Dear Mr Tan,
I had a bad experience with my previous financial adviser who asked me to buy a expensive policy. I have lapse my policy as I find it too expensive and not practical.
I am a 28 years old, single. I do not want to spend too much in paying for higher premium. I know that Term Insurance is the most ideal. Which is better - Level or Decreasing Term?
My financial adviser recommended me a Term Insurance cover up to age of 65. I will be covered after 65 without paying premium. The premium is about $108.00 per month. The sum assured is $60,000. Is it good?
I have a NTUC M Incomeshield (previous known as MediShield) policy. My current financial adviser has advised me to top up $120 per year to enhance the coverage. I am also covered under my company insurance.
REPLY
It is best for you to ask a few insurance companies to quote to you the premium for term insurance. Read this FAQ:
http://www.tankinlian.com/faq/termd.html
Here are some benchmark rates for your reference:
http://www.tankinlian.com/faq/benchmark.html
The adviser is dishonest. He or she is selling a high cost whole life policy with premium payable up to age 65, and telling you that it is a low cost term insurance. If you buy a decreasing term insurance, you need to pay a much smaller premium.
As you are covered under your company scheme, there is no need for you to buy the enhanced plan.
You can lodge a complaint against these two advisers for giving you bad advice.
Tuesday, May 27, 2008
Questions on Life Annuity
Dear Sir,
After reading through your website, I have some doubts about the benefits of annuities.
1. Are the monthly payouts inflation proofed? If not S$1 is not worth so much in 20+ years.
2. Are there any tax benefits?
3. Are there any early cancellation costs?
4. How does the return compare with say STI ETF's over 20years?
5. Funds are locked in?
6. What are the exact costs as compared to say holding Equities for the same period?
It seems not to be so easy for the average person to gauge the exact returns over the life of the annuity. In such case only the sweet parts are mentioned to attract allay peoples fears. I would appreciate your view on my comments.
REPLY
My views are expressed in this FAQ:
http://www.tankinlian.com/faq/life.html
After reading through your website, I have some doubts about the benefits of annuities.
1. Are the monthly payouts inflation proofed? If not S$1 is not worth so much in 20+ years.
2. Are there any tax benefits?
3. Are there any early cancellation costs?
4. How does the return compare with say STI ETF's over 20years?
5. Funds are locked in?
6. What are the exact costs as compared to say holding Equities for the same period?
It seems not to be so easy for the average person to gauge the exact returns over the life of the annuity. In such case only the sweet parts are mentioned to attract allay peoples fears. I would appreciate your view on my comments.
REPLY
My views are expressed in this FAQ:
http://www.tankinlian.com/faq/life.html
Seek a solution to the Bonus Restructure?
I have two rounds of discussion with the management of NTUC Income on the restructure (now called reshaping) of the bonus for 310,000 policies.
NTUC Income's management has assured me that the have the best interest of the policyholders in making this restructure of the bonus and will continue to observe the social purpose of NTUC Income (which they have stated previously). They are also willing to find ways to address the concerns of the policyholders. I have accepted their position on this matter.
I will provide an update within the next few days.
NTUC Income's management has assured me that the have the best interest of the policyholders in making this restructure of the bonus and will continue to observe the social purpose of NTUC Income (which they have stated previously). They are also willing to find ways to address the concerns of the policyholders. I have accepted their position on this matter.
I will provide an update within the next few days.
Investing my savings
I am now 60 years old. I have savings from my CPF (taken out at 55 years) and past savings from other sources.
At present, my total savings are invested in the following sources:
1. Foreign currency fixed deposits - 20%
2. REITS (real estate trusts) - 20%
3. Singapore and global shares - 50%
4. Life insurance policies - 10%
My investment in foreign currency fixed deposits earn an interest rate of 7% but is subject to currency risk. The REIT earns a dividend yield of about 5%. The Singapore and global shares earn a yield of about 3%.
All of these investments have risks. However, as I am investing them for 10 to 20 years, I can ride out the volatility in the markets. I hope that the good years will offset the bad years, and give me an average yield of more than 5%. In the case of the foreign currency fixed deposits, I expect the excess interest to offset a potential deprecation of the currency.
My savings in life insurance policies were made during the past 30 years. I keep these policies, if they continue to give a reasonable yield. I shall be discontinuing the policies that earn less than 3% p.a.
I will not be putting any new investments in a life insurance policy, as the return is poor. I do not like policies that have high terminal bonus, as a large part of the future yield is uncertain, non-transparent and beyond my control.
At present, my total savings are invested in the following sources:
1. Foreign currency fixed deposits - 20%
2. REITS (real estate trusts) - 20%
3. Singapore and global shares - 50%
4. Life insurance policies - 10%
My investment in foreign currency fixed deposits earn an interest rate of 7% but is subject to currency risk. The REIT earns a dividend yield of about 5%. The Singapore and global shares earn a yield of about 3%.
All of these investments have risks. However, as I am investing them for 10 to 20 years, I can ride out the volatility in the markets. I hope that the good years will offset the bad years, and give me an average yield of more than 5%. In the case of the foreign currency fixed deposits, I expect the excess interest to offset a potential deprecation of the currency.
My savings in life insurance policies were made during the past 30 years. I keep these policies, if they continue to give a reasonable yield. I shall be discontinuing the policies that earn less than 3% p.a.
I will not be putting any new investments in a life insurance policy, as the return is poor. I do not like policies that have high terminal bonus, as a large part of the future yield is uncertain, non-transparent and beyond my control.
Life insurance up to age 65
1. Is it necessary to take life insurance to cover the whole of life or up to age 65 only?
The primary purpose of life insurance is to protect against the loss of income due to premature death. You should have the protection for the period of your working life. Most people expect to stop work at 65. They need life insurance to cover the loss of income up to that age.
2. What type of life insurance plan is most suitable to provide the coverage?
I prefer a decreasing term insurance or family income insurance as they offers adequate coverage at a low cost. Here are some benchmark premium rates:
http://www.tankinlian.com/faq/benchmark.html
The premium rate is likely to be less than 10% of the cost of a whole life policy providing the same coverage.
3. How do I save for my retirement?
It is best to invest in a low cost investment fund. A low cost fund have an annual expense ratio of less than 1% per annum, with 50% or more invested in equities. The sales charge should be kept less than 2%.
4. Do I need critical illness coverage?
The expenses for treating the critical illness should be covered under a medical insurance poilcy. You can have an addtional cover of (say) one year's salary to cover the loss of income during the period of treatment. This can be covered under a critial illness policy taken up to age 65 and is optional.
5. Do I need life insurance coverage beyond 65 years?
You need an insurance policy to cover the medical expenses. In the past, some people need life insurance to provide money to pay estate duty. With the abolishment of estate duty, this is no longer needed.
6. Can I use life insurance to leave some money for my children?
If you have excess funds, you can buy a whole life policy with premiums paid through a single premium. You should avoid paying premium after your retirement. Make sure that your own needs (to pay your future living expenses) are taken care first, before you think of leaving money for your children.
You should choose an insurance company that gives you a good return on your single premium. Ask a few insurance companies to give you a quotation and compare the yield. You can get the telephone numbers of the insurance companies from this FAQ:
http://www.tankinlian.com/faq/termd.html
The primary purpose of life insurance is to protect against the loss of income due to premature death. You should have the protection for the period of your working life. Most people expect to stop work at 65. They need life insurance to cover the loss of income up to that age.
2. What type of life insurance plan is most suitable to provide the coverage?
I prefer a decreasing term insurance or family income insurance as they offers adequate coverage at a low cost. Here are some benchmark premium rates:
http://www.tankinlian.com/faq/benchmark.html
The premium rate is likely to be less than 10% of the cost of a whole life policy providing the same coverage.
3. How do I save for my retirement?
It is best to invest in a low cost investment fund. A low cost fund have an annual expense ratio of less than 1% per annum, with 50% or more invested in equities. The sales charge should be kept less than 2%.
4. Do I need critical illness coverage?
The expenses for treating the critical illness should be covered under a medical insurance poilcy. You can have an addtional cover of (say) one year's salary to cover the loss of income during the period of treatment. This can be covered under a critial illness policy taken up to age 65 and is optional.
5. Do I need life insurance coverage beyond 65 years?
You need an insurance policy to cover the medical expenses. In the past, some people need life insurance to provide money to pay estate duty. With the abolishment of estate duty, this is no longer needed.
6. Can I use life insurance to leave some money for my children?
If you have excess funds, you can buy a whole life policy with premiums paid through a single premium. You should avoid paying premium after your retirement. Make sure that your own needs (to pay your future living expenses) are taken care first, before you think of leaving money for your children.
You should choose an insurance company that gives you a good return on your single premium. Ask a few insurance companies to give you a quotation and compare the yield. You can get the telephone numbers of the insurance companies from this FAQ:
http://www.tankinlian.com/faq/termd.html
Reversionary Bonus
Dear Mr. Tan
I had abstracted out the policy contract for you to vet through hope you can help us.
Bonus (All life and endowment policy from Income)
If the policy is with profit policy, a reversionary Bonus will be added to the policy each year out of the surplus arising from the actuarial valuation of the life assurance fund. The amount of bonus will be determined by our actuary. The Bonus will not vest until two years from the entry date and is paid at the same time as the sum assured.
Bonus (vivolife- New life policy from Income)
This is a participating policy. Bonus when declared will be added to the policy out of the surplus arising from the actuarial valuation of the life assurance fund. The amount of bonus will be recommended by our appointed actuary and approved by our Board of Directors. Bonus will not vest two year from the policy entry date.
Most of the policyholders policy contract are mention in paragraph
1 . A reversionary Bonus will be added to the policy each year out of the surplus arising from the actuarial valuation of the life assurance fund. That mean they should declare the annual bonus in full sum once declared.
Those who brought vivolife policy under paragraph 2 stated that Bonus when declared will be added to the policy out of the surplus arising from the actuarial valuation of the life assurance fund. Reversionary word is missing. It does not mention the bonus will added to the policy each year so it can be reversionary or terminal bonus once declare will be added to the policy.
Hope this piece of information will help you to prepare our case cheers.
JL
I had abstracted out the policy contract for you to vet through hope you can help us.
Bonus (All life and endowment policy from Income)
If the policy is with profit policy, a reversionary Bonus will be added to the policy each year out of the surplus arising from the actuarial valuation of the life assurance fund. The amount of bonus will be determined by our actuary. The Bonus will not vest until two years from the entry date and is paid at the same time as the sum assured.
Bonus (vivolife- New life policy from Income)
This is a participating policy. Bonus when declared will be added to the policy out of the surplus arising from the actuarial valuation of the life assurance fund. The amount of bonus will be recommended by our appointed actuary and approved by our Board of Directors. Bonus will not vest two year from the policy entry date.
Most of the policyholders policy contract are mention in paragraph
1 . A reversionary Bonus will be added to the policy each year out of the surplus arising from the actuarial valuation of the life assurance fund. That mean they should declare the annual bonus in full sum once declared.
Those who brought vivolife policy under paragraph 2 stated that Bonus when declared will be added to the policy out of the surplus arising from the actuarial valuation of the life assurance fund. Reversionary word is missing. It does not mention the bonus will added to the policy each year so it can be reversionary or terminal bonus once declare will be added to the policy.
Hope this piece of information will help you to prepare our case cheers.
JL
Save for a child's education
Hi Mr tan,
I stomped onto your website and I found it really enlightening. I have 2 children aged 2 and 4 years old.. What is your advice on the right investment tool , considering the need to save up for high cost of education in the future and that children do not have any medical insurance? could you advice please. Thanks.
REPLY
My advice is contained in this FAQ:
http://www.tankinlian.com/faq/education.html
It is better to:
1. Save in a low cost investment fund
2. Buy Medishield or other medical insurance to cover your child
3. Have a decreasing term insurance on the parent's life
You can also have a more integrated saving plan, as suggested in this FAQ:
http://www.tankinlian.com/faq/savings.html
I stomped onto your website and I found it really enlightening. I have 2 children aged 2 and 4 years old.. What is your advice on the right investment tool , considering the need to save up for high cost of education in the future and that children do not have any medical insurance? could you advice please. Thanks.
