Friday, December 10, 2010

Risk of becoming an insurance agent

Some people gave up an office job to become an insurance agent, on the promise of being able to increase their earnings significantly. There are risks, as explained by the wife of an ex-insurance agent.

Do consider carefully, before you jump in. You may face stress, feel bad about cheating your friends, or suffer financial loss!

Thursday, December 09, 2010

Low cost investment fund

Read about the key issues in investing in a low cost investment fund, i.e. liquidity, diversification, dollar cost averaging, long term yield .....

Not insured under Medishield

Some people are worried that their parents are not insured under Medishield. The cost of health care will increase as they grow older. This article explains how you can cope.

Wednesday, December 08, 2010

Political event of the year

Register for this interesting event.

CPF Life - making a choice

Here is an analysis about CPF Life - is it good or bad?

High speed trading in the stock exchange

Be careful about trading in the stock exchange. As a small investor, you are at a disadvantage against the big traders that have access to high speed trading tools. More can be found in SGEP

Property Bubble

There are some lessons that should have been learnt from the 1996 property bubble and the link between the bubble and the effects Asian financial crisis that came shortly after that housing bubble.
Many Asian countries appeared to have learnt from that episode to keep bank lending in real-estate market low. If the lessons from 1996 have faded, there were reminders from the recent subprime crisis in the USA and what happened in Ireland.
Many Asian countries appeared to learnt the lessons well to contain the risks to financial system...but there are exceptions.


Guess which country is the exception? It is quite close to home ... actually it is home! Read Lucky Tan's blog in SGEP

Oil price hit 2 year high

Oil price is now at US$ 90 per barrel, a 2 year high, due to the weak US dollar and demand from China.  Petrol prices are expected to increase in Singapore. This will also impact on electricity prices and other cost of living. The prospects for the global economy is not good. It is in a mess, with no solution. Read my view here.

Red Cross and donations

Red Cross reported an employee who pocketed $90,000. The Commission of Charities asked Red Cross to stop collecting actively soliciting of donations. In my view, the Commissioner has been over-reacting to this situation.

For a large organisation, the risk of embezzlement by an employee is always present. It is not possible to have perfect loss prevention - unless the requirements are made rigorous and impractical. In some cases, the correct response is taken when a loss occurs, i.e. loss reduction measure. The Red Cross has taken this measure to report to the Police and the Commissioner of Charities.

However, the mindset of the bureaucrat under the Singapore system is:

1. I need to have a perfect KPI, to earn a bonus and promotion.
2. Any mistake will damage my KPI
3. I close my eyes and ears - so that I do not have to report any shortcoming
4. If a problem occurs, I will try to find another agency to be responsible
5. If the problem is in my turf, I will find the perfect system (i.e. doesn't matter if the cure is worse than the pain).

(I removed my previous message about the corrupt manager, as I quoted the agency - sorry).

Tan Kin Lian

100 mishaps a day on expressways

The Straits Times reported an average of 100 mishaps a day on expressways, up 40% from three years ago. Most caused 20 minutes delay.

My views:
1. It is quite a hassle to drive on our expressways. It is congested most times of the day. Traffic moves slowly.
2. Singapore has the twin disadvantage of high cost (i.e. COE, ERP) and slow traffic.
3. I prefer to travel my MRT but it is quite troublesome to reach a destination that is not served by MRT
4. Our transport system is now quite bad.

Tan Kin Lian

Renovation: Market forces decide certification fees

Reply in Straits Times Forum

WE THANK Mr Tan Kin Lian for his feedback ('Renovation certification:  It does not make sense to impose such a heavy fee for small premises'; Dec 2).

Major G. Gobi
Senior Staff Officer (Media Analysis) Public Affairs Department
Singapore Civil Defence Force

My reply
It is nice of Major Gobi to give a detailed reply. This is quite rare nowadays. In most cases, the relevant department ignore the issue, pretending that it is somebody else business.

