FISCA Talk: Insuring your Financial Security

Title of talk: Insuring your Financial Security
Date : 18 Dec 10, Sat, 2-5 pm
Venue : The Verge (2 Serangoon Road Level 6)(Near Little India MRT)

FiSCA is pleased to bring to you another new topic on insurance. The speaker is Mr Tan Kin Lian, who has over 30 years of experience in insurance business. His talk will focus on how to consider insurance as another tool for your financial security. Make use of this great opportunity to learn from the insurance guru.

This event is available to all FiSCA members at $20 and non-members at $30.
We encourage the public to join as FiSCA members as the annual fee for members is only $36.

More details and registration can be found at:
http://www.fisca.sg/events

Outline of the talk can be found here.

HK: Minibond investors misled, says prosecutor

A bank manager appeared in court yesterday accused of misleading six investors, some barely educated and retired, to buy HK$6.8 million of Lehman Brothers minibonds.

Cheung Kwai-kwai, 47, a former personal financial services manager at Bank of China (Hong Kong), pleaded not guilty in the District Court to nine counts of fraudulently or recklessly inducing the victims to invest money between 2005 and 2008, violating the Securities and Futures Ordinance.

Senior prosecutor Jonathan Man Tak-ho said that Cheung misrepresented to the victims the minibonds were "principal protected", "of very low risk" or "highly secured" while experts said the products were complicated structures whose principal - the sum invested - was not protected, meaning investors could lose all of their money.

The alleged victims are now aged 51 to 78. Three were retirees when they were induced to buy the products, the court heard on the first day of the trial.

Read the following link for the full story:
http://www.lbv.org.hk/content/pages/posts/minibond-investors-misled-says-prosecutor10705.php

Learn to be entrepreneur

Singaporeans generally are not entrepreneurial. They are brought up in an environment to be careful, to work hard, to get the right answer and to avoid mistake. They tend to avoid making decisions and to take responsibilty for bad decisions. They like other people to decide for them. This is part of the Singaporean culture.

To be an entrepreneur, one has to be willing to try and experiment, to make mistakes and learn from mistakes, to learn by doing (rather than to take instructions from other people).

I have developed the BEST Business Game to allow the players to learn the skill of making decisions on pricing, marketing and resource allocation. It allows the player to develop the skill by practicing over many rounds.

Learn to be a business entrepreneur. Go to www.easysearch.sg and click on BEST Business Game.

Making advance payments

Consumers should be wary about making advance payments for private school fees, spa treatments or other services, or investing in investment schemes by unregulated bodies that promises a high rate of return.

Ask Mr. Tan

Rising cost of health care

Many people are worried about the rising cost of health care. The insurance agent tell them that the solution is to buy private shield insurance. This is bad advice, especially for people who have a tight budget and do not have sufficient savings for their retirement.

My reasons are explained in several FAQs that can be found in my website, www.tankinlian.com/ask.aspx. You can search for them by using the keyword "Shield" or "health".

The insurance agents tend to exaggerate the need frequency and high cost of medical treatment to get people to buy private shield. Here are the reasons why you should avoid spending this money:

• Young people have a low incidence of serious illness
• If it happens, they can be treated at a low cost in a subsidized ward or will be paid by the employer
• By buying private shield, you have to pay a higher premium and a higher co-payment for treatment
• There is the risk of the claim under private shield being rejected due to non-disclosure or exclusion. You can read a few stories of rejected claims in my website. 

The cost of health care can increase 5 to 15 times for older people. If the buy private shield, the cost can be 2.5 to 4 times of Medishield. To keep the cost at a more manageable level, the elderly people insure under Medishield and pay a lower premium and a lower co-payment when they are hospitalised.

Private shield should only be bought by people who are wealthy and have more than enough savings for their retirement, and want to have the choice of their own doctor, and do not mind paying a higher premium and higher co-payments.

Tan Kin Lian

Buying Term Insurance

A few consumers have asked me to tell them how they can buy Term Insurance. I asked them to go to my website (www.tankinlian.com/ask.aspx) and search for "Term". There are a few FAQs that help them to find the right premium and to go to the right website. I do not know the answer myself, so I have to make the same search.

Pay the right price

Consumers often ask me the following:

• Is it good to buy private shield, compared to Medishield?
• Should I stay on pension or take the lump sum?
• Should I invest in an ILP?

The correct answer should be - it depends on the price. If you pay the right price relative to the benefits, then the policy is good. If you are paying an excessive price, then the policy is bad.

For example, a civil servant asked me whether it is better to keep the pension or take a lump sum. It depends on how much the retiree gets to give up the pension. After providing the figures, it is easier to make a judgement by comparing the different options. This type of question cannot be answered "in a vacuum". 