REPLY
My advice is contained in this FAQ:
http://www.tankinlian.com/faq/education.html
It is better to:
1. Save in a low cost investment fund
2. Buy Medishield or other medical insurance to cover your child
3. Have a decreasing term insurance on the parent's life
You can also have a more integrated saving plan, as suggested in this FAQ:
http://www.tankinlian.com/faq/savings.html
Monday, May 26, 2008
Investing retirement savings
Dear Mr Tan,
I wish to invest S$ 200,000 for my retirement savings for 10 to 15 years time. I have studied a few products and found that NTUC Growth policy is the best, giving lowest risk and reasonable return. Could plse give me you expertise advice.
REPLY
Read these FAQs:
http://www.tankinlian.com/faq/returns.html
http://www.tankinlian.com/faq/savings.html
http://www.tankinlian.com/faq/expense.html
I hope that they will help you to make your decision.
I wish to invest S$ 200,000 for my retirement savings for 10 to 15 years time. I have studied a few products and found that NTUC Growth policy is the best, giving lowest risk and reasonable return. Could plse give me you expertise advice.
REPLY
Read these FAQs:
http://www.tankinlian.com/faq/returns.html
http://www.tankinlian.com/faq/savings.html
http://www.tankinlian.com/faq/expense.html
I hope that they will help you to make your decision.
Investing your savings - for the young
Hi Mr Tan,
I've just graduated recently. To start planning for my future, I've decided to buy an investment product from a local bank. My projected investment horizon is around 15 years. My risk appetite is low to moderate, and I wish to earn around 5 to 8 % returns on my investment.
I am also looking into foreign currency fixed deposits (FCFD)and in a savings account. I plan to save up to 20% of my income. Some doubts in mind are:
1) Is the rate of returns of 5 to 8% achieveable? Or am I paying too much fees for these funds?
2) Is such spreading of my savings sufficient? I am contributing S$100 per month into this investment product, another S$100 in a savings plan and some money in FCFD.
REPLY
I suggest that you avoid a regular premium ILP as it has high charges.
Read this FAQ:
http://www.tankinlian.com/faq/ilp.html
I hope that this FAQ will give you a better idea on how to invest your savings.
http://www.tankinlian.com/faq/savings.html
I've just graduated recently. To start planning for my future, I've decided to buy an investment product from a local bank. My projected investment horizon is around 15 years. My risk appetite is low to moderate, and I wish to earn around 5 to 8 % returns on my investment.
I am also looking into foreign currency fixed deposits (FCFD)and in a savings account. I plan to save up to 20% of my income. Some doubts in mind are:
1) Is the rate of returns of 5 to 8% achieveable? Or am I paying too much fees for these funds?
2) Is such spreading of my savings sufficient? I am contributing S$100 per month into this investment product, another S$100 in a savings plan and some money in FCFD.
REPLY
I suggest that you avoid a regular premium ILP as it has high charges.
Read this FAQ:
http://www.tankinlian.com/faq/ilp.html
I hope that this FAQ will give you a better idea on how to invest your savings.
http://www.tankinlian.com/faq/savings.html
Life insurance for a Malaysian
Hi,
I am a Malaysian working in singapore right now. Its is better for me to buy insurance in Malaysia or Singapore. Based on transparency, I believe Singapore give better value instead. Pls advice.
REPLY
It is better for you buy a Term insurance and invest the difference. Read these FAQs:
http://www.tankinlian.com/faq/savings.html
http://www.tankinlian.com/faq/choice.html
You can call these insurance companies to get a quotation on the cost of the term insurance:
http://www.tankinlian.com/faq/termd.html
By separating your insurance protection from your savings, you have the greatest flexibility in the future, in case you decide to work outside of Singapore.
I am a Malaysian working in singapore right now. Its is better for me to buy insurance in Malaysia or Singapore. Based on transparency, I believe Singapore give better value instead. Pls advice.
REPLY
It is better for you buy a Term insurance and invest the difference. Read these FAQs:
http://www.tankinlian.com/faq/savings.html
http://www.tankinlian.com/faq/choice.html
You can call these insurance companies to get a quotation on the cost of the term insurance:
http://www.tankinlian.com/faq/termd.html
By separating your insurance protection from your savings, you have the greatest flexibility in the future, in case you decide to work outside of Singapore.
Make hotline simpler for customers
The bank of my DBS credit card showed the customer service line as 1800 111 1111. When I called this hotline, it goes to the DBS Bank main hotline. I have to answer many confusing questions before I can get to the credit card section. I got lost along the way two times. I gave up and called my customer relationship manager.
It is clear that the user of the credit card wants to ask about his credit card. It is better for DBS to give a number that goes straight to the credit card department.
This type of approach is used by many large organisations. I hope that they will change their system to be more customer friendly. Let us talk to the right people, without going through a maze.
I hope that officers of DBS and other orgaisations with similar systems provide this feedback to their management.
It is clear that the user of the credit card wants to ask about his credit card. It is better for DBS to give a number that goes straight to the credit card department.
This type of approach is used by many large organisations. I hope that they will change their system to be more customer friendly. Let us talk to the right people, without going through a maze.
I hope that officers of DBS and other orgaisations with similar systems provide this feedback to their management.
Exclusions under a medical insurance policy
Dear Mr Tan,
Some time back, I extended my Shield cover to an enhanced one. Because of my hypertension and diabetes conditions, the enhancement came with an exclusion clause to exclude these two conditions and their sequelae. I understood "sequelae" to mean conditions resulting from, or a consequence of, hytension and diabetes.
I would like to know from your experience that when invoking this exclusion clause, whether the onus should be on the insurance company to provide medical certification to prove cause and effect, ie that hypertension and/or diabetes result in or caused another condition for which an insurance claim is being made under the enhanced policy.
Hypertension and diabetes are generally recognised as risk factors for numerous diseases affecting the heart, kidney, liver etc, But it does not mean the these diseases are automatically a sequelae of hypertension or diabetes as there are also other causes.
If such exclusions are meant to have a blanket cover on such common and widespread disease without evidence of connectivity, then you can imagine how "useless" it is to pay to get insured in a nation-wide medical insurance scheme which is meant to be our main protection in the absence of any public-funded scheme. I hope you can illuminate.
REPLY
I suggest that you ask the insurance company to give their explanation on this matter. You can send it to me after getting that explanation. I shall see if it is a reasonable interpretation.
I believe that the onus of proof is on the insurance company, if they wish to reject a claim due to the exclusion clause.
It is important for an insurance company to provide contractual terms that are clear to the consumer.
Some time back, I extended my Shield cover to an enhanced one. Because of my hypertension and diabetes conditions, the enhancement came with an exclusion clause to exclude these two conditions and their sequelae. I understood "sequelae" to mean conditions resulting from, or a consequence of, hytension and diabetes.
I would like to know from your experience that when invoking this exclusion clause, whether the onus should be on the insurance company to provide medical certification to prove cause and effect, ie that hypertension and/or diabetes result in or caused another condition for which an insurance claim is being made under the enhanced policy.
Hypertension and diabetes are generally recognised as risk factors for numerous diseases affecting the heart, kidney, liver etc, But it does not mean the these diseases are automatically a sequelae of hypertension or diabetes as there are also other causes.
If such exclusions are meant to have a blanket cover on such common and widespread disease without evidence of connectivity, then you can imagine how "useless" it is to pay to get insured in a nation-wide medical insurance scheme which is meant to be our main protection in the absence of any public-funded scheme. I hope you can illuminate.
REPLY
I suggest that you ask the insurance company to give their explanation on this matter. You can send it to me after getting that explanation. I shall see if it is a reasonable interpretation.
I believe that the onus of proof is on the insurance company, if they wish to reject a claim due to the exclusion clause.
It is important for an insurance company to provide contractual terms that are clear to the consumer.
Option to stay with the old bonus structure
Dear Mr. Tan,
Just want to thank you for every effort you put in recently to resolve the matter with NTUC Income management. Ideally, I hope that they would grant us to stay on with the old bonus structure, maybe, just to those who had signed to indicate their preference.
At least one thing for sure, after this incident, many people (those who read about it) are cautious when they intend to take up an insurance policy. Nothing is absolute, even the terms are written in black and white. Once again, your effort is appreciated!
FL
Just want to thank you for every effort you put in recently to resolve the matter with NTUC Income management. Ideally, I hope that they would grant us to stay on with the old bonus structure, maybe, just to those who had signed to indicate their preference.
At least one thing for sure, after this incident, many people (those who read about it) are cautious when they intend to take up an insurance policy. Nothing is absolute, even the terms are written in black and white. Once again, your effort is appreciated!
FL
MAS Notice 320
MAS has issued a detailed notice governing the distribution of bonus on participating policies. It is shown here:
http://www.mas.gov.sg/resource/legislation_guidelines/insurance/notices/MAS_Notice_320.pdf
I shall be studying the requirements in detail and will post my explanations of the requirements. This will help us make sure that the disclosures by the insurance companies meet the spirt and intent of the notice.
http://www.mas.gov.sg/resource/legislation_guidelines/insurance/notices/MAS_Notice_320.pdf
I shall be studying the requirements in detail and will post my explanations of the requirements. This will help us make sure that the disclosures by the insurance companies meet the spirt and intent of the notice.
New Benefit Illustration
Life insurance companies are now required to use a new format of Benefit Illustration, based on the projected investment yield of 3.75% and 5.25% per annum. The lower yield of 3.75% reflect the current investment environment, with low yields on bond investments.
Policyholders should be aware that the charges imposed on a life insurance policy to pay for the marketing expenses (e.g. agent commission and sales incentives), administrative expenses and mortality charges (for the life insurance cover) remains to be quite high.
I estimate that the charges can reduce the yield by about 2.5% for an endowment policy and 3.5% by a whole life or critical illness policy.
If the gross yield is 3.75%, the net yield after the charges can be less than 1.5% or 0.5% for a saving over 20 years or longer. If the policy is terminated earlier, the yield will be negative (i.e. the cash value is less than the premiums paid). Read this FAQ:
http://www.tankinlian.com/faq/expense.html
I hope that life insurance companies will reduce their charges and expenses and give a better value to their policyholders under their endowment, whole life or critical illness policies. If you are considering to buy any of these policies, you should ask the insurance adviser to give you the answers to the following questions:
http://www.tankinlian.com/faq/right.html
You should also avoid high cost investment linked policies (ILP), as explained here:
http://www.tankinlian.com/faq/ilp.html
Due to the high charges and low return from a life insurance policy, it is better to buy a low cost term insurance policy and invest your savings in a low cost investment fund, as explained here:
http://www.tankinlian.com/faq/savings.html
Policyholders should be aware that the charges imposed on a life insurance policy to pay for the marketing expenses (e.g. agent commission and sales incentives), administrative expenses and mortality charges (for the life insurance cover) remains to be quite high.
I estimate that the charges can reduce the yield by about 2.5% for an endowment policy and 3.5% by a whole life or critical illness policy.
If the gross yield is 3.75%, the net yield after the charges can be less than 1.5% or 0.5% for a saving over 20 years or longer. If the policy is terminated earlier, the yield will be negative (i.e. the cash value is less than the premiums paid). Read this FAQ:
http://www.tankinlian.com/faq/expense.html
I hope that life insurance companies will reduce their charges and expenses and give a better value to their policyholders under their endowment, whole life or critical illness policies. If you are considering to buy any of these policies, you should ask the insurance adviser to give you the answers to the following questions:
http://www.tankinlian.com/faq/right.html
You should also avoid high cost investment linked policies (ILP), as explained here:
http://www.tankinlian.com/faq/ilp.html
Due to the high charges and low return from a life insurance policy, it is better to buy a low cost term insurance policy and invest your savings in a low cost investment fund, as explained here:
http://www.tankinlian.com/faq/savings.html
Sunday, May 25, 2008
Indonesian newspaper writes about life insurance
There was an article in the Kompass newspaper about life insurance. It was written in Indonesian language. My friend translated the key points of the article for me. The journalist wrote these points after interviewing a few consumers:
1. The consumer find the insurance agent to be disturbing their privacy. They keep calling the consumer, when they are no longer welcomed.
2. The consumer finds life insurance products to be complicated and does not understand the explanation by the agent.
3. The agent will keep in close touch with the consumer up to the point of sale. After that, the agent cannot be found.
I was quite surprised at the frankess and independence of the newspaper. They are willing to write a negative report on life insurance, even though it may affect their advertising revenue. My friend said that this paper is highly respected for its journalistic independence.
1. The consumer find the insurance agent to be disturbing their privacy. They keep calling the consumer, when they are no longer welcomed.