Here are the points that I will be sending directly to Major Gobi:

1. Market forces does not work.

2. Consumers are being fleeced to pay high fees for minor work.
3. I have asked 4 renovation contractors to quote for the work - all of them added the cost of around $3,500 for  the fire safety works, even though it is mainly minor addition/ alternation to the premises.
4. It is easy for SCDF to regulate the fee for small scale work - rather than leave the public to be fleeced
5. The SCDF can make enquiry with the public on how much they are paying to meet the fire safety requirements, rather than say "leave it to the market".

I will send the letter to Straits Times again, but they may not publish my letter.

Tuesday, December 07, 2010

Be wary of dishonest agents

A dishonest agent will tell his client that his company has introduced a new policy that offers better benefits, and get the client to switch to the new policy - allowing the agent to earn a fat commission again, at the expense of the client. Read this article and avoid being fooled by a dishonest agent.

Opposition participation and the coming election

Read the views by Patrick Lee, an astute political observer:

And the playing field has never been so inviting to the opposition than now. Even the illiterate uncles and aunties in hawker centres and void decks were discussing how difficult life is now with everything becoming more expensive. Even the ordinary folks are saying PAP is hoodwinking them.


Suzy Orman

Suzy Orman is a financial adviser who hosts a weekly program on  CNBC. She gives advice on investment, insurance and financial planning. She has strong views against insurance policies that are bad for consumers. Read her views here.

Public talk by Dr. Jacques Attali

On the 13th of January 2011 we are organising a ‘Public Talk’ by the French economist and writer Jacques Attali, one of the top 100 public intellectuals of the world.
This event is co-organised with the Institute of Southeast Asian Studies (ISEAS).
Singapore Foreign Minister Mr George Yeo will be present in this event to introduce Dr Attali.
This will be an open session where people from different walks of life living in Singapore would get an opportunity to interact with Dr Attali.
The topic for discussion: “Is The Global Economy Still In Crisis?”
The venue of the event is the Ballroom, Raffles Hotel (13th January, Thursday, 10.00 am to 12.00 noon)

register on our website at 

Practical Guide on Financial Planning - case study

Here is a case study of a person who has read the book, Practical Guide on Financial Planning, and has a few follow up questions on how to apply the principles in the book.

By reading the book and considering how to apply the principles, the consumer is able to have a good understanding of the subject and make the right financial decisions, with confidence. The book can be purchased here.

Standard of postal service

The standard of postal services seemed to have deteriorated. Some citizens have complained in the past, that Sing Post is now engaging in too many business activities, in the quest to boost their profits, that they are neglecting their core functions.

Read about the recent incidents of poor service in SGEP.

Blatant cheating (3)

An unwary consumer was cheated by an insurance agent into buying an investment linked policy (ILP) with an annual premium of $40,000. She thought that she was investing $40,000 in a unit trust. The agent assured her that she would get a better return.

She did not know that the annual premium ILP would take away more than 1 year of her savings. She was not given the benefit illustration and did not receive the policy document. The half yearly statement showed by the insurance company indicated the fund value to be quite close the the invested sum, but the surrender value to be only 10% of the fund value. She did not understand what the surrender value meant.

When she asked the agent for explanation about what was happening to her investment, she received vague and evasive answers.

MAS relied on the board of directors and top management of insurance companies to have a process to govern the behavior of their insurance agents. It is not clear about what is required to be done.  Surely, if someone buys an ILP with an annual premium of $40,000 and the insurance agent (and agency manager) is likely to earn more tan $40,000 in commission, an enquiry should be carried out to make sure that the customer is aware about the surrender charge?

If this is not happening, what is the MAS requirement for? Is it just to appear good? Is MAS interested to know the details of this case? Will their official, who is monitoring my blog, contact me?

