Editor
Lianhe Zaobao
I refer to the letter, 'Annuity plans need improvements', by Mr Yang Song Jian, (Zaobao, 23 March).
Mr Yang asked insurance companies to improve the annuity plans to better take care of the elderly. More should be done educate Singaporeans on the importance of financial planning and savings.
I agree.
In a recent survey, we found out that 50 percent of the respondents wanted to increase their regular savings for their retirement. They know that their current savings in the Central Provident Fund is inadequate.
As a general guide, each person should set aside 10 to 15 percent of the regular earnings as savings for the future. They can use the savings for their retirement or to meet emergencies, in they lose their jobs or have to pay a large medical bill.
They should invest these savings in a flexible plan that can give an attractive rate of return, by investing for the long term.
NTUC Income offers a choice of attractive annuity plans. We handle 65 percent of all life annuities sold in Singapore. Our annuities offer an attractive return, an annual bonus (in most years) to supplement the guaranteed return, and a refund of the balance of the capital on death.
There are a few ways for the public to learn about financial planning:
- see an insurance adviser;
- attend an educational talk;
- visit an educational website.
NTUC Income holds an educational talk every week. The topics include retirement plans, medical insurance, financial planning, reverse mortgage scheme, etc. Schedule of the talks can be found at www.income.coop/seminar. Admission to these talks is free.
We also manage an educational website at www.KnowYourInsurance.com.sg. It is available in English, Chinese and Malay versions. The website covers a wide range of insurance topics, such as: personal accident, medical insurance, financial planning, travel insurance and saving for education.
Tan Kin Lian
Chief Executive Officer
NTUC Income
Monday, April 03, 2006
Tips on Financial Planning
My daughter asked me to give three important tips for financial planning to her. Here is my reply:
Tip 1. Save 10% to 20% of your regular earnings. This is in addition to CPF.
Tip 2. Invest in an investment-linked policy (ILP). It allows you to adjust your regular savings. Choose an ILP with low distribution charges.
Tip 3. Invest in global equities or Singapore equities. They are likely to give a better return than bonds. You can get a better return. Risk is an advantage.
After listening to my explanation, she became quite convinced. It makes a lot of sense.
Tip 1. Save 10% to 20% of your regular earnings. This is in addition to CPF.
Tip 2. Invest in an investment-linked policy (ILP). It allows you to adjust your regular savings. Choose an ILP with low distribution charges.
Tip 3. Invest in global equities or Singapore equities. They are likely to give a better return than bonds. You can get a better return. Risk is an advantage.
After listening to my explanation, she became quite convinced. It makes a lot of sense.
Assessment on the spot
Editor
Straits Times
I refer to the letters, 'Pictures can help settle insurance claims' by Mr Sin Chee Kharn and 'Refusal to submit report foils claim' by Mr Goh Khee Kuan (ST, March 29).
Mr Sin shared the usefulness of submitting photographs of a motor accident scene in the claims process.
Each month, NTUC Income handles about 2,000 motor accident claims. About 10 per cent of these are disputed by the parties, who give conflicting versions of the accident.
Since Dec 15 last year, we have introduced the 'assessment-on-the-spot' service. This service provides roadside assistance to motorists at the scene of accident. Motorists who need help after an accident can call 67886616. Once the service is activated, our appointed assessor will arrive at the accident scene in about 15 minutes.
The assessor helps our policyholder and the third party driver to assess the damage at the scene of the accident. He also helps them fill in Singapore Accident Statement (SAS) forms, and takes photographs of the damaged vehicles. Disputes can be minimised if both parties to the accident agree to sign the SAS on the spot.
If anyone is injured, the assessor calls an ambulance and reports to the police. All documents, particulars and photographs will be forwarded to Income for follow-up by its claims officer.
The officer is usually able to come to a decision on the appropriate apportionment of liability. We are fair in our assessment and do not favour any side. If any party disagrees with our assessment, they can ask for an independent expert to review the case or take the case to court.
We have a simple service to leverage on technology to allow a speedy motor claims process. During an accident, motorists are encouraged to use their mobile phone to take photographs of the damage and send them to us via MMS on 93885992 or e-mail photo@income.com.sg
This initiative has received a favourable response and has resulted in a more professional and efficient way of handling liability disputes. An average of 35 cases each month are successfully resolved because photographs were sent to us via MMS.
Freddy Neo
General Manager
NTUC Income
Straits Times
I refer to the letters, 'Pictures can help settle insurance claims' by Mr Sin Chee Kharn and 'Refusal to submit report foils claim' by Mr Goh Khee Kuan (ST, March 29).
Mr Sin shared the usefulness of submitting photographs of a motor accident scene in the claims process.
Each month, NTUC Income handles about 2,000 motor accident claims. About 10 per cent of these are disputed by the parties, who give conflicting versions of the accident.
Since Dec 15 last year, we have introduced the 'assessment-on-the-spot' service. This service provides roadside assistance to motorists at the scene of accident. Motorists who need help after an accident can call 67886616. Once the service is activated, our appointed assessor will arrive at the accident scene in about 15 minutes.
The assessor helps our policyholder and the third party driver to assess the damage at the scene of the accident. He also helps them fill in Singapore Accident Statement (SAS) forms, and takes photographs of the damaged vehicles. Disputes can be minimised if both parties to the accident agree to sign the SAS on the spot.
If anyone is injured, the assessor calls an ambulance and reports to the police. All documents, particulars and photographs will be forwarded to Income for follow-up by its claims officer.
The officer is usually able to come to a decision on the appropriate apportionment of liability. We are fair in our assessment and do not favour any side. If any party disagrees with our assessment, they can ask for an independent expert to review the case or take the case to court.
We have a simple service to leverage on technology to allow a speedy motor claims process. During an accident, motorists are encouraged to use their mobile phone to take photographs of the damage and send them to us via MMS on 93885992 or e-mail photo@income.com.sg
This initiative has received a favourable response and has resulted in a more professional and efficient way of handling liability disputes. An average of 35 cases each month are successfully resolved because photographs were sent to us via MMS.
Freddy Neo
General Manager
NTUC Income
Sunday, April 02, 2006
You can change a nomination
QUESTION FROM POLICYHOLDER
What happens if I have made a nomination for my insurance policy, and many years later when I made a will, I decide to add or change the nominee of the policy in the will.
REPLY
You can change the nomination (by submitting a new nomination) or by cancelling it. If you have a specific nomination in force, we will pay according to the nomination, and not according to the will.
What happens if I have made a nomination for my insurance policy, and many years later when I made a will, I decide to add or change the nominee of the policy in the will.
REPLY
You can change the nomination (by submitting a new nomination) or by cancelling it. If you have a specific nomination in force, we will pay according to the nomination, and not according to the will.
Policyholder ask for supplementary liability cover
Our policyholder wish to rent a car in the USA for 11 days. His rented car pays for third party liability up to about US$50,000. He has to pay US$11 a day to buy supplementary cover for US$1 million.
He asked us to provide this cover to you at a lower rate.
We offer to reduce the rate to US$5 a day, as he already enjoys a 50% no claim discount. The policyholder is delighted to have this offer.
Tentative. We intend to extend this privilage to other policyholders who are insured with NTUC Income. If you rent a car in another country, eg USA, UK, Europe, Australia, you can get this supplementary cover at a discount of 50% from the rate that is normally charged in the respective country.
This will be offered only to a policyholder who now enjoys a NCD of 20% or higher.
He asked us to provide this cover to you at a lower rate.
We offer to reduce the rate to US$5 a day, as he already enjoys a 50% no claim discount. The policyholder is delighted to have this offer.
Tentative. We intend to extend this privilage to other policyholders who are insured with NTUC Income. If you rent a car in another country, eg USA, UK, Europe, Australia, you can get this supplementary cover at a discount of 50% from the rate that is normally charged in the respective country.
This will be offered only to a policyholder who now enjoys a NCD of 20% or higher.
Saturday, April 01, 2006
Car Sharing Scheme
NTUC Income operates a car sharing scheme with more than 3,000 paying members. This scheme is growing in popularity. Here is a feedback from a member:
FEEDBACK
You have got a great team and based on my experience with your team (guys like Kendrick, Dave and Yusoff and Han), are really proactive and go out of their way to support members like us.
Kendrick especially has supported me with the various issues that I faced eg. over the recent weekend, I had a car that was having some continuous sound coming from the back of the car.
Kendrick offered to return back to the office to look into arranging another courtesy car for me. Fortunately, the sound disappeared after an hour later.
Another time, again over the weekend, my car broke down and engine failed to start. Kendrick made altenate arrangement and that really helped a lot
As a result of such positive experience, I have thus always endeavour to recommend to people around me without a car to try out carcoop and refer them to
your website to sign up for trial services.
FEEDBACK
You have got a great team and based on my experience with your team (guys like Kendrick, Dave and Yusoff and Han), are really proactive and go out of their way to support members like us.
Kendrick especially has supported me with the various issues that I faced eg. over the recent weekend, I had a car that was having some continuous sound coming from the back of the car.
Kendrick offered to return back to the office to look into arranging another courtesy car for me. Fortunately, the sound disappeared after an hour later.
Another time, again over the weekend, my car broke down and engine failed to start. Kendrick made altenate arrangement and that really helped a lot
As a result of such positive experience, I have thus always endeavour to recommend to people around me without a car to try out carcoop and refer them to
your website to sign up for trial services.
Friday, March 31, 2006
Reverse Mortgage on HDB Flat - 4th loan
Brief profile: case 4
Mdm X, aged 72 years old is a widow. Her 2 children migrated overseas and now give her a monthly allowance of $400. Her 2-room HDB flat in Jln Bukit Merah has a market valuation of $105k. There is no outstanding loan.
At her request, we have exceptionally approved a lumpsum of $28k over 10 years. Lumpsum is granted to settle outstanding policy loan taken under our Guaranteed Life Annuity.
Mdm X, aged 72 years old is a widow. Her 2 children migrated overseas and now give her a monthly allowance of $400. Her 2-room HDB flat in Jln Bukit Merah has a market valuation of $105k. There is no outstanding loan.
At her request, we have exceptionally approved a lumpsum of $28k over 10 years. Lumpsum is granted to settle outstanding policy loan taken under our Guaranteed Life Annuity.
Tuesday, March 28, 2006
Save for your child's education
The cost of university education can be quite high. The average cost is:
Singapore $40,000
Australia $160,000
USA $280,000
The cost is expected to increase in future years.
Are you saving for your child's education?
If you save $300 a month over 16 years, the total savings with interest will be:
2% per annum: $68,000
6% per annum: $95,000
You can get 40% more, if you can invest in a plan that gives you a higher return, and risk reduced through diversification.
Singapore $40,000
Australia $160,000
USA $280,000
The cost is expected to increase in future years.
Are you saving for your child's education?
If you save $300 a month over 16 years, the total savings with interest will be:
2% per annum: $68,000
6% per annum: $95,000
You can get 40% more, if you can invest in a plan that gives you a higher return, and risk reduced through diversification.
Are Singaporeans working too hard?
In my view, the answer is "yes". Look at the people who work late hours most days of the week.
It is better to work "smart". One can be more effective by working less, and to work on the right priorities.
Here are my tips:
- communicate more
- do the easy things that produce quick results
- act promptly
- ask advice from other people
- do by trial and error
- think, use your judgement
- do not rely on your boss to tell you what to do.
These tips will lead you to more results with less work. It is working "smart".
It is better to work "smart". One can be more effective by working less, and to work on the right priorities.
Here are my tips:
- communicate more
- do the easy things that produce quick results
- act promptly
- ask advice from other people
- do by trial and error
- think, use your judgement
- do not rely on your boss to tell you what to do.
These tips will lead you to more results with less work. It is working "smart".
Advantage of a Nomination
NTUC Income allows a policyholder to make a specific nomination for each insurance policy. This allows the proceeds to be paid to the nominees named in the nomination.
If there is no nomination, the proceeds (up to $150,000) will be paid to a "rightful claimant" which is defined in the Insurance Act as the spouse or a family member. The rightful claimant receive the money and distribute it in an appropriate member among the family members.
The policy proceeds will be part of the estate. There will be other assets as well, such as shares, property and cash.
If there is a will, the estate will be distributed according to the will. If not, it will be distributed according to the intestate law.
However, in most cases, the family members will agree on how the estate is to be distributed. They do not need to follow the formula in the intestate law.
The advantage of a nomination is for the policyholder to set aside a sum of money to be distributed specifically to the nominees. This is useful, if the policyholder has a specific intent. Otherwise, the distribution according to the will or intestate law is a fairer way.
If there is no nomination, the proceeds (up to $150,000) will be paid to a "rightful claimant" which is defined in the Insurance Act as the spouse or a family member. The rightful claimant receive the money and distribute it in an appropriate member among the family members.
The policy proceeds will be part of the estate. There will be other assets as well, such as shares, property and cash.
If there is a will, the estate will be distributed according to the will. If not, it will be distributed according to the intestate law.
However, in most cases, the family members will agree on how the estate is to be distributed. They do not need to follow the formula in the intestate law.
The advantage of a nomination is for the policyholder to set aside a sum of money to be distributed specifically to the nominees. This is useful, if the policyholder has a specific intent. Otherwise, the distribution according to the will or intestate law is a fairer way.
Inflation rate over 50 years
50 years ago, the Reader's Digest magazine cost $1. Now, it cost $9.50.
What is the inflation rate over the past 50 years, for this magazine?
My financial calculator showed 4.6% per annum.
What is the inflation rate over the past 50 years, for this magazine?
My financial calculator showed 4.6% per annum.
An inappropriate request
A customer was unhappy with his interaction with my manager. He lodged a complaint about his "poor professionalism".
I replied that I have taken note of your feedback and that it was probably a misunderstanding.
The customer asked, "I suppose NTUC has in some way going to compensate me for the unnecessary and inconvenience caused?"
I replied that we will not be making any compensation and that his request was inappropriate.
He withdrew his request and closed the matter.
I replied that I have taken note of your feedback and that it was probably a misunderstanding.
The customer asked, "I suppose NTUC has in some way going to compensate me for the unnecessary and inconvenience caused?"
I replied that we will not be making any compensation and that his request was inappropriate.
He withdrew his request and closed the matter.
Saturday, March 25, 2006
Reverse mortage on HDB flats - 3 loans granted
The government recently approved granting of reverse mortgage on HDB flats. We received about 250 enquiries during the first few days.
We have since approved 3 reverse mortgage loans on HDB flats. All applicants are above 70 years old (condition set by NTUC Income). The names given below are not the real name.
CASE #1
Mr & Mrs Chan have no dependents. Their 3-room HDB Flat is situated at Marine Parade with a current market valuation of $240k. There is no outstanding loan on the
flat.
We have approved a monthly advance of $300 over 16 years at a modest loan to valuation ratio of 40%. We may eventually extend to a monthly advance of $540 (within acceptable loan to valuation ratio of 70%), pending borrower's decision.
CASE #2
Mr & Mrs Cheong have no dependents. Their 3-room HDB Flat (23 yrs old) is situated at Jurong East with a current market valuation of $160k. There is no outstanding loan on the flat.
We have approved a monthly advance of $295 over 18 years at maximum loan to
valuation ratio of 70%.
CASE #3
Mr Teo is currently staying with his wife. He is receiving some allowances from his 3 children. His 4-room HDB Flat (18 yrs old) is situated at Simei with a current market valuation of $250k. There is no outstanding loan on the flat.
At his request, we have approved a monthly advance of $400 over 12 years at
a modest loan to valuation ratio of 34%. He has intention to either sell
or downgrade the flat again (previously downgraded fr 5-room) at the end of
the loan period.
We have since approved 3 reverse mortgage loans on HDB flats. All applicants are above 70 years old (condition set by NTUC Income). The names given below are not the real name.
CASE #1
Mr & Mrs Chan have no dependents. Their 3-room HDB Flat is situated at Marine Parade with a current market valuation of $240k. There is no outstanding loan on the
flat.
We have approved a monthly advance of $300 over 16 years at a modest loan to valuation ratio of 40%. We may eventually extend to a monthly advance of $540 (within acceptable loan to valuation ratio of 70%), pending borrower's decision.
CASE #2
Mr & Mrs Cheong have no dependents. Their 3-room HDB Flat (23 yrs old) is situated at Jurong East with a current market valuation of $160k. There is no outstanding loan on the flat.
We have approved a monthly advance of $295 over 18 years at maximum loan to
valuation ratio of 70%.
CASE #3
Mr Teo is currently staying with his wife. He is receiving some allowances from his 3 children. His 4-room HDB Flat (18 yrs old) is situated at Simei with a current market valuation of $250k. There is no outstanding loan on the flat.
At his request, we have approved a monthly advance of $400 over 12 years at
a modest loan to valuation ratio of 34%. He has intention to either sell
or downgrade the flat again (previously downgraded fr 5-room) at the end of
the loan period.
Friday, March 24, 2006
Special features of loans from NTUC Income
NTUC Income plans to offer loans with the following special features:
- competitive rates
- fixed rates for first 3 or 5 years
- repayment start after one year
- lower rates for "preferred" policyholders
- deferment of installments due to loss of employment
- rebate on prompt payment of installments
We hope that our loans will be more suited to our policyholders.
- competitive rates
- fixed rates for first 3 or 5 years
- repayment start after one year
- lower rates for "preferred" policyholders
- deferment of installments due to loss of employment
- rebate on prompt payment of installments
We hope that our loans will be more suited to our policyholders.
Payment of death claims under DPS
24 March 2006
Editor
Forum Page
Straits Times
I refer to the article by Lorna Tan entitled "Key difference in two DPS options not highlighted: Case" (Straits Times, 23 March 2006)
The article highlighted some concern about how the benefit under the Dependent Protection Scheme that is insured with NTUC Income and Great Eastern will be paid out.
The sum involved is only $46,000 or slightly more. In the event of death and the absence of a nomination or will, the benefit will be paid to the family members (ie spouse, children, parents) according to the Insurance Act. It is usually quite straight forward.