2. The consumer finds life insurance products to be complicated and does not understand the explanation by the agent.
3. The agent will keep in close touch with the consumer up to the point of sale. After that, the agent cannot be found.
I was quite surprised at the frankess and independence of the newspaper. They are willing to write a negative report on life insurance, even though it may affect their advertising revenue. My friend said that this paper is highly respected for its journalistic independence.
2006 Earthquake at Jogja
On the way from the airport, I asked the driver how many people were killed during the 2006 earthquake in Jogjakarta. He guessed that it must be 100,000 people, but he was not sure.
I checked Wikipedia. The number is much smaller. The 6.3-magnitude earthquake killed 5,782 people and left some 36,299 persons injured. More than 135,000 houses are damaged, and 600,000 people are homeless.
It is still serious, but the scale is smaller than the Sichuan earthquake in 2008.
I checked Wikipedia. The number is much smaller. The 6.3-magnitude earthquake killed 5,782 people and left some 36,299 persons injured. More than 135,000 houses are damaged, and 600,000 people are homeless.
It is still serious, but the scale is smaller than the Sichuan earthquake in 2008.
Jogjakarta, Indonesia
I stayed in Jogjakarta for the past two days. My last visit was more than 20 years ago, when I also visited Borobodur.
Jogja (the short name of Jogjakarta) is a charming city. All the buildings are less than five stories, as they cannot be taller than the Sultan's palace. There are still many buildings from the colonial era, in Dutch style.
I attended a life insurance event at the Prembanan, which is an old site containing a few Hindu temples. The people are friendly and peaceful. During the 1998 riots in Indonesia, Jogja was peaceful.
The Sultan is also the Governor of Jogja. My Indonesian friend said that he has high integrity. The people respect him very much.
Jogja (the short name of Jogjakarta) is a charming city. All the buildings are less than five stories, as they cannot be taller than the Sultan's palace. There are still many buildings from the colonial era, in Dutch style.
I attended a life insurance event at the Prembanan, which is an old site containing a few Hindu temples. The people are friendly and peaceful. During the 1998 riots in Indonesia, Jogja was peaceful.
The Sultan is also the Governor of Jogja. My Indonesian friend said that he has high integrity. The people respect him very much.
Commodity Prices
Hi Mr. Tan,
I would like to seek your advice on commodity investment during this period. I have bought X commodity fund a few months ago and my gain is around 5%, after paying the 5% sales charge to the bank.
Should I sell off this fund? Should I set a profit target or should I continue monitoring the commodity market and sell it once the commodities prices starts going down?
REPLY
I am not familiar with the timing of commodity prices. I cannot advise you on this matter.
Commodity prices are already at a high level. Some people think that they will go higher due to shortages, high demand, etc. But, there is a risk that it is already over-priced.
In the past, some stock, commodity and property prices have gone beyond their realistic level due to speculative reasons. Remember the dotcom days? When the bubble burst, the investors make a big loss.
I would like to seek your advice on commodity investment during this period. I have bought X commodity fund a few months ago and my gain is around 5%, after paying the 5% sales charge to the bank.
Should I sell off this fund? Should I set a profit target or should I continue monitoring the commodity market and sell it once the commodities prices starts going down?
REPLY
I am not familiar with the timing of commodity prices. I cannot advise you on this matter.
Commodity prices are already at a high level. Some people think that they will go higher due to shortages, high demand, etc. But, there is a risk that it is already over-priced.
In the past, some stock, commodity and property prices have gone beyond their realistic level due to speculative reasons. Remember the dotcom days? When the bubble burst, the investors make a big loss.
Forced to buy other insurance products
Dear Mr. Tan Kin Lian,
I was motivated to write to you as you seem to speak up if an insurance company is doing things that are unfair to their consumers.
My insurance company X recently sent a letter as follows, "We will not renew your Workmen Compensation because you do not have any property insurances with us. If you are interested in insuring other commercial insurance products with us, we will be very willing to assist you."
I called the representative who said that X has decided to stop providing the Workmen Compensation as a standalone product, unless we also buy another commercial property insurance e.g. shop fire or theft. The company was not making money from the Workmen's Compensation, and require a second product as a bundle.
I was very upset as this seems to me that X is trying to force us to buy another product (fire/ theft), knowing full well we are required by law to buy the first product (workmen compensation). The representative said that other insurance companies had adopted this practice as well.
I cannot accept this unfair and unethical practice, especially if the industry players have ganged up to change this.
I wanted to find out if MOM and MAS are aware of and condone this practice. I was directed by a FiDREC officer to call an officer in MAS. The officer insisted that this was just a "bad commercial decision" and MAS cannot interfere.
I find it disappointing that MAS as a regulatory organisation is apparently helpless against bad industry practices. It seems that insurance companies are at liberty to do as they wish. Is there any authority for me to complain to, who will look into this matter?
REPLY
I am sorry that you were not given a satisfactory answer by X, FiDREC or MAS. Do you like to bring this matter up to the newspaper? Maybe, a journalist will be happy to write this story.
In USA, for the classes of insurance that are made compulsory (e.g. motor and worker compensation), the regulator set up a "residual market". Any consumer who is not able to get insurance from the private insurance market can approach the "residual market" to get insurance.
I think that the "residual market" is a better approach, compared to the practice of requiring the consumer to buy another insurance product that may be unnecessary. I hope that MAS will look into this matter.
I was motivated to write to you as you seem to speak up if an insurance company is doing things that are unfair to their consumers.
My insurance company X recently sent a letter as follows, "We will not renew your Workmen Compensation because you do not have any property insurances with us. If you are interested in insuring other commercial insurance products with us, we will be very willing to assist you."
I called the representative who said that X has decided to stop providing the Workmen Compensation as a standalone product, unless we also buy another commercial property insurance e.g. shop fire or theft. The company was not making money from the Workmen's Compensation, and require a second product as a bundle.
I was very upset as this seems to me that X is trying to force us to buy another product (fire/ theft), knowing full well we are required by law to buy the first product (workmen compensation). The representative said that other insurance companies had adopted this practice as well.
I cannot accept this unfair and unethical practice, especially if the industry players have ganged up to change this.
I wanted to find out if MOM and MAS are aware of and condone this practice. I was directed by a FiDREC officer to call an officer in MAS. The officer insisted that this was just a "bad commercial decision" and MAS cannot interfere.
I find it disappointing that MAS as a regulatory organisation is apparently helpless against bad industry practices. It seems that insurance companies are at liberty to do as they wish. Is there any authority for me to complain to, who will look into this matter?
REPLY
I am sorry that you were not given a satisfactory answer by X, FiDREC or MAS. Do you like to bring this matter up to the newspaper? Maybe, a journalist will be happy to write this story.
In USA, for the classes of insurance that are made compulsory (e.g. motor and worker compensation), the regulator set up a "residual market". Any consumer who is not able to get insurance from the private insurance market can approach the "residual market" to get insurance.
I think that the "residual market" is a better approach, compared to the practice of requiring the consumer to buy another insurance product that may be unnecessary. I hope that MAS will look into this matter.
Bad claim service
Dear Mr Tan,
We are having some problem with X. They have proceeded with the 3rd party claim without our nowledge. We are concerned as it will affect our 50% NCD.
Based on our conversation with the claim officer, they said that the claim was $1,700 ($1,400 for repair, $300 for loss of use) which is ridicoulously high for a minor accident. We requested for the official quotation which has not been provided up to now. In fact we are willing to settle out of our own pocket but was initially advise to wait for IDAC report.
How many days does the 3rd party claim? How long does the repair takes? Why is X so generous in the settlement? I asked these questions through the telephone and have not obtained an answer.
Whose interest is X protecting? By paying a higher claim, they will increase our premium.
Out of our frustration, I told the staff that we might not even consider to continue with X. Not surprisingly she reply "Go Ahead!".
I hope that you will advise other motorist to be aware of such situations. A reputable insurance company may not able to protect your interest but take the opportunity to make more "business" out of someone instead.
May I request what is the procedures X takes on a 3rd party claim? Are they allowed to act without the policyholders acknowledge.
REPLY
I am sending your e-mail to the service quality manager of X. I hope that she will reply to you.
We are having some problem with X. They have proceeded with the 3rd party claim without our nowledge. We are concerned as it will affect our 50% NCD.
Based on our conversation with the claim officer, they said that the claim was $1,700 ($1,400 for repair, $300 for loss of use) which is ridicoulously high for a minor accident. We requested for the official quotation which has not been provided up to now. In fact we are willing to settle out of our own pocket but was initially advise to wait for IDAC report.
How many days does the 3rd party claim? How long does the repair takes? Why is X so generous in the settlement? I asked these questions through the telephone and have not obtained an answer.
Whose interest is X protecting? By paying a higher claim, they will increase our premium.
Out of our frustration, I told the staff that we might not even consider to continue with X. Not surprisingly she reply "Go Ahead!".
I hope that you will advise other motorist to be aware of such situations. A reputable insurance company may not able to protect your interest but take the opportunity to make more "business" out of someone instead.
May I request what is the procedures X takes on a 3rd party claim? Are they allowed to act without the policyholders acknowledge.
REPLY
I am sending your e-mail to the service quality manager of X. I hope that she will reply to you.
Waiting for the time to buy a property
Mr. Tan,
We just sold our house prior coming to Singapore. We are renting, while waiting for the right time to buy. We have some money in foreign bank (which gives 3.5% fixed deposit) and another 90K sitting in the saving account with almost no interest. I saw the ad in the newspaper from X about emerging market notes, that lock $ 20,000 for 5 years, with 3.3% p.a and give fixed deposit of 2.65%. Do you think this is a good idea? What about unit trust? Which product do you recommend?
After reading some of your articles, I trust you better than agent selling me their products.
REPLY
I am not familiar with this product from X. Normally, I avoid structured products, for the reasons given in this FAQ:
http://www.tankinlian.com/faq/sinvest.html
You can read this FAQ on investment for the long term:
http://www.tankinlian.com/faq/savings.html
For short term investments, you should accept the current low rate of return.
We just sold our house prior coming to Singapore. We are renting, while waiting for the right time to buy. We have some money in foreign bank (which gives 3.5% fixed deposit) and another 90K sitting in the saving account with almost no interest. I saw the ad in the newspaper from X about emerging market notes, that lock $ 20,000 for 5 years, with 3.3% p.a and give fixed deposit of 2.65%. Do you think this is a good idea? What about unit trust? Which product do you recommend?
After reading some of your articles, I trust you better than agent selling me their products.
REPLY
I am not familiar with this product from X. Normally, I avoid structured products, for the reasons given in this FAQ:
http://www.tankinlian.com/faq/sinvest.html
You can read this FAQ on investment for the long term:
http://www.tankinlian.com/faq/savings.html
For short term investments, you should accept the current low rate of return.
Harrassed over an old case
Hi Mr. Tan
Would be very appreciative if you could advise on the following matter, please.
My wife was involved in a minor accident where her car grazed a pedestrain who was not paying attention when he stepped off the sidewalk at the roundabout a few years ago. My insurer X assessed and accepted that my wife was not at fault (I have on hand various correspondences) and I have been enjoying 50% NCD plus additional NCD protection premium all these past years.
Almost 3 years later, we received a letter from thier lawyer which brusquely requested my wife to go for an interview with the lawyer and bringing all the necessary documents, police reports, pictures etc. These were already provided to X for their assessment earlier. The lawyer warned that failure to comply or cooperate would entitle X to repudiate liability against my wife, leaving my wife personally liable to any damages and costs which may be obtained against her.
Is this the norm for X or their lawyer to go after the policy holder years after they have assessed the policy holder to be not af fault and closed the case?
REPLY
I suggest that you meet with the lawyer and ask this question to the lawyer.
If you feel that you have been unfairly inconvenienced, you can send your feedback to the top management. In the worse case, you can lodge a complain with Fidrec.
http://www.fidrec.com.sg/website/faq.html
Generally, the insurance company should look after the interest of the policyholder and should not give unnecessary trouble and inconvenience to the policyholder.
Would be very appreciative if you could advise on the following matter, please.
My wife was involved in a minor accident where her car grazed a pedestrain who was not paying attention when he stepped off the sidewalk at the roundabout a few years ago. My insurer X assessed and accepted that my wife was not at fault (I have on hand various correspondences) and I have been enjoying 50% NCD plus additional NCD protection premium all these past years.
