Mr. Tan
I met with a small accident with a motor cyclist two years ago. The insurance company did not pay any claim to the motorist but kept a reserve of $3,000 in case there is claim for medical expenses. They reduced by NCD from 50% to 20% and my revised premium jumped from $1,000 to $1,800, which I consider to be quite high.
Almost two years have passed and the motor cyclist has still not submitted a claim. How long will they keep the reserve and penalize me on the NCD? Why should the motor cyclist take so long to submit a claim? If there is no claim, should the insurance company refund the difference in premium to me?
REPLY
It is not fair for the insurance company to penalize you by reducing the NCD when they have not paid any claim. You should ask the insurance company to allow you the full NCD (and give you a refund on the difference in premium for the past year). If a claim actually materialize, they can impose the reduction in NCD at that time. I think that the insurance company should adopt my proposed approach, as it would be fairer to the consumer.
Saturday, July 31, 2010
Residual market for motor insurance
Published in St Times
Madam Phyllis Oh ('Insurance dilemma when repairs are costly'; July 10) found it difficult to obtain renewal of her client's motor insurance.
In America, there is a system of the 'residual market'. The purpose is to make insurance available without giving too much hassle to motorists who cannot get cover from the free market. The residual market is managed by an underwriter and the results are shared by all the licensed insurance companies.
I suggest the Monetary Authority of Singapore or the General Insurance Association consider the feasibility of introducing this concept in Singapore.
Tan Kin Lian
Financial sector and profits
The financial industry is making too much money at the expense of ordinary people. This article explains why you should invested in a low cost indexed fund, or an exchange traded fund, like the STI ETF. Don't pay high fees for actively managed mutual funds or unit trust. The average expense ratio in USA is 0.81%, which the article considered to be high. In Singapore, most funds have expense ratio of 2% to 3%. Imagine how much considers in Singapore are being charged !!!
Land banking
A month ago, a land banking company invited me to visit their office, so that they can educate me on the merits of their type of investment. I have always declined invitations to attend talks on land banking and would be reluctant to waste my time to be brainwashed, in the interest of education.
I replied that I would spend 2 hours if they make a donation of $1,000 to FISCA (Financial Services Consumer Association). I never heard from them again.
I replied that I would spend 2 hours if they make a donation of $1,000 to FISCA (Financial Services Consumer Association). I never heard from them again.
Singapore GDP
Read this article.
My view
In the past, Singaporeans rejoice when the economy performs well. The reaction now is quite different - people do not feel that the GDP growth has benefited them.
My view
In the past, Singaporeans rejoice when the economy performs well. The reaction now is quite different - people do not feel that the GDP growth has benefited them.
Pay a fee for advice
A reader sent 10 benefit illustrations from two insurance companies and asked me to analyse them, and recommend which plan offers the best value. I replied to ask if he is willing to donate $50 for each benefit illustration that I analyse. I never heard from him.
The insurance agent who sent prepared the computerized benefit illustration will earn a few hundred or thousand dollars from the consumer. The agent should be the person who spends the time to explain and guide the consumer to make the right choice. It would be unfair for the consumer to expect Mr. Tan to spend the time to read 10 benefit illustrations and give advice for free.
The insurance agent who sent prepared the computerized benefit illustration will earn a few hundred or thousand dollars from the consumer. The agent should be the person who spends the time to explain and guide the consumer to make the right choice. It would be unfair for the consumer to expect Mr. Tan to spend the time to read 10 benefit illustrations and give advice for free.
Late submission of motor claim
Hi Mr Tan,
Eight months ago, I was involved in a car accident with a van, causing damage to my front wheel. I repaired it for $1,500 in a auto workshop and submitted a claim against the insurer of the other party.
I just received a call from my insurer, telling me that the van is now making a claim against me for $3500.
1) Is it legal to make a claim after so many months? It is incredible to think that he is driving around for 8 months and suddenly needs repair done (and quite serious repair for a total sum of $3500).
2) I was told by my insurance company that my NCD will drop from 50% to 20% due to my claim against th other insurer. Why is this so? If claiming against the other party results in the loss of my NCD, then in every accident, shouldn't those involved just claim against their own insurer? They have nothing to gain by not claiming against their own insurance.
Jennifer
REPLY
1) The other party can make the claim late but you (or your insurer) can reject it. It is for them to prove the the damage were caused by you. You can deny that you were responsible for the damages. It would be difficult for the other party to prove that you caused the damages, after a lapse of 8 months. I hope that your insurance company will help you to reject this unjustified, late claim.
2) If you make a claim against the other party, your NCD will not be affected. Your NCD is affected only if you claim against your own insurance company, or you ask your insurance company to make the third party claim. The claims staff of your insurance company is giving you the wrong information. You should ask them give a reply to you in writing about this matter.
Eight months ago, I was involved in a car accident with a van, causing damage to my front wheel. I repaired it for $1,500 in a auto workshop and submitted a claim against the insurer of the other party.
I just received a call from my insurer, telling me that the van is now making a claim against me for $3500.
1) Is it legal to make a claim after so many months? It is incredible to think that he is driving around for 8 months and suddenly needs repair done (and quite serious repair for a total sum of $3500).
2) I was told by my insurance company that my NCD will drop from 50% to 20% due to my claim against th other insurer. Why is this so? If claiming against the other party results in the loss of my NCD, then in every accident, shouldn't those involved just claim against their own insurer? They have nothing to gain by not claiming against their own insurance.
Jennifer
REPLY
1) The other party can make the claim late but you (or your insurer) can reject it. It is for them to prove the the damage were caused by you. You can deny that you were responsible for the damages. It would be difficult for the other party to prove that you caused the damages, after a lapse of 8 months. I hope that your insurance company will help you to reject this unjustified, late claim.
