Saturday, November 06, 2010

Is exclusion of liability for injury caused by negligence lawful?

I refer to the letter "Indemnity forms unfair to participants" by Mr David Kwok Ng Kan (Nov 1).
Given the prevalence of this practice in the workplace and educational institutions,
perhaps it should be made a criminal offence
for anyone to purport to exclude liability in such circumstances.
Peter Wadeley

My view
I agree that it is unlawful for a party to exclude liability in circumstances where they were negligent. The exclusion is unfair to consumers and goes against the established law of negligence.

Instead of waiting for Parliament to pass a new law, the relevant authority has existing power to tell these parties that they are doing something that is illegal. The relevant authority should step forward and exercise the powers that they already have, instead of standing by and watch.

Choice of insurance plan hinges on affordability, buyer's needs

Published in the Straits Times

WE REFER to the recent discussion
(Mr Tan Kin Lian,
 'Why insurers, agents may turn a deaf ear to SM Goh's appeal'; Oct 27)
on Senior Minister Goh Chok Tong's appeal to the insurance industry
('Keep insurance affordable: SM Goh'; Oct 23),
and would like to share our views on
term insurance versus traditional whole life and investment-linked plans.
Such plans and their suitability are largely dependent on the consumer's
financial needs as well as affordability.

Term insurance, which charges cheaper premiums, does not offer any cash value.
Such plans are often temporary solutions to permanent whole life plans.
Most term life plans do not offer coverage beyond the age of 85.

Traditional whole life plans, on the other hand, offer bonuses -
albeit non-guaranteed, but which become guaranteed once declared -
that will be added to the basic sum assured.

Investment-linked policies offer more flexibility and transparency
as to how cash values are accumulated.
As it involves investment, it is not suitable for risk-adverse consumers.

Not all term insurance policies pay a lower commission
than traditional whole life and investment-linked policies.

Pricing of insurance products is a matter of actuarial science
determined by insurers.

There is documentation of the financial planning process that is signed off by the client.
The recommendations based on the fact-find are further checked by managers
for compliance and can be audited by regulators.
Financial representatives subject themselves to mandatory training hours
in compliance, knowledge and skills,
while disciplinary actions are taken to address unethical practices.
The Life Insurance Association's report released on Aug 5 stated that
72 per cent of life insurance applications were completed
with a full or partial fact-find.

Ultimately, consumers would have to decide for themselves
on the advice given as well as the option to compare and choose plans
across the various insurers.
The answer to SM Goh's appeal should be multifaceted,
whereby insurers, industry players and financial representatives
work to educate consumers on the importance of adequate insurance coverage.
Examples include MoneySense and public forums.

Jeffrey Tan President Insurance and Financial Practitioners Association of Singapore

My view
My consumers have sought my advice on the insurance policies that they have bought. They were shocked to learn about the high dedction, amounting to more than 50% of the accumulated premium. They were not aware about the high charge as it is not explained by the agent.

I hope that these consumers will write to reply to the letter from Jeffrey Tan. Consumers who have been cheated should now voice their unhappiness. They cannot stand on the sideline and expect other people fight for them.

If you wish to write a letter to the St Times but is not confident about how to write the letter, you can send a draft to I will help you to polish up your draft. You should talk about how you were sold a life insurance policy, and how much you understood or did not understand the product, and how shocked you were to learn about the high percentage that is deducted from the policy, giving you a large loss for a lifetime.

Do take this chance to write, and help to change the bad practice and dishonest selling that is happening for a long time in the life insurance industry.

Guilin, China

I was in Guilin for the past four days. I went on a vacation by the inaugural flight to Guilin on Jetstar. It was an excellent trip to visit a beautiful place with nice people. The service by Jestar was excellent.

China still blocked Google and Youtube. I was not able to access my blog. But I was able to get the Google Mail.

I met many new and old friends on this trip. The enjoyed the shape quiz that I gave to them. They were fascinated by the challenging puzzles. They also enjoyed the amazing numbers. Many of them wanted to buy the Shape Quiz book, which is available here.

Wednesday, November 03, 2010

Risk of Private Shield

I have seen several examples of the problems encountered by consumers when they change from Medishield to Private Shield or from one Private Shield to another plan. They encountered rejection of their claim due to failure to disclose previous medical conditions. In some cases, the previous medical conditions were quite trivial and are not material to merit rejection of the claim. However, the claim officer is "trigger happy" in rejecting the claims, so that they can make more profit for the insurance company.

The purpose of insurance is to pay claims, especially for legitimate claims. It is not to make excessive profit for the insurance company. In some countries, it is illegal for an insurance company to reject a claim for unjustified reasons. If they wish to cite "non-disclosure", they need to have reasonable grounds. As the situation seem to be quite bad in Singapore, it is best for consumers to avoid changing insurers or to avoid upgrading of Shield plans.

The behavior of the insurance company is bad in another respect. Even if they are entitled to reject the claim, it is still their duty to pay the Medishield portion of the claim, as this cover is supposed to continue from one insurer to another, and from one plan to another. By rejecting the claim, the insurance company is failing in its duty to treat its customer fairly.