NTUC has paid out 300 DPS claims since being appointed one of the insurer. More than 95% of these claims were paid to the proper claimants according to the Insurance Act, who were either executors of wills for those who have made a will or family members for those without a will. The remaining 5% are paid according to specific
nomination submitted by the policyholder. The nominees are usually family members.
Most policyholders will thus find this arrangement to be suitable.
A policyholder of NTUC Income can submit a specific nomination, if they wish to distribute the proceeds in a different manner. The forms are available on request.
Tan Kin Lian
Chief Executive Officer
NTUC Income
Editor
Forum Page
Straits Times
I refer to the article by Lorna Tan entitled "Key difference in two DPS options not highlighted: Case" (Straits Times, 23 March 2006)
The article highlighted some concern about how the benefit under the Dependent Protection Scheme that is insured with NTUC Income and Great Eastern will be paid out.
The sum involved is only $46,000 or slightly more. In the event of death and the absence of a nomination or will, the benefit will be paid to the family members (ie spouse, children, parents) according to the Insurance Act. It is usually quite straight forward.
NTUC has paid out 300 DPS claims since being appointed one of the insurer. More than 95% of these claims were paid to the proper claimants according to the Insurance Act, who were either executors of wills for those who have made a will or family members for those without a will. The remaining 5% are paid according to specific
nomination submitted by the policyholder. The nominees are usually family members.
Most policyholders will thus find this arrangement to be suitable.
A policyholder of NTUC Income can submit a specific nomination, if they wish to distribute the proceeds in a different manner. The forms are available on request.
Tan Kin Lian
Chief Executive Officer
NTUC Income
Reply: Annuity plans need improvements
24 March 2006
Editor
Zaobao
I refer to the letter, 'Annuity plans need improvements', by Mr Yang Song Jian, (Zaobao, 23 March).
Mr Yang asked insurance companies to improve the annuity plans to better take care of the elderly. More should be done educate Singaporeans on the importance of financial planning and savings.
I agree.
In a recent survey, we found out that 50 percent of the respondents wanted to increase their regular savings for their retirement. They know that their current savings in the Central Provident Fund is inadequate.
As a general guide, each person should set aside 10 to 15 percent of the regular earnings as savings for the future. They can use the savings for their retirement or to meet emergencies, in they lose their jobs or have to pay a large medical bill.
They should invest these savings in a flexible plan that can give an attractive rate of return, by investing for the long term.
NTUC Income offers a choice of attractive annuity plans. We handle 65 percent of all life annuities sold in Singapore. Our annuities offer an attractive return, an annual bonus (in most years) to supplement the guaranteed return, and a refund of the balance of the capital on death.
There are a few ways for the public to learn about financial planning:
- see an insurance adviser;
- attend an educational talk;
- visit an educational website.
NTUC Income holds an educational talk every week. The topics include retirement plans, medical insurance, financial planning, reverse mortgage scheme, etc. Schedule of the talks can be found at www.income.coop/seminar. Admission to these talks is free.
We also manage an educational website at www.KnowYourInsurance.com.sg. It is available in English, Chinese and Malay versions. The website covers a wide range of insurance topics, such as: personal accident, medical insurance, financial planning, travel insurance and saving for education.
Tan Kin Lian
Chief Executive Officer
NTUC Income
Editor
Zaobao
I refer to the letter, 'Annuity plans need improvements', by Mr Yang Song Jian, (Zaobao, 23 March).
Mr Yang asked insurance companies to improve the annuity plans to better take care of the elderly. More should be done educate Singaporeans on the importance of financial planning and savings.
I agree.
In a recent survey, we found out that 50 percent of the respondents wanted to increase their regular savings for their retirement. They know that their current savings in the Central Provident Fund is inadequate.
As a general guide, each person should set aside 10 to 15 percent of the regular earnings as savings for the future. They can use the savings for their retirement or to meet emergencies, in they lose their jobs or have to pay a large medical bill.
They should invest these savings in a flexible plan that can give an attractive rate of return, by investing for the long term.
NTUC Income offers a choice of attractive annuity plans. We handle 65 percent of all life annuities sold in Singapore. Our annuities offer an attractive return, an annual bonus (in most years) to supplement the guaranteed return, and a refund of the balance of the capital on death.
There are a few ways for the public to learn about financial planning:
- see an insurance adviser;
- attend an educational talk;
- visit an educational website.
NTUC Income holds an educational talk every week. The topics include retirement plans, medical insurance, financial planning, reverse mortgage scheme, etc. Schedule of the talks can be found at www.income.coop/seminar. Admission to these talks is free.
We also manage an educational website at www.KnowYourInsurance.com.sg. It is available in English, Chinese and Malay versions. The website covers a wide range of insurance topics, such as: personal accident, medical insurance, financial planning, travel insurance and saving for education.
Tan Kin Lian
Chief Executive Officer
NTUC Income
Tuesday, March 21, 2006
Pensioners lost money on their investments ?
Recently, I saw a news article with this headline. It refers to another country. This can be a frightening prospect.
Here are some suggestions on how to invest your retirement money and not face the same risk:
- invest for the long term
- invest in a professionally managed and well diversified fund
It does not matter that the value of the investments can go up or down. They do not concern you. If you are investing for the long term in equities, you should get a better return compared to bonds.
Based on past record, the average return over 10 or 20 years is likely to be 6% to 9%.
The combined fund from NTUC Income is structured to give a good return, with little risk. In fact, risk can be turned to an advantage.
If are keen to learn more, you can call us to attend an educational talk.
Here are some suggestions on how to invest your retirement money and not face the same risk:
- invest for the long term
- invest in a professionally managed and well diversified fund
It does not matter that the value of the investments can go up or down. They do not concern you. If you are investing for the long term in equities, you should get a better return compared to bonds.
Based on past record, the average return over 10 or 20 years is likely to be 6% to 9%.
The combined fund from NTUC Income is structured to give a good return, with little risk. In fact, risk can be turned to an advantage.
If are keen to learn more, you can call us to attend an educational talk.
Monday, March 20, 2006
Participating or adjustible annuity?
NTUC Income holds a 60% market share in life annuity. Our key product is the participating annuity.
PARTICIPATING ANNUITY
A male annuitant investing $100,000 at age 62 in a immediate life annuity (with no
capital refund) receives $524 per month.
This represents a payout of 6.3% per annum, comparising of a guaranteed return of 2.5% with the balance being a consumption of the capital.
If we earn a net investment return over 2.5%, we will add a bonus to the annuity. We expect an average bonus of 2.5% per annum over the future years, but this is not guaranteed.
If the annuitant wish to have a refund of the balance of capital on death, the annuity payment reduces to $446 per month (ie 5.3% p.a).
ADJUSTIBLE ANNUITY
Some annuitants prefer to have a larger payout, instead of an increasing payout.
We are considering to offer an adjustible annuity that comprise of a guaranteed amount of $524 per month, plus an non-guaranteed amount of $136, making a total payment of $660 per month. The annual payout is 7.9%
The non-guaranteed amount may be adjusted up or down, according to our investment return. If the net investment return is 5%, the amount will not be changed. If it is higher, the non-guaratneed amount will be increased. If it is lower, the amount will be reduced. Any adjustment is expected to be in small gradual steps.
The guaranteed amount will always be payable.
We may offer the option of the adjustible annuity, if there is interest in this product.
If the annuitant wish to have a refund of the balance of capital on death, the annuity payment reduces to $602 per month (ie 7.2% p.a).
PARTICIPATING ANNUITY
A male annuitant investing $100,000 at age 62 in a immediate life annuity (with no
capital refund) receives $524 per month.
This represents a payout of 6.3% per annum, comparising of a guaranteed return of 2.5% with the balance being a consumption of the capital.
If we earn a net investment return over 2.5%, we will add a bonus to the annuity. We expect an average bonus of 2.5% per annum over the future years, but this is not guaranteed.
If the annuitant wish to have a refund of the balance of capital on death, the annuity payment reduces to $446 per month (ie 5.3% p.a).
ADJUSTIBLE ANNUITY
Some annuitants prefer to have a larger payout, instead of an increasing payout.
We are considering to offer an adjustible annuity that comprise of a guaranteed amount of $524 per month, plus an non-guaranteed amount of $136, making a total payment of $660 per month. The annual payout is 7.9%
The non-guaranteed amount may be adjusted up or down, according to our investment return. If the net investment return is 5%, the amount will not be changed. If it is higher, the non-guaratneed amount will be increased. If it is lower, the amount will be reduced. Any adjustment is expected to be in small gradual steps.
The guaranteed amount will always be payable.
We may offer the option of the adjustible annuity, if there is interest in this product.
If the annuitant wish to have a refund of the balance of capital on death, the annuity payment reduces to $602 per month (ie 7.2% p.a).
Sunday, March 19, 2006
Why NTUC Income supports Idac
19 March 2006
Editor
Forum Page
Straits Times
I refer to the report entitled "Only 11 insurers left on Idac accident scheme" (St Times, 18 March).
The report covered the reasons why several insurers left the Idac scheme. I wish to tell the other side of the story - why NTUC Income choose to remain in the scheme.
Each day, about 60 of our policyholders and 30 third party claimants reported their accidents to an Idac center.
It is easy for claimants to visit any of 12 Idac centers located in various parts of Singapore. They can get the address by calling 6788 6616.
The accident report and damage assessment is usually completed within 20 minutes. There is no undue delay and hassle.
Most policyholders are willing to leave their vehicles at the Idac center for the repairs to be arranged by us. The repairs are usually completed within five days. If they are covered under our Quality Plus plan, we provide a courtesy car for their use.
We carry out an inspection of the vehicle after the repair, to ensure that the repair is carried out to a satisfactory standard. We also provide six month warranty on the repair.
If the policyholder prefers his regular workshop to repair the vehicle, we offer a cash settlement based on our best estimate of the repair cost. Less than 5% of policyholder choose this option.
We carry out a survey of our policyholders after the repair. We have consistently obtained high scores:
- 98% are satisfied with the service provided by Idac center
- 96% are satisfied with the quality of the repair
We have a small percentage of disputes, usually not involving Idac services. They involve the determination of the party responsible for the accident, potential loss of no-claim discount, and replacement of "wear and tear" parts. We try our best to resolve these disputes.
By using the Idac scheme, we are able to reduce our repair bill by about 15%, representing about 6% of total claims. We pass the saving to our policyholders through lower premium. We are able to offer premium rates that are 10% to 15% lower than the market.
Your report alleged that "Idac was feeding a top insurer early information about cases". This is an unfair statement. I wish to give our perspective.
The Idac scheme allows for immediate reporting of all cases into a centralised computer system. We use this information to contact third party claimants and make direct settlement with them. This helps us to reduce the cost of third party claims. We believe that this information is available to any other insurers, if they choose to use it pro-actively.
Finally, I wish to state that NTUC Income has a sufficient volume of business to start an assessment system on our own. We have decided to support an industry wide scheme, as it is the best way to overcome the inflated repair bills that have troubled the insurance industry in many countries over the past decades.
Tan Kin Lian
Chief Executive Officer
NTUC Income
Editor
Forum Page
Straits Times
I refer to the report entitled "Only 11 insurers left on Idac accident scheme" (St Times, 18 March).
The report covered the reasons why several insurers left the Idac scheme. I wish to tell the other side of the story - why NTUC Income choose to remain in the scheme.
Each day, about 60 of our policyholders and 30 third party claimants reported their accidents to an Idac center.
It is easy for claimants to visit any of 12 Idac centers located in various parts of Singapore. They can get the address by calling 6788 6616.
The accident report and damage assessment is usually completed within 20 minutes. There is no undue delay and hassle.
Most policyholders are willing to leave their vehicles at the Idac center for the repairs to be arranged by us. The repairs are usually completed within five days. If they are covered under our Quality Plus plan, we provide a courtesy car for their use.
We carry out an inspection of the vehicle after the repair, to ensure that the repair is carried out to a satisfactory standard. We also provide six month warranty on the repair.
If the policyholder prefers his regular workshop to repair the vehicle, we offer a cash settlement based on our best estimate of the repair cost. Less than 5% of policyholder choose this option.
We carry out a survey of our policyholders after the repair. We have consistently obtained high scores:
- 98% are satisfied with the service provided by Idac center
- 96% are satisfied with the quality of the repair
We have a small percentage of disputes, usually not involving Idac services. They involve the determination of the party responsible for the accident, potential loss of no-claim discount, and replacement of "wear and tear" parts. We try our best to resolve these disputes.
By using the Idac scheme, we are able to reduce our repair bill by about 15%, representing about 6% of total claims. We pass the saving to our policyholders through lower premium. We are able to offer premium rates that are 10% to 15% lower than the market.
Your report alleged that "Idac was feeding a top insurer early information about cases". This is an unfair statement. I wish to give our perspective.
The Idac scheme allows for immediate reporting of all cases into a centralised computer system. We use this information to contact third party claimants and make direct settlement with them. This helps us to reduce the cost of third party claims. We believe that this information is available to any other insurers, if they choose to use it pro-actively.
Finally, I wish to state that NTUC Income has a sufficient volume of business to start an assessment system on our own. We have decided to support an industry wide scheme, as it is the best way to overcome the inflated repair bills that have troubled the insurance industry in many countries over the past decades.
Tan Kin Lian
Chief Executive Officer
NTUC Income
Friday, March 17, 2006
How to pass your wealth to your children
The baby boomer generation, who are now in their 50s and 60s, benefitted from the economic growth and are generally quite wealthy.
Some of them are thinking of how best to transfer a portion of their wealth to their children.
I suggest that they should make a partial transfer now, when their children are in their 20s. The children need the mney now, rather than 20 years later (when their parents pass away).
NTUC Income will organise seminars to cover will writing, annuity plan, term annuity, trust, estate duty and similar topics.
More details will be announced later.
Some of them are thinking of how best to transfer a portion of their wealth to their children.
I suggest that they should make a partial transfer now, when their children are in their 20s. The children need the mney now, rather than 20 years later (when their parents pass away).
NTUC Income will organise seminars to cover will writing, annuity plan, term annuity, trust, estate duty and similar topics.
More details will be announced later.
Preferred policyholder
NTUC Income plans to register a "preferred policyholder". They will be allowed to have a loan in the future (for car, house, and other purpose) at a preferential interest rate and more attractive terms.
This will be specially useful for young policyholders. The saving on interest can amount to a lot of money.
We will communicate to our policyholders soon.
This will be specially useful for young policyholders. The saving on interest can amount to a lot of money.
We will communicate to our policyholders soon.
High cost of living
I read a news report that young people find the cost of living to be high in Singapore.
I agree.
When I was young, the HDB flats and shops were at a subsidisied and controlled price. This helps to keep the cost of living low, and make Singapore competitive.
During the late 1980s, the HDB flats were allowed to appreciate to the "market price". This benefitted the HDB flat owners, but increased the cost of living for the next generation.
Looking back, it would have been better for Singapore, if HDB flats had been kept at the controlled prices. But, it is too late to turn back the clock.
At the current high prices, property will be just like any other investment. One has to think carefully before investing in property. Is the price right?
For some people, it may be better to rent a property. The rental may be lower than the cost of owning the property.
The capital sum can be invested in other means, eg in unit trusts or the combined fund from NTUC Income. These investments may give a better return in the long run.
Get advice. Make the right choice.
I agree.
When I was young, the HDB flats and shops were at a subsidisied and controlled price. This helps to keep the cost of living low, and make Singapore competitive.
During the late 1980s, the HDB flats were allowed to appreciate to the "market price". This benefitted the HDB flat owners, but increased the cost of living for the next generation.
Looking back, it would have been better for Singapore, if HDB flats had been kept at the controlled prices. But, it is too late to turn back the clock.
At the current high prices, property will be just like any other investment. One has to think carefully before investing in property. Is the price right?
For some people, it may be better to rent a property. The rental may be lower than the cost of owning the property.
The capital sum can be invested in other means, eg in unit trusts or the combined fund from NTUC Income. These investments may give a better return in the long run.
Get advice. Make the right choice.
Thursday, March 16, 2006
Incomeshield Unlimited
Someone suggested that we should call our medical plan as "Incomeshield Unlimited".
This plan now provides unlimited lifetime coverage. The total claimable amount is subject to certain specific and annual limits, but is unlimited in the amount that can be claimed during a lifetime.
Our coverage is better than the $5,100,000 limit that is advertised by another medical plan (which charge much higher premium than Incomeshield).
This plan now provides unlimited lifetime coverage. The total claimable amount is subject to certain specific and annual limits, but is unlimited in the amount that can be claimed during a lifetime.
Our coverage is better than the $5,100,000 limit that is advertised by another medical plan (which charge much higher premium than Incomeshield).
Logic9 National Competition
Here is an interesting competition to find the faster players to solve the Logic9 (Sudoku) puzzle. Registration is free.
Click on the following link to get details of the competition and to register
http://www.logic9.com.sg.
You have a chance to win up to 36,000 worth of prizes. The top prize for each age group is an IBM Thinkpad notebook worth $4,000.
You stand a better chance of winning, if you practice for this competition. You can buy a Logic9 CD or booklet for $5 only at selected NTUC Fairprice supermarkets.
Click on the following link to get details of the competition and to register
http://www.logic9.com.sg.
You have a chance to win up to 36,000 worth of prizes. The top prize for each age group is an IBM Thinkpad notebook worth $4,000.
You stand a better chance of winning, if you practice for this competition. You can buy a Logic9 CD or booklet for $5 only at selected NTUC Fairprice supermarkets.
Tuesday, March 14, 2006
Growth plan gives a fairly attractive return
A policyholder invested $50,000 in a Growth plan in 2001. It matured 5 years later with a maturity value of $58,000.
The policyholder earned a net return of 3.1% over the past 5 years on the Growth policy.
As the Growth policy has to be invested mostly in short term secure bonds, the return of 3.1% is quite attractive. During the past five years, Government bonds provide a return of around 3%.