2) If you make a claim against the other party, your NCD will not be affected. Your NCD is affected only if you claim against your own insurance company, or you ask your insurance company to make the third party claim. The claims staff of your insurance company is giving you the wrong information. You should ask them give a reply to you in writing about this matter.
Invest in unit trust
I have written a FAQ on how a unit trust operates and what to look for when you invest in a unit trust. Go to my website and search for the keyword "Unit Trust".
www.tankinlian.com
www.tankinlian.com
Friday, July 30, 2010
Job training and jobs
Read this letter.
My view
Singapore is giving a lot of emphasis on job training. It creates jobs for the trainers, but does not find employment for the trainees, who remain unemployed. It is better to provide job subsidy for recruitment of the unemployed (similar to the Job Credit scheme, which is now being phased out). The subsidy can be for the older people, who now find it difficult to get employment.
My view
Singapore is giving a lot of emphasis on job training. It creates jobs for the trainers, but does not find employment for the trainees, who remain unemployed. It is better to provide job subsidy for recruitment of the unemployed (similar to the Job Credit scheme, which is now being phased out). The subsidy can be for the older people, who now find it difficult to get employment.
Promotion on TKL books
The promotion will end tomorrow midnight (31 July 2010). To enjoy the lower price, order now.
FAQ Investment Linked Policy
Many consumers are confused with an investment-linked policy (ILP). I have explained the key features of this policy in a FAQ in my website, www.tankinlian.com. Search for "Investment-linked Policy".
TKL Website - change name of document
Dear Mr. Tan
I like the design of your website, especially as it allows me to download a document to read later. I can also send it by e-mail to a friend. However, I saw that the saved file does not have a descriptive title, and will only show a number. Can you use the title of the document as the file name?
REPLY
A few people have made the same request. I checked with my developer, but he explained that it would take a lot of work and the database has to be restructured. I already have a lot of documents stored in the database and wish to avoid this tedious work.
I suggest that you can rename the file before it is actually saved. Your browser will ask you for the name, so you can type in the title. You can even change it to suit your own naming style. I hope that this works for you. It will be quite convenient after you get used to it.
www.tankinlian.com
I like the design of your website, especially as it allows me to download a document to read later. I can also send it by e-mail to a friend. However, I saw that the saved file does not have a descriptive title, and will only show a number. Can you use the title of the document as the file name?
REPLY
A few people have made the same request. I checked with my developer, but he explained that it would take a lot of work and the database has to be restructured. I already have a lot of documents stored in the database and wish to avoid this tedious work.
I suggest that you can rename the file before it is actually saved. Your browser will ask you for the name, so you can type in the title. You can even change it to suit your own naming style. I hope that this works for you. It will be quite convenient after you get used to it.
www.tankinlian.com
Investing in gold
Mr. Tan,
My friend approached me to invest in gold. I pay a price for the gold bar and am allowed to keep the gold. I can sell back the goal at a guaranteed price and earn an attractive rate of return. Is this a good investment?
Bob
REPLY
You are probably required to pay for the gold at a much higher price than the market price. When the time comes for you to sell back the gold bar, you will probably not find the seller. At that time, you have to hold the gold bar at an inflated price, i.e. the actual price is lower than the amount that you have invested.
Remember this message: whenever someone comes to market an investment product to you, you have to be careful. It is likely to be a scam, even though the seller may be your friend and your friend may not be aware of the scam. Read my article on "Marketed Financial Products" which can be found in www.tankinlian.com (click on Information and enter the search word "Marketed".
www.tankinlian.com
My friend approached me to invest in gold. I pay a price for the gold bar and am allowed to keep the gold. I can sell back the goal at a guaranteed price and earn an attractive rate of return. Is this a good investment?
Bob
REPLY
You are probably required to pay for the gold at a much higher price than the market price. When the time comes for you to sell back the gold bar, you will probably not find the seller. At that time, you have to hold the gold bar at an inflated price, i.e. the actual price is lower than the amount that you have invested.
Remember this message: whenever someone comes to market an investment product to you, you have to be careful. It is likely to be a scam, even though the seller may be your friend and your friend may not be aware of the scam. Read my article on "Marketed Financial Products" which can be found in www.tankinlian.com (click on Information and enter the search word "Marketed".
www.tankinlian.com
Act of God
Hi Mr Tan
MM Lee attributed the recent floods in Singapore to "an act of God" and said that no amount of engineering can prevent flooding....
While Chairman Mao pledged that the Chinese would be able to bend nature to their will, our MM thinks that no amount of engineering can prevent flooding in Singapore as they are "acts of God"....
Lu Xun, one of the great thinkers of the democratic May 4th Movement in the first decades of the 20th century, made a famous attack on the then ruling elite for issuing telegrams that blamed God for the woes befalling China. Lu quipped, "God replied in dismay: 'But I wasn't even there!'”
Read http://de-leviathan.blogspot.com/
C H Yak
MM Lee attributed the recent floods in Singapore to "an act of God" and said that no amount of engineering can prevent flooding....
While Chairman Mao pledged that the Chinese would be able to bend nature to their will, our MM thinks that no amount of engineering can prevent flooding in Singapore as they are "acts of God"....
Lu Xun, one of the great thinkers of the democratic May 4th Movement in the first decades of the 20th century, made a famous attack on the then ruling elite for issuing telegrams that blamed God for the woes befalling China. Lu quipped, "God replied in dismay: 'But I wasn't even there!'”
