Saturday, October 17, 2015

What to look for in a benefit illustration

Mr. Tan,
An insurance agent tried to sell a life insurance policy to me. I asked him to explain the benefit illustration to me. He was at first reluctant, but he did it with some effort.
I found the explanation very confusing. There were so much detail, such as how the insurance company invested its funds.  He explained the different percentages invested in different types of investments. As I am not an investment expert, I do not know if their investment policy is good or bad.
I do not know how to interpret the information - why they earned a good return in some years and a poor return in other years.
After listening to him for one hour, I am still confused. I don't know if I should or should not buy the policy.

There are two items of information that are relevant for your decision.
1. Distribution cost
2. Effect of deduction

Ask the insurance agent to explain these two items to you. Also, ask them to tell you how much is the distribution cost, and who pays for it. It is actually the amount that is taken from your premiums. The amount is usually very big. Ask yourself, if the insurance agent ask you to pay a fee equal to the distribution cost, will you be willing to make this payment?

Ask the agent to explain the effect of deduction. Ask him to explain why it is so much more than the distribution cost. Ask him to explain how this effect of deduction impact on you, the customer.

If you are still confused, you can buy this book and read an explanation.

Friday, October 16, 2015

Travelling on Hong Kong MTR and Singapore MRT

This article shows the difference in experience between travelling on the MTR in Hong Kong and the MRT in Singapore. Although it carried a Westerner name, it is likely to be written by a Singaporean. Still, the description is fairly accurate.

A ferry puzzle

I went to Circular Quay in Sydney to take the ferry up the Parramatta River to Paramatta town. The 3.07 pm ferry stop at one stop before Paramatta and passengers have to transfer to a free bus shuttle to the destination. The next ferry at 4.07 pm goes all the way to Parramatta. Why can't the 3.07 pm ferry go direct to Parramatta?

Rider to cover critical illness and early detection

Hi Mr. Tan
Is it necessary for me to buy the rider to cover critical illness and early detection together with the term insurance policy?
There is a small risk of critical illness during the 25 years of the policy, but it should be very small. If you buy the rider, make sure that you are paying a fair premium. Ask three insurance companies to provide a quotation for the term insurance and the rider, and make your decision based on the quotation.
Get an independent financial adviser to source for the quotation for you and pay him or her a fee for this work.

Thursday, October 15, 2015

Buy Term Insurance for 25 years

Most term life insurance coverage is only until around 75 years old. I think due to the advancement of medical technology, people are living to a longer period. If that happens to me, I will not be covered from then on. What are your thoughts on this?

I recommend that you buy a 25 year term insurance policy and invest your savings in an indexed fund or ETF. At the end of 25 years, your accumulated savings, together with the investment return, should be adequate for your future needs. You will not need any more life insurance after that.

Read this book to get an explanation.

Trans Pacific Partnership Agreement

Is it good for Singapore to join the Trans Pacific Partnership Agreement? Give your views in this website.

Parliament should meet at least once a week

Parliament should meet at least once a week for MPs to question the ministers, Do you agree? Give your vote in this website:

Wednesday, October 14, 2015

Summary of voting on the issues

Here is a summary of the voting for all the issues in the website.

When you click on Pick, you can see the reasons for and against the issue. You can see the reasons given by the voters. You can also submit your vote.

Misleading advertisement by Scoot

I received an email from Scoot advertising a fare of $89 between Singapore and Sydney.
When I visited their website, I received some difficulty in accessing the information. It could be due to heavy traffic.
I finally found that the fare is $170 to $300 (not $89) and the add on for taxes and surcharges is $90.
The advertising is misleading. It is causing a lot of trouble for the customers.
In Australia, there is a regulation that airlines should advertise the actual fare, and not the net fare (before add on and surcharges). The regulator in Singapore should impose a similar requirement to avoid a lot of unproductive activity.

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