investing in unregulated financial products

Be careful about investing in unregulated financial products. Someone, probably an investor who lost money, sent this message to me:

Please look-out for a "tonne" of investors who lost $$$... to company X selling UK & US land. They have been selling Oil Estates program similar to another Oil pods scheme. Now they have diverted to US land leaving the investors in the lurch. Many of the investors still unaware of what hit them...have you heard about them?

This company were under investigation by the Financial Services Authority of the UK under the name Y but they changed their name now to X.

Benefit illustration of life insurance products

I wish to have some benefit illustrations of the life insurance products that are now being sold. I will analyse them, but will not disclose your identity. Please scan and send them to

Health care reform in USA

How much will it cost? Read this report.

Wednesday, October 14, 2009

Truth in advertising

It is illegal to deceive people, even in blogs. Read this article about the law in USA.

Personal experience on land banking

If you have made any investment in land banking products in past years, and have made a profit or loss, please share your personal experience. You can write to me at I will not quote you by name, unless you wish to be identified.

In your story, please state the representations that were made to you which led to your decision. Indicate if these representations turned out to be true or were misleading, and if you have evidence to support the representations. If the representations were made verbally, you can check with other attendees who heard the same representations and ask them to verify your statement.

If you have made a gain from the investment, please send your story to me too. I like to hear the good and bad angles of land banking.

Tan Kin Lian

Lawyers should uphold truth and justice

There is a letter printed in a newspaper from a blogger who made a honest opinion about the quality of food in a restaurant. She received a letter from a lawyer acting from the restaurant, asking for the blog to be removed or face the threat of legal action for defamation.

Is it proper for the lawyer to make such a threat? Has the lawyer already established that there were grounds for a defamatory action? Does the lawyer have a duty to advice the client on the difference between an honest opinion and a malicious intent?

If the lawyer does not have valid grounds and make such a threat to frighten the blogger, does it constitute "bullying"? Is it legal? Is the legal profession required by their ethics to uphold truth and justice, and avoid the abuse of the legal process?

I shall be asking the views of the Law Society on this matter. I will see if there is grounds for a complaint to be lodged against the lawyer for unethical behavior.

Tan Kin Lian

Wasteful competition

Singapore can give a good case study about wasteful competition. Some examples to be studied are:

a) Multiple set-top boxes to watch different pay TV channels
b) Multiple cash cards for travel and merchants
c) Public transport operated by two large operators

The competition led to duplication and waste. Consumers are inconvenienced. Merchants are not willing to accept the new mode of cashless payments, due to the need to install multiple gadgets. The public transport network is not convenient for consumers, especially the last mile.

There is a case for these functions provided by the state or by a regulated monopoly. Some countries adopt the concept of regulated monopoly, which can work well under proper management.

Conversation with a German resident

I had a conversation with a Malaysian who married a German and had raised two children in Germany. She told me the following:

a) Germany now has a 35 hour week.
b) Her boys had to do compulsory military service or community service, but the duration is less than one year.
c) They are paid above minimum wage for the compulsory service. They enjoy it, as they have the chance to learn and travel.

I have not verified the facts. I hope that someone who is familiar with the situation can provide an update.

Tuesday, October 13, 2009

Unfair business practices

Have you come across any unfair business practice, e.g. excessive charge, hidden fees, non-transparency, onerous penalty. Give details in this survey.

PayTV to carry all channels

Printed in MyPaper on 13 October


I refer to the letter entitled “MDA asked for sports package pricing clarity” (MyPaper 12 Oct 09).

I hope that the Media Development Authority (MDA) should address this issue from a broader perspective. It is wasteful and inconvenient for consumers to have two set top boxes and wirings in their home to receive content from two separate PayTV operators.

MDA should the PayTV operator to deliver the content of any provider at a regulated charge for the delivery of the content. The regulator should disallow the PayTV operator to adopt predatory pricing or other restrictions to block out the content of their competitors.

The consumer should be allowed to choose any PayTV operator (i.e. Starhub or SingTel) and have access to all available contents. This will allow competition to work at its best, to reduce cost and increase choice for consumers.

Tan Kin Lian

Speed and control sensors of an automated car

What is the ideal speed of an automated car? What are its control sensors? Read this blog.

Invest in STI ETF

Last year, my wife asked for my views on the shares to invest in. Previously, she kept her money in fixed deposits, but interest rate had dropped to below 1% for a few years already. The banks sold her a few structured products over the past years that gave a very poor return. e.g. 2% for 5 years, but fortunately her principal was intact.

I advised her to invest in the STI ETF. This is an exchange traded fund that is invested in the component stocks of the ST Index. It is a large, well diversified fund with low cost.

Her friends advised her to invest in some of the hot stocks that have higher liquidity and market interest. Fortunately, she took my advice.

For a while, the STI ETF lost money due to the market collapse earlier this year. I advised her not to worry, as it is a long term investment.

Recently, she told me that the STI ETF had made a large profit for her. The gain must be more than 30% over the past year. This was the best performing share among the few shares that she held.