Almost 3 years later, we received a letter from thier lawyer which brusquely requested my wife to go for an interview with the lawyer and bringing all the necessary documents, police reports, pictures etc. These were already provided to X for their assessment earlier. The lawyer warned that failure to comply or cooperate would entitle X to repudiate liability against my wife, leaving my wife personally liable to any damages and costs which may be obtained against her.
Is this the norm for X or their lawyer to go after the policy holder years after they have assessed the policy holder to be not af fault and closed the case?
REPLY
I suggest that you meet with the lawyer and ask this question to the lawyer.
If you feel that you have been unfairly inconvenienced, you can send your feedback to the top management. In the worse case, you can lodge a complain with Fidrec.
http://www.fidrec.com.sg/website/faq.html
Generally, the insurance company should look after the interest of the policyholder and should not give unnecessary trouble and inconvenience to the policyholder.
Collective Protest - Update 25 May 2007
I just returned from a two day visit to Jogjakarata. I cleared through my mail on the Collective Protest. I now have 537 signatures.
It is short of my target of 1,000 signatures, but has passed the half way mark. I wish to thank policyholders who have made the effort to collect the signatures and send them to me.
If you wish to send more signature, you can continue to do so. You can mail to me, or send it to kinlian@gmail.com.
You can get the Collective Protest from from:
http://www.tankinlian.com/faq/collectiveprotest.html
It is short of my target of 1,000 signatures, but has passed the half way mark. I wish to thank policyholders who have made the effort to collect the signatures and send them to me.
If you wish to send more signature, you can continue to do so. You can mail to me, or send it to kinlian@gmail.com.
You can get the Collective Protest from from:
http://www.tankinlian.com/faq/collectiveprotest.html
Prefer the old bonus distribution
Dear Mr. Tan
I support the Collective Protest against the restructure of bonus, however it is too late to mail you the form, hopes this helps.
Just few weeks ago newspaper was still advertising about the high return NTUC Income payout in the past few years, I was then seriously considering new policy for both my daughters. It is surprise to know that the bonus policy can change overnight. I sincerely hope that Income can revert back to its old bonus distribution policy.
REPLY
You can still mail the signature form to me. I will use it for a future occasion.
I support the Collective Protest against the restructure of bonus, however it is too late to mail you the form, hopes this helps.
Just few weeks ago newspaper was still advertising about the high return NTUC Income payout in the past few years, I was then seriously considering new policy for both my daughters. It is surprise to know that the bonus policy can change overnight. I sincerely hope that Income can revert back to its old bonus distribution policy.
REPLY
You can still mail the signature form to me. I will use it for a future occasion.
Friday, May 23, 2008
Collective Protest - Action
If you wish to participate in the Collective Protest against the restructure of bonus, please click on this page:
http://www.tankinlian.com/faq/collectiveprotest.html
You have to print the letter and signature form. Please collect as many signatures as possible. Mail it to my address shown in the instruction page, to reach me before 25 May 2008.
http://www.tankinlian.com/faq/collectiveprotest.html
You have to print the letter and signature form. Please collect as many signatures as possible. Mail it to my address shown in the instruction page, to reach me before 25 May 2008.
Make it easy to pay by bank transfer
Mr. Tan,
When I get my invoices processed, my Accounts department will start processing if I provide an email copy in advance. They still need an original (i.e. signed) invoice before releasing the cheque. I think that this is required as an audit trail.
A direct debit payment (DDA) has to be done through banks. I understand that it is a hassle to arrange with the bank such a payment mode. I think that there are extra charges or delays. For one-time payments, perhaps it's much easier to pay by cheque.
REPLY
We are caught in the old ways of making payments, due to various reasons. Mostly, it is the reluctance to try a new way.
Many people continue to write cheques and mail them. The receipients have to open the envelope and visit the bank to deposit the payment into their account.
In many other "advanced" countries such as Cjhina, the payee instructs the bank to make the transfer to the payor. The bank gives detailed information to the payor about the payment - sufficient for audit trail, etc
I hope that employees of commercial organisations or banks reading my blog will ring this matter up to their bosses.
When I get my invoices processed, my Accounts department will start processing if I provide an email copy in advance. They still need an original (i.e. signed) invoice before releasing the cheque. I think that this is required as an audit trail.
A direct debit payment (DDA) has to be done through banks. I understand that it is a hassle to arrange with the bank such a payment mode. I think that there are extra charges or delays. For one-time payments, perhaps it's much easier to pay by cheque.
REPLY
We are caught in the old ways of making payments, due to various reasons. Mostly, it is the reluctance to try a new way.
Many people continue to write cheques and mail them. The receipients have to open the envelope and visit the bank to deposit the payment into their account.
In many other "advanced" countries such as Cjhina, the payee instructs the bank to make the transfer to the payor. The bank gives detailed information to the payor about the payment - sufficient for audit trail, etc
I hope that employees of commercial organisations or banks reading my blog will ring this matter up to their bosses.
Thursday, May 22, 2008
Low transaction cost
I have a good arrangement with my remisier. He sends a few documents to me daily to keep me updated on the major investment opportunities. If I need information on any company, I send an e-mail to him. He forward it to the research department and give me the information within one day.
I pay 0.3% for each transaction. If it involves $10,000, the brokerage is $30. He keeps about 40% of this fee, i.e. $12. If the trade is $50,000, he earns $60. He also takes care of the paperwork involved in the trade. Although the cost is low, my remisier can look forward to a few trades in each month from each active client.
I hope, one day, that insurance sales can be made as efficient and low cost as trading of shares.
I pay 0.3% for each transaction. If it involves $10,000, the brokerage is $30. He keeps about 40% of this fee, i.e. $12. If the trade is $50,000, he earns $60. He also takes care of the paperwork involved in the trade. Although the cost is low, my remisier can look forward to a few trades in each month from each active client.
I hope, one day, that insurance sales can be made as efficient and low cost as trading of shares.
Contact NTUC Income
Dear Mr. Tan
I tried to email my NTUC Income agent regarding to my living policies cash value. However, she has not replied to my mail for a long time. Then I tried to write to xxxxx@income.com.sg, Again, there is no reply. What other email address can I write to for a reply?
REPLY
You can try the service quality officer, sq@income.com.sg
I tried to email my NTUC Income agent regarding to my living policies cash value. However, she has not replied to my mail for a long time. Then I tried to write to xxxxx@income.com.sg, Again, there is no reply. What other email address can I write to for a reply?
REPLY
You can try the service quality officer, sq@income.com.sg
Benefit Illustration
Dear Mr. Tan,
I am given a benefit illustration for a life insurance product. It seems to be quite detailed, long and complicated. Do you have any tips on the important things to watch out for?
REPLY
You should ask the agent to explain the key points to you. You can ask the questions contained in this FAQ:
http://www.tankinlian.com/faq/right.html
Make sure that the agent explain the answers clearly. Do not be shy to ask for clarification, if the point is not clear to you. It is the agent's duty to provide clear explanation.
I am given a benefit illustration for a life insurance product. It seems to be quite detailed, long and complicated. Do you have any tips on the important things to watch out for?
REPLY
You should ask the agent to explain the key points to you. You can ask the questions contained in this FAQ:
http://www.tankinlian.com/faq/right.html
Make sure that the agent explain the answers clearly. Do not be shy to ask for clarification, if the point is not clear to you. It is the agent's duty to provide clear explanation.
True cost of life insurance
Dear Mr. Tan
I read several comments in your blog. They seem to suggest that there is such a thing as a high cost life insurance policy, and a low cost policy. How can a consumer tell the difference?
REPLY
You can read this FAQ:
http://www.tankinlian.com/faq/true.html
It explains the true cost of a life insurance policy, as reflected in the reduction in the yield that can be earned from the life fund.
I read several comments in your blog. They seem to suggest that there is such a thing as a high cost life insurance policy, and a low cost policy. How can a consumer tell the difference?
REPLY
You can read this FAQ:
http://www.tankinlian.com/faq/true.html
It explains the true cost of a life insurance policy, as reflected in the reduction in the yield that can be earned from the life fund.
Tunis, Tunisia
What is the difference between Tunis and Tunisia?
Tunis is the capital of Tunisia, a country in North Africa. It is a small country situated between Libya and Algeria. I will be visiting Tunis in June. It will be my first trip to the continent of Africa.
A few countries have a name ending with "sia", e.g. Malaysia, Indonesia, Tunisia, Rhodesia (now Zimbabwe) and Polynesia.
Tunis is the capital of Tunisia, a country in North Africa. It is a small country situated between Libya and Algeria. I will be visiting Tunis in June. It will be my first trip to the continent of Africa.
A few countries have a name ending with "sia", e.g. Malaysia, Indonesia, Tunisia, Rhodesia (now Zimbabwe) and Polynesia.
Wednesday, May 21, 2008
Wealth Accumulator
Dear Mr. Tan
Someone told me that you recommended a product called the "Wealth Accumulator". Can you explain the features of this product, and why it is good?
REPLY
This product is just a concept at this time. It has no front-end load and a low annual fee. It is like an indexed fund. I hope to get a new life insurance company to offer this product in the near future.
You can read more about this product here:
http://www.tankinlian.com/faq/low.html
In the meantime, if you wish to find a low cost investment fund, you can consider any of the following:
http://www.tankinlian.com/faq/lowcost.html
Someone told me that you recommended a product called the "Wealth Accumulator". Can you explain the features of this product, and why it is good?
REPLY
This product is just a concept at this time. It has no front-end load and a low annual fee. It is like an indexed fund. I hope to get a new life insurance company to offer this product in the near future.
You can read more about this product here:
http://www.tankinlian.com/faq/low.html
In the meantime, if you wish to find a low cost investment fund, you can consider any of the following:
http://www.tankinlian.com/faq/lowcost.html
Wigan
Football fans will remember that Wigan FC played the last game of the Premier League against Manchester United. That game decided MU to be the champion of the League.
My first encounter with Wigan was about 25 years ago. I was in a train which stopped at Wigan Wallgate. I found the name Wigan to be strange, and Wallgate to be strange also. I mentioned this to my English friend. He laughed and told me that the town of Wigan actually had two train stations, called Wigan Wallgate and Wigan North Western. He told this joke.
An Indian immigration worked in Wigan for many years. He received a telegram asking him to return to India, as his mother was very sick.
We went to the train station in Wigan and asked for a train ticket to take him to Bombay, India. Nobody at the station had every heard of Bombay or India. They sent him by train to London.
Nobody in London heard of Bombay or India either. So, they sent him to Paris. He finally arrived in India after much difficulty. He stayed in Bombay for some time until after his mother passed away. Now it is time for him to return to England.
He went to the train station in Bombay and asked for a ticket to Wigan. The clerk replied immediately, "Yes, sir. Do you want to be at Wigan Wallgate or Wigan North-western?"
Where is the joke? During the days of the British Empire, nobody in England has heard of any place outside of England. Everybody in the British Empire knows all the train stations in England!
My first encounter with Wigan was about 25 years ago. I was in a train which stopped at Wigan Wallgate. I found the name Wigan to be strange, and Wallgate to be strange also. I mentioned this to my English friend. He laughed and told me that the town of Wigan actually had two train stations, called Wigan Wallgate and Wigan North Western. He told this joke.
An Indian immigration worked in Wigan for many years. He received a telegram asking him to return to India, as his mother was very sick.
We went to the train station in Wigan and asked for a train ticket to take him to Bombay, India. Nobody at the station had every heard of Bombay or India. They sent him by train to London.
Nobody in London heard of Bombay or India either. So, they sent him to Paris. He finally arrived in India after much difficulty. He stayed in Bombay for some time until after his mother passed away. Now it is time for him to return to England.
He went to the train station in Bombay and asked for a ticket to Wigan. The clerk replied immediately, "Yes, sir. Do you want to be at Wigan Wallgate or Wigan North-western?"
Where is the joke? During the days of the British Empire, nobody in England has heard of any place outside of England. Everybody in the British Empire knows all the train stations in England!
Pay and Performance of Leaders
Someone asked my views on this topic a few weeks ago. I posted my views in this blog. I have since written an expended version, which will appear in http://www.theonlinecitizen.com/ later today under a new title.
MAS Guidelines on Fair Dealing Outcome
I have submitted my views to MAS on their consultation paper on "fair dealing outcome" to consumers.
MAS wants to make the management and board of financial institution responsible to achieve this outcome. The key points of my paper are:
1. The management and board of financial institutions have the goal of making the most profit for shareholders. It is difficult for them to be responsible for "fair dealing outcome" for consumers. There is a conflict of interest.
