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Rebating of insurance

As a insurance agent I am very concerned that recently the portal below have launched sales of insurance term and whole life products online giving as much as 50% commissions back to the client. They represent quite a few reputable insurers.

http://www.fundsupermart.com/main/research/viewHTML.tpl?articleNo=8179

I know that the FAIR recommendations has suggested the sales of insurance products online which to my understanding insurers have to redesign their products to make them cheaper and not rebating commissions like this case.

With such portal in place, clients will tend to 'bargain' with agents asking for commissions rebate. Are we going back to the past practices 10-20 years ago of commissions rebate.

We may come across clients asking for quotes and finally enticed with the 50% rebates and purchased online. This will definitely impact the livelihood of the estimated 20,000 agents in the market.

Something is not right by allowing corporate entity to rebate commissions. Is this a common practice worldwide or are we the first in the world to give commissions rebate to consumers.

What is your view Mr Tan.
REPLY
I understand your concern about the practice of rebating. However, I do not have any strong views on this matter. 

I believe that a good insurance agent, who is able to advice the client properly, deserves to be fairly remunerated. It may be better for the agent to go on a fee-based basis.

Akin to deposits

1 May 2013

Editor

Forum Page

Straits Times

I wish to give my rebuttal to the letter from Miss Grace Tan Mui Gek
"Why protect these investors?" (ST 1 May 2013}

Ms Tan did not address my key concern. There are already existing laws

on deposit taking and issue of securities that are supposed to be administered 

by the Monetary Authority of Singapore (MAS). 

The gold bar scheme that promises an attractive rate of interest and return 

of capital is akin to a deposit. It should be possible for the MAS to advice the 

operators that they could be running foul of this law, and if they still persist, to 

file a charge in court.

Miss Tan give the ridiculous example of strangers standing outside the 

corridor of her flat. I am not asking the authority to act against these 

strangers.

I am asking the authority to act against a company that is registered in 

Singapore, promotes investment schemes that could infringe the 

existing laws in Singapore, advertises their dubious products through 

the main newspapers, television channels or public talks, and 

carrying on these activities for several years. 

Being allowed to operate for so long, they acquire the mantle of 

authenticity. 

By putting them in the Investors Alert List, they MAS do know

of the existence of these dubious schemes but did not take action to investigate. 

How many members of the public are aware of the existence of such a list?

Some of these products are later found to be fraudulent and have been investigated

by the Commercial Affairs Department. But the action is taken far too late, and

too many investors have lost a lot of savings. This will bring down the good

reputation of Singapore.

Tan Kin Lian

President

Financial Services Consumer Association

Bashing bad products and unethical agents

A former colleague in NTUC Income was unhappy to read several postings which he consider to be "bashing insurance agents". This is an unfair comment. 

1.  I "bash" bad insurance products that are unfair to consumers, such as taking away a large part of their savings for most duration. This is like "highway robbery".

2. I "bash" insurance agents who know the products to be bad, but hide these bad features from their clients. These agents only want to make the sale and earn the commission, but do not care about the interest of the client.

3. I know that some insurance agents, especially those who recently joined the industry, are not aware about the bad features as the training is defective. I do not wish to "bash" these agents, but ask them to learn more about the products and make a balanced recommendation to their clients.

4. I encourage consumers to buy a good insurance product, even if the premium rate is slightly higher than the lowest offer in the market. The insurance agent need to earn a living and the insurer need to cover their expenses and make a profit. Be willing to pay a fair price, even if it is slightly higher.

5. Life insurance, if properly designed, is good for consumers to save for the future and to provide protection for their family. I urge the insurers to offer the products that are fair to consumers.

Surplus in Government Budget

I heard some remarks by Leong Sze Hian in Hong Lim Park regarding the surplus in the Government finances. 

The government reported a surplus of $3 billion but according to IMF accounting conventions, the actual surplus is $30 billion. (I cannot quite remember the figures that he used, so this is based on my recollection).