Tan Kin Lian

Comparing whole life and term insurance

Lorna Tan (Sunday Times Money Page) gave a bad comparison of whole life and term insurance. The whole life policy insuring $500,000 cost nearly $11,000. She said that the term insurance policy (insuring up to age 99) cost $3,300. This is the line of reasoning used by insurance agents, and in a dishonest manner, to get people to buy whole life insurance.

The proper comparison is a 25 year term insurance policy, where the annual premium is $800. The balance of $10,000 can be invested in an indexed fund to earn 4% or more over the next 30 years. It will produce an accumulated savings of more than $500,000. By that time, there is no need for life insurance - as the accumulated savings is more than the sum assured!

By buying a whole life policy, the consumer will have a cash value that is 40% to 50% less than the accumulated savings. Why give so much of the savings away in a whole life policy?

Tan Kin Lian

Courts charged 36% on installment payments

Some time ago, I saw an advertisement by Courts about the cash price and the installment price of their products. They used a standard formula. The interest rate embedded in the installment price is 36% per annum.

Consumers may not be aware about the high interest rate that they have to pay for installment payments.  They should consider saving the money and paying for their purchase in cash, to reduce their cost by 36%.

I do not know if Courts is still charging this high interest rate now. I shall check when they next have their advertisements in the newspapers.

Tan Kin Lian

Computer buyers sent on a wild goose chase

Monica Lau wrote in the Straits Times about an advertisement by Courts Bukit Timah offering a Dell notebook from $399. After taking the trouble, "braving the rain" to be at the store, she found that there was no such offer. The only Dell notebook was being sold at $999.

Was this a misleading advertisement? Are there anybody who takes action to address these complaints? Is this another example of the "buyer beware" culture?

US to extend tax cuts

President Obama has proposed to extend the Bush tax cuts for two years, in return for the extension of unemployment benefits. This is great for Americans, but is bad for the US deficits. How is the US going to pay for their wasteful spending, without the tax revenue to pay for it? More borrowings from the other countries? Watch for the collapse of the US dollar!

High cost and poor standard of taxi service

There are two letters in the Straits Times Forum about the poor standard of taxi service in Singapore. Taxis are not available on rainy days to pick up passengers at taxi stands or on the road, but they become available on taxi calls,where a large surcharge had to be paid. Commuters have been asking the authority to act against errant taxi drivers.

This type of complaints had been aired on countless occasions in past years. Nothing has been done to address this situation. It is not possible to rein in the errant taxi drivers, who have their own side of the story to tell. They have to pay high taxi rental fees and need the surcharge to make a living.

This is Singapore! Everyone is in the business of ripping off the consumers to make the extra buck. This is why citizens are complaining about the high cost of living in Singapore. And this is possible in the pro-business culture   that is being encouraged by our government of the day.

What can be done to improve our taxi service? I have written a letter to the Straits Times. I hope that they publish it.

Tan Kin Lian

Excessive charges to boost profits

I read the reply from the Executive Director of the National Dental Center of Singapore. Dr. Kwa said that the fee for the medical report reflect some of their cost. It seemed to imply that the other part of the fee is to make profit for the center.

The situation in Singapore has become very bad in recent years. Many corporations, private and public,  find ways (and excuses) to increase their profits, imposing a high cost on consumers. This is made in the interest of increasing productivity, efficiency and service. In reality, it is ripping off the hapless consumers in a deregulated environment. It is also unethical business practice, but has become a habit in Singapore.

When will our government leaders wake up and find out why the citizens are complaining about the high cost of living, and the high cost of operating a business in Singapore?

There was a time, in a more ethical environment, when corporation give incidental services free or at a nominal fee. There were not allowed to make profits from these services. I wish to go back to these good old days.

Tan Kin Lian

Enjoy discounts on books

There are two book bundles giving attractive discounts:

a) Bundle of 5 books - with 40% discount
b) Bundle of 3 copies of Financial Planning book (buy 2, get 1 free). Three friends can share this discount.
c) Bundle of 3 books (book 1, 2 and 3) - Wisdom on how to live life - Dr. Tommy Wong

Available at

Monday, December 06, 2010

US needs more quantitative easing!