In the FAQs in my blog, I educate consumers about what is the right price, and how to avoid being over-charged. You can go to my website, www.tankinlian.com/ask.aspx to search for the relevant FAQ. You have to enter a keyword, such as "investment linked" or "shield" or "pension" and see the FAQs that are relevant to the subject. If you cannot find the FAQ, you can change the keyword and try again.

When you find the FAQ, you can read it on the browser, or download it into your PC. You can also print it out, if you need to read it offline.

Spend some time to search and read the relevant FAQ before you send a question to me. You can get a better answer when you are educated. You should not rely on other people to think for you.

Tan Kin Lian

Alan Shadrake's case - reply by Singapore High Commissioner

The Singapore High Commissioner to UK replied to the Guardian newspaper about Alan Shadrake's case.

SGEP

Victims of spas that closed down

Dear Sir,
I would like to raise to your attention that many people who had signed up for spa packages with True Spa and Subtle Senses are still paying for credit card installments even after these 2 spas have stop operations.


http://www.facebook.com/home.php?sk=group_170620749615018&ap=1#!/home.php?sk=group_170620749615018&view=doc&id=171669619510131


Is it possible if you could explain to the consumers how this can be possible?


Someone asked why can’t consumers just pay banks the factoring fee they earned and then the credit cards go after the spas for the rest?


The Government has chosen to remain silent about all these or take a watch and see stance. I feel there is a lot of injustice in Singapore.


The victims have started a Facebook group which is now about 500 people. Even though there 18000 customers, many have been fearful of defamation charges or trouble if they make noise. I heard someone who sued True Spa last year was countersued for defamation by True Spa.


Where is the justice in Singapore? Do you know how we can ask the government to take action to swiftly freeze the voluntary liquidation of Subtle Senses? I think instead of using customers’ advance payments to operate the spa businesses, True Spa is now an empty shell and we are not sure where all the millions of dollars of customers’ monies is now.


Hope the government can do something quickly. Otherwise the monies will just disappear after being transferred here and there.


Thank you for your kind attention.
Ally

Pension or lump sum?

Should a Singapore civil servant who reaches retirement age keep the pension or give it up for a lump sum payment? Read this article to learn about what to look for and how to make your decision.

www.tankinlian.com/ask.aspx

CPF and low cost housing

Read the views of the Reform Party in SGEP.

Singapore Casinos causing problems to Johore familes

Singapore casinos are causing problems to Johore familes. Read SGEP

Loan shark harrassment cases

Are these cases on the rise or falling? Read SGEP

Questionable business practice

Hi Mr. Tan,

I would like to bring you to the attention of this practice an insurance company agency is carrying out at IT exhibition fairs such as Sitex 2010 which starts today.

They claim to offer car insurance quotes. From anecdotal accounts (such as one here), the representatives at the fair will approach exhibition goers with car insurance, trying to get them to discuss it at their booth. They will later try to push financial products like anticipated endowment plans to these people. 

Their website currently lists their address. A quick reference reveals this address to be a building of a life insurance company. They also collect personal and contact information on their website. I can only imagine how such particulars are being used.

I cannot imagine this to be tolerable by local regulators. Is there a channel where we can notify the regulators to look into this matter?

Many thanks for reading.

REPLY

You can lodge a complaint with MAS.

Monkey sprayed with water

Have you wondered why some government or company regulations are followed mindlessly for years, after they have lost their purpose? Read this story.

Monkey sprayed with water

Neighbourhood schools now require balloting

Hi Mr Tan,
You said "parents have the choice to ignore these competitive requirements and send their child to a nearby school, i.e.instead of competing for the "good" schools.". I wish to update you on the P1 registration today. Many so-called non-famous schools (eg. in Woodlands, Sembawang) require balloting nowadays. This is due to the fact that PRs enjoy the same priority as citizens for P1 registration. As S'pore PR is easily obtainable, this is tantamount to giving foreigners equal standing as citizens for P1 registration. The recent amendment to give citizens an extra ballot slip is just cosmetic. A PR whose sibling is already studying in the school will get priority over citizens without one. Is this fair?

The P1 registration priority system is very convoluted for a reason. It allows many well connected parents to obtain backdoor entry to famous schools without a soul noticing. I have come across such cases before. It is ironic that this government prides itself as being meritocratic!


TY

Understand your life insurance needs

Many people have to consider life insurance when they are approached by an agent (or someone who is called an adviser or consultant). The agent will tell them about the risk of premature death or critical illness or the need to save for the future, and recommend a life insurance policy as the solution.

The agent is well trained to tell convincing stories to the consumer, but these stories are often exaggerated. The life insurance policy is usually not in the interest of the consumer, i.e. the consumer can find better alternative solutions. The agent is likely to recommend the life policy that pays a fat commission (usually several thousand dollars) to the agent, and is taken away from the consumer.