If you are caught in this situation, and your claim is unfairly rejected, you have the following options:

  • Lodge a complaint to FIDREC ( for your claim to be mediated or adjudicated
  • Write a letter to the newspaper to complain about the unfair rejection
You can read several stories about unfair rejection of Shield claims in my website. Go to and search for 'Rejection" or "Shield".

Tan Kin Lian

Amazing Number cards

I have arranged the numbers into in a format that allows you to print them into small cards. You can print out the page, paste into a hard card and cut out the small cards. You can try the trick with your friends. Click here.

Tuesday, November 02, 2010

Ask Mr. Tan in

I have now written about 100 articles on insurance, investment and financial planning in the Ask Mr. Tan section of my website, You can access this section directly from the "Ask Mr. Tan" button on the top of the right frame of my blog. When you are at the website, you can search for an article easily by entering a keyword, such as "health insurance" in the Search tab to get all articles on this topic.

In the past, I post these articles in my blog but they quickly disappear from the top of my blog after a few days.
By putting them in the TKL website, they can be easily retrieved in the future, using the search function.

I am a regular user of this Search function. When someone ask me a question, it is easy for me to retrieve the article or FAQ using this search and give a link as a reply. But I want to encourage my readers to search for the article on their own, rather than give me the additional burden of making the search.

SM Goh & NTU Forum [3]

More comments about the NTU Forum can be found at General Election Portal

Rechargeable torchlight

Watch this video
The torchlight can be ordered here at $6.50 (Promotion: $20 for 4 pieces).

Managing personal risk

This article explains the importance of managing the risk of unemployment and inadequate savings for retirement and how to tell the difference between a good and bad life insurance policy. Read this article.

You can search for other FAQs and articles in or the link "Ask Mr Tan" on the right.

Buy financial planning book here.

Key tips for a new job entrant

When a graduate starts work for the first time, he or she is likely to be targeted by an insurance agent who will sell a life insurance policy to protect against the loss of future income. The life insurance policy is likely to give a poor yield for the future savings, and the protection need is not really necessary. But, it is easy for the job entrant to be misled by the well trained agent.

Read this article about the uncomfortable experience of a job entrant in being sold a policy that he does not really want, but find it difficult to say "no" to an agent who is his friend.

Read this article to find out about the insurance that you really need. And read this article about the importance of having personal savings that you are kept in flexible form - which you may need for a future emergency.

PDF Centric website - some views

14 people participated in the survey.

71% like the PDF centric website ( They find it easy to search and read the information and to download the PDF for offline reading or sending by e-mail. 29% dislike it. They find it difficult to open the PDF on smartphones or Mac browsers.

77% replied that they find it easy to search for information on the PDF centric websites. 23% prefer to use the Google search.

A few people asked for direct links to the PDF rather than to search for it using the search function. My purpose is to get people familiar with visiting the "Latest" tab and using the "Search" tab. I do not want them to only refer to the specific PDF that is directly linked to my blog.

Buy High, Sell Low

Its your money and your responsibility.
Neither the Fed Chief, nor your advisor nor any guru nor blogger nor Jim Cramer.
You are the one who is going to be either going to live in comfortable retirement,
or eating cat food tacos.

My view
Some consumers ask for my advice on whether it is the right time to buy or sell any stock or other investment. This is not a fair question to ask of me. Even if they pay a fee to the adviser, they will not get any good outcome. The investor should do their own homework and take their own punting decision - after all it is their own money.

How much is 1 trillion dollars?

The US deficit is $1.3 trillion dollars in 2010. How much is it?

The myths about entrepreneurs

Is the auditing of firms and other sectors that bad?

IN the wake of the recent global financial and economic crisis,
the role of audit was queried.
The audit model is not broken beyond repair, but it needs to be reworked.

Call for control on hedge funds

Managers want them to be regulated like other funds in Malaysia.

My view
Hedge funds are bad for the global economy. They should be controlled in the USA, Europe and Singapore, not just in Malaysia. 

PDF centric website - TKL website

PRIZE: The two winners, selected by a draw, are C Yee and Chen WL. Thanks to all participants.

My website, is designed as a PDF centric website. The new design has been operational for about three months. It attracts over 400 unique visitors daily. The vistors come daily to view the new FAQ and articles on insurance and investments that are uploaded into the website regulary.

I am able to create a FAQ or article easily using Microsoft Word and to convert it into a PDF. It takes less than one minute to upload the FAQ or article and to write a description. The easy of uploading makes it easy for me to cerate a dynamic and active website.

The PDF centric website is also convenient for my readers to search and read the FAQs and articles. They can download the PDF into their computer for offline reading or to have a hard copy printout. They can also forward the PDF by e-mail to another person.

I can add graphics and pictures to the PDF easily, if I wish. The content of the PDF document can also be located with a google search.

I hope that my regular readers are now familiar with the style of the PDF centric website and like this format. Please give your feedback here.