Apart from giving a fairly good return, our Growth plan also give life insurance cover, which is built into the contract and not charged separately.
Our aim is to invest the funds prudently, get a fairly attractive return, and return most of the return to our policyholders.
Here is the good news for our policyholders of our Growth plan. The bonus rate has been increased recently. We expect to give better than 3.1% return in future years, based on the higher bonus rates. For a Growth plan that is invested for more than 10 years, the return should be higher than 4% per annum, based on our current bonus rates.
The policyholder earned a net return of 3.1% over the past 5 years on the Growth policy.
As the Growth policy has to be invested mostly in short term secure bonds, the return of 3.1% is quite attractive. During the past five years, Government bonds provide a return of around 3%.
Apart from giving a fairly good return, our Growth plan also give life insurance cover, which is built into the contract and not charged separately.
Our aim is to invest the funds prudently, get a fairly attractive return, and return most of the return to our policyholders.
Here is the good news for our policyholders of our Growth plan. The bonus rate has been increased recently. We expect to give better than 3.1% return in future years, based on the higher bonus rates. For a Growth plan that is invested for more than 10 years, the return should be higher than 4% per annum, based on our current bonus rates.
Survey of Young People
2,140 young people responded to the survey.
Which is more important to you?
* Get a better return on your savings 86%
* Make regular savings from salary 52%
* Adequate insurance cover 42%
* Get preferential terms for a loan in the future 19%
NTUC Income is planning to offer special terms for a loan "preferred policyholder". Which do you prefer?
* Lower interest rate 92%
* Hassle free application 50%
* Longer repayment period 29%
* Higher loan amount 27%
* Pre-approval of loan 15%
Which type of loan is likely to be attractive to you?
* To buy a home 66%
* For education 43%
* To buy a car or motor cycle 41%
* Loan for marriage 20%
* Other purpose 26%
To be a "preferred policyholder", you will need to be insured for at least 2 years and have total regular saving of more than $5,000. Do you find these conditions acceptable?
* I am interested to qualify in 2 years time 41%
* I already meet them 35%
* I am not interested at all 24%
Which is more important to you?
* Get a better return on your savings 86%
* Make regular savings from salary 52%
* Adequate insurance cover 42%
* Get preferential terms for a loan in the future 19%
NTUC Income is planning to offer special terms for a loan "preferred policyholder". Which do you prefer?
* Lower interest rate 92%
* Hassle free application 50%
* Longer repayment period 29%
* Higher loan amount 27%
* Pre-approval of loan 15%
Which type of loan is likely to be attractive to you?
* To buy a home 66%
* For education 43%
* To buy a car or motor cycle 41%
* Loan for marriage 20%
* Other purpose 26%
To be a "preferred policyholder", you will need to be insured for at least 2 years and have total regular saving of more than $5,000. Do you find these conditions acceptable?
* I am interested to qualify in 2 years time 41%
* I already meet them 35%
* I am not interested at all 24%
Switch and save on part of the 150%
Some people invested in a regular premium investment linked product from another insurer and have to incur up a distribution cost. Up to 150% of the annual premium may be taken away from their investment during the first few years.
A policyholder who has bought an expensive policy recently, and who was not told clearly about the high distribution cost, may find it better to switch to NTUC Income now.
They do not have to incur the distribution cost for the remaining period (usually up to three years) and can take a similar ILP policy from NTUC Income (Ideal 5) where 100% of the saving is invested from the first month.
There is a small catch. We impose $20 more in policy fee each year. You can see our adviser or visit our business center.
A policyholder who has bought an expensive policy recently, and who was not told clearly about the high distribution cost, may find it better to switch to NTUC Income now.
They do not have to incur the distribution cost for the remaining period (usually up to three years) and can take a similar ILP policy from NTUC Income (Ideal 5) where 100% of the saving is invested from the first month.
There is a small catch. We impose $20 more in policy fee each year. You can see our adviser or visit our business center.
Get 150% more
NTUC Income advertise our Ideal plan, which invests 100% of the monthly premium from the start. Similar plans from other insurers take away as much as 150% of the annual premium during the first few years.
Some insurers are unhappy with our advertisement. They expressed that our advertisement denigrates their product.
Here is my reply.
We wish to educate the general public that they have an option to buy a regular investment linked plan that does not carry a large front end load.
We do not intend to denigrate the products of other member companies. I am
sure that they are capable of convincing the consumers about the necessity
and value of paying the front end load.
Some insurers are unhappy with our advertisement. They expressed that our advertisement denigrates their product.
Here is my reply.
We wish to educate the general public that they have an option to buy a regular investment linked plan that does not carry a large front end load.
We do not intend to denigrate the products of other member companies. I am
sure that they are capable of convincing the consumers about the necessity
and value of paying the front end load.
Monday, March 13, 2006
Internet portal reduce front end charges
The Straits Times reported that two internet portals have reduced their front end charges for investing in unit trusts. The charges have been reduced to 1% and 2.5% respectively.
The unit trusts sold by these portals have high annual charges, typically from 1.5% to 2.5% per annum.
These high annual charges can reduce your return over a 10 year period.
By comparison, the combined fund from NTUC Income has modest charges, as follows:
- initial spread: 1.5% to 3.5%, depending on amount invested
- annual charge: about 1% per annum.
By investing with NTUC Income, you can get a return of about 3% to 12% more over 10 years, assuming that the performance of the fund is similar. This better return comes mainly from our lower annual charge.
The unit trusts sold by these portals have high annual charges, typically from 1.5% to 2.5% per annum.
These high annual charges can reduce your return over a 10 year period.
By comparison, the combined fund from NTUC Income has modest charges, as follows:
- initial spread: 1.5% to 3.5%, depending on amount invested
- annual charge: about 1% per annum.
By investing with NTUC Income, you can get a return of about 3% to 12% more over 10 years, assuming that the performance of the fund is similar. This better return comes mainly from our lower annual charge.
Thursday, March 09, 2006
How to give to your adult child
A woman in her mid 50s wanted to pass some of her wealth to her adult child. But she does not want to give a lump sum as the child may spent the money.
I suggested to buy an annuity for the child. The annuity will make an annual payment for a certain number of years. The payment can start from a certain date in the future.
She thought that this was a good idea. It did not occur to her.
The annuity provides a return of 3% to 4% per annum, guaranteed. It is tax exempt.
She originally wanted to buy a property and give the rental income to the child. However, this may involve some knowledge of how to look after the property and to find tentant. It may be too troublesome for the child.
I suggested to buy an annuity for the child. The annuity will make an annual payment for a certain number of years. The payment can start from a certain date in the future.
She thought that this was a good idea. It did not occur to her.
The annuity provides a return of 3% to 4% per annum, guaranteed. It is tax exempt.
She originally wanted to buy a property and give the rental income to the child. However, this may involve some knowledge of how to look after the property and to find tentant. It may be too troublesome for the child.
Get an affordable medical plan
If a male aged 25 buy an expensive medical plan, he has to pay a total premium of $57,600 in premium up to age 80 based on current premium rates.
The total premium may increase in the future, as the premiums are subject to revision.
If he buys Incomeshield with corresponding top-up rider, total premium is only $40,100, or 31% lower.
The coverage under both plans are largely similar.
The total premium may increase in the future, as the premiums are subject to revision.
If he buys Incomeshield with corresponding top-up rider, total premium is only $40,100, or 31% lower.
The coverage under both plans are largely similar.
Tuesday, March 07, 2006
Inadequate life insurance
The average amount of life insurance per breadwinner is $37,000. This is inadequate.
Each breadwinner should aim to have 3 to 5 years of earnings to take care of the needs of the family in the event of premature death. As a guide, they should aim to have a sum of $100,000 in life insurance.
Many people find it costly to insure for $100,000 in an endowment, whole life or dread disease policy. The premium is too high.
The current amount of life insurance probably reflect what they can afford to spend for a traditional life policy.
I suggest that they should take a personal accident or term life policy to make up the difference. The premium is quite low, as it is intended solely for protection.
Each breadwinner should aim to have 3 to 5 years of earnings to take care of the needs of the family in the event of premature death. As a guide, they should aim to have a sum of $100,000 in life insurance.
Many people find it costly to insure for $100,000 in an endowment, whole life or dread disease policy. The premium is too high.
The current amount of life insurance probably reflect what they can afford to spend for a traditional life policy.
I suggest that they should take a personal accident or term life policy to make up the difference. The premium is quite low, as it is intended solely for protection.
Reverse mortgage for HDB flats
We have been offering reverse mortgage to private property owners since 1997. HDB is now allowing HDB flat owners to obtain reverse mortgage from us.
We will be the 1st insurer to offer Reverse Mortgage for HDB flat. We hope that older HDB owners will be able to benefit from this .
The key features are as follow:
Eligibility for all flat owners of between 70 to 90 years of age
HDB Flat must have at least a remaining tenure of 50 years at the end of the loan period
Competitive effectove interest rate - at 5% pa (for promotion period)
Loan Quantum - up to the total projected loan not exceeding 70% of the total projected valuation of the property.
Loan Period - Up to 20 years OR 90 years of age OR death, whichever earlier
We will be the 1st insurer to offer Reverse Mortgage for HDB flat. We hope that older HDB owners will be able to benefit from this .
The key features are as follow:
Eligibility for all flat owners of between 70 to 90 years of age
HDB Flat must have at least a remaining tenure of 50 years at the end of the loan period
Competitive effectove interest rate - at 5% pa (for promotion period)
Loan Quantum - up to the total projected loan not exceeding 70% of the total projected valuation of the property.
Loan Period - Up to 20 years OR 90 years of age OR death, whichever earlier
Reverse mortgage for HDB flats
Here are the tentative terms, subject to modification.
------------------------------------------------------------
1. Eligibility
All flat owners from age 70 to 90, who has no and small outstanding loan on their HDB property. The lease at the end of the loan period should be at least 50 years
Borrower must be our life policyholder for at least 1 year. For non-policyholder, borrower can take up a life/personal accident policy
2. Tenure of loan - age 90 or death, whichever is earlier subject to 20 years term.
3. Monthly drawdown
Below is an illustration of the maximum drawdown per month (assuming upfront fees of $3.5k):
Monthly payout should not fluctuate greatly and should be for 20 years or up to age 90 years.
For someone who enters at age 70, the monthly drawdown is 0.2% of the property value at the time of taking the loan. The borrower can opt to receive a lower amount. NTUC Income is allowed to vary the monthly payout in accordance to the value of the property.
4. Lump sum borrowing
At the start of the loan, the owner can take a lump sum of up to 5% of property valuation – once off. This is mainly intended to help borrowers settle other debt he/she may have run up at much higher interest rate.
5. Mechanism of the reverse mortgage
a. Loan repayment
The loan is not repayable until the oldest borrower have died or moved out of their flat. The total loan outstanding including interest must then be repaid.
If one of the borrowers dies, or needs to go into medical or care facility, monthly drawdown amount will not change. The other borrower can carry on living in the HDB property as before.
b. Property value fluctuation
If the HDB property increases in value, it will allow the monthly drawdown to be extended for a longer period, and leave a larger balance to be passed to the beneficiaries. If the flat decreases in value, NTUC Income may cease the payout if the outstanding sum exceeds 70% of the value of the property.
c. Early repayment
We allow the owner to sell the flat at any time and repay the balance of the loan without penalty.
If the borrower downgrade to a smaller HDB flat, the RM loan have to be repaid in full or repaid in part if the smaller HDB flat is under RM financing, depending on the situation.
6. Counseling and financial advice (Mandatory)
This is to ensure that the borrower understands the working of reverse mortgage, and how it serves their needs. The borrower must be made fully aware of the features and risks, including:
personal counseling, as each borrower’s financial situation is unique
access to advice on their legal rights - Eg: home may not be left to heirs.
a reverse mortgage is a long term commitment and not for short term cash needs
advise on the consequences of repossession and on other income alternatives, such as downgrading to a smaller flat, or home-stay arrangements
------------------------------------------------------------
1. Eligibility
All flat owners from age 70 to 90, who has no and small outstanding loan on their HDB property. The lease at the end of the loan period should be at least 50 years
Borrower must be our life policyholder for at least 1 year. For non-policyholder, borrower can take up a life/personal accident policy
2. Tenure of loan - age 90 or death, whichever is earlier subject to 20 years term.
3. Monthly drawdown
Below is an illustration of the maximum drawdown per month (assuming upfront fees of $3.5k):
FlatType PropValue Monthly Payout
3-room 160k $200-$230
4-room 240k $320-$360
5-room 320k $430-$490
Exec apt 480k $660-$750
Monthly payout should not fluctuate greatly and should be for 20 years or up to age 90 years.
For someone who enters at age 70, the monthly drawdown is 0.2% of the property value at the time of taking the loan. The borrower can opt to receive a lower amount. NTUC Income is allowed to vary the monthly payout in accordance to the value of the property.
4. Lump sum borrowing
At the start of the loan, the owner can take a lump sum of up to 5% of property valuation – once off. This is mainly intended to help borrowers settle other debt he/she may have run up at much higher interest rate.
5. Mechanism of the reverse mortgage
a. Loan repayment
The loan is not repayable until the oldest borrower have died or moved out of their flat. The total loan outstanding including interest must then be repaid.
If one of the borrowers dies, or needs to go into medical or care facility, monthly drawdown amount will not change. The other borrower can carry on living in the HDB property as before.
b. Property value fluctuation
If the HDB property increases in value, it will allow the monthly drawdown to be extended for a longer period, and leave a larger balance to be passed to the beneficiaries. If the flat decreases in value, NTUC Income may cease the payout if the outstanding sum exceeds 70% of the value of the property.
c. Early repayment
We allow the owner to sell the flat at any time and repay the balance of the loan without penalty.
If the borrower downgrade to a smaller HDB flat, the RM loan have to be repaid in full or repaid in part if the smaller HDB flat is under RM financing, depending on the situation.
6. Counseling and financial advice (Mandatory)
This is to ensure that the borrower understands the working of reverse mortgage, and how it serves their needs. The borrower must be made fully aware of the features and risks, including:
personal counseling, as each borrower’s financial situation is unique
access to advice on their legal rights - Eg: home may not be left to heirs.
a reverse mortgage is a long term commitment and not for short term cash needs
advise on the consequences of repossession and on other income alternatives, such as downgrading to a smaller flat, or home-stay arrangements
Friday, March 03, 2006
Comparison of Motor Premium Rates
We compared the premium rates charged by the key insurers for 10 models of vehicles.
The average premium rate for the 10 models are shown below:
The premium rates charged by NTUC Income are lower than the other insurers. One insurer charge 45% more than our rates.
The average premium rate for the 10 models are shown below:
Age of car: 1-5 Years 6 Years
NTUC Income $584 100% $534 100%
Company AI $648 110% $635 119%
Company AS $702 120% $675 126%
Company AX $790 135% $774 145%
The premium rates charged by NTUC Income are lower than the other insurers. One insurer charge 45% more than our rates.
Consumer Education Effort
QUESTION FROM JOURNALIST
MAS's deputy managing director, Ms Teo Swee Lian gave a speech outlining the general trends and challenges facing the insurance industry.
Question: Do you agree with the areas mentioned by her?
Reply: I agree with the following priorities:
- futher consumer education efforts
- improve clarity in the sales process and in documents
- raise ethical standards of agents
- raise proficiency of financial advisers
Question: I think NTUC Income for its part, has spearheaded some education efforts. Can you tell me more about these?
Reply: We have set up a website called www.KnowYourInsurance.com.sg. We encourage the public to visit the webite and learn about specific insurance topics on their own. They can take a simple test. On completing the test, we offer them a modest discount if they take the insurance with us, either directly or through our adviser.
The website receives an average of 500 visitors a day. About 100 take the test daily. We are happy with the results. We consider this to be a successful website.
I also write about insurance matters in my personal blog, www.tankinlian.blogspot.com. About 100 people read my blog each day. Some fo them e-mail to me, after reading my blog to ask additional questions. They told me that they like my blog, as it is educational.
MAS's deputy managing director, Ms Teo Swee Lian gave a speech outlining the general trends and challenges facing the insurance industry.
Question: Do you agree with the areas mentioned by her?
Reply: I agree with the following priorities:
- futher consumer education efforts
- improve clarity in the sales process and in documents
- raise ethical standards of agents
- raise proficiency of financial advisers
Question: I think NTUC Income for its part, has spearheaded some education efforts. Can you tell me more about these?
Reply: We have set up a website called www.KnowYourInsurance.com.sg. We encourage the public to visit the webite and learn about specific insurance topics on their own. They can take a simple test. On completing the test, we offer them a modest discount if they take the insurance with us, either directly or through our adviser.
The website receives an average of 500 visitors a day. About 100 take the test daily. We are happy with the results. We consider this to be a successful website.
I also write about insurance matters in my personal blog, www.tankinlian.blogspot.com. About 100 people read my blog each day. Some fo them e-mail to me, after reading my blog to ask additional questions. They told me that they like my blog, as it is educational.
Tuesday, February 28, 2006
Make a direct claim against your insurer
A motorist left the workshop to make a claima against NTUC Income. The workshop inflated the bill and submitted the claim through a lawyer. We disputed the claim.
The motorist sent an e-mail to me directly. He complained that we were not fair in handling this claim and labelled it as "Unfair Insurance Practice".
Here is my reply:
-----------------------------------
Dear
It appears that you are insured with another insurance company and you wish to make a third party claim against NTUC Income.
Under our fair practice, you should contact us directly and allow us to settle the claim with you, Apparently, you did not.
You asked the workshop to handle the claim for you. The workshop probably submitted a claim that is much higher than the cost of
repair that can be done by our workshop.
There is also the question about liability. Is the truck insured by NTUC Income liable for the accident? This has to be
established.
I want you to realise that you have caused a lot of problem to us by your unfair approach. But I realise that you were not aware
about it.
I will ask xxxxxxx to look into this case, and see if he can help to expediate the matter. I hope that you agree with my
view.