I strongly advice consumers to be educated about life insurance and personal financial planning so that you can make a better decision for your future. You can read my book on financial planning (www.tankinlian.com/ishop) or attend the educational talks conducted by FISCA (www.fisca.sg).

You can also get answers to specific questions in the FAQs posted in my website, www.tankinlian.com/ask.aspx. Some of these FAQs can be found by searching for the keywords below:

Half truths
Right prioirty
Low cost
How to say "No"

My message is specially directed to young people who are starting work for the first time, as you will be the target of several life insurance agent within a few months. Some of them are your classmates or friends. You need to know how to ask the right questions and how to say "no" to them. You have to learn this skill, as it could save several thousand dollars from being wasted.

My message is also for parents of these young people. Do pass this message to your children. It will mean a lot for their future.

Tan Kin Lian

Competing to enter "good" schools

Hi Mr Tan,

Recently, there was an article about MM Lee acknowledging that admission to primary school is "unfair"
http://edvantage.com.sg/edvantage/news/news/493926/MM_Lee_admits_admission_to_primary_school_is_unfair.html

I have a toddler myself and I am aware of the "pressures" that many parents face when thinking about their child's education.  Many parents start signing up for parent volunteer work, planning for move, when the child is like 2-3 years old (maybe even younger) and there's alot of emphasis on which schools to go to, based on the "perception" that some schools are better than others. For the teachers, I am sure those who are from the "elite" or more popular schools will face added pressure of keeping up their "reputation", will it inevitably focus more on academic results than the development of the child per se?

I am overseas, and until the day i return to Singapore, I guess I am "fortunate" not to be overly stressed by this issue. But I am just wondering aloud here, is it unthinkable that the education ministry scrap all these "crap" about alumnus, parent volunteer etc, and let the MAIN critieria for admission be proximity to the school and siblings being in the same school. Wouldn't that level the playing field, instead of the current vicious cycle?

Do you have any views? Whether what I suggest is a viable option to consider by our government?

MY REPLY

Parents have the choice to ignore these competitive requirements and send their child to a nearby school, i.e.instead of competing for the "good" schools. 

I was educated in a primary school near my home, and it was not a "good" school. I was able to top the school without too much hard work and continue my secondary school in Raffles Institutition (which I entered on merit). I did receive an education that was suitable for my working life.

 

Tan Kin Lian

Manila, Philippines

 

Rich people should pay more taxes

Here is the view of Warren Buffett:
http://www.bloomberg.com/news/2010-11-21/warren-buffett-tells-abc-rich-people-should-pay-more-in-taxes.html

Know what is happening in Singapore

There are many things happening in Singapore that citizens should be aware of. Some of these happenings are negative, and are not covered in the local media, as they only present the positive sides. They are covered by bloggers and are usually well written. You can get updated on these happenings by visiting the General Election portal (SGEP).

For example, there is the case of a young man, borne in Japan with a Singaporean mother, who lived in Singapore since 10 years old and served National Service. He overlooked to make his oath of negligence (as he was not aware about it) and his citizenship is taken away. No one in the civil service is willing to take the responsibility to bend the law and allowed him to retain his citizenship. This is quite typical of behavior in Singapore - no one wants to take the responsibility - not even the Minister!

Be aware of the issues. Read SGEP. At the next general election, ask yourself .... do you wish to see changes for the better?

Wall Street Cover-Ups, Deceptions and Lies

Hi

Here is an interesting article whose contents you already know but good to share with your readers.

http://www.uncommonwisdomdaily.com/wall-street-cover-ups-deceptions-and-lies-10676?FIELD9=5

Mike

John Lennon’s song and Tommy Wong’s books

Listen to John Lennon’s song “Imagine” and read Tommy Wong’s books “Wisdom on How to Live Life”, you will find that amazingly both deliver the same message for the betterment of mankind.

The books can be ordered here.

Teaching of Chinese language

I met someone recently who come from a family with a strong background in Chinese education. He spoke strongly against the new method of teaching Chinese using Pinyin. The students focused too much in Pinyin and did not pay sufficient attention to the Chinese writing. He said that this approach would destroy the Chinese language and culture. According to him, this view is shared by many Chinese language teachers.

He further remarked, "Just because some elites have children who are not able to cope with Chinese, they are now changing the system to suit their own purpose!" This is a strong statement, but I sense that there is probably some grounds for this belief. To avoid this type of feeling, it is best that these types of issues should be openly discussed. It is bad for decisions to be taken by a few elites, making the other people feeling left out.

Skyway in Manila

I am now in Manila to speak at a seminar. On the way to the hotel, the limousine went up a road called the "Skyway". It is an elevated highway. There is no toll fee. The skyway is not congested and the traffic flows smoothly. Most cars use the ground level road as they travel a short distance and have to make turns. The skyway is useful for long distance travel.