2. "Fair dealing outcome" has to be defined more clearly. It should be defined as a product that have fair (not excessive) charges and give good value to consumers.
3. For complicated financial products, the regulator must ask two independent financial experts to study and give their views. The vews of the experts should be posted in a website to guide consumers.
I quote the example of new drugs. The regulator tests and approves the new drugs before they are sold to the public. They do not expect the consumers to do their own testing. Financial products should go through the same test.
MAS wants to make the management and board of financial institution responsible to achieve this outcome. The key points of my paper are:
1. The management and board of financial institutions have the goal of making the most profit for shareholders. It is difficult for them to be responsible for "fair dealing outcome" for consumers. There is a conflict of interest.
2. "Fair dealing outcome" has to be defined more clearly. It should be defined as a product that have fair (not excessive) charges and give good value to consumers.
3. For complicated financial products, the regulator must ask two independent financial experts to study and give their views. The vews of the experts should be posted in a website to guide consumers.
I quote the example of new drugs. The regulator tests and approves the new drugs before they are sold to the public. They do not expect the consumers to do their own testing. Financial products should go through the same test.
Annual and Terminal Bonuses
Dear Mr. Tan,
I wish to share my views on this matter. Please post it in your blog.
1) Does terminal bonus smooth returns for policyholders?
Policyholders who have the rotten luck of dying, surrendering (due to unemployment/financial hardships), or whose policy matures (to pay for their children's university education) when the investment markets are doing badly, will see low returns on their terminal bonus policies - perhaps insufficient for their initial plan on how to use the maturity payout.
Policyholders who claims/surrenders/matures during good investment times will be paid the returns shown in the benefit illustration (ie around 3.5% to 4.5%).
But is this fair and equitable? Is this the intention of with-profits life insurance policies?
For reversionary bonus, the impact of investment market volatility on the claimants, surrenders, maturities are significantly reduced, since past bonuses are guaranteed and cuts in reversionary bonus affects all policyholders fairly.
Compare this to terminal bonus which affects only unfortunate claimants in bad investment cycles. Higher reversionary bonus payouts provide higher certainty for all policyholders.
2) Bonuses are not guaranteed anyway, so are they different products?
The provision of certainty and higher bonus-vesting (via high reversionary bonus) adds value to policyholders and is a very different product from the high terminal bonus version.
My friend gave me this analogy. If you ask your investment broker to buy a secure long-term government bond, but instead he gives you a well diversified unit-trust but giving you an excuse that you can expect higher returns, will you be happy with it?
A promise is a promise. Income has promised policyholders a design of high reversionary bonus (low terminal bonuse). Arguably, Income's management does not have the right to change to a low reversionary bonus design unilaterally. In the past, I have personally recommended Income's policies based on this high reversionary bonus design. The move to 'industry practice' is a significant drawback.
3) So what's the value-add of Terminal Bonus? Does it really give higher returns? Are terminal bonus less likely to be cut?
Using an insurance adviser's example, a return of 3.5% is about long-term bond gov rate. Old income policies also returns around the same rate.
Which is more valuable to policyholders, an uncertain return of 3.5% (based mostly on terminal bonus) or a more-certain return of 3.5% (based mostly on reversionary bonus)? Clearly, the reversionary bonus. Bear in mind that 3.5% is about the returns of very secure long-term government bonds anyway.
All else being equal, are policies with high terminal bonus less likely to suffer bonus cuts? Evidently no. Since during the last investment down cycle, industry players cut terminal bonus significantly as well.
4) What about solvency and investment allocation? Terminal bonus approach allows more allocations to high returns/risk assets right?
My recent statistics collated from the MAS website, shows industry players that uses terminal bonus approach have on average solvency ratio of 300%, equity investment ratio of 20%-30%. What level of solvency ratio is adequate? Is 300% too high?
Bearing in mind, MAS minimum is 120% at company level. Are these companies being too safe at the expense of policyholders? With such a comfortable buffer of 300% solvency ratio, shouldn't allocations to risky investments be higher?
Yew Ming
I wish to share my views on this matter. Please post it in your blog.
1) Does terminal bonus smooth returns for policyholders?
Policyholders who have the rotten luck of dying, surrendering (due to unemployment/financial hardships), or whose policy matures (to pay for their children's university education) when the investment markets are doing badly, will see low returns on their terminal bonus policies - perhaps insufficient for their initial plan on how to use the maturity payout.
Policyholders who claims/surrenders/matures during good investment times will be paid the returns shown in the benefit illustration (ie around 3.5% to 4.5%).
But is this fair and equitable? Is this the intention of with-profits life insurance policies?
For reversionary bonus, the impact of investment market volatility on the claimants, surrenders, maturities are significantly reduced, since past bonuses are guaranteed and cuts in reversionary bonus affects all policyholders fairly.
Compare this to terminal bonus which affects only unfortunate claimants in bad investment cycles. Higher reversionary bonus payouts provide higher certainty for all policyholders.
2) Bonuses are not guaranteed anyway, so are they different products?
The provision of certainty and higher bonus-vesting (via high reversionary bonus) adds value to policyholders and is a very different product from the high terminal bonus version.
My friend gave me this analogy. If you ask your investment broker to buy a secure long-term government bond, but instead he gives you a well diversified unit-trust but giving you an excuse that you can expect higher returns, will you be happy with it?
A promise is a promise. Income has promised policyholders a design of high reversionary bonus (low terminal bonuse). Arguably, Income's management does not have the right to change to a low reversionary bonus design unilaterally. In the past, I have personally recommended Income's policies based on this high reversionary bonus design. The move to 'industry practice' is a significant drawback.
3) So what's the value-add of Terminal Bonus? Does it really give higher returns? Are terminal bonus less likely to be cut?
Using an insurance adviser's example, a return of 3.5% is about long-term bond gov rate. Old income policies also returns around the same rate.
Which is more valuable to policyholders, an uncertain return of 3.5% (based mostly on terminal bonus) or a more-certain return of 3.5% (based mostly on reversionary bonus)? Clearly, the reversionary bonus. Bear in mind that 3.5% is about the returns of very secure long-term government bonds anyway.
All else being equal, are policies with high terminal bonus less likely to suffer bonus cuts? Evidently no. Since during the last investment down cycle, industry players cut terminal bonus significantly as well.
4) What about solvency and investment allocation? Terminal bonus approach allows more allocations to high returns/risk assets right?
My recent statistics collated from the MAS website, shows industry players that uses terminal bonus approach have on average solvency ratio of 300%, equity investment ratio of 20%-30%. What level of solvency ratio is adequate? Is 300% too high?
Bearing in mind, MAS minimum is 120% at company level. Are these companies being too safe at the expense of policyholders? With such a comfortable buffer of 300% solvency ratio, shouldn't allocations to risky investments be higher?
Yew Ming
Land Banking
Dear Sir,
I wish to hear your opinion about land banking opporunity through X as follow:
> audited track records 29 yrs
> no clients losing money
> audited by Y
REPLY
I do not like this investment product. There is no liquid market. You can put your money in, but you have to wait a long time before you can find someone to buy the investment from you. I have been approached many times to invest in the product, but I always declined.
You can search my blog for my past postings on this type of investment. Type "land banking" and click on Search Blog.
I wish to hear your opinion about land banking opporunity through X as follow:
> audited track records 29 yrs
> no clients losing money
> audited by Y
REPLY
I do not like this investment product. There is no liquid market. You can put your money in, but you have to wait a long time before you can find someone to buy the investment from you. I have been approached many times to invest in the product, but I always declined.
You can search my blog for my past postings on this type of investment. Type "land banking" and click on Search Blog.
Tuesday, May 20, 2008
Uncertain yield
A policyholder sent to me a whole life policy (premiums payable for 10 years) taken for a child age 19, covering a sum assured of $50,000.
The yield for the first 10 years is negative. The yield becomes positive over the subsequent 20 years due to the non-guaranteed special bonus. If the special bonus is reduced, the yield will fall accordingly. The yield on this policy is uncertain.
Total Cash Value Yield
Premium Gtd N-Gtd Total p.a.
10 yr $15,980 $14,050 $1,523 $15,573 -0.5%
20 yr $15,980 $18,400 $6,887 $25,287 2.2%
30 yr $15,980 $23,700 $15,723 $39,423 3.0%
The yield for the first 10 years is negative. The yield becomes positive over the subsequent 20 years due to the non-guaranteed special bonus. If the special bonus is reduced, the yield will fall accordingly. The yield on this policy is uncertain.
Revolution in financial advisory industry
Mr. Tan,
I'm an ardent follower of your blog since it was launched. It has been delightful gaining insight into your views on investment and insurance.
I just read your entry on the fee based approach. For me, that is a very viable alternative for both clients and advisors which I whole-heartedly endorse. I, too, believe "Buy Term, Invest the Rest" is a mantra that give the best value to most clients.
However, most financial advisory firms do not advocate this. It might be attributed to :-
1) Infrastructure. The two investment platform, iFast and Navigator, available do not carry low-cost funds especially index funds or index ETFs.
2) Business sustainability. The current business model of the firms are meant to maximize shareholder value.
3) The Advisors. Advisors are commissioned based and as such, it's human instinct to "milk" as much as possible, considering that the amount of time expended in travelling and prospecting need to be justified.
With your approach of clients visiting the "clinic", I am sure that advisors will be more willing to jump onto the bandwagon and hopefully, lead to a revolution in the financial advisory industry.
W
I'm an ardent follower of your blog since it was launched. It has been delightful gaining insight into your views on investment and insurance.
I just read your entry on the fee based approach. For me, that is a very viable alternative for both clients and advisors which I whole-heartedly endorse. I, too, believe "Buy Term, Invest the Rest" is a mantra that give the best value to most clients.
However, most financial advisory firms do not advocate this. It might be attributed to :-
1) Infrastructure. The two investment platform, iFast and Navigator, available do not carry low-cost funds especially index funds or index ETFs.
2) Business sustainability. The current business model of the firms are meant to maximize shareholder value.
3) The Advisors. Advisors are commissioned based and as such, it's human instinct to "milk" as much as possible, considering that the amount of time expended in travelling and prospecting need to be justified.
With your approach of clients visiting the "clinic", I am sure that advisors will be more willing to jump onto the bandwagon and hopefully, lead to a revolution in the financial advisory industry.
W
Monday, May 19, 2008
Invest your SRS savings
Hi Mr. Tan,
Let me say thank you for your blog which has been educational. I hope more people will read it and hopefully learn to be slightly more financially savvy in their personal financial planning / management.
I believed that ultimately knowledge and education is the best way the customer can be protected. The rules and regulation set by the authorities such as MAS are also important steps that served to protect customer's interest.
In view of Income proposed restructuring of its bonus, which effectively reduce the yearly vested annual bonus significantly in favour of non-vested terminal/special bonus, I think that parking SRS money in Growth policies for long-term is no longer an attractive option.
For you personally, where would you park your yearly SRS contribution, given the current situation, assuming that you are taking an investment time-frame of 15 to 20 years?
REPLY
In the past, I have invested my SRS in the Growth Policy (i.e. single premium endowment). I will keep this policy, as NTUC Income has assured the policyholders that the total bonus payout on maturity will not be reduced by the restructuring of the bonus. The reduction in annual bonus will be compensated by an increase in the special (terminal) bonus.
Today, if I wish to invest my SRS contribution for next 15 to 20 years, I would chose an investment fund. This is explained here:
http://www.tankinlian.com/faq/savings.html
http://www.tankinlian.com/faq/investown.html
Let me say thank you for your blog which has been educational. I hope more people will read it and hopefully learn to be slightly more financially savvy in their personal financial planning / management.
I believed that ultimately knowledge and education is the best way the customer can be protected. The rules and regulation set by the authorities such as MAS are also important steps that served to protect customer's interest.
In view of Income proposed restructuring of its bonus, which effectively reduce the yearly vested annual bonus significantly in favour of non-vested terminal/special bonus, I think that parking SRS money in Growth policies for long-term is no longer an attractive option.
For you personally, where would you park your yearly SRS contribution, given the current situation, assuming that you are taking an investment time-frame of 15 to 20 years?
REPLY
In the past, I have invested my SRS in the Growth Policy (i.e. single premium endowment). I will keep this policy, as NTUC Income has assured the policyholders that the total bonus payout on maturity will not be reduced by the restructuring of the bonus. The reduction in annual bonus will be compensated by an increase in the special (terminal) bonus.