PRIZE: My Financial Planning book (retail price: $12) will be given to two lucky persons who replied to this survey (selected by a draw).

Can people afford to retire?

This article explains the need for governments in the West to raise the retirement age, where the state pensions scheme is funded on a "pay as you go" method which requires young workers to contribute towards the pensions of the retirees.

The Singapore government does not face this problem because it operates a provident fund scheme, where each contributor takes back his or her personal savings in the fund. However, the retirees in Singapore face the same problem of rising life expectancy and high cost of living - there is inadequate savings in the fund for their retirement. So, people in Singapore will have to continue working longer anyway as they cannot afford to retire.

But the elderly in Singapore face another big challenge - the elderly find it difficult to get jobs that pay a decent wage. They have to accept extremely low wage and even so, it is difficult to find these jobs. These challenge has to be addressed by the government, not just in words, but in concrete actions.

Tan Kin Lian

Monday, November 01, 2010

Inflation, savings and life insurance

A consumer told me that he is willing to take a life insurance policy if he can get back the total premiums that he has paid over a period of 20 to 30 years, without interest. He considers that he is getting good value from the life insurance and does not mind giving up the interest - so long as he gets the total premium back.

The consumer is not savvy and does not realise that over a period of 30 years, the value of money could fall by 50% to 75% of the real value, due to inflation. The real cost of the life insurance protection is only 20% of the amount of interest that he is giving away.

Read this article.

Financial Literacy

Each day, I receive a few requests from consumers asking for advice. In many cases, I find the following weaknesses:

  • The standard of financial literacy is quite low
  • The consumer likes someone to decide for them.

It is risky for consumers to be so dependent on somebody else for advice. They are likely to fall prey to unscrupulous people who can take them for a ride. They can be harmed financially and lose a lot of money that should be earned on their savings.

The consumers do not know what kind of question that can ask or should not ask from another person. For example, it is difficult for anybody to know how high the stock market or gold will go, and when they will reverse. If you are not familiar, do not take this type of investment risk.

The consumer should also be aware about the vested interest of the people that they are asking for advice. If there is a vested interest, the consumer is likely to get bad advice. Your loss becomes the profit of the vested party.

There are some consumers who want me to give advice for free, when they are not even prepared to read the FAQ in my website (which is free anyway) or to buy my Financial Planning book for $12 or attend the FISCA educational talk for $30. This is dangerous. They will fall prey to a dishonest cheat sometime in the future.

Financial planning book can be bought here.

Tan Kin Lian

Sunday, October 31, 2010

Damage caused by GRC system

My friend made this observation - the PAP MPs were good in the old days. They became different after the GRC system was adopted. Under the GRC system, they do not need to look after the voters, and only need to please one top man. The gulf between the PAP and the people widened over the years since.

Singapore General Election Portal - the secret on how it is maintained

Dear Mr. Tan,
How do you manage to put up the interesting articles in the General Election Portal? Although I am able to find the same articles by reading all the blog feeds, it is useful to go to your portal as you have made a good summary of the important articles. Saves me the time of reading through so many feeds.

I am fortunate to have the assistance of Gerald. He searches all the feeds every morning and extracts the articles that are relevant to my portal and my blog. He also summarizes the articles for me. It is easy for me to post them in the portal. There is another person (CH) who helps me to manage the portal.

Bookmark this to keep abreast of the issues for the general election:

SM Goh and Term Insurance - 3 letters

Read my letter to the Straits Times Forum and two follow up letters here:

Amazing numbers

Amaze your friends with these magic cards. Ask your friend to guess a number between 1 to 99. Show him the cards and ask your fiend to pick out the cards that contain the secret number. You can guess the number. The secret is shown in my website. (Search for Amazing Numbers)

Private shield and employer benefits

In an article in the Sunday Times, the editor recommended that the consumer should buy a Private Shield now, even if the consumer is provided with medical benefits by the employer. I find this to be a wasteful practice.

If the private shield cost $300 a year, the total premium, including interest at 4% per annum payable on the Medisave account, will amount to $22,000 at the end of 35 years. This is a lot of money to give away to a cover that is not really needed.

Although the Minister for Health did make a claim of $20,000 on his Private Shield policy, this is not a common case. For each person who makes a claim, there must be 10 other people who did not make the claim. The Minister is not covered for medical benefits by the employer, so a private shield is necessary.

This is not the case for many people in the private sector who are provided with medical benefits by the employer. Do not waste your money.

The consumer is told by the insurer or the agent that if they buy the private shield at a young age, they are guaranteed with the cover when they grow old. This is only partly true. The cost of private shield above age 65 is so costly (maybe $2,000 or more a year) that many retirees cannot afford it. They are likely to downgrade to Medisheld at that time. So, the consumer will be wasting $22,000, but it will be a lot of commission and profits for the agent and the insurer.

Read my articles in Search for "Shield". Remember - even if you pay the premium, you will not find it easy to make a claim under some situations.

Tan Kin Lian

SM Speech to NTU Forum

There are more blogs commenting on this episode:
Singapore General Election Portal

Blog Archive