Read http://de-leviathan.blogspot.com/
C H Yak
Thursday, July 29, 2010
Excessive deduction on investment-linked policy
Hi Mr Tan
I read about your explanation about Benefit Illustration and Effect of Deduction. I did a calculation on my investment-linked policy and found that the effect at the end of 40 years is 67%!
I am not sure my calculation is correct, would you help me out here? There was no mention of guaranteed cash value in the policy.
REPLY
I usually look at the effect of deduction for 25 years (rather than 40 years). Here are the figures taken from your benefit illustration.
At the assumed yield of 9%, the effect of deduction of $65,000 represents 55% of the value of accumulated premium of $118,000. At the assumed yield of 5%, the effect of deduction represents 52% of the accumulated premiums.
The effect of deduction of 52% to 55% is extremely high for a 25 year duration. In most other benefit illustrations , they are around 35% (which is already too high). In my book on financial planning, I advised that the effect of deduction for 25 years should NOT exceed 20%.
The cash value is NOT guaranteed as this is an investment linked policy. There is no guarantee on the maturity benefit or cash value.
I do not understand why this policy should take away so much from the policyholders. Clearly this is excessive, amounting to a rip-off of the trusting consumer.
There is additional premium payable for the riders. I do not know if the premium rates for these covers are too high. But they have to be paid for separately.
Please consider this suggestion: write a strong letter to complain to MAS for this type of excessive deduction. It does not seem right for consumers to be given such a poor deal.
Practical Guide on Financial Planning
I read about your explanation about Benefit Illustration and Effect of Deduction. I did a calculation on my investment-linked policy and found that the effect at the end of 40 years is 67%!
I am not sure my calculation is correct, would you help me out here? There was no mention of guaranteed cash value in the policy.
REPLY
I usually look at the effect of deduction for 25 years (rather than 40 years). Here are the figures taken from your benefit illustration.
At the assumed yield of 9%, the effect of deduction of $65,000 represents 55% of the value of accumulated premium of $118,000. At the assumed yield of 5%, the effect of deduction represents 52% of the accumulated premiums.
The effect of deduction of 52% to 55% is extremely high for a 25 year duration. In most other benefit illustrations , they are around 35% (which is already too high). In my book on financial planning, I advised that the effect of deduction for 25 years should NOT exceed 20%.
The cash value is NOT guaranteed as this is an investment linked policy. There is no guarantee on the maturity benefit or cash value.
I do not understand why this policy should take away so much from the policyholders. Clearly this is excessive, amounting to a rip-off of the trusting consumer.
There is additional premium payable for the riders. I do not know if the premium rates for these covers are too high. But they have to be paid for separately.
Please consider this suggestion: write a strong letter to complain to MAS for this type of excessive deduction. It does not seem right for consumers to be given such a poor deal.
Practical Guide on Financial Planning
FISCA course - Investing for the Long Term
www.fisca.sg
FISCA will be organising a course, "Investing for the Long Term" from August (tentative). It will cover the following topics:
FISCA will be organising a course, "Investing for the Long Term" from August (tentative). It will cover the following topics:
- Principles of long term investing, compounding and dollar cost averaging
- Earn a better yield by investing in equities
- Reduce risk by investing for the long term in a low cost, diversified fund
- How to access information from the SGX website
- How to get information about ETFs, REITS and blue chip shares (with high dividend yield)
- How to open an account with a stockbroker (using a remisier or an online account)
- Expenses of investing
There will be practical exercises and a question & answer session.
More details will be available soon in the FISCA website. If you are interested, please register your particulars in this survey now.
No retirement age
Mr. Lee Kuan Yew said that old people should continue to work. He quoted himself as an example.
My view
If old people in Singapore can earn $3 million a year, they would not mind working until they are 100 years old!
Here is another person's view.
My view
If old people in Singapore can earn $3 million a year, they would not mind working until they are 100 years old!
Here is another person's view.
Discharge of Personal Guarantee
Read this story about the trouble given to a consumer to get a discharge of a personal guarantee given to a bank.
My view
Many financial institutions are so engrossed in making profits that they forget about the hassle faced by their customers when they neglect to take steps to relief the customers of the liability under a personal guarantee.
My view
Many financial institutions are so engrossed in making profits that they forget about the hassle faced by their customers when they neglect to take steps to relief the customers of the liability under a personal guarantee.
Pyramid scheme
Read this story.
My view
The authority in Malaysia is more active in taking early action to prevent investment fraud and scams. In Singapore, we face shortage of manpower in the law enforcement agencies - and some people say that they are focusing on the wrong priorities.
My view
The authority in Malaysia is more active in taking early action to prevent investment fraud and scams. In Singapore, we face shortage of manpower in the law enforcement agencies - and some people say that they are focusing on the wrong priorities.
A bloated financial sector
I heard a discussion over CNBC. A guest commentator remarked that 25% of the US economy is in the financial sector that does not produce anything. This explains why the economic situation is so bad in the USA.
My view
Actually, the situation is bad in many countries, including Singapore. The finance sector is too big, and is distorting the rest of the economy. Who wants to do the real work, when it is easy to make money by inflating the price of shares and properties? This is similar to operating a bad casino - easy to make money by pandering to the greed and gambling habits of the people. The biggest winners are the operators of the casino - i.e. the big tycoons in the financial sector.
My view
Actually, the situation is bad in many countries, including Singapore. The finance sector is too big, and is distorting the rest of the economy. Who wants to do the real work, when it is easy to make money by inflating the price of shares and properties? This is similar to operating a bad casino - easy to make money by pandering to the greed and gambling habits of the people. The biggest winners are the operators of the casino - i.e. the big tycoons in the financial sector.
Theft of motor vehicles
The situation is quite bad in Malaysia with almost 9,000 vehicles stolen in 2009. Read this report.