Tan Kin Lian
CEO, NTUC Income
The motorist sent an e-mail to me directly. He complained that we were not fair in handling this claim and labelled it as "Unfair Insurance Practice".
Here is my reply:
-----------------------------------
Dear
It appears that you are insured with another insurance company and you wish to make a third party claim against NTUC Income.
Under our fair practice, you should contact us directly and allow us to settle the claim with you, Apparently, you did not.
You asked the workshop to handle the claim for you. The workshop probably submitted a claim that is much higher than the cost of
repair that can be done by our workshop.
There is also the question about liability. Is the truck insured by NTUC Income liable for the accident? This has to be
established.
I want you to realise that you have caused a lot of problem to us by your unfair approach. But I realise that you were not aware
about it.
I will ask xxxxxxx to look into this case, and see if he can help to expediate the matter. I hope that you agree with my
view.
Tan Kin Lian
CEO, NTUC Income
Take a cheaper medical plan
QUESTION
I attended A talk on medical insurance given by your manager. I was told that the rider (to cover the balance of the bill) has to be paid by cash and the premium will increase as I grow older.
Mr Tan, is there a limit, that is a certain period of age that can stop paying the premium for the rider. Or we must pay until we die. That means a lot of money to pay for the rider.
REPLY
Briefly, you can stop the rider at any time, so that you do not need to pay the increasing premium.
My advice is for you to take a lower cost plan, so that there is sufficient money to pay for the basic plan and the rider for as
long as possible.
I attended A talk on medical insurance given by your manager. I was told that the rider (to cover the balance of the bill) has to be paid by cash and the premium will increase as I grow older.
Mr Tan, is there a limit, that is a certain period of age that can stop paying the premium for the rider. Or we must pay until we die. That means a lot of money to pay for the rider.
REPLY
Briefly, you can stop the rider at any time, so that you do not need to pay the increasing premium.
My advice is for you to take a lower cost plan, so that there is sufficient money to pay for the basic plan and the rider for as
long as possible.
Monday, February 27, 2006
Principle of profit sharing
QUESTION FROM JOURNALIST
Why do you need to charge higher premiums for takaful-based motor insurance?
ANSWER:
In a conventional product (ie profit not shared with policyholders), the shareholders take the entire risk. All profit or loss is borne entirely by the shareholders.
In a profit-sharing product, such as takaful insurance, a major portion of the profits goes to the participants. It is necessary to increase the premium rate by about 10% to 20%, to reduce the risk of loss (in case of bad claims). As the shareholders take only a modest portion of the profit, it is fair that they should bear a smaller risk of loss.
It is likely that the rebate (or share of profit) will be more than the additional premium, so that the net cost (after the rebate) will be attractive to the policyholder.
The profit sharing will also encourage the policyholders to work in cooperation to minimise the loss, as they can benefit from the share of profit. This will be good for the policyholders in the long run.
Why do you need to charge higher premiums for takaful-based motor insurance?
ANSWER:
In a conventional product (ie profit not shared with policyholders), the shareholders take the entire risk. All profit or loss is borne entirely by the shareholders.
In a profit-sharing product, such as takaful insurance, a major portion of the profits goes to the participants. It is necessary to increase the premium rate by about 10% to 20%, to reduce the risk of loss (in case of bad claims). As the shareholders take only a modest portion of the profit, it is fair that they should bear a smaller risk of loss.
It is likely that the rebate (or share of profit) will be more than the additional premium, so that the net cost (after the rebate) will be attractive to the policyholder.
The profit sharing will also encourage the policyholders to work in cooperation to minimise the loss, as they can benefit from the share of profit. This will be good for the policyholders in the long run.
No extra charge for unlimited coverage
Last year, an insurer raises the lifetime limit on its Shield plan to $5 million and charges premiums that are 10% to 50% higher than a similar plan from NTUC Income (ie Incomeshield).
NTUC Income has recently removed the limit on lifetime claims. The policyholder can claim beyond $5 million a year.
We did not change our premium rates. Our premiums are much lower than the other Shield plan, and yet our coverage is better.
NTUC Income has recently removed the limit on lifetime claims. The policyholder can claim beyond $5 million a year.
We did not change our premium rates. Our premiums are much lower than the other Shield plan, and yet our coverage is better.
Sunday, February 26, 2006
Agents still selling critical year
Some agents are still selling the "critical year" concept. They tell the customer that after paying for 10 to 12 years, they do not have to pay any more premium, and that this is guaranteed.
The agent ask the customer to read 50 pages of policy illustration that are written in vague language.
Here is my advice to the customer.
Write to the insurance company. Ask them to confirm the guarantee in writing. Ask them to specify that this guarantee does not depend on the future bonus rates and investment return.
You will get a different answer from the company.
Here is a better advice. Contact NTUC Income. We will give you our Ideal plan with a decreasing term rider. It is a better plan. It offers you the coverage and a better return.
The agent ask the customer to read 50 pages of policy illustration that are written in vague language.
Here is my advice to the customer.
Write to the insurance company. Ask them to confirm the guarantee in writing. Ask them to specify that this guarantee does not depend on the future bonus rates and investment return.
You will get a different answer from the company.
Here is a better advice. Contact NTUC Income. We will give you our Ideal plan with a decreasing term rider. It is a better plan. It offers you the coverage and a better return.
Saturday, February 25, 2006
Insurance should be based on sharing, fairness and transparency
Takaful insurance is operated on the Islamic principles of sharing, fairness and transparency.
In my view, all insurance transactions should be operated on these principles. As a cooperative society, NTUC Income has been observing these principles for the past 36 years.
When a person buys insurance, this person is joining an insurance pool. The premium should be calculated on the total claim amount and the expenses of operating the insurance pool, and shared fairly among the participants.
The insurance operator has the responsibility to manage the insurance pool well, pay the legitimate claims, keep the expenses low and make a fair margin. In this way, the premium can be kept low for all the insured participants.
The insurance operator should not charge a high premium and make excessive profit for shareholders. This will be unfair to the participants.
Sometimes, the insurance can produce a higher profit than expected. This could arise if the claim experience is favourable, or if the investments earn a better return.
Under takaful principles, a fair portion of the profits should be shared with the insured participants. The proportion to be shared should be fair and disclosed to the participants at the start.
Similarly, if the insurance pool pays more claim than expected, it is fair that they pay a higher premium and do not expect the shareholders to bear the loss.
It is possible for takaful principles to operate on general insurance, such as motor insurance and personal accident insurance.
Under this system, the premium charged to the participant has to be slightly higher than the market rates, maybe 10 to 20 percent higher.
The insurance operator should continue to manage the claims and expenses well and produce a profit. A fair portion of the profits should be shared with the insured participants. If this profit sharing is more than 10 or 20 percent of premium, the net cost to the insured participant will actually be lower under takaful insurance.
The insured participants can help to lower the cost in the following ways:
- avoid making excessive claims, eg motor repairs or health claims
- cooperate with the insurance operator to minimise the claims
- discourage other participants from making excessive claims
- reduce the admistrative cost by staying with the insurance operator for many years
Through this cooperative effort, the total cost can be reduced. This will be good for the insurance participants (ie the policyholders) and the insurance operator (ie the insurance company). It is win-win.
NTUC Income will be studying how to apply these principles to general insurance. We may introduce this profit sharing for certain products, such as personal accident insurance and motor insurance over the next 6 to 12 months.
We need to educate the public about the principles of sharing of risks and profits, and the principle of working together in cooperation.
We will offer a choice to our policyholders:
- pay a market rate based on a commercial contract
- pay a slightly higher premium rate and enjoy a share of profits
The profit sharing concept will be made available to Muslims and non-Muslims. Muslims like this concept as it it based on Syariah principles. Non-Muslims may like it as well.
In my view, all insurance transactions should be operated on these principles. As a cooperative society, NTUC Income has been observing these principles for the past 36 years.
When a person buys insurance, this person is joining an insurance pool. The premium should be calculated on the total claim amount and the expenses of operating the insurance pool, and shared fairly among the participants.
The insurance operator has the responsibility to manage the insurance pool well, pay the legitimate claims, keep the expenses low and make a fair margin. In this way, the premium can be kept low for all the insured participants.
The insurance operator should not charge a high premium and make excessive profit for shareholders. This will be unfair to the participants.
Sometimes, the insurance can produce a higher profit than expected. This could arise if the claim experience is favourable, or if the investments earn a better return.
Under takaful principles, a fair portion of the profits should be shared with the insured participants. The proportion to be shared should be fair and disclosed to the participants at the start.
Similarly, if the insurance pool pays more claim than expected, it is fair that they pay a higher premium and do not expect the shareholders to bear the loss.
It is possible for takaful principles to operate on general insurance, such as motor insurance and personal accident insurance.
Under this system, the premium charged to the participant has to be slightly higher than the market rates, maybe 10 to 20 percent higher.
The insurance operator should continue to manage the claims and expenses well and produce a profit. A fair portion of the profits should be shared with the insured participants. If this profit sharing is more than 10 or 20 percent of premium, the net cost to the insured participant will actually be lower under takaful insurance.
The insured participants can help to lower the cost in the following ways:
- avoid making excessive claims, eg motor repairs or health claims
- cooperate with the insurance operator to minimise the claims
- discourage other participants from making excessive claims
- reduce the admistrative cost by staying with the insurance operator for many years
Through this cooperative effort, the total cost can be reduced. This will be good for the insurance participants (ie the policyholders) and the insurance operator (ie the insurance company). It is win-win.
NTUC Income will be studying how to apply these principles to general insurance. We may introduce this profit sharing for certain products, such as personal accident insurance and motor insurance over the next 6 to 12 months.
We need to educate the public about the principles of sharing of risks and profits, and the principle of working together in cooperation.
We will offer a choice to our policyholders:
- pay a market rate based on a commercial contract
- pay a slightly higher premium rate and enjoy a share of profits
The profit sharing concept will be made available to Muslims and non-Muslims. Muslims like this concept as it it based on Syariah principles. Non-Muslims may like it as well.
Loss of earnings lead to less babies
The Institue of Public POlicy Research in the UK pubished a report. Many families delay having children, because women prefer to work and to earn an income. The cost of raising a child, ie the loss of earnings, is too high.
When they decide to have a baby later, it is too late. The women are less fertile. It was difficult to have a child at an older age.
This problem is faced in Singapore and in other countries. The problem in Singapore is probably worse.
What is the solution?
I have a radical proposal.
- give the mother $500 a child each month, until the child is 12 years old
- this is limited to 2 children per mother
- give free or subsidised further education to mother with 2 children
The cost of raising 2 children in each family will be borne by society. This gives an attractive option for some mothers to raise a family first, before they embark on a working career later.
I think that some countries, eg in Scandinavia, has adopted a bold approach and seem to be more successful in encouraging their people to have more children.
When they decide to have a baby later, it is too late. The women are less fertile. It was difficult to have a child at an older age.
This problem is faced in Singapore and in other countries. The problem in Singapore is probably worse.
What is the solution?
I have a radical proposal.
- give the mother $500 a child each month, until the child is 12 years old
- this is limited to 2 children per mother
- give free or subsidised further education to mother with 2 children
The cost of raising 2 children in each family will be borne by society. This gives an attractive option for some mothers to raise a family first, before they embark on a working career later.
I think that some countries, eg in Scandinavia, has adopted a bold approach and seem to be more successful in encouraging their people to have more children.
Friday, February 24, 2006
Assessment on the Spot
NTUC Income insures 290,000 vehicles. An average of 100 vehicles are involved in accidents daily.
Under the normal practice, the policyholder calls our hotline and ask for assistance. The policyholder is usually required to drive the vehicle to an accident reporting center (also called an Idac center) for the vehicle to be assessed. If the vehicle is badly damaged and cannot be driven, we will arrange for a tow truck to tow the vehicle to an Idac center.
Since 15 December 2005, NTUC Income has introduced another service. This is called "assessment on the spot". It provides for the mobile assessor to appear at the scene of the accident and to carry out an on-the-spot assessment.
The assessor takes about 15 minutes to reach the scene of the accident. The assessor assists our the policyholder and third party driver to assesses the damages at the scene of the accident. The assessor also helps them to complete the Singapore Accident Statement (SAS) forms, and to take photographs of the damaged vehicles and the scene of accident.
If any person is injured, the assessor calls an ambulance and the police. The vehicles will be towed to an IDAC center, if it cannot be driven. All documents and particulars will be forwarded to NTUC Income for further assistance or assessment of claim.
A total of 45 policyholders have used this service during the past 80 days. Based on a survey after the event, all the policyholders found this service to be useful.
Tan Kin Lian
CEO, NTUC Income
Under the normal practice, the policyholder calls our hotline and ask for assistance. The policyholder is usually required to drive the vehicle to an accident reporting center (also called an Idac center) for the vehicle to be assessed. If the vehicle is badly damaged and cannot be driven, we will arrange for a tow truck to tow the vehicle to an Idac center.
Since 15 December 2005, NTUC Income has introduced another service. This is called "assessment on the spot". It provides for the mobile assessor to appear at the scene of the accident and to carry out an on-the-spot assessment.
The assessor takes about 15 minutes to reach the scene of the accident. The assessor assists our the policyholder and third party driver to assesses the damages at the scene of the accident. The assessor also helps them to complete the Singapore Accident Statement (SAS) forms, and to take photographs of the damaged vehicles and the scene of accident.
If any person is injured, the assessor calls an ambulance and the police. The vehicles will be towed to an IDAC center, if it cannot be driven. All documents and particulars will be forwarded to NTUC Income for further assistance or assessment of claim.
A total of 45 policyholders have used this service during the past 80 days. Based on a survey after the event, all the policyholders found this service to be useful.
Tan Kin Lian
CEO, NTUC Income
Wednesday, February 22, 2006
Dutch researcher: Innovative use of MMS
QUESTION:
I am a researcher for Endemol, a Dutch-based TV-production company.
I am currently working on a presentation on mobile marketing and mobile applications in the financial services industry. I just found out about NTUC's innovative MMS claim service which I think is very interesting!
Furthermore, when researching this service I found your blog, which I think is a very brave initiative! (I wouldn't know if a CEO of a Dutch insurance company would have the courage to do this, unfortunately)
I would like to highlight the NTUC MMS service in my presentation and would like to ask for some more information on the service. More specifically I have the following questions:
(deleted)
- Does NTUC have plans to launch other service-enhancing applications using mobile phones in the future.
REPLY:
Dear
We are delighted to be mentioned in your presentation. You may use our example.
We are now actively using SMS to send messages and reminders to our customers. It is working well.
Tan Kin Lian
CEO, NTUC Income
I am a researcher for Endemol, a Dutch-based TV-production company.
I am currently working on a presentation on mobile marketing and mobile applications in the financial services industry. I just found out about NTUC's innovative MMS claim service which I think is very interesting!
Furthermore, when researching this service I found your blog, which I think is a very brave initiative! (I wouldn't know if a CEO of a Dutch insurance company would have the courage to do this, unfortunately)
I would like to highlight the NTUC MMS service in my presentation and would like to ask for some more information on the service. More specifically I have the following questions:
(deleted)
- Does NTUC have plans to launch other service-enhancing applications using mobile phones in the future.
REPLY:
Dear
We are delighted to be mentioned in your presentation. You may use our example.
We are now actively using SMS to send messages and reminders to our customers. It is working well.
Tan Kin Lian
CEO, NTUC Income
Monday, February 20, 2006
Make retirement housing more affordable
QUESTION FROM JOURNALIST:
Can you comment on the 30-year land for retirement housing? Does this make it more viable?
REPLY BY TAN KIN LIAN:
I prefer a special arrangement for the land to be tendered only for retirement housing. This will reduce the competition for the land from other type of use. It will bring down the price to a more affordable level for retirees.
It may be costly to buy a project for 30 years and to tear it down. The building cost has to be amortised over a short period.
It is better to allow for a longer period to amortised the building cost, for example 60 or 99 years.
The retirement housing can be owned by a cooperative, which can rent out to the retirees for a lifetime or a shorter period. The housing can be rented out to new tenants, after the retiree has passed away or moved out.
A retirement housing has the following advantages to the retirees:
- it is built to suit their special needs
- they have friends of similar ages that can spend time together
- they can go to the community to mix with younger people
I hope that my suggestions will give another perspective to reduce the cost to the retirees.
Can you comment on the 30-year land for retirement housing? Does this make it more viable?
REPLY BY TAN KIN LIAN:
I prefer a special arrangement for the land to be tendered only for retirement housing. This will reduce the competition for the land from other type of use. It will bring down the price to a more affordable level for retirees.
It may be costly to buy a project for 30 years and to tear it down. The building cost has to be amortised over a short period.
It is better to allow for a longer period to amortised the building cost, for example 60 or 99 years.
The retirement housing can be owned by a cooperative, which can rent out to the retirees for a lifetime or a shorter period. The housing can be rented out to new tenants, after the retiree has passed away or moved out.
A retirement housing has the following advantages to the retirees:
- it is built to suit their special needs
- they have friends of similar ages that can spend time together
- they can go to the community to mix with younger people
I hope that my suggestions will give another perspective to reduce the cost to the retirees.
Reply: there is no catch in the top-up rider
20 February 2006
Editor
Forum
The Straits Times
I refer to the article, "Incomeshield removes limits on amount of lifetime claims", by Lorna Tan (Straits Times, 15 February 2006).
In the article, Mr Patrick Lim of Promiseland Independent was quoted as saying "Incomeshield's new top-up rider came with a catch. Unless it is an emergency case, policyholders are required to seek Income's approval for the treatment, by giving the insurer four days' notice prior to incurring the expense."
I wish to give our perspective of this feature.
NTUC Income recognises the concerns of some policyholders that the current limits are inadequate for major illnesses. The top up rider will pay for the additional expenses. In most cases, the policyholder can claim under the basic plan for the ordinary expenses, before hitting the current limit. The need for top-up expenses applies only to a small percentage of cases.