Today, if I wish to invest my SRS contribution for next 15 to 20 years, I would chose an investment fund. This is explained here:
http://www.tankinlian.com/faq/savings.html
http://www.tankinlian.com/faq/investown.html
Welfare in Singapore
Should the Singapore Government spend more on welfare?
Read my views in:
http://theonlinecitizen.com/2008/05/the-anorexic-state/#comments
Read my views in:
http://theonlinecitizen.com/2008/05/the-anorexic-state/#comments
Cost of travelling - taxi and car
The petrol consumption on my Toyota Camry is 24 cents per kilometer. If I travel by taxi, the fare is 60 cents p kilometer (off-peak) and 80 cents (peak hours). So, taxi cost 3 to 4 times of driving. In both cases, I have to pay the ERP charges. I save on parking charges when I take a taxi.
Conclusion? Take the MRT!
Conclusion? Take the MRT!
Advice backed by proper research
A person by the name of "June" attacked me in http://www.theonlinecitizen.com/. "She" said that the views posted by Mr. Tan Kin Lian in his blog and website are not backed by proper research.
It is easy for "June" to discredit me, while under the cloak of anonymity. I do not know if "she" is a real person and what is her background.
I invite my visitors to read the FAQs posted here:
www.tankinlian.com/faq
You can take my advice, if they are relevant to you. You can ignore them, if they are not relevant or not backed by "proper research".
You can judge if the financial adviser is making a recommendation that is backed by "proper research" or "selective research" and is beneficial to you. Be sure that you understand the adviser. If the adviser does not explain clearly to you, do not trust the adviser.
Ask the simple and relevant questions, including those set out in this FAQ:
http://www.tankinlian.com/faq/right.html
It is easy for "June" to discredit me, while under the cloak of anonymity. I do not know if "she" is a real person and what is her background.
I invite my visitors to read the FAQs posted here:
www.tankinlian.com/faq
You can take my advice, if they are relevant to you. You can ignore them, if they are not relevant or not backed by "proper research".
You can judge if the financial adviser is making a recommendation that is backed by "proper research" or "selective research" and is beneficial to you. Be sure that you understand the adviser. If the adviser does not explain clearly to you, do not trust the adviser.
Ask the simple and relevant questions, including those set out in this FAQ:
http://www.tankinlian.com/faq/right.html
Understanding the Benefit Illustration
Someone posted a comment in http://www.theonlinecitizen.com/ as follows,
"Mr. Tan suggested that the public should look at the Effect of Deduction and Distribution Cost" in the Benefit Illustration. What is the point of these information, when consumers do not understand what they mean?"
I agree with this comment.
The regulator required the financial institution to disclose these key information. The financial institutions found a way to provide these information buried in 10 pages or more, of other details. The consumers are lost.
The financial advisers have the responsibility to explain the relevant points to the consumer. I suspect that they will skip these sensitive areas. Even if the consumer ask, the adviser could find a way to confuse the consumer and side-track this issue.
I suggest that the regulaor should carry out a survey (say with 50 consumers who have recently bought a life insurance product) and ask the following questions:
1. Have you been told about the Effect of Deduction and the Distribution Cost?
2. Did the adviser explain these terms to you clearly, before you buy the product?
3. Now that you are aware about these items, do you feel that you have made the correct decision in buying the product?
"Mr. Tan suggested that the public should look at the Effect of Deduction and Distribution Cost" in the Benefit Illustration. What is the point of these information, when consumers do not understand what they mean?"
I agree with this comment.
The regulator required the financial institution to disclose these key information. The financial institutions found a way to provide these information buried in 10 pages or more, of other details. The consumers are lost.
The financial advisers have the responsibility to explain the relevant points to the consumer. I suspect that they will skip these sensitive areas. Even if the consumer ask, the adviser could find a way to confuse the consumer and side-track this issue.
I suggest that the regulaor should carry out a survey (say with 50 consumers who have recently bought a life insurance product) and ask the following questions:
1. Have you been told about the Effect of Deduction and the Distribution Cost?
2. Did the adviser explain these terms to you clearly, before you buy the product?
3. Now that you are aware about these items, do you feel that you have made the correct decision in buying the product?
Wasteful way to make a payment
An organisation wanted to pay me $400 to give a talk. I asked them to credit the payment directly into my bank account.
This is what actually happened.
1. I was asked to send a signed invoice by mail. They do not accept an invoice by e-mail.
2. I had to provide a photocopy of my bank statement for them to verify my bank account.
3. Three weeks later, they send a cheque to me by mail (in spite of verifying my bank account).
4. I have to mail the cheque to my bank to credit the payment.
The practice of this organisation is quite common in Singapore. They have still not woke up to the new world. They are still stuck to the old bureaucratic way of making payment by cheque.
My friend in China was surprised at our outdated practice in Singapore. Cheques are almost unheard of in China. All payments are made through bank transfer.
Wake up, Singapore. The world has changed. Why are we still using outmoded and expensive methods to make a simple payment?
I hope that people reading my blog will give the following suggestions to their bosses. You can take this suggestion as your own, and earn some merits:
1. Organisations can make payments directly to bank accounts
2. Banks can encourage and educate their business clients to adopt this new method
3. MAS and IDA can encourage the business community to adopt the more efficient methods.
This is what actually happened.
1. I was asked to send a signed invoice by mail. They do not accept an invoice by e-mail.
2. I had to provide a photocopy of my bank statement for them to verify my bank account.
3. Three weeks later, they send a cheque to me by mail (in spite of verifying my bank account).
4. I have to mail the cheque to my bank to credit the payment.
The practice of this organisation is quite common in Singapore. They have still not woke up to the new world. They are still stuck to the old bureaucratic way of making payment by cheque.
My friend in China was surprised at our outdated practice in Singapore. Cheques are almost unheard of in China. All payments are made through bank transfer.
Wake up, Singapore. The world has changed. Why are we still using outmoded and expensive methods to make a simple payment?
I hope that people reading my blog will give the following suggestions to their bosses. You can take this suggestion as your own, and earn some merits:
1. Organisations can make payments directly to bank accounts
2. Banks can encourage and educate their business clients to adopt this new method
3. MAS and IDA can encourage the business community to adopt the more efficient methods.
Financial advice for a young person
Hi Mr Tan,
Your website has certainly been extremely important in my understanding of today's financial products and situation.
I have just graduated and will be starting work soon. I carried out some research on how I should diversify my savings into investment and insurance. Through your guidance, I decided to do them separately.
A financial adviser tried to promote the following product:
Riders attached with this plan:
1) Disability Linked
2) Waiver of Contribution (TPD or Critical Illness)
3) Critical Illness link benefit
For all 3 riders: Sum assured is $150,000. Regular Contribution: $250 and about $22 being contributed to payment of insurance
Bid offer spread: 5%
Top up Minimum S$500, at no additional charge
Partial withdrawal allowed (minimum of S$250 per withdrawal)
Unit allocation (as percentage of premiums paid)
Year 1: 13%
Year 2: 40%
Year 3: 45%
Year 4 to 6: 100%
Year 7 to 9: 103%
Year 10 onwards: 105%
Is this investment-linked plan advantageous to me? I have my doubts over the low percentage of premium going into the investments.
Secondly, at my age, what kind of insurance should I actually consider? Is it all right to purchase term insurance.
Thirdly, I have considered embarking on a monthly investment plan on unit trusts with the intention of starting my investments early, not trying to time the market and at the same time accumulating my savings for future investments. I would like to seek your advice on whether this is feasible.
REPLY
Do not invest in this high cost product. 200% of your annual premium is taken away during the first three years.
Read this FAQ:
http://www.tankinlian.com/faq/ilp.html
This product appears to give you allocation of 105% from year 10. After discounting the spread of 5%, you are actually investing at the net asset value. A honest adviser will tell you the truth. A dishonest adviser will mislead you into thinking that you are getting 5% more.
Here is my suggestion for investing your monthly savings:
http://www.tankinlian.com/faq/savings.html
http://www.tankinlian.com/faq/savings.html
Your website has certainly been extremely important in my understanding of today's financial products and situation.
I have just graduated and will be starting work soon. I carried out some research on how I should diversify my savings into investment and insurance. Through your guidance, I decided to do them separately.
A financial adviser tried to promote the following product:
Riders attached with this plan:
1) Disability Linked
2) Waiver of Contribution (TPD or Critical Illness)
3) Critical Illness link benefit
For all 3 riders: Sum assured is $150,000. Regular Contribution: $250 and about $22 being contributed to payment of insurance
Bid offer spread: 5%
Top up Minimum S$500, at no additional charge
Partial withdrawal allowed (minimum of S$250 per withdrawal)
Unit allocation (as percentage of premiums paid)
Year 1: 13%
Year 2: 40%
Year 3: 45%
Year 4 to 6: 100%
Year 7 to 9: 103%
Year 10 onwards: 105%
Is this investment-linked plan advantageous to me? I have my doubts over the low percentage of premium going into the investments.
Secondly, at my age, what kind of insurance should I actually consider? Is it all right to purchase term insurance.
Thirdly, I have considered embarking on a monthly investment plan on unit trusts with the intention of starting my investments early, not trying to time the market and at the same time accumulating my savings for future investments. I would like to seek your advice on whether this is feasible.
REPLY
Do not invest in this high cost product. 200% of your annual premium is taken away during the first three years.
Read this FAQ:
http://www.tankinlian.com/faq/ilp.html
This product appears to give you allocation of 105% from year 10. After discounting the spread of 5%, you are actually investing at the net asset value. A honest adviser will tell you the truth. A dishonest adviser will mislead you into thinking that you are getting 5% more.
Here is my suggestion for investing your monthly savings:
http://www.tankinlian.com/faq/savings.html
http://www.tankinlian.com/faq/savings.html
Existing Life Insurance Policies
A commentor agreed that it is better to "Buy Term and invest the Difference". He asked, "What should the policyholder do, with the high cost life insurance policies purchased in the past?" Many people are caught in this situation.
My advice is given in these FAQs. Read them:
http://www.tankinlian.com/faq/existinglife.html
http://www.tankinlian.com/faq/benchmark.html
Generally, I advise people to keep the existing policies, as they have already incurred the high front-end charges. But, if the continuing charges remain too high, they should terminate the policies and invest differently.
For younger people, I strongly advise them to follow the advice given in this FAQ:
http://www.tankinlian.com/faq/savings.html
After you have read and understood the FAQ, it is all right for you to talk to a financial or insurance adviser. The adviser will be able to help you to find a low cost option. Some of the advisers do look after the interests of their clients. You can help them to help you, by being educated about the options available to you.
My advice is given in these FAQs. Read them:
http://www.tankinlian.com/faq/existinglife.html
http://www.tankinlian.com/faq/benchmark.html
Generally, I advise people to keep the existing policies, as they have already incurred the high front-end charges. But, if the continuing charges remain too high, they should terminate the policies and invest differently.
For younger people, I strongly advise them to follow the advice given in this FAQ:
http://www.tankinlian.com/faq/savings.html
After you have read and understood the FAQ, it is all right for you to talk to a financial or insurance adviser. The adviser will be able to help you to find a low cost option. Some of the advisers do look after the interests of their clients. You can help them to help you, by being educated about the options available to you.
Sunday, May 18, 2008
Petrol Consumption - Toyota Camry
During the past 11 days, my Toyota Camry travelled 473 km, consuming 52.91 litres, or 8.9 km per litre. The price is $2.136 per litre. The petrol consumption is 24 cents per kilometer - consistent with my previous record. I spent $107 for 11 days. My petrol consumption is almost $300 per month. It is high.
Write to ask NTUC Income
Hi Mr. Tan,
I have several Growth policies (single premium) and a Living policy. Are these policies much affected by the bonus resturcturing?
REPLY
I suggest that you write to ask NTUC Income. They should have informed you by now.
If your policies are taken during the last 15 years, and I suspect that your Growth policy falls in this category, it is affected by the bonus restructuring. My Growth policy is in this category.-
I have several Growth policies (single premium) and a Living policy. Are these policies much affected by the bonus resturcturing?
REPLY
I suggest that you write to ask NTUC Income. They should have informed you by now.
If your policies are taken during the last 15 years, and I suspect that your Growth policy falls in this category, it is affected by the bonus restructuring. My Growth policy is in this category.-
Mortgage Insurance
Dear Mr Tan,
We are planning to apply for Bank Home Loan (both my wife and I are PRs) and would like to know about Home Loan insurance. We already have term insurance including critical illness policy, hospitalisation insurance.