It is frightening that the US needs any dose of quantitative easing. Although the first two round has caused havoc around the world - asset bubbles in Asia and the potential of the collapse of the US dollar.

Social safety net

Does Singapore have a good social safety net? Read Ng Kok Lim's reply to PM Lee.

TKL Tips

Tips on financial planning, buying insurance and healthy lifestyle can be found here.

More topics will be added later.

Avoid insurance agents

I wish to advise consumers to avoid insurance agents (unless this is someone that you know and can trust). I have seen too many cases of insurance agents cheating on unsuspecting consumers by telling blatant lies. (There are many cases where they used half truths, which is also dishonest, but not as bad as blatant lies).

This statement may be unfair to some agents who act honestly and take care of their customers' interest. But it is difficult for consumers to tell the honest agent from the dishonest ones. This situation is made worse when the the dishonest agents are allowed to get away scot-free by asking consumers to sign blank forms. Some of the life insurance policies are clearly unfair to consumers, with excessive charges that seem to be designed to rip off the unwary consumers.

I urge MAS to investigate complaints of dishonest practices, rather than let the matter be decided by FIDREC as a dispute. FIDREC takes a long time to decide, and does not have the disciplinary power.

Tan Kin Lian

Blatant cheating (2)

I helped the consumer to write the complaint the insurance company and MAS. She was cheated by an insurance agent who sold her an annual premium investment linked policy for $40,000 (the actual amount is higher). She did not receive the policy document or the benefit illustration showing the charges.

A few months after the policy was issued, the investment dropped by 14% (but I don't know if there is a front end charge of 5%). The surrender value, which she did not understand, was only 5% of the invested sum, presumably due to the back end surrender charge. All of these facts were not explained to the consumer. She did not know that she was sold an annual premium policy that had a high back end surrender charge. Clearly, the agent cheated her.

Well, she did sign a blank form - and she admitted that it was a mistake. She admitted that she was naive for parting with such a large sum of money to a person (from a well know insurance company) who promised a higher return than bank interest. She had also invested in unit trust before, but the bank did explain the details to her. In the case of the agent (actually called financial services consultant), she thought that it would have been like a unit trust, but she never knew that it would be an annual policy that had a big back-end surrender charge.

I tried to look for an e-mail in the MAS website for her to send her complaint. There is no such e-mail address. There is a prominent message that all disputes with financial institutions should be sent to FIDREC. MAS should realise that that there is a difference between a dispute and a blatant cheating case, and should have an avenue for consumers to address MAS directly.

I wonder why the insurance company never made any enquiry about an annual premium policy of $40,000. The consumer is clearly not in a position to afford such an annual premium. It represents a large portion of her her hard earned lifetime savings, which is now going up in smoke.

MAS has been relying on financial institutions to act in the best interest of consumers and consumers to be educated. No amount of education can help consumers who can be easily cheated by crooks. I hope that MAS will make an investigation into such types of cheating cases.

Tan Kin Lian

Indisputability clause in insurance policies

This article explains the indisputability clause, and how consumers can be protected under this clause against unfair rejection of claims.

Ask Mr. Tan

Sunday, December 05, 2010

Blatant cheating

Some insurance agents cheat their customers blatantly. I have just received an e-mail from a consumer who was asked to invest $40,000 from cash. Originally, she was supposed to invest from the CPF account but was later persuaded by the agent to pay in cash.

She was shocked to learn that the investment had depreciated by a lot for 1 year. Now, she received a notice to pay an additional $40,000. The agent must have sold her an annual premium policy. She certainly could not afford this amount of annual premium.

From her e-mail, she is quite ignorant about the policy, and signed for the policy only on the vague promise by the agent that it will earn a higher interest rate than CPF (which is also a blatant lie, as there is a large amount deducted to pay commission).