Our approach is to ensure that the larger medical expenses are kept at a reasonable level. If necessary, we will ask our own doctor to give a second opinion on the proposed treatment. This will be beneficial to the policyholder as well.
We aim aim to avoid excessive billing under a blanket "as charged" plan. We will manage the claims effectively and keep the premium affordable for our policyholders. This is important, as premium rates are expected to increase significantly when the policyholder gets older.
We have 800,000 people insured under our Incomeshield plan. As a cooperative society, our aim is to look after their best interest. We believe that a top up rider will pre-approval condition will serve them best in the long run.
Tan Kin Lian
Chief Executive Officer
NTUC Income
Editor
Forum
The Straits Times
I refer to the article, "Incomeshield removes limits on amount of lifetime claims", by Lorna Tan (Straits Times, 15 February 2006).
In the article, Mr Patrick Lim of Promiseland Independent was quoted as saying "Incomeshield's new top-up rider came with a catch. Unless it is an emergency case, policyholders are required to seek Income's approval for the treatment, by giving the insurer four days' notice prior to incurring the expense."
I wish to give our perspective of this feature.
NTUC Income recognises the concerns of some policyholders that the current limits are inadequate for major illnesses. The top up rider will pay for the additional expenses. In most cases, the policyholder can claim under the basic plan for the ordinary expenses, before hitting the current limit. The need for top-up expenses applies only to a small percentage of cases.
Our approach is to ensure that the larger medical expenses are kept at a reasonable level. If necessary, we will ask our own doctor to give a second opinion on the proposed treatment. This will be beneficial to the policyholder as well.
We aim aim to avoid excessive billing under a blanket "as charged" plan. We will manage the claims effectively and keep the premium affordable for our policyholders. This is important, as premium rates are expected to increase significantly when the policyholder gets older.
We have 800,000 people insured under our Incomeshield plan. As a cooperative society, our aim is to look after their best interest. We believe that a top up rider will pre-approval condition will serve them best in the long run.
Tan Kin Lian
Chief Executive Officer
NTUC Income
Sunday, February 19, 2006
Switch back to Incomeshield
To be sent to policyholders who switched away from Incomeshield recently.
22 February 2006
Incomeshield
You were previously insured under Incomeshield, but has transfered your insurance to another Shield plan. I wish to ask you to re-consider your decision.
Here are some key advantages of Incomeshield:
- The premium rates are lower than comparable plans
- It provides adequate coverage to meet most medical treatments
- You can buy a rider to cover the deductible and co-insurance
- You can buy a top-up rider to cover the major illness
- You enjoy unlimited lifetime coverage
- The insurance is guaranteed to be renewable for a liftime, beyond age 80 or 85.
Here is a brief comparison of the total premium payable over 40 years (from age 41 to 80 years) between Incomeshield and similar plans offered by other insurers:
The coverages provided by the various plans are quite similar, except for some diffferences in the limits. The difference in premium can be as much as 60%. You can save up to $12,000 over 40 years, by insuring with NTUC Income. As the premium rates are expected to increase further in future years, it is important to choose an affordable plan.
If you wish to switch back to Incomeshield, you can call 6332-1133. We will arrange with CPF for you to switch bank and to get a refund of the proportionate amount paid to the other plan. You can also add the top-up rider to cover major illness.
If you wish to attend a dialogue session, you can call 6877-3366.
Tan Kin Lian
Chief Executive Officer
22 February 2006
Incomeshield
You were previously insured under Incomeshield, but has transfered your insurance to another Shield plan. I wish to ask you to re-consider your decision.
Here are some key advantages of Incomeshield:
- The premium rates are lower than comparable plans
- It provides adequate coverage to meet most medical treatments
- You can buy a rider to cover the deductible and co-insurance
- You can buy a top-up rider to cover the major illness
- You enjoy unlimited lifetime coverage
- The insurance is guaranteed to be renewable for a liftime, beyond age 80 or 85.
Here is a brief comparison of the total premium payable over 40 years (from age 41 to 80 years) between Incomeshield and similar plans offered by other insurers:
Plan NTUC Income Other insurers
A $30,000 $34,000 to $42,000
B $18,000 $22,000 to $28,000
The coverages provided by the various plans are quite similar, except for some diffferences in the limits. The difference in premium can be as much as 60%. You can save up to $12,000 over 40 years, by insuring with NTUC Income. As the premium rates are expected to increase further in future years, it is important to choose an affordable plan.
If you wish to switch back to Incomeshield, you can call 6332-1133. We will arrange with CPF for you to switch bank and to get a refund of the proportionate amount paid to the other plan. You can also add the top-up rider to cover major illness.
If you wish to attend a dialogue session, you can call 6877-3366.
Tan Kin Lian
Chief Executive Officer
Set up a trust policy
Here is another idea of how a wealthy person can reduce estate duty:
- contribute a certain sum for each beneficiary in a trust policy now
- invest this sum in our combined fund or annuity
- allow the beneficiary to draw out a monthly sum from a certain birthday
- restrict the right of the beneficiary to draw out the principal sum
This gift is subject to estate duty, if the benefactor dies within 5 years of the transfer. This liability can be covered by a 5 year term policy.
RATIONALE: It is better for a wealthy person to transfer part of your wealth to your beneficiary now. If you do not want them to use the money immediately, you can set up a trust policy to ensure that the fund is withdrawn in instalments.
- contribute a certain sum for each beneficiary in a trust policy now
- invest this sum in our combined fund or annuity
- allow the beneficiary to draw out a monthly sum from a certain birthday
- restrict the right of the beneficiary to draw out the principal sum
This gift is subject to estate duty, if the benefactor dies within 5 years of the transfer. This liability can be covered by a 5 year term policy.
RATIONALE: It is better for a wealthy person to transfer part of your wealth to your beneficiary now. If you do not want them to use the money immediately, you can set up a trust policy to ensure that the fund is withdrawn in instalments.
Use section 73 to reduce estate duty
Under section 73 of the Conveyancing and Law of Property Act, a policyholder can take up a life assurance policy and pledge it for the benefit of specified beneficiaries. Each policy will form a separate estate.
Here is an example of the use of Section 73 to save on estate duty
When a wealthy person passes away, the estate has to pay estate duty as follows:
- first $600,000 if free of tax
- next $x million will be taxed at 5%
- any excess will be taxed at 10%
The wealthy person can reduce the estate duty as follows:
- take a separate policy under section 73 for each beneficiary
- each policy is treated as a separate estate.
- the tax impact is lower.
Here is an example of the use of Section 73 to save on estate duty
When a wealthy person passes away, the estate has to pay estate duty as follows:
- first $600,000 if free of tax
- next $x million will be taxed at 5%
- any excess will be taxed at 10%
The wealthy person can reduce the estate duty as follows:
- take a separate policy under section 73 for each beneficiary
- each policy is treated as a separate estate.
- the tax impact is lower.
Get a better medical insurance plan
Incomeshield offers you these attractive features!
* Unlimited Lifetime Coverage: Similar plans limit the amount that you can claim for a lifetime. Incomeshield covers has removed the lifetime limit.
* Guaranteed Renewability: Incomeshield guarantees that your cover will be renewable for a lifetime, beyond age 80, beyond age 85.
* Afforable premium: The premium payable under Incomeshield are 10% to 35% lower than similar plans charged by other insurers for similar coverage. As the premium increases sharply when you grow older, it is important for you to buy an affordable plan.
* Flexible Deductible: Incomeshield allows you to be treated in a lower class ward and to enjoy a lower deductible.
* Test and follow-up expenses: If your daily limit is fully utilised, the balance can be used to cover specialist consultation, examination and laboratory tests and post hospitalisation treatment.
* Riders: You can buy riders to cover the deductible and co-insurance, and to provide additional payments for critical illness
* No claim discount: If you have been insured for more than 3 years and have not made any claim in the preceding 12 months, you will enjoy a 10% discount on your premium (subject to review).
* Unlimited Lifetime Coverage: Similar plans limit the amount that you can claim for a lifetime. Incomeshield covers has removed the lifetime limit.
* Guaranteed Renewability: Incomeshield guarantees that your cover will be renewable for a lifetime, beyond age 80, beyond age 85.
* Afforable premium: The premium payable under Incomeshield are 10% to 35% lower than similar plans charged by other insurers for similar coverage. As the premium increases sharply when you grow older, it is important for you to buy an affordable plan.
* Flexible Deductible: Incomeshield allows you to be treated in a lower class ward and to enjoy a lower deductible.
* Test and follow-up expenses: If your daily limit is fully utilised, the balance can be used to cover specialist consultation, examination and laboratory tests and post hospitalisation treatment.
* Riders: You can buy riders to cover the deductible and co-insurance, and to provide additional payments for critical illness
* No claim discount: If you have been insured for more than 3 years and have not made any claim in the preceding 12 months, you will enjoy a 10% discount on your premium (subject to review).
Saturday, February 18, 2006
Good news: Lower cost for health and motor
In the budget statement, the Minister of Finance announced that insurance companies can recover the GST on payments for repairs for passenger cars and health care bills.
This will mean that the cost of health and motor insurance will reduced by 3% to 4%.
This request for recovery of GST was submitted by NTUC Income. Anyway, all policyholders will benefit from this change in GST, regardless of who they insure with.
NTUC Income has already reduced our motor premiums by 5% from 1 January 2006. For health insurance, we will not increase the premium for 2006 and 2007, in spite of rising bills.
The saving in cost will help us to delay any future increase in premium for a longer period.
This will mean that the cost of health and motor insurance will reduced by 3% to 4%.
This request for recovery of GST was submitted by NTUC Income. Anyway, all policyholders will benefit from this change in GST, regardless of who they insure with.
NTUC Income has already reduced our motor premiums by 5% from 1 January 2006. For health insurance, we will not increase the premium for 2006 and 2007, in spite of rising bills.
The saving in cost will help us to delay any future increase in premium for a longer period.
Friday, February 17, 2006
Top up rider for Incomeshield
NTUC Income has announced our top-up rider for Incomeshield. It has been generally well received. Many policyholders welcome this rider.
A few members of the public have raised these questions:
1. Is NTUC Income contradicting itself by first denouncing as-charged plans and subsequently introducing it?
Reply: We recognise the concern of some policyholders that the current limits under Incomeshield are inadquate for the major illness. The top up rider will cover the more expensive treatments. We do not cover "as charged" as there are some controls against inflated bills.
2. Definition of "emergency"
REPLY: An "emergency" is a situation where it is not possible for the policyholder to contact us to get prior approval.
3. Whether its practical to wait for prior approval being being admitted to hospital.
Reply: In most cases, the policyholder can get prior approval for the major illness that are likely to exceed the limits under the basic plan. It is a good idea to have a second opinion before committing to a major treatment. Our doctor can provide the second opinion.
4. Can NTUC Income spell out the conditions more transparently? If not, I do not trust the conditions.
Reply: We have spelled out the principles quite transparently. In the actual implementation, we have to be practical and flexible. We are a cooperative, and will do our best for our policyholders.
Unlike other insurers, we do not aim to make a lot of profit from medical insurance. It is better for consumers to insure with us, as we aim to keep the cost affordable for them.
A few members of the public have raised these questions:
1. Is NTUC Income contradicting itself by first denouncing as-charged plans and subsequently introducing it?
Reply: We recognise the concern of some policyholders that the current limits under Incomeshield are inadquate for the major illness. The top up rider will cover the more expensive treatments. We do not cover "as charged" as there are some controls against inflated bills.
2. Definition of "emergency"
REPLY: An "emergency" is a situation where it is not possible for the policyholder to contact us to get prior approval.
3. Whether its practical to wait for prior approval being being admitted to hospital.
Reply: In most cases, the policyholder can get prior approval for the major illness that are likely to exceed the limits under the basic plan. It is a good idea to have a second opinion before committing to a major treatment. Our doctor can provide the second opinion.
4. Can NTUC Income spell out the conditions more transparently? If not, I do not trust the conditions.
Reply: We have spelled out the principles quite transparently. In the actual implementation, we have to be practical and flexible. We are a cooperative, and will do our best for our policyholders.
Unlike other insurers, we do not aim to make a lot of profit from medical insurance. It is better for consumers to insure with us, as we aim to keep the cost affordable for them.
Thursday, February 16, 2006
Parallel imports - pay less for your new car
NTUC Income is working with parallel importers to offer popular models of cars at a significant discount from the normal dealer prices. NTUC Income will provide the warranty for 3 years.
Tentatively, the savings can be 5% to 10%. More details will be announced later in the educational website:
www.KnowYourInsurance.com.sg
Tentatively, the savings can be 5% to 10%. More details will be announced later in the educational website:
www.KnowYourInsurance.com.sg
Tuesday, February 14, 2006
Combined funds earned 8.2% in 2005
Dear Policyholder,
Investment Linked Funds
Thank you for investing in our investment linked funds. I have good news for you again.
Our investment funds continued to perform well in 2005. The average weighted return was 6.8%, after deduction of fees. Total fund under management has grown to more than $5,000 million.
Our combined funds performed better. The average weighted return was 8.2%. It has also outperformed its benchmark over the past 3 years.
Our funds performed well, due to the expertise of our fund managers and our commitment to bring you best value.
In a recent survey, 88% of our policyholders who invested in the combined fund are happy with the returns. More than 50% are interested to increase their investment.
To find out more about our funds, I invite you to my investment seminars held once every two weeks. You can visit our website www.income.coop or call 6877 3366.
Tan Kin Lian
Chief Executive Officer
Investment Linked Funds
Thank you for investing in our investment linked funds. I have good news for you again.
Our investment funds continued to perform well in 2005. The average weighted return was 6.8%, after deduction of fees. Total fund under management has grown to more than $5,000 million.
Our combined funds performed better. The average weighted return was 8.2%. It has also outperformed its benchmark over the past 3 years.
Our funds performed well, due to the expertise of our fund managers and our commitment to bring you best value.
In a recent survey, 88% of our policyholders who invested in the combined fund are happy with the returns. More than 50% are interested to increase their investment.
To find out more about our funds, I invite you to my investment seminars held once every two weeks. You can visit our website www.income.coop or call 6877 3366.
Tan Kin Lian
Chief Executive Officer
Get a better return for your baby bonus?
The parent is allowed to contribute up to $6,000 in a child development account (ie baby bonus). The governemnt matches with $6,000.
The total of $12,000 has to be invested with POSB which pays interest at 0.275% a year. Unused money in the account will be transferred to edusave when the child enters primary school. The investment in POSB is for 6 years.
Capital sum $12,000
Interest for 6 years at 0.275% p.a $199
Interest for 6 years at 2.5% p.a $1,916 (10 times more)!
Interest for 6 years at 5.5% p.a. $4,546 (not guaranteed, 22 times more!)
The difference is still sizeable.
We will find a way to convince the government to allow the money to be invested in our balanced fund to earn a higher return.
The total of $12,000 has to be invested with POSB which pays interest at 0.275% a year. Unused money in the account will be transferred to edusave when the child enters primary school. The investment in POSB is for 6 years.
Capital sum $12,000
Interest for 6 years at 0.275% p.a $199
Interest for 6 years at 2.5% p.a $1,916 (10 times more)!
Interest for 6 years at 5.5% p.a. $4,546 (not guaranteed, 22 times more!)
The difference is still sizeable.
We will find a way to convince the government to allow the money to be invested in our balanced fund to earn a higher return.
Monday, February 13, 2006
What is Islamic insurance?
The Muslim community prefer insurance that are based on takaful principles, such as:
- transparency in transactions
- fair dealings, meaning mutual benefit
- cooperation for a common good to assist those in need
Under these principles, the policyholders are fairly treated and receive a fair return on their savings. The insurance provider can also get a fair profit from operating their insurance business.
As a cooperative society, NTUC Income has been operating on principles that are similar to Islamic principles.
Some Muslim scholars even hold the view that takaful should be operated as a cooperative or mutual insurance.
Our Amanah fund ($300 million now, to be increased to $1 billion) is popular with both Muslims and non-Muslims.
- transparency in transactions
- fair dealings, meaning mutual benefit
- cooperation for a common good to assist those in need
Under these principles, the policyholders are fairly treated and receive a fair return on their savings. The insurance provider can also get a fair profit from operating their insurance business.
As a cooperative society, NTUC Income has been operating on principles that are similar to Islamic principles.
Some Muslim scholars even hold the view that takaful should be operated as a cooperative or mutual insurance.
Our Amanah fund ($300 million now, to be increased to $1 billion) is popular with both Muslims and non-Muslims.
Sunday, February 12, 2006
Enjoy benefit as a "preferred policyholder"
NTUC Income is looking for a better way to serve our policyholders. We plan to offer special loan terms to a "preferred policyholder":
[] Lower interest rate
[] Pre-approval of loan
[] Hassle free application
[] Longer repayment period
[] Higher loan amount
The loan could be for:
[] loan for marriage
[] to buy a car or motor cycle
[] to buy a home
[] for education
[] other purpose
To quality as a "preferred policyholder", the policyholder must be insured for at least 2 years and have total regular saving of more than $5,000.
We will also extend this status to a policyholder whose parent has at least $20,000 in cash value with us.
We want to make it a benefit for a young policyholder to be a "preferred policyholder".
[] Lower interest rate
[] Pre-approval of loan
[] Hassle free application
[] Longer repayment period
[] Higher loan amount
The loan could be for:
[] loan for marriage
[] to buy a car or motor cycle
[] to buy a home
[] for education
[] other purpose
To quality as a "preferred policyholder", the policyholder must be insured for at least 2 years and have total regular saving of more than $5,000.
We will also extend this status to a policyholder whose parent has at least $20,000 in cash value with us.
We want to make it a benefit for a young policyholder to be a "preferred policyholder".
Earn on your investment immediately!
If you buy a regular premium ILP (investment linked plan), you are likely to pay 150% of your annual premium as distribution cost.
If you invest $300 a month, the distribution cost will take away $5,400 from your savings. It goes to pay the agent's commission. This is the money that should be earning an attractive return for you instead.