14 years ago, I suggested to the Minister for Transport to build a second level expressway above the Central Expressway. This would be suitable for long distance travel and would relief the congestion on the CTE. He consulted his engineers and replied that there were technical constraints. They did not want to talk to me. I disagreed with the assessment, but did not wish to pursue the matter.

I believe that the elevated highway is a good approach to relief the traffic congestion and should be considered as a possible solution.

Tan Kin Lian

Will Singapore face the same outcome as Ireland?

Should we be worried about Singapore? Prevention is better than cure.

DareToAct

Excerpt:
Ireland was one of the poorest countries in Europe when it joined the EU in 1973 along with Britain. Even with European subsidies, unemployment in the mid-1980s averaged 16 percent.


In the 1990s, lured by a 12.5 percent corporate tax, companies such as Pfizer Inc. and Microsoft Corp. helped Ireland export its way into becoming the “Celtic Tiger.” The jobless rate sank to 3.9 percent by 2001. In the decade through 2006, Ireland grew at an average annual rate of about 7 percent, the fastest among euro-area countries.


That expansion, together with easy credit, fanned a real- estate bubble. Home prices almost quadrupled in the decade through 2007. It went disastrously wrong for Ireland following the 2008 demise of Lehman Brothers Holdings Inc ., which turned the slowdown in the property market into an implosion that engulfed the economy. The ISEQ stock index has plunged 70 percent from its record in 2007.
 
My view
Singapore is following the same path and is likely to face the same outcome.

Unreformed socialist

I met a doctor friend who has known me for many years. He remarked, "Kin Lian, I heard you speak at the medical seminar. You are an unreformed socialist. This is a dangerous occupation in our capitalist society today".

I understand his remarks. So many powerful people in Singapore, including our government leaders, are pursuing their personal wealth and interest. Someone who is willing to speak for the ordinary people, will not be welcomed by them.

It is sad to see what has been happening in recent years. We have among the worst income distribution in the world, as measured by the Gini coefficient. Many people have to work on two jobs to earn enough for the family. They are paid wages that are way below the poverty line, and yet our leaders refuse to consider a minimum wage.

Singapore made the best progress in our earlier years, when the economic policies were more fair and equal ( i.e more socialist), than they are today. Singapore was a more cohesive society in the old days.

Tan Kin Lian

Recognize the right priority

The insurance agent tells consumers that their biggest risk is premature death and critical illness. This is not true. The chance of this happening during the working life ins less than 10%. More than 90% is likely to work till retirement without facing these risks. They are more likely to retire with inadequate savings, in spite of saving prudently over a lifetime, because a large part of their accumulated savings is taken away from them due to the bad life insurance policies. This is a bigger risk facing more people.

www.tankinlian.com/latest.aspx

ILP - sharing our experience and mistake.

Dear Mr Tan,

Here is my two cents worth for investment linked products. My wife being the naive person she is bought some insurance/investment plan from DBS/AVIVA called her assurance gold in a bid to earn a decent return on her hard earned money but alas she was sweet-talked by a financial planner to sign up for the plan.

Once the plan had been signed, the financial planner did not call her for the next 5 years and she had faithfully contributed $500/mth to this plan.

She started investing in this product in July 2004 till present Nov 2011 which would make it a total of 77 months of premium paid up to date. (Do correct me if I got the months wrong) Thus paying up to $38,500 in total. The current value is worth only $26,650.22 which a loss of 31% (no including inflation)

After selling the policy, agents have a hands off approach. I do believe that most people are better off investing in an STI ETF or some blue chip share which gets dividends.

I do hope that other investors do learn from our mistakes and not be CONNED into buying investment linked products from agents who think of nothing but earning a quick buck from naive people like my wife.

My pain is your gain!

*Kindly take note that most insurance agents do not have a basic salary or a very low basic salary thus they would sell products which would give them the most commission as just to meet the client, they would have to pay for dinner, transport, parking etc thus selling low commission products such as term insurance would not make sense to them.

PUT YOURSELF IN THEIR SHOES, WOULD YOU BE SELLING TERM INSURANCE TO EARN A MEASLY COMMISSION OR INVESTMENT LINKED/LIFE INSURANCE? (Food for thought)

KC

My view
Although an insurance agent needs to earn an income, it does not justify selling a policy that makes the customer poor for a long time. Some agents earn more than a modest income to make a living - they earn a large income of five figures a month.

The agent claims to be professional and to give advice in the interest of the client. It is bad for them to mislead the client and sell bad products to rip off the client.

Rising cost of health care

Are you financially prepared to meet the rising cost of health care when you are retired? How much does it cost? What is the best way to preserve your Medisave savings to meet this rising cost? Here are the tips.

www.tankinlian.com/ask.aspx