Slow response to an accident
Read this letter. The ambulance took 30 minutes and the police took 45 minutes to arrive at the scene of the accident.
My view
There is a shortage of manpower in the Police and the emergency services. Too many people want to join the banking and financial sector (for the high pay) and too few wants to do the ground work. The traffic congestion in Singapore adds to this situation.
Singapore is now heading in the wrong direction and things will get worse, unless the top people wake up and listen to the people on the ground.
My view
There is a shortage of manpower in the Police and the emergency services. Too many people want to join the banking and financial sector (for the high pay) and too few wants to do the ground work. The traffic congestion in Singapore adds to this situation.
Singapore is now heading in the wrong direction and things will get worse, unless the top people wake up and listen to the people on the ground.
Car Pools
I am developing a service to help people to car pool. It will be placed in the Easysearch portal, i.e. www.easysearch.sg. Are there already existing car pooling sites in Singapore that are well used? What do you like to see in this new website? Please give your comments here or send your views to kinlian@gmail.com.
Update
I checked Google and and saw many car pool sites in Singapore. See
http://www.google.com/search?q=car+pools+singapore&rls=com.microsoft:en-US:{referrer:source?}&ie=UTF-8&oe=UTF-8&sourceid=ie7&rlz=1I7ADBR
However, they do not seem to organise the car pooling by sector. I will use postal code to identify people who live or work close to each other. This will help them to search each other person better.
Update
I checked Google and and saw many car pool sites in Singapore. See
http://www.google.com/search?q=car+pools+singapore&rls=com.microsoft:en-US:{referrer:source?}&ie=UTF-8&oe=UTF-8&sourceid=ie7&rlz=1I7ADBR
However, they do not seem to organise the car pooling by sector. I will use postal code to identify people who live or work close to each other. This will help them to search each other person better.
Invest for the Long Term
I have given some tips on how you can choose suitable shares or funds to invest for the long term, when you decide to handle your own investment, instead of getting a low yield for your savings in an insurance policy.
Go to www.tankinlian.com, click on "Ask Mr. Tan" and search for "Invest for the Long Term".
Motor insurance - get lower premium
Mr. Tan,
I just got my renewal for my motor policy. You know what - the premium increased by more than 15% and I did not even make any claim. I called the insurance company and they were arrogant - like take it or leave it. Where can I get a lower premium rate? Motoring cost keeps increasing - petrol, ERP and now insurance!
REPLY
Go to my website, www.tankinlian.com and click on "Ask Mr. Tan". Type "motor" in the search box. You will find a FAQ on motor insurance. Click on "view" to read the document. You will find the link to some insurance companies that can give you an online quote on motor insurance. You may be able to get a cheaper premium.
An alternative is for you to buy non-comprehensive insurance and enjoy a reduction of about 35% in the premium - but you have to pay for the repair cost of your own car. If you have a regular workshop, you can use them for minor repairs. And drive carefully.
I just got my renewal for my motor policy. You know what - the premium increased by more than 15% and I did not even make any claim. I called the insurance company and they were arrogant - like take it or leave it. Where can I get a lower premium rate? Motoring cost keeps increasing - petrol, ERP and now insurance!
REPLY
Go to my website, www.tankinlian.com and click on "Ask Mr. Tan". Type "motor" in the search box. You will find a FAQ on motor insurance. Click on "view" to read the document. You will find the link to some insurance companies that can give you an online quote on motor insurance. You may be able to get a cheaper premium.
An alternative is for you to buy non-comprehensive insurance and enjoy a reduction of about 35% in the premium - but you have to pay for the repair cost of your own car. If you have a regular workshop, you can use them for minor repairs. And drive carefully.
Wednesday, July 28, 2010
Warren Buffett's Philantrophic Pledge
Read this pledge.
My view
This is what makes America great! While Singapore leaders want to follow the free market practice of America, we should also follow their examples in philantrophy and in protecting the rights and welfare of consumers.
My view
This is what makes America great! While Singapore leaders want to follow the free market practice of America, we should also follow their examples in philantrophy and in protecting the rights and welfare of consumers.
Unjustified billings
Here are two letters on the invoices sent out by Singapore Information Services to businesses that did not subscribe for their services:
http://www.straitstimes.com/STForum/OnlineStory/STIStory_558527.html
http://www.businesstimes.com.sg/sub/news/story/0,4574,396946,00.html
Based on my common sense understanding of the law, a business that send out an invoice without justification could be considered as cheating. They do not have the power to impose a service on another party without the other party's consent and to bill the party for that service. I hope that our attorney general's office will study this issue to see if any criminal offence has been committed.
I hope that they are not too busy studying how to frame a charge for illegal hawking against some people who sell the newsletters of political parties.
Tan Kin Lian
http://www.straitstimes.com/STForum/OnlineStory/STIStory_558527.html
http://www.businesstimes.com.sg/sub/news/story/0,4574,396946,00.html
Based on my common sense understanding of the law, a business that send out an invoice without justification could be considered as cheating. They do not have the power to impose a service on another party without the other party's consent and to bill the party for that service. I hope that our attorney general's office will study this issue to see if any criminal offence has been committed.
I hope that they are not too busy studying how to frame a charge for illegal hawking against some people who sell the newsletters of political parties.
Tan Kin Lian
Trading in financial products
Hi Mr Tan
What are your thougths about all these "trading expert" that we see everyday in the newspaper advertsing their courses and claiming to make returns of 100% -1000% easily?
They are many PMET that turn to such course hoping to find a way out of their financial challenges only to find that after spending $3k to $5k, they are nowhere near being financially free but some ended up losing even more money trading FX, derivatives (options & futures) and stock market.