Should we buy Home Loan insurance? I know some banks already included in their home loan product. Can we opt-out and choose separate Home Loan insurance? What are the best low cost insurance for Home Loan in the market?
REPLY
You can buy a Mortgage Insurance. You need to provide the following:
Amount of mortgage loan
Duration of repayment
Interest rate on theloan
Ages of the insured persons, e.g. you and your spouse
You can call a few insurance companies and ask them to give you a quote. You can select the company that respond to you (indicate that they give good service) and give you the best terms. Ask about the annual premium and the number of years paid. You can also opt to pay a single premium.
The telephone numbers of the insurance companies are shown here:
http://www.tankinlian.com/faq/termd.html
We are planning to apply for Bank Home Loan (both my wife and I are PRs) and would like to know about Home Loan insurance. We already have term insurance including critical illness policy, hospitalisation insurance.
Should we buy Home Loan insurance? I know some banks already included in their home loan product. Can we opt-out and choose separate Home Loan insurance? What are the best low cost insurance for Home Loan in the market?
REPLY
You can buy a Mortgage Insurance. You need to provide the following:
Amount of mortgage loan
Duration of repayment
Interest rate on theloan
Ages of the insured persons, e.g. you and your spouse
You can call a few insurance companies and ask them to give you a quote. You can select the company that respond to you (indicate that they give good service) and give you the best terms. Ask about the annual premium and the number of years paid. You can also opt to pay a single premium.
The telephone numbers of the insurance companies are shown here:
http://www.tankinlian.com/faq/termd.html
Effect of Deduction
A policyholder sent to me a whole life policy (premiums payable for 10 years) taken for a child age 19, covering a sum assured of $50,000.
The Effect of Deduction is as follows:
After paying the premium for 10 years, the cash value is still less than the premiums paid. The effect of deduction is about $5,830, This is the money that could have been earned by investing the premiums.
The effect of deduction over 30 years is about $20,132. If the parent had bought a level term assurance for the child for 30 years, the total premiums plus interest would be about $3,500. This is cheaper than the $20,132 (i.e. "effect of deduction") charged under the life insurance policy.
Read this FAQ:
http://www.tankinlian.com/faq/benchmark.html
The Effect of Deduction is as follows:
Total Cash Value Effect of
Premium Gtd N-Gtd Total Deduction
10 yr $15,980 $14,050 $1,523 $15,573 $5,830
20 yr $15,980 $18,400 $6,887 $25,287 $10,416
30 yr $15,980 $23,700 $15,723 $39,423 $20,132
After paying the premium for 10 years, the cash value is still less than the premiums paid. The effect of deduction is about $5,830, This is the money that could have been earned by investing the premiums.
The effect of deduction over 30 years is about $20,132. If the parent had bought a level term assurance for the child for 30 years, the total premiums plus interest would be about $3,500. This is cheaper than the $20,132 (i.e. "effect of deduction") charged under the life insurance policy.
Read this FAQ:
http://www.tankinlian.com/faq/benchmark.html
Vivolife (premiums payable for 10 years)
Dear Mr Tan,
My posting on theonlinecitizen gave an example of a Vivolife policy, where premium is payable for 10 yrs (not 20 yrs as mentioned by you) but the coverage is for whole life.
Here are the details you requested:
Age 30 male (non-smoker).
Premium for a $100,000 Vivolife-10 yr premium term. Premium is $4251.75 a yr.
Total premium paid for 10 yrs is $42518. The cash value continues to grow even though premium is stopped.
At age 60 (that is, after the policy is inforce for 30 yrs), the cash value is $99306. If the policyholder surrenders the policy, he gets $99,306 (capital gain of $56788). Using a financial calculator, the yield is 4%p.a. This is similar to the coupon rate of long term government bonds.
Where can you find a zero coupon bond that allows you to pay in installments (instead of upfront) and yet offers you insurance coverage, as well as the flexibility to cash out and get a FULL refund + interests?
My investment savvy clients are familiar with asset allocation and they prefer to include Vivolife in part of their bond portfolio.
They classify Vivolife as an appreciating asset and Term policy is an expense. My clients are covered with both term and whole life policies.
Catherine Choong
REPLY
Dear Catherine
I calculate the yield on this policy, kept for 30 years, to be about 3.5% p.a. (and not 4%).
Can you give the following figures from your Benefit Illustration, i.e. total premiums paid, cash value (guaranteed, non guaranteed), effect of deduction for 10, 20, and 30 years.
I understand that a large portion of the yield at the end of 30 years depends on non-gauranteed terminal bonuses. There is a high degree of uncertainty, as the terminal bonuses could be removed during bad years (and this has happened with other insurance companies). I suspect also, that the yields during the earlier durations could be negative.
If the policyholder invest the premium in an investment fund to earn a net yield of 4.5% p.a. the total amount at the end of 30 years is $132,000 (i.e. 33% higher than $99,306). As he is investing for 30 years, he can choose a higher risk profile and invest in equities. If he earns a net yield of 6%, he will get $191,000 at the end of 30 years.
The cost of providing the insurance protection has to be paid out of the savings, so the estimated return in 30 years could be lower than the gross figures of $132,000 and $191,000 by 10% to 15% (my estimate, depending on the cost of the protection).
If the policyholder choose an investment fund, there is flexibility to continue the saving beyond 10 years, instead of having to buy another high cost product. He can also discontinue saving for some years, without suffering any penalty.
In spite of my comments, I recognise that the non-savvy policyholders may find the packaging of Vivolife to be more suitable to their needs. A good adviser will present both options for the customer to choose.
My posting on theonlinecitizen gave an example of a Vivolife policy, where premium is payable for 10 yrs (not 20 yrs as mentioned by you) but the coverage is for whole life.
Here are the details you requested:
Age 30 male (non-smoker).
Premium for a $100,000 Vivolife-10 yr premium term. Premium is $4251.75 a yr.
Total premium paid for 10 yrs is $42518. The cash value continues to grow even though premium is stopped.
At age 60 (that is, after the policy is inforce for 30 yrs), the cash value is $99306. If the policyholder surrenders the policy, he gets $99,306 (capital gain of $56788). Using a financial calculator, the yield is 4%p.a. This is similar to the coupon rate of long term government bonds.
Where can you find a zero coupon bond that allows you to pay in installments (instead of upfront) and yet offers you insurance coverage, as well as the flexibility to cash out and get a FULL refund + interests?
My investment savvy clients are familiar with asset allocation and they prefer to include Vivolife in part of their bond portfolio.
They classify Vivolife as an appreciating asset and Term policy is an expense. My clients are covered with both term and whole life policies.
Catherine Choong
REPLY
Dear Catherine
I calculate the yield on this policy, kept for 30 years, to be about 3.5% p.a. (and not 4%).
Can you give the following figures from your Benefit Illustration, i.e. total premiums paid, cash value (guaranteed, non guaranteed), effect of deduction for 10, 20, and 30 years.
I understand that a large portion of the yield at the end of 30 years depends on non-gauranteed terminal bonuses. There is a high degree of uncertainty, as the terminal bonuses could be removed during bad years (and this has happened with other insurance companies). I suspect also, that the yields during the earlier durations could be negative.
If the policyholder invest the premium in an investment fund to earn a net yield of 4.5% p.a. the total amount at the end of 30 years is $132,000 (i.e. 33% higher than $99,306). As he is investing for 30 years, he can choose a higher risk profile and invest in equities. If he earns a net yield of 6%, he will get $191,000 at the end of 30 years.
The cost of providing the insurance protection has to be paid out of the savings, so the estimated return in 30 years could be lower than the gross figures of $132,000 and $191,000 by 10% to 15% (my estimate, depending on the cost of the protection).
If the policyholder choose an investment fund, there is flexibility to continue the saving beyond 10 years, instead of having to buy another high cost product. He can also discontinue saving for some years, without suffering any penalty.
In spite of my comments, I recognise that the non-savvy policyholders may find the packaging of Vivolife to be more suitable to their needs. A good adviser will present both options for the customer to choose.
Saturday, May 17, 2008
Due diligence on Credit Cards
tatos@irc.rizon.net said...
In the age, actually one have to actually watch out for 'Card Tricks', affectionately known at 'clauses that specifically' protect the Credit Card Companies' interests, in general.
No Joke - I mean No Joke. I have friends who incur a lot of debts just by little overdrafting and letting the mini-debt grow and grow.
This doesn't come at a surprise to anybody, but most money lenders do not have your best interests at heart. Some even send out 'misleading' marketing information as lure. Even the most reputable credit card issues bombard customers with 'benefits' that are specially designed to 'pad' fees and interest payments. Cash Advances and convenience checks don't come cheap, just read about the new Hybrid Cards in Singapore, and one can imagine a consequences of mis-using it, like overdrafting a 'debit card'.
There are some common 'ouchies' that could happen if you own a credit card.
1) Magical Appearing Annual Fee. You signed up for a card with no Annual fee. Then out of the sudden, you find one, some lenders start charging annual feel who pay their bills off every month - Its best to cancel the card AS SOON AS POSSIBLE.
2) Sliding Credit Line. Another inethical but not uncommon practice to entice a customer to use a cash advance check or skip-a-month payment offer and then lower their credit limit. The maxed-out customer is then charged an additional fee for being above it. Or just simply lower customer's credit limit once they reach it - It depends on how disciplined you are with your card, you might not have to worry as much as the other fellow if you are really concious about debt payments.
3) Mysterious Fees. You may not have to pay a charge to get a cash advance. But most banks charges hefty transaction fees, which can easily go around 2% of the total amount and no less than $10. Also watch out for calling the toll-free number to check your balance and penalty fees for ACCOUNT INACTIVITY. (Don't forget about the credit card buried at the bottom of your wallet!)
4) The Disappearing Grace Period. Watch out for lenders who pull the grace period out from under you. Remember, if your grace period is eliminated, you'll accrue interest from the day you make a purchase. And the only way to avoid this charge would be to pay your bill before you even receive it. This is the most horrible act I've heard, but it yet happened to Singapoeans, I think.
5) Credit Report Blunders - These do happen in real life. But with little diligence on your part, such inaccuracies can be looked into, updated and even removed from your account relatively quickly. If you are sure thats an Error (by keeping records of copies of your purchases, checks and past billing statements) and they still wouldn't bulge in helping you, try finding any authority to investigate your claim AS SOON AS POSSIBLE.
Not that Credit Cards are bad, its just require a little more due diligence prior getting a card and maintaining that card for your own conveniences and benefits, like actually assist in your budgeting by posting monthly statement print statements, etc. While also bolster your image in the eyes of another lender, especially if you consider using credit to establish a firm borrowing history, if you are going to apply for a large line of credit, like mortage or car loan, but overall it depends on one's disciplined to use it responsibly, and productively.
And remember, if you are going to cancel a card, it is best to contact though the Hotline AS SOON AS POSSIBLE and CLOSE THE ACCOUNT rather than going though other means (waiting for them to close the account for you), for this may help to reserve your Credit Score (if such a thing exist).
In the age, actually one have to actually watch out for 'Card Tricks', affectionately known at 'clauses that specifically' protect the Credit Card Companies' interests, in general.
No Joke - I mean No Joke. I have friends who incur a lot of debts just by little overdrafting and letting the mini-debt grow and grow.
This doesn't come at a surprise to anybody, but most money lenders do not have your best interests at heart. Some even send out 'misleading' marketing information as lure. Even the most reputable credit card issues bombard customers with 'benefits' that are specially designed to 'pad' fees and interest payments. Cash Advances and convenience checks don't come cheap, just read about the new Hybrid Cards in Singapore, and one can imagine a consequences of mis-using it, like overdrafting a 'debit card'.
There are some common 'ouchies' that could happen if you own a credit card.
1) Magical Appearing Annual Fee. You signed up for a card with no Annual fee. Then out of the sudden, you find one, some lenders start charging annual feel who pay their bills off every month - Its best to cancel the card AS SOON AS POSSIBLE.
2) Sliding Credit Line. Another inethical but not uncommon practice to entice a customer to use a cash advance check or skip-a-month payment offer and then lower their credit limit. The maxed-out customer is then charged an additional fee for being above it. Or just simply lower customer's credit limit once they reach it - It depends on how disciplined you are with your card, you might not have to worry as much as the other fellow if you are really concious about debt payments.