If you buy a ILP from NTUC Income, 100% of your savings is invested immediately. You can get a much higher return on the maturity date!
Wow! It makes more sense to invest with NTUC Income.
Unbelievable? Go to www.askdrmoney.com.
If you have recently bought an expensive ILP, you can still make a switch now to NTUC Income. We can help you to reduce your cost and start making an invsetment gain now.
Call 6788 1111
If you invest $300 a month, the distribution cost will take away $5,400 from your savings. It goes to pay the agent's commission. This is the money that should be earning an attractive return for you instead.
If you buy a ILP from NTUC Income, 100% of your savings is invested immediately. You can get a much higher return on the maturity date!
Wow! It makes more sense to invest with NTUC Income.
Unbelievable? Go to www.askdrmoney.com.
If you have recently bought an expensive ILP, you can still make a switch now to NTUC Income. We can help you to reduce your cost and start making an invsetment gain now.
Call 6788 1111
Saturday, February 11, 2006
Visitors to my blog
My site meter shows an average of 67 people visit my blog every day, including weekends. Thank you for being one of them.
Tell you friends to visit my blog.
Tell you friends to visit my blog.
Friday, February 10, 2006
Offer better value to consumers
100 years ago, it was difficult to sell life insurance.
An insurance agent had to spend many months to learn about insurance and selling skills. A productive agent sold 20 policies in a year. It was hard work to convince people to buy life insurance.
The agent had to earn enough to make a living. So, commission had to be high, as much as 1 year of premium, to make it worth while for the agent.
The government gave tax relief to the policyholder. If the policyholder kept the policy for 10 years or longer, the saving in tax relief was more than the commission earned by the agent. The return to the policyhoder from life insurance was quite attractive, in spite of the high distribution cost.
About 20 years ago, the government in many countries removed the tax relief or made it worth much less.
Around that time, the life insurance funds were able to earn a high rate of investment return. If the policyholder kept the policy for a long period, the net return was still quite attractive, even after paying for the high distribution cost.
For example, if the insurance fund earned a net rate of 7% per annum, and the expenses effectively took away 2.5%, the net return to the policyholder was still quite attractive at 4.5%.
The scenario changes when investment return dropped. If the investment return was 4.5%, and 2.5% was deducted for expenses, the net return to the policyholder was only 2%. This would be unattractive for a 20 year investment.
Life insurance agents changed their selling pitch. They sold to customers about the importance of insurance. But the product is not really the right one, as it is too costly and give a poor return.
What is the solution?
Life insurance agents and companies have to change their approach.
They have to offer better value products to their customers. They have to reduce their distribution cost and other expenses, and distribute a larger portion of the investment return to their customers.
How can agents survive on lower commission? By finding new ways to increase the volume of sales, without having to work longer hours. In other words, by being more productive.
They should sell 50 to 100 policies a year, and not only 20 policies. The commission can be lower for each policy, but the income on the higher volume of sales will be higher.
Life insurance companies must also do their part by streamlining operations and reducing expenses.
By working together, agents and their companies can lower costs, increase returns and remain competitive in this new consumer-savvy environment.
NTUC Income is making the changes to provide better value to the customers. By adapting, we expect to prosper in the insurance industry of the 21st century.
An insurance agent had to spend many months to learn about insurance and selling skills. A productive agent sold 20 policies in a year. It was hard work to convince people to buy life insurance.
The agent had to earn enough to make a living. So, commission had to be high, as much as 1 year of premium, to make it worth while for the agent.
The government gave tax relief to the policyholder. If the policyholder kept the policy for 10 years or longer, the saving in tax relief was more than the commission earned by the agent. The return to the policyhoder from life insurance was quite attractive, in spite of the high distribution cost.
About 20 years ago, the government in many countries removed the tax relief or made it worth much less.
Around that time, the life insurance funds were able to earn a high rate of investment return. If the policyholder kept the policy for a long period, the net return was still quite attractive, even after paying for the high distribution cost.
For example, if the insurance fund earned a net rate of 7% per annum, and the expenses effectively took away 2.5%, the net return to the policyholder was still quite attractive at 4.5%.
The scenario changes when investment return dropped. If the investment return was 4.5%, and 2.5% was deducted for expenses, the net return to the policyholder was only 2%. This would be unattractive for a 20 year investment.
Life insurance agents changed their selling pitch. They sold to customers about the importance of insurance. But the product is not really the right one, as it is too costly and give a poor return.
What is the solution?
Life insurance agents and companies have to change their approach.
They have to offer better value products to their customers. They have to reduce their distribution cost and other expenses, and distribute a larger portion of the investment return to their customers.
How can agents survive on lower commission? By finding new ways to increase the volume of sales, without having to work longer hours. In other words, by being more productive.
They should sell 50 to 100 policies a year, and not only 20 policies. The commission can be lower for each policy, but the income on the higher volume of sales will be higher.
Life insurance companies must also do their part by streamlining operations and reducing expenses.
By working together, agents and their companies can lower costs, increase returns and remain competitive in this new consumer-savvy environment.
NTUC Income is making the changes to provide better value to the customers. By adapting, we expect to prosper in the insurance industry of the 21st century.
Wednesday, February 08, 2006
Give work to students from poor family
NTUC Income plans to give work to students who come from poor family. They will be recommended by the school.
We will pay them at $6 or $7 an hour. The work can be done using the personal computer in the school. The student can work for 2 hours each day.
We hope to benefit 500 students in a year.
If these students do not have useful work, they may idle and loiter. Giving them useful work can help their family to pay for their school expenses. It will give them something meaningful to work for.
We will pay them at $6 or $7 an hour. The work can be done using the personal computer in the school. The student can work for 2 hours each day.
We hope to benefit 500 students in a year.
If these students do not have useful work, they may idle and loiter. Giving them useful work can help their family to pay for their school expenses. It will give them something meaningful to work for.
Invest in a 10 year annuity and save tax
Here is an idea. An annuitant can invest in a 10 year annuity and save on tax.
Annuity is now exempt from tax. Here is an example of how it can be used for tax saving.
The annuitant invest $10,000 to receive an annuity certain of $1,232 per year for 10 years. This assumes that 4% interest is used in the computation.
The total payment for 10 years is $12,320. The actual interest earned is $2,320. If the annuitant pays income tax at 10%, the tax payable on the interest component should be $232. By investing in an annuity plan, the annuitant save $232 on the tax.
The tax saving add 0.4% to the yield. This is the same as investing in another product to earn 4.4%, pay income tax at 10% and get the same net return as the annuity.
Annuity is now exempt from tax. Here is an example of how it can be used for tax saving.
The annuitant invest $10,000 to receive an annuity certain of $1,232 per year for 10 years. This assumes that 4% interest is used in the computation.
The total payment for 10 years is $12,320. The actual interest earned is $2,320. If the annuitant pays income tax at 10%, the tax payable on the interest component should be $232. By investing in an annuity plan, the annuitant save $232 on the tax.
The tax saving add 0.4% to the yield. This is the same as investing in another product to earn 4.4%, pay income tax at 10% and get the same net return as the annuity.
Monday, February 06, 2006
Know Your Insurance - Topics
If you like to learn about any of the topics below, you can visit
www.KnowYourInsurance.com.sg
INSURANCE
Motor Insurance
iYoung
Investment Linked Plan
Personal Accident
Travel Insurance
Medical Insurance
Saving for Education
FAST (Financial Advice)
An insurance cooperative
Life Annuity
Home Insurance
GENERAL
Manage Your Money
Take a holiday in Sabah
Invest your CPF savings
Buying a new car
Estate Duty
www.KnowYourInsurance.com.sg
INSURANCE
Motor Insurance
iYoung
Investment Linked Plan
Personal Accident
Travel Insurance
Medical Insurance
Saving for Education
FAST (Financial Advice)
An insurance cooperative
Life Annuity
Home Insurance
GENERAL
Manage Your Money
Take a holiday in Sabah
Invest your CPF savings
Buying a new car
Estate Duty
Know Your Insurance website - Mandarin & Malay
NTUC Income is launching the Mandarin and Malays versions of the "Know Your Insurance" website.
We first launched the English version of this website on 21 December 2005. It received encouraging response. A total of 33,000 people have visited the website over the past five weeks, or an average of 1,000 visitors daily.
5,000 people have taken the test on the insurance topics and are eligible for a discount when they purchase NTUC Income's insurance products.
A recent survey of 200 visitors:
82 per cent find the website to be educational
94 per cent of the users will visit the website again
82 per cent will recommend their friends to visit the website
74 per cent will take advantage of the discounts to buy insurance
The top five popular topics are: Motor Insurance, Investment-Linked Plan, Life Annuity, Medical Insurance and iYoung.
We first launched the English version of this website on 21 December 2005. It received encouraging response. A total of 33,000 people have visited the website over the past five weeks, or an average of 1,000 visitors daily.
5,000 people have taken the test on the insurance topics and are eligible for a discount when they purchase NTUC Income's insurance products.
A recent survey of 200 visitors:
82 per cent find the website to be educational
94 per cent of the users will visit the website again
82 per cent will recommend their friends to visit the website
74 per cent will take advantage of the discounts to buy insurance
The top five popular topics are: Motor Insurance, Investment-Linked Plan, Life Annuity, Medical Insurance and iYoung.
Saturday, February 04, 2006
My wish for budget 2006 - SRS
If I were the Finance Minister, I would ... Review the Supplementary Retirement Scheme and make it more effective in helping people to make additional savings for retirement.
I will increase the amount of contribution to a flat 15% of annual income, or $16,000 whichever is higher.
For non-residents who do not contribute to CPF, I will allow an additional contribution of 20% of earnings, subject to a cap of $9,600 (being 20% on $4,000 X 12).
The other features of the SRS can remain the same.
I will increase the amount of contribution to a flat 15% of annual income, or $16,000 whichever is higher.
For non-residents who do not contribute to CPF, I will allow an additional contribution of 20% of earnings, subject to a cap of $9,600 (being 20% on $4,000 X 12).
The other features of the SRS can remain the same.
Annuity income is exempt from personal tax
If you buy an annuity, the income that you receive is fully exempt from personal tax.
Here is an example. Assume an annuitant invest $100,000 in an annuity and receive back a total of $150,000 during the lifetime. This comprise of a return of capital (ie $100,000) and the income earned on investing this sum, (ie $50,000).
The annuitant does not have to pay any personal tax on the full amount revieved as annuity.
If the annuitant had invested invested in other type of investment and earned an income of $50,000 over several years, this income will be taxed at the marginal rate. If this rate is an average of 10%, the tax payable is $5,000.
By investing in the life annuity, the annuitant enjoy this tax exemption and receives $5,000 more.
An annuity has a tax advantage. It is better to invest in an annuity, if the return given is competitive.
In the above example, if the total payout of $150,000 is received over 20 years, the annuity income for each year is $7,500. This represents an attractive return of 7.5% on the invested sum. However, this return comprise partly of the consumption of the capital and on the actual income earned.
NTUC Income offers an attractive return on our annuities. We now account for 60 percent of the market. The remaining 40% is shared by several life insurance companies.
Here is an example. Assume an annuitant invest $100,000 in an annuity and receive back a total of $150,000 during the lifetime. This comprise of a return of capital (ie $100,000) and the income earned on investing this sum, (ie $50,000).
The annuitant does not have to pay any personal tax on the full amount revieved as annuity.
If the annuitant had invested invested in other type of investment and earned an income of $50,000 over several years, this income will be taxed at the marginal rate. If this rate is an average of 10%, the tax payable is $5,000.
By investing in the life annuity, the annuitant enjoy this tax exemption and receives $5,000 more.
An annuity has a tax advantage. It is better to invest in an annuity, if the return given is competitive.
In the above example, if the total payout of $150,000 is received over 20 years, the annuity income for each year is $7,500. This represents an attractive return of 7.5% on the invested sum. However, this return comprise partly of the consumption of the capital and on the actual income earned.
NTUC Income offers an attractive return on our annuities. We now account for 60 percent of the market. The remaining 40% is shared by several life insurance companies.
Friday, February 03, 2006
Cancel your motor insurance and move to NTUC Income
NTUC Income charges a lower premium rate for motor insurance. The difference can be up to 25%.
If you have insured at a higher premium rate, you can cancel the existing policy, get the refund premium and move to NTUC Income now.
Your current insurer will normally charge 15% of the premium or $100 for administration charges for cancellation. The unused premium minus the cancellation charge is returned to the policyholder.
Here is an example.
Take the case of a policyholder who pays a premium of $1,200 and wish to cancel the policy after 6 months.
The refund premium is 1/2 of 85% of $1,200 = $510.
If our premium is $900 (ie 25% lower than $1,200), the policyholder pays only $450 for the 6 month of insurance with us.
He will benefit by cancelling the policy and moving to us now. The benefit is higher, if you cancel your policy within the first few months.
If you have insured at a higher premium rate, you can cancel the existing policy, get the refund premium and move to NTUC Income now.
Your current insurer will normally charge 15% of the premium or $100 for administration charges for cancellation. The unused premium minus the cancellation charge is returned to the policyholder.
Here is an example.
Take the case of a policyholder who pays a premium of $1,200 and wish to cancel the policy after 6 months.
The refund premium is 1/2 of 85% of $1,200 = $510.
If our premium is $900 (ie 25% lower than $1,200), the policyholder pays only $450 for the 6 month of insurance with us.
He will benefit by cancelling the policy and moving to us now. The benefit is higher, if you cancel your policy within the first few months.
Advice: How to restructure your life insurance
QUESTION
Dear Mr Tan
In today's global market condition and removal of the iron rice bowl, job security are now being a thing of the past. Many Singaporean whom have bought numerous
life insurance policies found that they are not able to keep up with the long term payment.
This has resulted in cancellation after emptying accumulated bonuses to pay their insurance premium. It is no longer attractive to make a long term commitment.
I am a victim of multinational company relocated from Singapore to New Delhi.
REPLY
Dear
I will get someone to assist you on restructuring your insurance plans, as follows:
- surrender for the cash value
- NTUC Income gives generous values compared to other insurance companies
- invest the cash value in our combined fund (for flexibility and attractive return)
- make flexible savings under our Ideal plan
- take a decreassing term assurance for your coverage (it cost you much less)
Dear Mr Tan
In today's global market condition and removal of the iron rice bowl, job security are now being a thing of the past. Many Singaporean whom have bought numerous
life insurance policies found that they are not able to keep up with the long term payment.
This has resulted in cancellation after emptying accumulated bonuses to pay their insurance premium. It is no longer attractive to make a long term commitment.
I am a victim of multinational company relocated from Singapore to New Delhi.
REPLY
Dear
I will get someone to assist you on restructuring your insurance plans, as follows:
- surrender for the cash value
- NTUC Income gives generous values compared to other insurance companies
- invest the cash value in our combined fund (for flexibility and attractive return)
- make flexible savings under our Ideal plan
- take a decreassing term assurance for your coverage (it cost you much less)
Thursday, February 02, 2006
Avoid Structured Deposit
QUESTION FROM A COLLEAGUE
In 2003, my father and I invested $5,000 in a 6-year capital guaranteed investment product called "Enrich Account".
It provides a 3.6% pay-out in the first year and subsequent pay-outs on the Bank's discretion. We received a payout of S$180 in 2003, S$90 in 2004 and no payout in 2005. The current value of the investment is S$4,300. We are tied up till 2009.
I suspect the poor performance is due to its bond investments which are affected by the rising interest rate environment. Although it is capital guaranteed, it ties up our money for 6 years and ultimately gives poor returns.
What is your advice?
LESSON:
This is a good example of structured deposits and the problems with them. I avoid them.
If you wish to invest in a structured product, you should understand how it works. You should also ask the Bank to disclose disclose the minimum and maximum return and the actual returns realised - for each of the structured products which have matured.
In 2003, my father and I invested $5,000 in a 6-year capital guaranteed investment product called "Enrich Account".
It provides a 3.6% pay-out in the first year and subsequent pay-outs on the Bank's discretion. We received a payout of S$180 in 2003, S$90 in 2004 and no payout in 2005. The current value of the investment is S$4,300. We are tied up till 2009.
I suspect the poor performance is due to its bond investments which are affected by the rising interest rate environment. Although it is capital guaranteed, it ties up our money for 6 years and ultimately gives poor returns.
What is your advice?
LESSON:
This is a good example of structured deposits and the problems with them. I avoid them.
If you wish to invest in a structured product, you should understand how it works. You should also ask the Bank to disclose disclose the minimum and maximum return and the actual returns realised - for each of the structured products which have matured.
Wednesday, February 01, 2006
A new way to sell insurance
INSURANCE AGENTS
Tired of prospecting?
Tired of making cold calls?
Tired of running around to make presentations?
Tired of long working hours?
We are looking for qualified agents to join our expanding team of full-time Insurance Consultants
• Fixed salary of $1,500 to $2,500 with performance-based incentives
• Comprehensive training and career progression
• Office-based environment
• Attractive staff benefits and balanced work-life
• 5-day work week
• Get a sign-on bonus of $1,000 (subject to conditions)
Interested candidates, please apply via: www.income.coop/career
Tired of prospecting?
Tired of making cold calls?
Tired of running around to make presentations?
Tired of long working hours?
We are looking for qualified agents to join our expanding team of full-time Insurance Consultants
• Fixed salary of $1,500 to $2,500 with performance-based incentives
• Comprehensive training and career progression
• Office-based environment
• Attractive staff benefits and balanced work-life
• 5-day work week
• Get a sign-on bonus of $1,000 (subject to conditions)
Interested candidates, please apply via: www.income.coop/career
Tuesday, January 31, 2006
Regular investments using CPF
QUESTION:
Dear Mr. Tan,
Thank you for regular updates in your blog. It is interesting, relevant and useful.
Could you discuss a little on regular savings plan for your investment funds products, using CPF OA and SA?
I am sure other readers would be keen to know if there is such a plan as it potentially helps to beat the CPF returns (if using CPF funds for investment). If there is no RSP arrangements, would NTUC be looking into this?