Why isn't the authorities like MAS putting a stop to this kind of nonsense? If the trainers are so good, they should be working for Temasek of GIC and helping them recover our billions of dollars lost!
Santi
They are many PMET that turn to such course hoping to find a way out of their financial challenges only to find that after spending $3k to $5k, they are nowhere near being financially free but some ended up losing even more money trading FX, derivatives (options & futures) and stock market.
Why isn't the authorities like MAS putting a stop to this kind of nonsense? If the trainers are so good, they should be working for Temasek of GIC and helping them recover our billions of dollars lost!
Santi
My view
This is very sad. However, it is difficult for MAS to put a stop to this type of training activity. It is better for the PMETs to realise that trading in financial products is likely to lead to losses over the long term.
Being ignorant of the financial market, the novice traders are likely to be beaten by the full time professionals. It is like playing poker against a card shark. This is worse than gambling in a casino.
Poor yield from Vivolife policy
A policyholder in mid 30s showed me a benefit illustration of a Vivolife policy (whole life policy with premiums payable for 25 years).
The net yield to the policyholder is between 1% to 2% and the reduction from the gross yield is almost 3%. I find this policy to be too expensive and gives a poor yield to the policyholder. The cash value comprise of a guaranteed portion and a non-guaranteed portion. If the bonus is reduced in the future, i.e. the non-guaranteed portion, the net yield will be even lower. It is better to buy a term insurance and invest the difference in a low cost fund. See Practical Guide on Financial Planning.
Year Premium Cash Value Gross Yield Net Yield Reduction 25 2727 77021 3.75% 0.93% 2.82%25 2727 90419 5.25% 2.11% 3.14%
Contempt of court
What is contempt of court? Read this article.
My view
I have always thought that contempt of court is to disobey a judge's instruction in court. It seems now to have been extended outside of the court room.
To be sure that I was not wrong, I checked for the definition in Google. I found this article in Wikipedia, which confirmed my understanding. Are we practicing law differently from what is generally understood in the developed world?
My view
I have always thought that contempt of court is to disobey a judge's instruction in court. It seems now to have been extended outside of the court room.
To be sure that I was not wrong, I checked for the definition in Google. I found this article in Wikipedia, which confirmed my understanding. Are we practicing law differently from what is generally understood in the developed world?
Life insurance for a new job entrant
Dear Mr. Tan
I need some advice. Can you tell me the difference between a critical illness policy, a life policy and an investment-linked policy? Which do you recommend? I am in my mid 20s and just started work.
REPLY
Please refer to the FAQs in my website, www.tankinlian.com. Click on Ask Mr. Tan to see a list of FAQs. Select those that are relevant to you. You can view the FAQ by clicking on "View". You can download the PDF document into your computer for offline reading or to be printed out. You can also search the FAQs using a keyword such as "life insurance", "critical illness" or "young". I will be writing a separate FAQ to explain the investment-linked policy.
Before you buy any life insurance policy, be sure to read the FAQ on "benefit illustration". It tells you about the important points to look for in a policy. Also, look at the FAQ on "marketed financial product".
Buy on my book Practical Guide on Financial Planning (on promotion for $10 up to 31 July) or join FISCA.
I need some advice. Can you tell me the difference between a critical illness policy, a life policy and an investment-linked policy? Which do you recommend? I am in my mid 20s and just started work.
REPLY
Please refer to the FAQs in my website, www.tankinlian.com. Click on Ask Mr. Tan to see a list of FAQs. Select those that are relevant to you. You can view the FAQ by clicking on "View". You can download the PDF document into your computer for offline reading or to be printed out. You can also search the FAQs using a keyword such as "life insurance", "critical illness" or "young". I will be writing a separate FAQ to explain the investment-linked policy.
Before you buy any life insurance policy, be sure to read the FAQ on "benefit illustration". It tells you about the important points to look for in a policy. Also, look at the FAQ on "marketed financial product".
Buy on my book Practical Guide on Financial Planning (on promotion for $10 up to 31 July) or join FISCA.
Marketed Financial Product [2]
When someone approaches you to market a financial product to you, you have to be extra careful. It is likely that the financial product will be a bad deal for you. You should be careful, even if the marketing person is your friend.
Many people have lost large sums of money after they have bought bad financial product. The marketing person may not even be aware about the bad nature of the product. In their eagerness to close the sale and earn the commission, the marketing person may mis-present the product to you, either deliberately or through ignorance or negligence.
Read the article under this title under the "Ask Mr. Tan" tab in www.tankinlian.com.
Tan Kin Lian
Many people have lost large sums of money after they have bought bad financial product. The marketing person may not even be aware about the bad nature of the product. In their eagerness to close the sale and earn the commission, the marketing person may mis-present the product to you, either deliberately or through ignorance or negligence.
Read the article under this title under the "Ask Mr. Tan" tab in www.tankinlian.com.
Tan Kin Lian
Tuesday, July 27, 2010
Sudoku Fans
If you are a Sudoku fan, you can try different levels of the puzzle online at www.easysearch.sg (Logic9). If you are able to achieve level 4, try the puzzles with different symbols, e.g. animals or flowers. This will train your mind to visualize.
Logic9
Logic9
TKL Website - PDF document
I have organised a lot of information in PDF documents that are uploaded to the database in my website.
The PDF documents have now been designed to have a nicer look. Can you look at the documents under "Consultancy" or "Internet Portal" and give me your views?
www.tankinlian.com
The PDF documents have now been designed to have a nicer look. Can you look at the documents under "Consultancy" or "Internet Portal" and give me your views?
www.tankinlian.com
TKL Website - Tangram book prize
I have selected the following participants in the survey to receive the Tangram book prize:
- Warren
- Kalimuthu
- Komatineni
- Chua H T
3 participants gave favorable comments and 1 was critical. But all their contributions were useful to me. I have sent them an e-mail to give me their mailing address.