Some people complained that there is not much liquidity in the STI ETF. For most ordinary investors who are investing for the long term, the liquidity is sufficient. The fund manager will create more units if there is demand.

Views of an unemployed, mature worker

Dear Mr. Tan,
I want to thank you for speaking out for the unemployed people, especially those who are in their middle aged and are unfortunate to be retrenched. I am one of these people. I worked for more than 10 years in a foreign company who decided two years ago, to relocate to China.

It was a big shock to me. I had all along thought that I had a steady job with a large company. But, life is so unpredictable now.

At first, I thought that it would be not difficult for me to find a similar job. After all, I worked hard and had kept up to date with technology. I also had accumulated a wealth of experience that could be applied to other manufacturing companies.

This was not the case. I had difficulty in finding another job, even though I was prepared to take a 50% reduction in salary. Somehow, things do not work out. The human resource managers probably felt that I would not stay long with a big reduction in salary. I never got the chance.

Fortunately, I had some savings, so I am not in debt. But I had to cut down on my expenses drastically, including giving up my car. But, the rejection of my countless applications for a job was difficult to take at first. By now, I got used to being rejected and declined.

It is quite unkind of people to pass remarks that the unemployed are unskilled and not hardworking. This may be true for some people, but it is not true for many others, such as me. When I was younger and during good times, I always had the confidence that I could always have a job, with my skill and education. But not any more.

For people posting unkind remarks, I can only say, "your time will come". Only then will you realise why people like Mr. Tan is asking for employment practices to be changed and for the available work to be shared fairly among the willing workers. There is no point in having people with jobs working long hours, neglecting their families, while other people are unemployed.

Mr. Tan, thank you for suggesting this idea of sharing job opportunities. I hope that the leaders will pay attention to it. It is a good idea.

Presentation on Shape Quiz

View this short presentation.

Order here

Experiences with Land Banking

5 people responded to my survey about their experience with land banking. The results are shown here:







No update from company regarding the investment.




Matured but yet to receive the returns




Supposed to be 5 yrs investment but now
they say its 5 to 8 yrs




Company rejected my option to surrender the plot back to them.




Did not deliver on promises

Hidden charges in Investment-linked policies

Read my letter published in the Straits Times.

I call on insurance companies to be transparent in their charges to commuters and not hide them from customers. If the charges are too high, they should reduce the charges and give better value to their customers.

Driver-less taxis

Here are some further comments on the driver-less taxi service to provide local transport within 3 km.

Advice from an insurance CEO

I met many senior insurance managers at an Asean Insurance Conference in Vientiane, Laos.

One participant, who is a CEO, told me that he advised his friends and family members to buy Term insurance for the insurance cover. He advised them to avoid insurance products as investments, as they get a poor return.

He wished that it was possible for his company to sell better value products, but after providing for the high commission to the agents, this was not possible. He was not able to develop a new sales channel to replace the agents.

Monday, October 12, 2009

Earn an income by selling my puzzle books

A few people are able to earn a good income by selling my puzzle books. Details of my books are found here. They sell the books by teaching people how to solve the puzzles. If you are interested to try, send an e-mail to The unsold books can be returned for a full refund.

Fair Dealing Outcome for Customers

I wish to post this article as a reminder to MAS and the financial institutions that they have the responsibility to ensure fair dealing outcome for customers. These should not be just hollow words, but should be pursued with conviction.

MAS calls on banks, finance companies to lead in fair dealing

Thu, Feb 21, 2008
The Straits Times

THE MONETARY Authority of Singapore (MAS) has called on the board and senior management of firms from the banking, insurance and capital market sectors to lead their companies to improve the level of service offered by their representatives.

MAS issued a consultation paper on Thursday, stressing the responsibility of such top-level individuals, and also asking them to review their business operations to deliver what the authority calls 'fair dealing outcomes' to retail consumers. MAS has issued five 'fair dealing outcomes'.

One such fair dealing outcome is that consumers have confidence that the financial institutions put consumers' interests first in the conduct of their business.

MAS encourages financial advisory industry assocations to actively promote fair dealing outcomes among member firms.

Interested parties can provide feedback on the guidelines, which are available on the MAS website.

Battle of PayTV Operators

SingTel has announced attractive packages for the football channels that are lower than the current packages offered by Starhub. But it does not solve the underlying probelm.

The two PayTV operators (i.e. SingTel and Starhub) cannot expect consumers to have two set top boxes (even if they are provided free) and two sets of wiring in the home. It is also inconvenient to switch between set top boxes.

I suggest that the Media Development Authority should intervene in in the interest of efficiency, reduce waste, and looking after the interest of consumers and introduce the following measures:

a) Allow the customer to choose a delivery channel, i.e. SingTel or Starhub
b) Require the delivery channel to carry the third party content channels at their content rates plus an additional charge (which should be regulated).

For example, an existing consumer with Starhub as the delivery channel should be allowed to watch the football channels at a regulated rate, which could be the same rate charged by SingTel plus an additional charge.