REPLY
Dear
NTUC Income has a regular savings plan. It is called the Ideal plan. It has to be paid by cash.
Alternatively, you can invest your CPF savings (ordinary or special account) as a single premium under our Flexilink plan. You can top up your savings at any time with a "recurring" single premium, provided that the top up is at least $1,000.
The advantage of a single premium plan is that the charge is very low.
Dear Mr. Tan,
Thank you for regular updates in your blog. It is interesting, relevant and useful.
Could you discuss a little on regular savings plan for your investment funds products, using CPF OA and SA?
I am sure other readers would be keen to know if there is such a plan as it potentially helps to beat the CPF returns (if using CPF funds for investment). If there is no RSP arrangements, would NTUC be looking into this?
REPLY
Dear
NTUC Income has a regular savings plan. It is called the Ideal plan. It has to be paid by cash.
Alternatively, you can invest your CPF savings (ordinary or special account) as a single premium under our Flexilink plan. You can top up your savings at any time with a "recurring" single premium, provided that the top up is at least $1,000.
The advantage of a single premium plan is that the charge is very low.
Top Up Rider for Incomeshield
QUESTION:
Dear Mr Tan,
I am a fan of your blog. My family are gratefully insured under Incomeshield for many years. Your recent discussion on affordable medical insurance prompts me to seek your advice.
In about a week's time, my father is likely to undergo an angioplasty op by a referred doctor in SGH's National Heart Centre, likely under "minimum" B1 ward. Based on our calculation, we may be able to claim less than half of the hospital bill from Incomeshield. My dad is under Plan B.
This prompts me to think of getting my family a second medical plan (a backup) that may cover the higher cost should special circumstances that need private or Class B1 govt ward arise in the future.
However, we do not wish to give up on Incomeshield which we have great faith in in taking care of us in decades to come. And I know private medical plans are very
expensive (as you have mentioned) and also have to be paid by cash.
I would like to seek your advice on whether NTUC Income (and/or CPF Board)
allow one to take up both Incomeshield (paid with cash instead) and another
Shield plan (e.g. Aviva's MyShield) (paid from CPF Medisave) at the same
time. If it is possible, how will the claim process be like with 2 shield
plans?
REPLY
Dear
I am sorry to learn about your father's medical condition. Is your father covered under a dread disease policy? He can claim under this policy for a cash benefit.
For Incomeshield, we will be introduced a rider that can pay more, for major illness. The additional premium is 15% of the standard premium. It should cover all of the medical bill for your father's case, apart from the mandatory deductible and co-insurance. Under plan B, the premium will be about 30% lower than the expensive
plan that covers everthing "as charged".
The rider should be ready within two months.
Tan Kin Lian
Dear Mr Tan,
I am a fan of your blog. My family are gratefully insured under Incomeshield for many years. Your recent discussion on affordable medical insurance prompts me to seek your advice.
In about a week's time, my father is likely to undergo an angioplasty op by a referred doctor in SGH's National Heart Centre, likely under "minimum" B1 ward. Based on our calculation, we may be able to claim less than half of the hospital bill from Incomeshield. My dad is under Plan B.
This prompts me to think of getting my family a second medical plan (a backup) that may cover the higher cost should special circumstances that need private or Class B1 govt ward arise in the future.
However, we do not wish to give up on Incomeshield which we have great faith in in taking care of us in decades to come. And I know private medical plans are very
expensive (as you have mentioned) and also have to be paid by cash.
I would like to seek your advice on whether NTUC Income (and/or CPF Board)
allow one to take up both Incomeshield (paid with cash instead) and another
Shield plan (e.g. Aviva's MyShield) (paid from CPF Medisave) at the same
time. If it is possible, how will the claim process be like with 2 shield
plans?
REPLY
Dear
I am sorry to learn about your father's medical condition. Is your father covered under a dread disease policy? He can claim under this policy for a cash benefit.
For Incomeshield, we will be introduced a rider that can pay more, for major illness. The additional premium is 15% of the standard premium. It should cover all of the medical bill for your father's case, apart from the mandatory deductible and co-insurance. Under plan B, the premium will be about 30% lower than the expensive
plan that covers everthing "as charged".
The rider should be ready within two months.
Tan Kin Lian
Saturday, January 28, 2006
Mr Yap: happy with investment-linked funds
Mr Yap, 43, was one of many policyholders who invested with NTUC Income and made a positive profit. Mr Yap started investing in Technology Fund in October 2002.
Mr Yap committed all his investment between October 2002 to May 2003. There were no education seminars then. He was able to get advice through various discussions with his peers.
Mr Yap is very happy with his investments in Investment Link Products ILP). He has invested in high risk funds such as Technology, Japan, Europe and Growth. He invested about $110,000 in total and have realised $80,000 of his investment, making a profit of about 45% over 2 years!
" I would definitely invest more in future. In the past, I do not believe in ILP or unit trust as the price movement is slow. I prefer higher risk instruments like shares and warrants.
However, I learnt some painful lessons which comes with very bad losses. The lesson leant is, for working people like me, it is better to leave the investment to the professional fund managers who charged reasonable costs. "
Mr Yap acknowledges that it is also less stressful to invest in investment funds and to aim for reasonable good returns. Investing in speculative stocks can be a very stressful experience for a already busy man like him.
" I will not hesitant to recommend my friends to invest with NTUC Income."
Mr Yap committed all his investment between October 2002 to May 2003. There were no education seminars then. He was able to get advice through various discussions with his peers.
Mr Yap is very happy with his investments in Investment Link Products ILP). He has invested in high risk funds such as Technology, Japan, Europe and Growth. He invested about $110,000 in total and have realised $80,000 of his investment, making a profit of about 45% over 2 years!
" I would definitely invest more in future. In the past, I do not believe in ILP or unit trust as the price movement is slow. I prefer higher risk instruments like shares and warrants.
However, I learnt some painful lessons which comes with very bad losses. The lesson leant is, for working people like me, it is better to leave the investment to the professional fund managers who charged reasonable costs. "
Mr Yap acknowledges that it is also less stressful to invest in investment funds and to aim for reasonable good returns. Investing in speculative stocks can be a very stressful experience for a already busy man like him.
" I will not hesitant to recommend my friends to invest with NTUC Income."
Refinance your home loan?
Are you worried about higher interest rates on your home loan?
If you home loan is $500,000 and your bank increase the interest rate by 1%, you have to pay $5,000 more in interest each year. Your bank can continue to increase the interest rate after that, depending on the market condition.
You can protect against higher interest rate by re-financing your home loan with a fixed rate loan. NTUC Income can offer you 5 year loan at a fixed interest rate of 3.99% per annum. This interest rate will not be changed for the next 5 years.
In the market, a bank now offers a 5 year loan fixed at 4.25% per annum. If you take a loan of $500,000 from us, you will save $1,300 a year (compared to the rate charged by the bank).
NTUC Income offers these attractive terms to re-finance your home loan:
- switch to our flexi rate at the end of 3 years.
- free processing and valuation.
- free fire insurance for first year.
- legal fees absorbed by us (for refinance only) *
- payment holiday up to 12 months *
* terms and conditions apply
If you home loan is $500,000 and your bank increase the interest rate by 1%, you have to pay $5,000 more in interest each year. Your bank can continue to increase the interest rate after that, depending on the market condition.
You can protect against higher interest rate by re-financing your home loan with a fixed rate loan. NTUC Income can offer you 5 year loan at a fixed interest rate of 3.99% per annum. This interest rate will not be changed for the next 5 years.
In the market, a bank now offers a 5 year loan fixed at 4.25% per annum. If you take a loan of $500,000 from us, you will save $1,300 a year (compared to the rate charged by the bank).
NTUC Income offers these attractive terms to re-finance your home loan:
- switch to our flexi rate at the end of 3 years.
- free processing and valuation.
- free fire insurance for first year.
- legal fees absorbed by us (for refinance only) *
- payment holiday up to 12 months *
* terms and conditions apply
Annuity income is free of tax
If you buy an annuity, the payment that you receive each month is free of personal income tax.
Here is an example:
- you invest $100,000 in a life annuity at age 62
- you get $446 a month (giving a return of 5.3% yearly)
- your annuity income is increased yearly by the bonus declared (not guaranteed)
- refund of your capital less payments received, on early death
The income that you receive each year is free of income tax.
Get an attractive return on your life annuity, free of personal income tax on it.
Here is an example:
- you invest $100,000 in a life annuity at age 62
- you get $446 a month (giving a return of 5.3% yearly)
- your annuity income is increased yearly by the bonus declared (not guaranteed)
- refund of your capital less payments received, on early death
The income that you receive each year is free of income tax.
Get an attractive return on your life annuity, free of personal income tax on it.
Enjoy discount on your insurance
We asked our policyholders in a survey how we can best serve them in 2006. 80% said that they to get a discount on their next purchase of insurance.
You can find a suitable plan and get a discount when you visit www.KnowYourInsurance.com.sg.
You can find a suitable plan and get a discount when you visit www.KnowYourInsurance.com.sg.
Sabah - an interesting holiday destination
Sabah is now becoming an interesting holiday destination for Singaporeans.
The attractions are:
- nature, adventure, montain climbing, marine parks, diving, golfing
- low cost airfare now available through Silk Air (promotion: $240 return)
- good food, sea food
- nice and friendly people, culture
NTUC Income will be offering a special promotion for policyholders.
Get more details. Visit www.KnowYourInsurance.com.sg. Select "Sabah".
The attractions are:
- nature, adventure, montain climbing, marine parks, diving, golfing
- low cost airfare now available through Silk Air (promotion: $240 return)
- good food, sea food
- nice and friendly people, culture
NTUC Income will be offering a special promotion for policyholders.
Get more details. Visit www.KnowYourInsurance.com.sg. Select "Sabah".
Thursday, January 26, 2006
Medical insurance can be very costly, when you get old
An Australian actuary was surprised to learn that medical insurance premium in Singapore increase with age. He asked, "how is the old folk able to afford paying the premium, which will be very expensive? "
Here is my reply.
NTUC Income offers premium rates at a more affordable level. We offer a choice of 4 plans.
At a younger age, the policyholder can opt for a better plan (eg plan P or plan A) and pay a higher premium. The premium rate is still affordable, ie less than $300 a year.
When the policyholder retires after age 60, the premium can be quite steep, more than $1,000 a year. At that time, the policyholder can move to a lower plan (eg plan B or plan C) and pay a lower premium (compared to plan P or plan A).
Most of the other insurers charge premium rates that are 20% to 50% higher than NTUC Income. Their premium rates will be very expensive at the older ages. It could be $3,000 or more a year.
Advice: take your medical insurance from NTUC Income. We will keep it affordable for you.
Here is my reply.
NTUC Income offers premium rates at a more affordable level. We offer a choice of 4 plans.
At a younger age, the policyholder can opt for a better plan (eg plan P or plan A) and pay a higher premium. The premium rate is still affordable, ie less than $300 a year.
When the policyholder retires after age 60, the premium can be quite steep, more than $1,000 a year. At that time, the policyholder can move to a lower plan (eg plan B or plan C) and pay a lower premium (compared to plan P or plan A).
Most of the other insurers charge premium rates that are 20% to 50% higher than NTUC Income. Their premium rates will be very expensive at the older ages. It could be $3,000 or more a year.
Advice: take your medical insurance from NTUC Income. We will keep it affordable for you.
Insure your new car with NTUC Income
If you buy a new car, you can insure it with NTUC Income. We offer:
- lower premium, representing a saving of $200 to $400 a year, every year
- protection against loss of warranty, if voided by the manufacturer
- repair at the manufacturer's workshop, if proprietary equipment is needed
- replace with a new car, if it is stolen or totally lost during the first year
You can also get an attractive loan from us.
Give us a call, before you look for your car. We can give you an attractive offer.
6477 7722
http://www.income.coop/insurance/motor/
- lower premium, representing a saving of $200 to $400 a year, every year
- protection against loss of warranty, if voided by the manufacturer
- repair at the manufacturer's workshop, if proprietary equipment is needed
- replace with a new car, if it is stolen or totally lost during the first year
You can also get an attractive loan from us.
Give us a call, before you look for your car. We can give you an attractive offer.
6477 7722
http://www.income.coop/insurance/motor/
Wednesday, January 25, 2006
Does buying an annuity help avoid estate duty?
25 January 2006
Editor
Forum Page
Straits Times
I refer to the letter "Does buying an annuity help avoid estate duty" by Ms Chua Qiing Yuan (St Times 24 January).
Ms Chua referred to my previous letter that was printed in the Straits Times on 29 December. I wish to clarify this matter.
Under a life annuity, the purchaser pays a capital sum to receive an income stream for a lifetime. The life insurance company estimates the future income from investing the capital sum and pays out the total capital and income over the expected lifetime of the annuitant. On death, the capital sum is treated as fully expended.
For example, a male annuitant at age 62 can invest $100,000 in a participating life annuity that pays back a monthly income of $524 for a lifetime. This represents a notional return of 6.3% on the invested sum. I use the word "notional return" as it includes a refund of the capital. The monthly income may be increased by a bonus yearly, depending on the actual investment return of the fund. The bonus will increase the notional return.
The annuitant can opt to receive a lower monthly payment of $446 in return for a capital guarantee. In this case, the balance of the capital sum (excluding interest), less the annuity payments received, will be refunded in the event of early death of the annuitant. If the total annuity payment is more than the capital sum, there is no refund.
If there is a refund at the time of death, that refund will be treated as part of the estate and is subject to estate duty. This estate duty is likely to be small, as a significant portion of the capital may have been paid back already.
Most annuitants are likely to survive beyond the refund period or may have bought a life annuity that does not have a capital guarantee. In this case, there is no estate duty.
The key advantage of a life annuity is that it pays an attractive income that is guaranteed for a lifetime. The payout continues even after the capital sum and accrued income has been fully paid out. This is only possible because the annuitants who die earlier leaves behind the balance of their money to pay the annuitants who live longer. This is the concept of sharing of risks.
There is another signficant advantage, often overlooked. The monthly income is
fully exempt from personal income tax. This applies to most life annuities, except those purchased under some special arrangement, such as the Supplementary Retirement Scheme.
NTUC Income has 29,000 annuitants who have invested a total of $1,450 million in these contracts. The average investment is $50,000 per annuitant. The average payout is $4,100 yearly, presenting a notional return of 8.2% on the invested sum.
Tan Kin Lian
Chief Executive Officer
Editor
Forum Page
Straits Times
I refer to the letter "Does buying an annuity help avoid estate duty" by Ms Chua Qiing Yuan (St Times 24 January).
Ms Chua referred to my previous letter that was printed in the Straits Times on 29 December. I wish to clarify this matter.
Under a life annuity, the purchaser pays a capital sum to receive an income stream for a lifetime. The life insurance company estimates the future income from investing the capital sum and pays out the total capital and income over the expected lifetime of the annuitant. On death, the capital sum is treated as fully expended.
For example, a male annuitant at age 62 can invest $100,000 in a participating life annuity that pays back a monthly income of $524 for a lifetime. This represents a notional return of 6.3% on the invested sum. I use the word "notional return" as it includes a refund of the capital. The monthly income may be increased by a bonus yearly, depending on the actual investment return of the fund. The bonus will increase the notional return.
The annuitant can opt to receive a lower monthly payment of $446 in return for a capital guarantee. In this case, the balance of the capital sum (excluding interest), less the annuity payments received, will be refunded in the event of early death of the annuitant. If the total annuity payment is more than the capital sum, there is no refund.
If there is a refund at the time of death, that refund will be treated as part of the estate and is subject to estate duty. This estate duty is likely to be small, as a significant portion of the capital may have been paid back already.
Most annuitants are likely to survive beyond the refund period or may have bought a life annuity that does not have a capital guarantee. In this case, there is no estate duty.
The key advantage of a life annuity is that it pays an attractive income that is guaranteed for a lifetime. The payout continues even after the capital sum and accrued income has been fully paid out. This is only possible because the annuitants who die earlier leaves behind the balance of their money to pay the annuitants who live longer. This is the concept of sharing of risks.
There is another signficant advantage, often overlooked. The monthly income is
fully exempt from personal income tax. This applies to most life annuities, except those purchased under some special arrangement, such as the Supplementary Retirement Scheme.
NTUC Income has 29,000 annuitants who have invested a total of $1,450 million in these contracts. The average investment is $50,000 per annuitant. The average payout is $4,100 yearly, presenting a notional return of 8.2% on the invested sum.
Tan Kin Lian
Chief Executive Officer
Monday, January 23, 2006
90 people visit my blog each day
This blog has a site meter. It records the number of visitors each day. My site meter shows that 90 people visit my blog each day.
Do tell your friends to visit my blog. I will post my views on insurance, financial and social issues. I hope that you find them to be useful.
Do tell your friends to visit my blog. I will post my views on insurance, financial and social issues. I hope that you find them to be useful.
Why is term insurance not popular?
Someone asked me, "Why is term insurance not popular?"
The answer is, "agents prefer to sell endowment and whole life insurance".
For example, a policyholder can buy term insurance for $100,000 over 20 years by paying a premium of $400 a year. If they buy a whole life policy, they pay a premium of $2000 a year.
Agents can earn commission of up to 1.5 years of premium when they sell a whole life policy. Yes, they can earn $3,000 on selling a whole life policy to you. You pay for it through the higher premium.
They earn less on their term insurance policy. Maybe $200 to $400 in commission.
So, agents sell whole life and endowment policy. They tell the customer that this is a better plan for the customer. They did not tell the customer that they earn a higher commission.
In reality, the customer is better off to buy a term insurance and to invest the difference in a unit trust or investment linked plan (such as the Ideal plan from NTUC Income) where 100% of the savings is invested.
Be careful about buying a ILP from other insurers. They may take away 1.5 years of your savings as well.
The answer is, "agents prefer to sell endowment and whole life insurance".