Visit: www.tankinlian.com
Donate to FISCA
Some visitors to my blog sent individual questions to seek my views. I tried my best to answer them. If you find the answer to be suitable and useful to you, please make a donation to FISCA or join as a member of FISCA ($36 a year).
FISCA has the goal of educating consumers on financial products and need funds to pay an honorarium to volunteers and maintain a website. Please be generous. Give financial support to FISCA, so that it can be more effective in its work.
You can also buy my book, Practical Guide on Financial Planning (on promotion until 31 July 2010)
www.fisca.sg
FISCA has the goal of educating consumers on financial products and need funds to pay an honorarium to volunteers and maintain a website. Please be generous. Give financial support to FISCA, so that it can be more effective in its work.
You can also buy my book, Practical Guide on Financial Planning (on promotion until 31 July 2010)
www.fisca.sg
10 stock market myths
Read this article.
My view
I usually advise people to invest in the stock market at regular intervals, using dollar cost averaging and avoid timing the market.
I wish to make an exception here. The outlook for the global economy is not good with too many unresolved issues - low interest rate, bubble in asset prices, government deficits, trade imbalances. It may be better to hold cash (even though interest rate is almost nil) and wait for a big market correction. If that happens, you must have the courage to move in.
My view
I usually advise people to invest in the stock market at regular intervals, using dollar cost averaging and avoid timing the market.
I wish to make an exception here. The outlook for the global economy is not good with too many unresolved issues - low interest rate, bubble in asset prices, government deficits, trade imbalances. It may be better to hold cash (even though interest rate is almost nil) and wait for a big market correction. If that happens, you must have the courage to move in.
Selling a HDB flat
Read this story.
My view
We can stop the price escalation of HDB flats by providing a supply of flats for rental at controlled prices. The Government has the means to achieve this goal, if they wish to. We have plenty of land and idle manpower (remember the unemployed PMETs) that can be put to build these flats. If rental flats are available at affordable prices, there is no need for citizens to panic and buy a HDB resale flat at inflated price.
When the property prices come down to a sensible level, i.e.5 years of average income, we will have a better economic and social structure. We will not have some people, e.g. land owners, property developers, property agents, lawyers and government leaders, making so much money at the expense of the ordinary people.
For this to be possible, we need a government that truly care for the welfare of the people.
My view
We can stop the price escalation of HDB flats by providing a supply of flats for rental at controlled prices. The Government has the means to achieve this goal, if they wish to. We have plenty of land and idle manpower (remember the unemployed PMETs) that can be put to build these flats. If rental flats are available at affordable prices, there is no need for citizens to panic and buy a HDB resale flat at inflated price.
When the property prices come down to a sensible level, i.e.5 years of average income, we will have a better economic and social structure. We will not have some people, e.g. land owners, property developers, property agents, lawyers and government leaders, making so much money at the expense of the ordinary people.
For this to be possible, we need a government that truly care for the welfare of the people.
Imbalance in the market
Here are two differing reports on the same situation:
Imbalance in resale market.
Shortage of HDB flats.
My view
It is bad to treat property as an investment and to have property prices escalate to a high level, more than 5 years of family income. The high property prices will put an unfair burden on our younger generation, who has to work hard for a lifetime just to pay for a place to live in. This is one key reason why younger people do not want to get married and to start a family.
While social researchers may point to "urban lifestyle", they can look beyond this label to seek the underlying cause. Urban lifestyle means high property prices in the city. Most governments fail in their duty to the citizens in keeping the property prices affordable.
Singapore used to be a good example of urban housing development, but the situation had got out of hand over the past 25 years.
Imbalance in resale market.
Shortage of HDB flats.
My view
It is bad to treat property as an investment and to have property prices escalate to a high level, more than 5 years of family income. The high property prices will put an unfair burden on our younger generation, who has to work hard for a lifetime just to pay for a place to live in. This is one key reason why younger people do not want to get married and to start a family.
While social researchers may point to "urban lifestyle", they can look beyond this label to seek the underlying cause. Urban lifestyle means high property prices in the city. Most governments fail in their duty to the citizens in keeping the property prices affordable.
Singapore used to be a good example of urban housing development, but the situation had got out of hand over the past 25 years.
Life insurance plans
Are you confused with the different types of life insurance plans in the market? Do you know the different between a whole life, endowment, term insurance, critical illness and investment linked plan. Go to www.tankinlian.com, click on "Ask Mr Tan" and search for "life insurance". Click on "View" to read the document.
Best Self-Help Book
Strategy on e-government services
I have written a strategy paper on how a government agency can organize its website and online processes to improve its productivity and deliver a better quality of service for the public. Read the paper entitled "e-Government" in my website, www.tankinlian.com
If you have experienced inconvenience or difficulty in searching for information or submitting an application to a government agency in the past, please send your story to kinlian@gmail.com or post a comment here.
If you have experienced inconvenience or difficulty in searching for information or submitting an application to a government agency in the past, please send your story to kinlian@gmail.com or post a comment here.
Monday, July 26, 2010
TKL website [8]
Dear Mr Tan,
I got to know of the site through your blog which I read almost everyday.
I take interest in the site as I like to keep in touch with the different views of the current events happening around us.
Your layout is easy to access and worded simply in such a way that any layman will be able to understand the language used and the icons used are simple to focus.
Thank-you for creating a simple and versatile site for us to access and be educated.
RK
I got to know of the site through your blog which I read almost everyday.