Tan Kin Lian

Reduce unemployment

Shin Min and Sunday Times have covered my suggestion, posted in this blog, to promote flexible work by paying an hourly rate (instead of a monthly salary)

The key thrust of my proposal is to create employment for school leavers and for people who lose their jobs due to restructuring and other reasons beyond their control.

If a company employs 1,000 people working 40 hours a week, they can employ an additional 100 people, if each person works 36 hours a week. A person working less hours will earn less based on the hourly rate, but at least more people can be employed. This is fairer than having 10% of the people being jobless.

Working 36 hours a week means more time for the family, for hobbies, for continuing education and for leisure. Those who wish to have a supplementary income can continue to have part time work, e.g. provide tuition or other service. It diversifies their sources of income, and will not affect them badly if they should get retrenched.

Under the hourly rate system, there is no need for people to work longer hours, without overtime pay, just to impress the employer and keep their full time job.

There is a need to ensure that the hourly rate of pay provides long term security for employees. I shall address this point in a separate article.

Tan Kin Lian

Sunday, October 11, 2009

RED Portal (18) - Do your research

My friend bought a cluster house at an attractive price recently. The market price has since moved up.

She was able to get the good price due to the time that was spent in carrying out research. She looked at the comparable price for landed property in the target vicinity. When the opportunity comes, she and her husband was able to make a decision quite quickly.

Apart from getting a good price, the cluster house is suitable for their needs, considering the workplace of the spouses, future schools for their children, and their lifestyle needs.

For people who are spending more than $1 million for a private house or condominium, it is important to carry out the research early and study the market for a few months.

Do not act when a property agent bring an offer to you and tell you that it is a good offer. The agent probably tells the same story to many other potential buyers, who have rejected the offer.

To carry out your research, you can study the property websites in Singapore. Look for actual transactions, rather than the properties that are listed for sale (as they are likely to be inflated).

I have created the RED Portal to offer this information to potential buyers. It is also useful for sellers to get to know the market, so that they do not underprice their property. Please tell your friend about the RED Portal.

Tan Kin Lian

Pay the right price for insurance

If you are offered an insurance product and there is no comparable products to compare the cost quoted to you, you can take the following approach:

a) Ask the adviser to get the insurer to disclose the claim to premium ratio for the product
b) If the ratio is 60% or higher, the product is fairly priced

In the competitive product for motor and health insurance, the claim ratio is usually 70% or higher. However, some health insurance products have a claim ratio less than 50%, as they are designed to make it difficult for customers to compare the price.

The insurer is able to disclose this information based on the past claim experience for that product. For a new product, they can state the assumptions used in the calculation. Ask for the information to be stated in writing.

If the insurer refuses to disclose the information, you should not buy the product - as the product is likely to be highly priced to generate a high profit margin.

This approach applies for an insurance product that offers pure protection, i.e. without any savings.

In the case of a savings product, a good method is to calculate the reduction in yield. If the reduction is 1% or lower, it is fairly priced. The cost of insurance can be computed separately. If the reduction is higher than 1%, the product is not fairly priced and should be avoided.

Tan Kin Lian

Remembering Seng Guat Neo

I went to the wake of Seng Guat Neo, who passed away recently due to a sudden illness. I knew her for about 25 years; she was active in selling insurance for NTUC Income as a part time organiser, and was the President of the Summit Club for many years.

Mdm Seng, as she is popularly known, is passionate about helping people to buy insurance to get protection for their family and to get an attractive return on their savings for the future. She worked extremely hard and was not deterred by the low rate of commission paid to her for her efforts, so that her clients can enjoy good value from the insurance policies. Many of her clients were doctors and nurses working in her workplace. She served them over the years through her personal service and care.

I met her husband and daughter. We recalled the values of the old days where the welfare of the policyholders was the driving force that make many people like Mdm Seng worked so hard.

I met another long time organiser at the wake. He disliked the new products that were introduced recently, as the premiums were higher and the policies provided a poor return to the policyholders. He will only sell the products that give a fair return to the policyholders, such as the single premium products. He believed in placing the interest of his clients above his own personal interest. He has reduced his selling activities considerably in recent years.

Tan Kin Lian

President Obama pushes for Financial Reform

Dear Mr. Tan,

The President pushes for one of the pillars of his new economic foundation: reforming our financial system to look out for consumers, not just banks.

I admire how the American's strong showing in protecting consumers. Obama openly pointed how consumers, even CPA certified, got "cheated" by the financial institutions' pages and pages of fine prints, unfair rates hikes, unfair dealings, etc.

Obama said

  • He do not want them to compete by figuring out how much they can fool ordinary Americans.

  • The Financial Consumer Protection Agency is not for big banks, financial firms, but for hardworking Americans.
President Obama Pushes for Financial Reform

Kudos to the Obama Administration!

Fixed and variable annuities

This article explains the concept of fixed and variable annuities.

Squeeze on the middle class

The middle class is being squeezed by stagnant income and higher expenses. This report refers to the situation in America. It applies to Singapore as well, except that both the middle and lower income classes are being squeezed.

This is caused by the widening income gap, brought about by deregulation, globalisation and the free market. This is bad for the future of society.

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