I advised the consumer to write a letter of complaint to the insurance company and to MAS and will assist her to draft the letter.

Pay premium for the whole of life

The insurance agent says that you need whole life insurance, because the cash value is so poor that you need to continue paying the premium and be insured for the whole of your lifetime.

If you buy a 25 year term insurance and invest the savings in an indexed fund, you can accumulate sufficient savings over 30 years to stop your life insurance policy. You would have accumulated sufficient savings that will be more than the sum assured. You will not need life insurance any more.

Remember, if you listen to the bad advice of an agent, you will certainly need whole life insurance, because you will never be financially independent. But, if you invest your savings in an indexed fund, you do not need life insurance after 30 years!

Riddle - what is this object?

The rich man needs it. The poor man has it. If you eat it, you die.

Mobile games on Windows Phone 7

I have developed 4 applications for the Windows Phone 7. This link allows you to view the videos of the applications:

The applications are:
  • 4D Simulator - simulate the 4D draws over 1 year and shows how many times your number (including permutations) appear.
  • Toto Luck - take your date of birth to generate random numbers and shows you the 7 Toto numbers that appears most often out of 10,000 numbers in the series.
  • One in a Million - takes your date of birth to generate random numbers and shows you the 4D numbers that appear most often out of 1 million numbers drawn at random
  • Entrepreneur - allows you to play the game of pricing, marketing and capacity for a product against 9 simulated players over 12 months.
These applications will be made available on Apple and other mobile platforms soon.

FISCA talk on financial planning

I gave a talk on financial planning under FISCA. 50 people attended. The majority of the participants are young people.

FISCA is now able to reach out to young people. It is wonderful, as the young people are likely to be the people who will stand to benefit by being educated and avoid giving a large part of their future savings away in a low yield insurance policy.

I encourage young people to attend the FISCA talk ( and be educated. You will be able to avoid being misled by an insurance agent who is only keen to earn a fat commission at your expense.

If you meet an insurance agent, who is highly trained and persuasive, this is how you can say "No"

You should also listen to the videos from Suzy Orman. Although she made her point in the context of USA, the same points are applicable in Singapore. In fact, the situation in Singapore is worse for consumers:

Tan Kin Lian

Medishield and Private Shield

Insurance agents scare consumers about the high cost of medical treatment and ask them to buy a private shield. The consumers are not aware that they will have to pay a higher premium, and when they go for treatment, they have to pay a higher co-payment as well. They will be hit twice. Read these articles:

The agent also use a number of myths to get consumers to make the decision that is good for agents, but may be bad for consumers. Read this article:

Apart from paying a higher premium and co-payment, consumers may be hit hard when their claim for reimbursement is rejected due to unintended non-disclosure. Read these articles:

The only reason to go for private shield is the chance that the public hospital do not have the doctor to treat your illness. I think that this risk is low and is exaggerated. There should be more than adequate facility to be treated in our public hospital.

Those who are well off can opt to go for private shield. For the majority, where the savings is not adequate, it is better to stay with Medishield.

Tan Kin Lian

Unethical methods used to sell life insurance

The wife of an ex-insurance agents describes some of the unethical methods used by insurance agents to get customers to buy insurance policies that harm them financially. She said that her husband might also be a victim as he was misled by his manager. Read:


Read the views of the Reform Party and the Singapore Democratic Party on the issues affecting Signaporeans.

Revival of protectionism?

Tan Kin Lian expects the US to resort to some form of protectionism to solve their economic and employment problems. How will this impact Singapore?

Ask Mr. Tan

TKL Tips

Go to this website

Click on
Tips on Financial Planning
Tips on Buying Insurance

Dividend yield on Singapore Equities

Thsi website shows the dividend yield on several Singapore equities, especially the larger ones: One reason to invest in stocks is to get a dividend yield of 3% and capital appreciation. Many shares meet this requirement.

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