I take interest in the site as I like to keep in touch with the different views of the current events happening around us.
Your layout is easy to access and worded simply in such a way that any layman will be able to understand the language used and the icons used are simple to focus.
Thank-you for creating a simple and versatile site for us to access and be educated.
RK
Efforts to control motor insurance claims
Three years ago, the General Insurance Association, representing the general insurance companies, announced several measures under the the Motor Claims Framework, as an attempt to control claims. I felt at that time that the measures were not practical and did not address the root of the problem. The regulator gave its support for the framework. The insurance leaders proclaimed that the measures would be effective in controlling the fraudulent claims and lower the insurance premiums.
It was a pipe dream. The measures actually caused the claims to escalate badly. The premium rates increased by 30% during the next two years. There is a big difference between declaration of intent and producing the actual results.
Two years later, the Consumer Association (CASE) formed a joint task force with the insurance association. They approached the problem more holistically. The task force was lead by the president of CASE who was supposed to have the political clout. The joint task force identified the problems and recommended the remedial actions. This time round, it appeared that the measures would be more effective.
I read a news report recently, quoting the president of CASE, that seemed to hint of slow progress in stopping the escalation of claims. Are the measures recommended by the joint task force ineffective?
Over the years, we hear of countless cases of fraudulent motor claims involving aggravated damages, inflated repair bills, and claims for non-existent injuries. Complaints about fraud were not acted by the police. The insurance companies were supposed to deal with the fraud by rejecting the claims, but they need evidence to justify their rejection. With time, the insurance companies found that it was easier to pay off the fraudulent claims rather than to incur the expense of investigating these claims.
Fraud has to be controlled by legislation and enforcement. It cannot be handled by expensive litigation through the courts. The parties that benefited from this unsatisfactory state of affairs are the lawyers, who have the opportunity to earn large fees from litigation work. Someone pointed out that a few members of our parliament or their immediate family members are involved in law firms. Could this be a reason for their reluctance to address this issue of public interest?
In the absence of effective action, the consumers have to pay the price through higher insurance premuims.
Tan Kin Lian
It was a pipe dream. The measures actually caused the claims to escalate badly. The premium rates increased by 30% during the next two years. There is a big difference between declaration of intent and producing the actual results.
Two years later, the Consumer Association (CASE) formed a joint task force with the insurance association. They approached the problem more holistically. The task force was lead by the president of CASE who was supposed to have the political clout. The joint task force identified the problems and recommended the remedial actions. This time round, it appeared that the measures would be more effective.
I read a news report recently, quoting the president of CASE, that seemed to hint of slow progress in stopping the escalation of claims. Are the measures recommended by the joint task force ineffective?
Over the years, we hear of countless cases of fraudulent motor claims involving aggravated damages, inflated repair bills, and claims for non-existent injuries. Complaints about fraud were not acted by the police. The insurance companies were supposed to deal with the fraud by rejecting the claims, but they need evidence to justify their rejection. With time, the insurance companies found that it was easier to pay off the fraudulent claims rather than to incur the expense of investigating these claims.
Fraud has to be controlled by legislation and enforcement. It cannot be handled by expensive litigation through the courts. The parties that benefited from this unsatisfactory state of affairs are the lawyers, who have the opportunity to earn large fees from litigation work. Someone pointed out that a few members of our parliament or their immediate family members are involved in law firms. Could this be a reason for their reluctance to address this issue of public interest?
In the absence of effective action, the consumers have to pay the price through higher insurance premuims.
Tan Kin Lian
DBS Preference Shares
Dear Mr. Tan,
DBS pref share is trading around 104 on par of 100.
It pays 6 a year on par of 100.
Please note that it is callable at 100 on 15 May 2011. If you buy at 104, you will have make a loss of 4 on capital (and gain 6 as dividend). You will get 3 on 15 Nov, and the other 3 on 15 May 2011 (together with 100).
If DBS decides not to call back the share, it will then start to pay dividend based on 3 mth Swap rates plus 2.28%. current swap rates is probably around 0.5%. without any big surprise, Swap rate will be around same level next May. this means that if DBS does not call back the share, it will be paying investors about 2.8% in dividend.
cm
My view
With this additional information, DBS preference shares is not attractive as an investment.
Financial Sense
Hi Mr. Tan
Here's the financial website which I find to be very educational for people like me with no financial backgrounds.
http://www.financialsense.com/
Here is the link for their weekly podcast which I personally find it very useful.http://www.financialsense.com/
YP
Here's the financial website which I find to be very educational for people like me with no financial backgrounds.
http://www.financialsense.com/
Here is the link for their weekly podcast which I personally find it very useful.http://www.financialsense.com/
YP
Values of Leadership
I have been asked to speak to poly students about the qualities of a leader for the future. I wish to share with them my 5 personal values:
- honesty
- fairness
- courage
- positive
- public service
I believe that President Barack Obama hold most or all of these values. From his speeches, I can see that he is honest, has courage, is positive and embrace public service. I am not sure about fairness.
If you know about his qualities or has read his book, please send your views to me at kinlian@gmail.com. Do you think that I have assessed him correctly? You can also post your comments here.
Learn Chinese
I downloaded a free application called "1000 Chinese characters" into my Android phone. It is the best document that I have encountered over the years, in my continuing desire to improve my Chinese. As it focused on the most common 1,000 characters, it is fun to learn.
For those struggling to learn Chinese, I recommend that they download this application (which may be available in other phone platforms, or buy a hard copy book (which I believe must be available).
Yellow Bridge.
For those struggling to learn Chinese, I recommend that they download this application (which may be available in other phone platforms, or buy a hard copy book (which I believe must be available).
Yellow Bridge.