He said that IMF convention recognize land sale, and transfer from government agencies as revenue to the government, but they were ignored in our government budget figures. I agree with the approach by IMF in this respect. 

I consider the reporting adopted in our budget to be under-stating the actual surplus.

Potential changes in HDB policies?

There are some discussions along the following lines:

1. Remove the salary cap to qualify for HDB houses
2. Give subsidies (grants) according to level of income
3. Remove the executive condo (EC) scheme
4. Require HDB owners to sell their HDB flats when they buy a private property.

I support these moves. They will improve the supply of housing for the people. It will also help to stabilize prices.

Sharing the results of economic growth

PM Lee said that "growing the economy is the best way to boost wages".

This is an important strategy, but it has to be supplemented by other measures. We also need to ensure that the results of economic growth are shared fairly among all the parties that contributed to the growth.

In the past decade, we have seen wages had remained stagnant for many workers, while rentals, top management salaries and profits have taken a higher share of the economic output. The cost of living and cost of housing had also increased, so many workers found it difficult to make ends meet. They have to work longer hours to earn enough to get by.

We need to introduce the following measures:


1. Implement a minimum wage that is adequate for a Singaporean to raise a family and meet the cost of living.
2. Offset the higher wage cost by an appropriate reduction in rental, top management salaries and excessive profit margins.
3. Ensure that the final cost to consumers should be kept affordable by creating a market that is free, open and transparent.
4. Regulate the working hours and terms of employment to ensure a healthy work life balance. 

These measures cannot be just "left to the market", which is the approach that is favored by PM Lee. We need a government that is more active in managing these issues. Some matters have to be regulated, while other measures can be left to the market. The government has to be wise in making the right judgment.

Solve this Einstein puzzle

Solve this puzzle, based on Einstein Quiz
http://tankinlian.com/admin/file.aspx?id=801&IID=808

Send your answer to kinlian@gmail.com.
The first 3 winners will get the PDF version of the book.

The physical book can be ordered at www.tankinlian.com/ishop

May Day Message - implement minimum wage

On this May Day, I wish to state, once again, my support for a minimum wage to be introduced in Singapore. 

1. The minimum wage should be adequate for a Singaporean to raise a family and meet the cost of living.
2. The higher wage cost should be offset by reduction in rental, top management salaries and excessive profit margins.
3. The final cost to consumers should be kept affordable by creating a market that is free, open and transparent.
4. The working hours and terms of employment should be regulated to ensure a healthy work life balance.

Workers of the world, UNITE!

Be ready to pay for time

When someone writes an email to me, expecting free advice, I give this reply to them. 

Read this:
http://tankinlian.com/admin/file.aspx?id=740&IID=746

Often, the asker is too lazy to attend talks, to read books, or even to write their issue properly. If they continue this bad habit, they will be ripped off and cheated of their savings.

Send a few dollars and hours to attend my talk or read my books and save $100,000 or more!

Bad insurance policy

Here is a warning against buying a life insurance policy. Read the benefit illustration. Look at the guaranteed cash value and compare against the effect of deduction. If you find the cash value after the 5th year to be lower than the effect of deduction, reject the policy. 
At one time, there was some regulation that give a minimum cash value. This regulation was removed a few years ago. Now the cash value can be very much smaller than the deductions. It means that a large part of your savings and interest, more than 80% in some cases, can be confiscated from you,if you are not able to pay the premiums. This is daylight robbery!
If you have bought a policy that has this bad feature, write to kinlian@gmail.com.

May Day Rally, Hong Lim Park

I am attending the rally at Hong Lim park today at 4 PM. I hope to see many of you there. 
I will not be speaking but will be interested to hear what the speakers have to see. I am bringing clappers to give away to those who recognize me. 
If you wish to sign your protest against the 6.9 million population figure, go to www.tklcloud.com/petition.

HAPPY MAY DAY.