For example, a policyholder can buy term insurance for $100,000 over 20 years by paying a premium of $400 a year. If they buy a whole life policy, they pay a premium of $2000 a year.
Agents can earn commission of up to 1.5 years of premium when they sell a whole life policy. Yes, they can earn $3,000 on selling a whole life policy to you. You pay for it through the higher premium.
They earn less on their term insurance policy. Maybe $200 to $400 in commission.
So, agents sell whole life and endowment policy. They tell the customer that this is a better plan for the customer. They did not tell the customer that they earn a higher commission.
In reality, the customer is better off to buy a term insurance and to invest the difference in a unit trust or investment linked plan (such as the Ideal plan from NTUC Income) where 100% of the savings is invested.
Be careful about buying a ILP from other insurers. They may take away 1.5 years of your savings as well.
Friday, January 20, 2006
Beware about the distribution charges under ILP
Beware about the distribution charges, when you buy a regular premuim investment linked product (ILP).
Some products take away nearly 2 years of your savings. If you annual savings is $3,000, you stand to lose up to $6,000. This is used to pay commission to the insurance agent.
If you buy the ILP from NTUC Income, 100% of your savings is invested from the first month.
What is the catch?
If you terminate your policy within 20 years, you are required to pay $40 a year for the remaining period. If you terminate on the 10th year, you have to pay a back end charge of $40 X 10 = $400. That is all.
This is, of course, much lower than $6,000.
The name of the ILP from NTUC Income is called Ideal plan (code: ID5). And here is another tip: you can save as much as you wish, say $500 a month, and you still pay the same back end charge. ID5 makes a lot of sense, if you save a large monthly sum.
Some products take away nearly 2 years of your savings. If you annual savings is $3,000, you stand to lose up to $6,000. This is used to pay commission to the insurance agent.
If you buy the ILP from NTUC Income, 100% of your savings is invested from the first month.
What is the catch?
If you terminate your policy within 20 years, you are required to pay $40 a year for the remaining period. If you terminate on the 10th year, you have to pay a back end charge of $40 X 10 = $400. That is all.
This is, of course, much lower than $6,000.
The name of the ILP from NTUC Income is called Ideal plan (code: ID5). And here is another tip: you can save as much as you wish, say $500 a month, and you still pay the same back end charge. ID5 makes a lot of sense, if you save a large monthly sum.
Thursday, January 19, 2006
My wish for budget 2006
Here is my wish for budget 2006.
I wish that the finance minister will encourage people to make private savings for their retirement. This is to supplement the Central Provident Fund savings, which has been significantly reduced in recent years.
In many countries, there is an attractive tax relief to encourage private savings. The savings are deducted from taxable income. But, as most lower and middle income earns do not pay income rate in Singapore, this may not work.
In the USA, the investment earnings from the retirement funds are deferred till retirement. Again, this will only work when most people pay income tax.
In all cases, there is a recognition by the government to forego some tax revenue to encourage people to make supplementary savings.
In Singapore, I suggest two possible ways to encourage more people, especially from the lower and middle income, to save for their retirement:
- government to contribute $1 for every $4 of savings; this scheme is similar to the baby bonus, but at a lower rate
- government to issue long term bonds that pays an attractive return that can only be invested by retirement funds; the return can be 1% or 2% higher than the market rate.
We need to have an attractive scheme that will encourage people to save for retirement. It will cost money to the government, but it will benefit the government in the long run, as there is less need to take care of poor old people.
I wish that the finance minister will encourage people to make private savings for their retirement. This is to supplement the Central Provident Fund savings, which has been significantly reduced in recent years.
In many countries, there is an attractive tax relief to encourage private savings. The savings are deducted from taxable income. But, as most lower and middle income earns do not pay income rate in Singapore, this may not work.
In the USA, the investment earnings from the retirement funds are deferred till retirement. Again, this will only work when most people pay income tax.
In all cases, there is a recognition by the government to forego some tax revenue to encourage people to make supplementary savings.
In Singapore, I suggest two possible ways to encourage more people, especially from the lower and middle income, to save for their retirement:
- government to contribute $1 for every $4 of savings; this scheme is similar to the baby bonus, but at a lower rate
- government to issue long term bonds that pays an attractive return that can only be invested by retirement funds; the return can be 1% or 2% higher than the market rate.
We need to have an attractive scheme that will encourage people to save for retirement. It will cost money to the government, but it will benefit the government in the long run, as there is less need to take care of poor old people.
Singaporeans, grow up!
I reproduce the letter from Cheyenne Yee, that was printed in Today 19 January. I agree with the views expressed in the letter. We need to mature as a society.
---------------------------------------
SORRY FOR THE INCONVENIENCE
Dear Mervyn Tan,
I pity you.
I pity you because you were born in a country where we would rather see you in jail than embrace your talent. Although you left the country and renounced your citizenship, we still want you to pay for an offence you commited almost 20 years ago.
You did not go through the same suffering as we did, and maybe we bear a grudge against people like you. We will not forgive you since we are not mature enough.
Maybe if you were a woman, it would be easier since women in Singapore do not serve National Service (NS). It is okay for them not to do it. But it is not okay for you. You have no choice.
The moment you are born male here, you have to serve NS even if your family decided to raise you elsewhere - even if you have few memories of this place, and no longer have a sense of belonging here. Sounds illogical, but this is how we work.
So, stay away. We really do not want you back. Even if you are world-famous. Come back ony when we grow up.
Cheyenne Yee
---------------------------------------
SORRY FOR THE INCONVENIENCE
Dear Mervyn Tan,
I pity you.
I pity you because you were born in a country where we would rather see you in jail than embrace your talent. Although you left the country and renounced your citizenship, we still want you to pay for an offence you commited almost 20 years ago.
You did not go through the same suffering as we did, and maybe we bear a grudge against people like you. We will not forgive you since we are not mature enough.
Maybe if you were a woman, it would be easier since women in Singapore do not serve National Service (NS). It is okay for them not to do it. But it is not okay for you. You have no choice.
The moment you are born male here, you have to serve NS even if your family decided to raise you elsewhere - even if you have few memories of this place, and no longer have a sense of belonging here. Sounds illogical, but this is how we work.
So, stay away. We really do not want you back. Even if you are world-famous. Come back ony when we grow up.
Cheyenne Yee
Reply to: Income agents quitting
19 January 2006
Editor
Forum Page
Straits Times
I refer to the article entitled "Income agents quitting over insurer's direct sales strategy" (St Times, 17 Jan).
Your article mentioned that 50 agents have left so far, angered by introduction of salaried team. This is not correct.
Each year, about 100 full time advisers leave us for a variety of reasons. Most of them leave for a change of career. This is also the experience in other life insurance companies. The decline of 50 full time advisers in 2005 was due primarily to a drop in the recruitment of new advisers.
We now have 700 full time advisers. They are doing quite well, and earned more than in previous years. They have benefitted from the sales promotions that accompany our new strategy.
We expect about 170 advisers to qualify for the prestigious Million Dollar Round Table based on their sales in 2005. This is an increase compared to 130 for the previous year.
To quality for the MDRT, the adviser has to earn at least $51,000 in commission on new insurance sales in each year. The actual earnings, including renewal commission, is much higher.
Our strategy is to serve our policyholders in the best possible way. We offer suitable insurance products that provide good value and best meet the needs of our policyholder. We will keep our expenses low, so that our policyholders will be able to enjoy the best possible return on their savings.
Our direct channel offers the chance for customers to enjoy the savings through a modest discount. To qualify for this discount, they have to visit our business center, and save on the time taken by our insurance advisers from visiting them in their home.
Our business center is now manned by salaried consultants. In the future, our insurance advisers may be able to offer the same modest discount to the customers, provided that the customers visit them in the office.
We also encourage customers to visit our educational website to learn about insurance on their own. The website www.KnowYourInsurance.com.sg now attracts 1,500 visitors each day.
We will continue to offer to customers the choice of being served by insurance advisers who visit their homes or workplaces. The customers will find our insurance products to be attractive, as the commissions paid to our insurance advisers are at a modest level, compared to the market. This channel continues to be an important pillar of our sales strategy.
Contrary to the impression given in your article, our insurance advisers will continue to have a bright future, as they will benefit from the business growth that is generated by our strategy to look after the best interest of policyholders.
Tan Kin Lian
Chief Executive Officer
NTUC Income
Editor
Forum Page
Straits Times
I refer to the article entitled "Income agents quitting over insurer's direct sales strategy" (St Times, 17 Jan).
Your article mentioned that 50 agents have left so far, angered by introduction of salaried team. This is not correct.
Each year, about 100 full time advisers leave us for a variety of reasons. Most of them leave for a change of career. This is also the experience in other life insurance companies. The decline of 50 full time advisers in 2005 was due primarily to a drop in the recruitment of new advisers.
We now have 700 full time advisers. They are doing quite well, and earned more than in previous years. They have benefitted from the sales promotions that accompany our new strategy.
We expect about 170 advisers to qualify for the prestigious Million Dollar Round Table based on their sales in 2005. This is an increase compared to 130 for the previous year.
To quality for the MDRT, the adviser has to earn at least $51,000 in commission on new insurance sales in each year. The actual earnings, including renewal commission, is much higher.
Our strategy is to serve our policyholders in the best possible way. We offer suitable insurance products that provide good value and best meet the needs of our policyholder. We will keep our expenses low, so that our policyholders will be able to enjoy the best possible return on their savings.
Our direct channel offers the chance for customers to enjoy the savings through a modest discount. To qualify for this discount, they have to visit our business center, and save on the time taken by our insurance advisers from visiting them in their home.
Our business center is now manned by salaried consultants. In the future, our insurance advisers may be able to offer the same modest discount to the customers, provided that the customers visit them in the office.
We also encourage customers to visit our educational website to learn about insurance on their own. The website www.KnowYourInsurance.com.sg now attracts 1,500 visitors each day.
We will continue to offer to customers the choice of being served by insurance advisers who visit their homes or workplaces. The customers will find our insurance products to be attractive, as the commissions paid to our insurance advisers are at a modest level, compared to the market. This channel continues to be an important pillar of our sales strategy.
Contrary to the impression given in your article, our insurance advisers will continue to have a bright future, as they will benefit from the business growth that is generated by our strategy to look after the best interest of policyholders.
Tan Kin Lian
Chief Executive Officer
NTUC Income
Monday, January 16, 2006
Work together to promote car sharing
NTUC Income operates the largest car sharing scheme in Singapore. We have 5,600 members sharing 200 cars located in 70 locations.
There are three other operators, namely CitySpeed, WhizzCar and Honda. Together, they have 5,400 members sharing 160 cars.
NTUC Income cooperates with the other operators to develop the car sharing market in Singapore. Each serves a different market segment. We meet regularly to share
experiences to improve the standard of carsharing service.
For example, NTUC Income shares our technology and call center facility with one of the operator.
I want to quote this example as another way for business to work in Singapore. We do not need to compete aggressively. We can cooperate to improve efficiency (and bring down cost) and quality of service.
There are three other operators, namely CitySpeed, WhizzCar and Honda. Together, they have 5,400 members sharing 160 cars.
NTUC Income cooperates with the other operators to develop the car sharing market in Singapore. Each serves a different market segment. We meet regularly to share
experiences to improve the standard of carsharing service.
For example, NTUC Income shares our technology and call center facility with one of the operator.
I want to quote this example as another way for business to work in Singapore. We do not need to compete aggressively. We can cooperate to improve efficiency (and bring down cost) and quality of service.
Sunday, January 15, 2006
Buying a new car?
BUYING A NEW CAR?
Take your insurance from NTUC Income and enjoy these excellent benefits:
- potential saving of $400 yearly on your insurance premium
- protection against loss of manufacturer warranty for 3 years **
- no extra loading on your premium, even if you had a bad accident **
- replacement with a new car, if it is stolen or total loss during the first year **
- repairs at manufacturer's workshops for engine and proprietary repairs **
- attractive terms for your car loan
** subject to conditions
Call 6477 7722
www.income.coop/insurance/motor/
www.income.coop/insurance/motor/comparison.asp
Take your insurance from NTUC Income and enjoy these excellent benefits:
- potential saving of $400 yearly on your insurance premium
- protection against loss of manufacturer warranty for 3 years **
- no extra loading on your premium, even if you had a bad accident **
- replacement with a new car, if it is stolen or total loss during the first year **
- repairs at manufacturer's workshops for engine and proprietary repairs **
- attractive terms for your car loan
** subject to conditions
Call 6477 7722
www.income.coop/insurance/motor/
www.income.coop/insurance/motor/comparison.asp
Stay with Incomeshield
Taken from NTUC Income's website
If you have been approached to switch from Incomeshield to another Shield product, you should consider your decision carefully. Here are some key advantages of Incomeshield:
- Our premium rates are more affordable than other Shield plans
- We provide adequate coverage to meet most medical treatments
- You can buy a rider to cover the deductible and co-insurance
- You can buy a rider to cover the major illnesses (for only 15% more)
- You can enjoy unlimited lifetime coverage
Here is a brief comparison of the total premium payable over 40 years (from age 41 to 80 years) between Incomeshield and similar Shield plans offered by other insurers:
The coverages provided by the various plans are quite similar, except for some diffferences in the limits. The difference in premium can be as much as 60%. You can save up to $12,000 over 40 years, by insuring with NTUC Income.
These premiums shown above are based on current rates. They are expected to increase in future years, due to higher medical costs. It is important that you choose an affordable plan from NTUC Income.
The insurance agent or broker who advise you to switch away from Incomeshield may have earned an attractive commission from the other insurer. The agent is required to tell you about the commisison that they will earn now and in the future.
If you wish to attend a dialogue session, you can call 6877-3366.
Tan Kin Lian
Chief Executive Officer
If you have been approached to switch from Incomeshield to another Shield product, you should consider your decision carefully. Here are some key advantages of Incomeshield:
- Our premium rates are more affordable than other Shield plans
- We provide adequate coverage to meet most medical treatments
- You can buy a rider to cover the deductible and co-insurance
- You can buy a rider to cover the major illnesses (for only 15% more)
- You can enjoy unlimited lifetime coverage
Here is a brief comparison of the total premium payable over 40 years (from age 41 to 80 years) between Incomeshield and similar Shield plans offered by other insurers:
Plan NTUC Income Other insurers
A $30,525 $34,071 to $42,263
B $18,338 $21,609 to $28,403
The coverages provided by the various plans are quite similar, except for some diffferences in the limits. The difference in premium can be as much as 60%. You can save up to $12,000 over 40 years, by insuring with NTUC Income.
These premiums shown above are based on current rates. They are expected to increase in future years, due to higher medical costs. It is important that you choose an affordable plan from NTUC Income.
The insurance agent or broker who advise you to switch away from Incomeshield may have earned an attractive commission from the other insurer. The agent is required to tell you about the commisison that they will earn now and in the future.
If you wish to attend a dialogue session, you can call 6877-3366.
Tan Kin Lian
Chief Executive Officer
Customers want to buy insurance directly
E-MAIL FROM CUSTOMER
Dear Mr Tan
I read your blog with great interest; it provides a lot of informative material with real life case studies.
I have been looking around for insurance policies to save for children and own retirement. I realise the amount of commissions that go to the adviser is quite high. Up to two years of premiums go towards their commissions.
I know that more professionals are now turning to financial advisers simply because they want to buy policies for themselves and their families without having to pay high commissions to agents.
NTUC has gone through a positive revolutionary changes under your stewardship. I look forward to a day when you become a one-stop shop for insurance. You should allow customers to buy insurance directly, without having to pay high commission.
People like me can read and understand the insurance products. All we want is to buy the product and not pay for the service of the agent.
For now, we do not seem to have a choice but to have to go through an agent. Every insurance company I have gone to has the same system.
Mr Tan, I sincerely implore that you kindly look into this revolutionary way of selling insurance. I can assure you there will be a lot of buyers who are interested to buy insurance in this way.
When that day comes, I will certainly be one of your first customers at the service counter. I hope that you will provide several counters, to service those who walked in, and those who made an appointment. I shall hold my breath and reserve my funds for now.
------------------
REPLY
Dear
We do have a business center that operates in the way that you wish for. It is is staffed by salaried consultants, who are able to provide advice and also to help you to find the right insurance policy to buy. We provide a modest discount to a customer who come to us directly.
Call 6788 1111 if you wish to make an appointment to see a consultant at our business center.
We also have an interactive and educational website for you to learn about the various insurance products. You can visit www.KnowYourInsurance.com.sg
Tan Kin Lian
Chief Executive Officer
Dear Mr Tan
I read your blog with great interest; it provides a lot of informative material with real life case studies.
I have been looking around for insurance policies to save for children and own retirement. I realise the amount of commissions that go to the adviser is quite high. Up to two years of premiums go towards their commissions.
I know that more professionals are now turning to financial advisers simply because they want to buy policies for themselves and their families without having to pay high commissions to agents.
NTUC has gone through a positive revolutionary changes under your stewardship. I look forward to a day when you become a one-stop shop for insurance. You should allow customers to buy insurance directly, without having to pay high commission.
People like me can read and understand the insurance products. All we want is to buy the product and not pay for the service of the agent.
For now, we do not seem to have a choice but to have to go through an agent. Every insurance company I have gone to has the same system.
Mr Tan, I sincerely implore that you kindly look into this revolutionary way of selling insurance. I can assure you there will be a lot of buyers who are interested to buy insurance in this way.
When that day comes, I will certainly be one of your first customers at the service counter. I hope that you will provide several counters, to service those who walked in, and those who made an appointment. I shall hold my breath and reserve my funds for now.
------------------
REPLY
Dear
We do have a business center that operates in the way that you wish for. It is is staffed by salaried consultants, who are able to provide advice and also to help you to find the right insurance policy to buy. We provide a modest discount to a customer who come to us directly.
Call 6788 1111 if you wish to make an appointment to see a consultant at our business center.
We also have an interactive and educational website for you to learn about the various insurance products. You can visit www.KnowYourInsurance.com.sg
Tan Kin Lian
Chief Executive Officer
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