TKL Website [7]
The FAQs on insurance and investments in my website, www.tankinlian.com, is expanding quite rapidly, as many more documents are being added. If you find it difficult to read the entire list, you can use the Search function as follows:
- Enter a keyword, such as "blue chip" or "critical illness" or "education" or "child"
- A list of documents with this keyword in the title or description will be displayed
- You can see if any of these documents interest you
- If not, try another keyword.
- When you find your document, click on "View" to read the PDF document. You can save it in your computer for offline reading or to print out.
Try it.
Marketed Financial Products
When a marketing person approaches you to invest in a financial product, you have to be careful. Here is the reason.
You can also read the other FAQs in my website, www.tankinlian.com/ask.aspx
Read
Practical Guide on Financial Planning
You can also read the other FAQs in my website, www.tankinlian.com/ask.aspx
Read
Practical Guide on Financial Planning
SAF Group Insurance
Is it advisable to be insured under the SAF Group Insurance? I have given my views in my website, www.tankinlian.com (click on Ask Mr. Tan). You can also read the SAF Group Insurance brochure that gives more details of the coverage, terms and condition. You can get similar coverage under other group insurance policies, as explained in the FAQ.
Tan Kin Lian
Tan Kin Lian
Sunday, July 25, 2010
Blue chip shares
Read about blue chip shares here
Investor Buddy
About.com
Blue chips are large, well managed companies that have a long history of giving good dividends to their shareholders. They are usually the companies that are selected to form the stock market index. Examples of blue chip shares in Singapore are Singapore Airlines, the three local banks, Singapore Press Holdings, SMRT, Singtel, Starhub, the large property companies and shipyards.
In the past, the asset mangers expect a yield of 7% to 10% on these blue chip shares. If a small investor were to buy into the shares at the market price, the expected yield is at this level, comprising of dividend (around 3%) and capital appreciation. There is volatility, i.e. the share price can go up or down by a large margin, but over the long term, this is averaged out to give a yield of expected long term yield.
Some blue chip shares can go bust, but the risk is much lower than the speculative or smaller shares in the stock market. You can diversify the risk by investing in an exchange traded fund (such as the STI ETF). In other countries, you can invest in an indexed fund (i.e. a unit trust that is invested in the stocks comprising the stock market index) but this is not available in Singapore.
Read the FAQ about investing in blue chip shares in www.tankinlian.com (Ask Mr. Tan)
Tan Kin Lian
Investor Buddy
About.com
Blue chips are large, well managed companies that have a long history of giving good dividends to their shareholders. They are usually the companies that are selected to form the stock market index. Examples of blue chip shares in Singapore are Singapore Airlines, the three local banks, Singapore Press Holdings, SMRT, Singtel, Starhub, the large property companies and shipyards.
In the past, the asset mangers expect a yield of 7% to 10% on these blue chip shares. If a small investor were to buy into the shares at the market price, the expected yield is at this level, comprising of dividend (around 3%) and capital appreciation. There is volatility, i.e. the share price can go up or down by a large margin, but over the long term, this is averaged out to give a yield of expected long term yield.
Some blue chip shares can go bust, but the risk is much lower than the speculative or smaller shares in the stock market. You can diversify the risk by investing in an exchange traded fund (such as the STI ETF). In other countries, you can invest in an indexed fund (i.e. a unit trust that is invested in the stocks comprising the stock market index) but this is not available in Singapore.
Read the FAQ about investing in blue chip shares in www.tankinlian.com (Ask Mr. Tan)
Tan Kin Lian
Invest in Preference Shares
A consumer asked for my views about a 5 year single premium product that pays a guaranteed yield of 2% p.a. or 10% for 5 years. The investment showed an immediate 10% loss during the first year, a smaller loss during the next two years and will only produce the gain of 10% on maturity at the end of 5 years. I advised the consumer against this type of investment, as it locks up the money for 5 years and only gives a modest return.
I did some research on preference shares and REITS and have posted several articles in this blog. I have also written a FAQ on "investing in preference shares", which is posted in my website, www.tankinlian.com (click on Ask Mr. Tan). The preference shares issued by the local banks give a yield of 4.2% to 5.9% and should be relative safe.
Tan Kin Lian
I did some research on preference shares and REITS and have posted several articles in this blog. I have also written a FAQ on "investing in preference shares", which is posted in my website, www.tankinlian.com (click on Ask Mr. Tan). The preference shares issued by the local banks give a yield of 4.2% to 5.9% and should be relative safe.
Tan Kin Lian
TKL Website [6]
Feedback on TKL website: www.tankinlian.com
a.. How do you come to know about the website?
Via google search for term insurance
b. What information were you looking for?
I was comparing term insurance prices across different companies
c. Do you like the design and layout of the website?
Simple is good, its the content that matters. The various investment/insurance articles are useful starting points for me.
d. What do you like best about the website (if you like it at all).
The simple and easy to understand articles.
Videos on Puzzles
Internet and Business Productivity
Mission
Tan Kin Lian believes that the Internet provides a great opportunity for a business enterprise to improve its productivity and customer service. He is developing many web and mobile applications to help an enterprise to achieve this goal.
Visit www.tankinlian.com
View this document: http://tankinlian.com/admin/file.aspx?id=102
Tan Kin Lian believes that the Internet provides a great opportunity for a business enterprise to improve its productivity and customer service. He is developing many web and mobile applications to help an enterprise to achieve this goal.
Visit www.tankinlian.com
View this document: http://tankinlian.com/admin/file.aspx?id=102
Sudoku (Logic9) online
Try our interesting version of Sudoku online at www.easysearch.sg. You can try with other symbols, instead of numbers. This trains your creativity.
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