Education policy - a horror story

When you save in an education policy for your child, check the benefit illustration carefully and make sure that you do not fall into a trap. You may be losing a large part of your savings, if you are not able to complete the full policy term.
http://tankinlian.com/admin/file.aspx?id=800&IID=807

Letter to Government Ministers

Here is a list of letters that I have sent to Government Ministers on issues affecting the lives of Singaporeans. In most cases, their response is quite unsatisfactory, such as:

• No acknowledgement or reply
• Giving a reply without understanding the issue
• Refuse to call me for a discussion before giving their reply

This is why I advocate that this Government should be changed. Their current system of governance is bad for Singapore.

http://tankinlian.com/Admin/Information.aspx?CatID=17

Facebook of Tan Kin Lian

I am now more active in posting my views in my Facebook page, www.facebook.com/kinlian. I like to ask my blog followers to set up a Facebook profile and to link to my page.

Digital display of KM of bus stop

I have written to Land Transport Authority to suggest that each bus should have a digital display that shows the km of the next bus stop. This is the same km that is used for calculating the fare.

On boarding the bus, the commuter can check the km of the desired bus stop (say 12.6 km for thomson plaza) and pay attention to the km that is displayed at the stop. The commuter will know if he is arriving or has past the destination.

The passenger may have already found the km of the bus stop from an app, before boarding the bus.

The km proposal is an alternative to the bus stop number.

The LTA feedback manager said that she takes the bus, and does not need this information. I told her that I need passengers need this information when travelling at night or rain heavily or when taking a route that they are not familiar with.

Before you invest in a new business with a friend ...

Retirees with a lot of cash should be careful about starting a new business with a friend. 

I have seen many cases where the business failed, and the friendship broke down. In some cases, the retiree is a passive investor and is cheated by the friend.

If you really wish to invest in the business, you should start by spending a few thousand dollars to get a lawyer to write a legal contract or shareholder's agreement. The lawyer can ask the right question and verify some of the statements made by the promoter.

If you wish to invest in land or other shares overseas, you should also engage a lawyer to do the necessary legal checks.

Send small money now, to avoid losing large sum of money later. Do not be "penny wise, pound foolish".

Rationalize our bus services

There are 500 bus services in Singapore. Yes, 500! Few people are aware about how complicated and messy Singapore has become. 

Due to competition between SBS and SMRT, there is some duplication of services. As the buses have to cover all the side roads, there are many services linking the same destinations but going on many side roads. 

This system is quite inefficient. The bus has to stop every 0.4 km and there are too many stops along the way. This leads to jerky buses and a long journey.

A better system is to have the bus stop every 2 km and have feeder buses to handle the intermediate stops, and also to take passengers along the side roads.

Commuters are already familiar with taking a feeder bus to the MRT station. It will be more convenient to take a feeder bus to the main bus stop, as the passenger alight and board the next bus at the same stop.

Multiple Funds in Investment Linked Policies

Do not invest in any investment linked policies that offer you many funds to choose from. Some of these funds are probably stuffed with bad assets at over valued prices. You will not be able to know one from the other. You may buy into a good fund but later the assets are switched and you get bad results. You cannot keep track of these activities. 

Anyway, a few investors have approached me with funds that show a negative return after 10 years. If they had invested in an index fund over the same period, their investment could have appreciated 50%

intimidation of Leslie Chew

Leslie Chew, the cartoonist of Demon-cratic Singapore, is being investigated by the Police for offences under the Sedition Act. 

I find this action to be intimidating and deplorable. Sedition are actions to incite disorder leading to the overthrow of the Government. His cartoons, suggesting that a minority might be unfairly treated, is an opinion that will hardly be taken seriously. 

Many Singaporeans are now quite worried whether their views and criticism of the Government might lead to investigation under the Sedition Act. 

This climate of fear is unwarranted. I urge Singaporeans to have more courage in expressing our views.