3) Mysterious Fees. You may not have to pay a charge to get a cash advance. But most banks charges hefty transaction fees, which can easily go around 2% of the total amount and no less than $10. Also watch out for calling the toll-free number to check your balance and penalty fees for ACCOUNT INACTIVITY. (Don't forget about the credit card buried at the bottom of your wallet!)
4) The Disappearing Grace Period. Watch out for lenders who pull the grace period out from under you. Remember, if your grace period is eliminated, you'll accrue interest from the day you make a purchase. And the only way to avoid this charge would be to pay your bill before you even receive it. This is the most horrible act I've heard, but it yet happened to Singapoeans, I think.
5) Credit Report Blunders - These do happen in real life. But with little diligence on your part, such inaccuracies can be looked into, updated and even removed from your account relatively quickly. If you are sure thats an Error (by keeping records of copies of your purchases, checks and past billing statements) and they still wouldn't bulge in helping you, try finding any authority to investigate your claim AS SOON AS POSSIBLE.
Not that Credit Cards are bad, its just require a little more due diligence prior getting a card and maintaining that card for your own conveniences and benefits, like actually assist in your budgeting by posting monthly statement print statements, etc. While also bolster your image in the eyes of another lender, especially if you consider using credit to establish a firm borrowing history, if you are going to apply for a large line of credit, like mortage or car loan, but overall it depends on one's disciplined to use it responsibly, and productively.
And remember, if you are going to cancel a card, it is best to contact though the Hotline AS SOON AS POSSIBLE and CLOSE THE ACCOUNT rather than going though other means (waiting for them to close the account for you), for this may help to reserve your Credit Score (if such a thing exist).
More trains for commuters
I congratulate SMRT and the Land Transport Authority for introducing more train services to meet the higher demand for public transport. This will reduce the over-crowding and waiting time, and make the journey more pleasant.
I hope that LTA will allow SMRT to introduce more feeder services to bring commuters to the train station. This allows a more integrated service. The feeder services will be easier for commuters to use. I hope that these new feeder services do not make many long loops within the area that they serve.
SBS Transit can continue to provide a competitive service to provide point-to-point journeys.
I hope that LTA officials reading this blog can pass my congratulation and suggestion to your bosses.
I hope that LTA will allow SMRT to introduce more feeder services to bring commuters to the train station. This allows a more integrated service. The feeder services will be easier for commuters to use. I hope that these new feeder services do not make many long loops within the area that they serve.
SBS Transit can continue to provide a competitive service to provide point-to-point journeys.
I hope that LTA officials reading this blog can pass my congratulation and suggestion to your bosses.
Return on Vivolife policies
Catherine Choong posted a detailed posting on Vivolife (i.e. whole life policy with premiums paid for 20 years) in The Online Citizen. She pointed out several benefits of the policy, (which I accept). The main drawback of the policy, in my view, is the somewhat low return to the policyholder at the end of 20 years.
A few weeks ago, a policyholder asked my advice on three Vivolife policies that he bought for his family. I calculated the return on the policies as follows:
The total premium paid for 20 years is shown in (2). If the premium is invested to earn a net yield of 4.5%, the accumulated amount is shown in (3). The expected gain is shown in (4). The cash value of the policy (based on a gross yield of 5.25%) is shown in (5). The gain in cash value is shown in (6).
Assuming a gross yield of 5.25%, the Vivolife policies took away between 58% to 69% of the expected gain, leaving 31% to 42% of the gain to the policyholder. If the gross yield is lower, the value to the policyholder will be even lower.
If the policyholder buy the insurance cover separately, the cost of the cover is likely to be not more than 20% of the expected gain (just my guess). A good adviser will be able to calculate this alternative cost for the customer to make an informed choice.
If these examples do not reflect a true picture of the return on the Vivolife policy, I hope that Caterine Choong will send some other examples to me. I shall be happy to post them here.
Note: I believe that the Vivolife gives better values compared to similar products in the market (although I do not have concrete evidence on this point).
A few weeks ago, a policyholder asked my advice on three Vivolife policies that he bought for his family. I calculated the return on the policies as follows:
1. 2. 3. 4. 5. 6. 7. 8.
Policy Premium Accum Expected Cash Value Gain % Taken
20 yrs @4.5% gain 20 yrs in CV away
Self $29,080 $47,666 $18,586 $34,907 $5,827 31% 69%
Wife $24,340 $39,890 $15,550 $29,478 $5,138 33% 67%
Son $23,420 $38,389 $15,969 $30,234 $6,814 42% 58%
The total premium paid for 20 years is shown in (2). If the premium is invested to earn a net yield of 4.5%, the accumulated amount is shown in (3). The expected gain is shown in (4). The cash value of the policy (based on a gross yield of 5.25%) is shown in (5). The gain in cash value is shown in (6).
Assuming a gross yield of 5.25%, the Vivolife policies took away between 58% to 69% of the expected gain, leaving 31% to 42% of the gain to the policyholder. If the gross yield is lower, the value to the policyholder will be even lower.
If the policyholder buy the insurance cover separately, the cost of the cover is likely to be not more than 20% of the expected gain (just my guess). A good adviser will be able to calculate this alternative cost for the customer to make an informed choice.
If these examples do not reflect a true picture of the return on the Vivolife policy, I hope that Caterine Choong will send some other examples to me. I shall be happy to post them here.
Note: I believe that the Vivolife gives better values compared to similar products in the market (although I do not have concrete evidence on this point).
Give good value products to the people who trust us
POSTED IN ONLINE CITIZEN
http://theonlinecitizen.com/2008/05/the-truth-about-life-insurance/#comment-7789
Dear Catherine Choong
You can read these FAQs to understand why I recommend buy term and invest the difference.
http://www.tankinlian.com/faq/savings.html
http://www.tankinlian.com/faq/
Life insurance is important for a family,but it can be low cost insurance, covering death, accidents and critical illness. I invite readers to read my FAQ to make an informed choice.
http://www.tankinlian.com/faq/choice.html
The remaining savings, invested in a low cost fund, is likely to give an accumulated value that will be more than the face value of the policy at the end of 30 years. The policyholder does not need to die or suffer a critical illness to get this face value. The invested fund is likely to produce this sum.
http://www.tankinlian.com/faq/savings.html
A higher accumulated value in an investment fund (compared to a lower cash value in a life insurance policy) will give more money for the policyholder to spend during his or her retirement years. This is an important function of financial planning that is not well served by a life insurance policy, due to its high cost structure.
Although the return from an investment fund is subject to volatility, it is not a serious matter for a long term investor. This point is covered in my FAQ. A life insurance policy with a high terminal bonus, also provides uncertain cash value, and is less transparent.
The life insurance policy gives a poor return due to the "effect of deduction". This is the huge sum that is taken away from the policyholder to pay the marketing expenses and other charges.
My general analysis is on the life insurance products commonly sold in the market. I believe that the "effect of deduction", in the case of NTUC Income, are lower than the market. It is for you, as the adviser, to tell the policyholder about this lower effect of deduction and demonstrate the value of the Vivolife product.
Someone showed me a benefit illustration for Vivolife. I was surprised that the cash value at the end of 20 years still showed a poor yield. I hope that this is an aberration, and that the yield for most other Vivolife products are better. Perhaps you can show some examples, illustrating the total premiums paid for 20 years, the cash value and the "effect of deduction" for the 20 years.
I have other point about an inflexible life insurance policy that forces the policyholder to continue paying the premiums and imposing a big penalty on early termination. This is not fair to the general public.
During the time that I headed NTUC Income, I declared high annual bonus and provided higher cash value (compared to the market), so that the policyholders who cannot continue the policy does not suffer a large penalty.
I believe that a flexible savings plan invested in a low cost fund is better for the policyholders in this modern time. Many of them are now investing in low cost unit trusts and mutual funds available from other platforms.
I hope that the life insurance industry and advisers can rise to the challenge to give good value products to the large number of people who entrust their future to us.
Tan Kin Lian
http://theonlinecitizen.com/2008/05/the-truth-about-life-insurance/#comment-7789
Dear Catherine Choong
You can read these FAQs to understand why I recommend buy term and invest the difference.
http://www.tankinlian.com/faq/savings.html
http://www.tankinlian.com/faq/
Life insurance is important for a family,but it can be low cost insurance, covering death, accidents and critical illness. I invite readers to read my FAQ to make an informed choice.
http://www.tankinlian.com/faq/choice.html
The remaining savings, invested in a low cost fund, is likely to give an accumulated value that will be more than the face value of the policy at the end of 30 years. The policyholder does not need to die or suffer a critical illness to get this face value. The invested fund is likely to produce this sum.
http://www.tankinlian.com/faq/savings.html
A higher accumulated value in an investment fund (compared to a lower cash value in a life insurance policy) will give more money for the policyholder to spend during his or her retirement years. This is an important function of financial planning that is not well served by a life insurance policy, due to its high cost structure.
Although the return from an investment fund is subject to volatility, it is not a serious matter for a long term investor. This point is covered in my FAQ. A life insurance policy with a high terminal bonus, also provides uncertain cash value, and is less transparent.
The life insurance policy gives a poor return due to the "effect of deduction". This is the huge sum that is taken away from the policyholder to pay the marketing expenses and other charges.
My general analysis is on the life insurance products commonly sold in the market. I believe that the "effect of deduction", in the case of NTUC Income, are lower than the market. It is for you, as the adviser, to tell the policyholder about this lower effect of deduction and demonstrate the value of the Vivolife product.
Someone showed me a benefit illustration for Vivolife. I was surprised that the cash value at the end of 20 years still showed a poor yield. I hope that this is an aberration, and that the yield for most other Vivolife products are better. Perhaps you can show some examples, illustrating the total premiums paid for 20 years, the cash value and the "effect of deduction" for the 20 years.
I have other point about an inflexible life insurance policy that forces the policyholder to continue paying the premiums and imposing a big penalty on early termination. This is not fair to the general public.
During the time that I headed NTUC Income, I declared high annual bonus and provided higher cash value (compared to the market), so that the policyholders who cannot continue the policy does not suffer a large penalty.
I believe that a flexible savings plan invested in a low cost fund is better for the policyholders in this modern time. Many of them are now investing in low cost unit trusts and mutual funds available from other platforms.
I hope that the life insurance industry and advisers can rise to the challenge to give good value products to the large number of people who entrust their future to us.
Tan Kin Lian
Get a quote on your motor insurance
Dear Mr Tan,
1. In 2006 I bought my car insurance from company X and the premium is $4XX
And now i need to renew and the amount is $6XX, which is around $200 more. The
car is now older by two more years and the value is lower by maybe 30%, but the premium increased by 30%. I have 100% clean record for the passed 20 years. Should I still stay royal to this company?
I wonder why such a great increased just two years . Since my car value drop more than 25 to 30% why the premium increased?
REPLY
You should contact other insurance companies and ask for a quote. Read this FAQ
http://www.tankinlian.com/faq/motord.html
The premium on your car depends on the claim experience, and not on the value of the car. Last year, the claims increased significantly and most insurance companies made big losses. They have to increase the premium rate by more than 20% to catch up with the claims.
1. In 2006 I bought my car insurance from company X and the premium is $4XX
And now i need to renew and the amount is $6XX, which is around $200 more. The
car is now older by two more years and the value is lower by maybe 30%, but the premium increased by 30%. I have 100% clean record for the passed 20 years. Should I still stay royal to this company?
I wonder why such a great increased just two years . Since my car value drop more than 25 to 30% why the premium increased?
REPLY
You should contact other insurance companies and ask for a quote. Read this FAQ
http://www.tankinlian.com/faq/motord.html
The premium on your car depends on the claim experience, and not on the value of the car. Last year, the claims increased significantly and most insurance companies made big losses. They have to increase the premium rate by more than 20% to catch up with the claims.
Friday, May 16, 2008
Nominating a beneficiary
Dear Mr Tan
I am single and have no relatives. I went to an insurance company to change my beneficiary but was informed that I cannot nominate someone not related to me. Instead, I was asked to change my beneficiary to my estate and have to write a will. This brings about the following questions:
1. For people with no relatives, is it still necessary to have an insurance policy?
2. Does it mean I have no choice but to engage the services of a lawyer to draw up a will?
3. What is the cost involved to engage a lawyer to do a will.
REPLY
You can leave your policy money to your estate. If you do not have a will, it will be distributed according to the intestate law.
If you wish to write a will, you can use the will writing service provided by NTUC Income. You can get more details from Big Trumpet, www.bigtrumpet.com.sg
I am single and have no relatives. I went to an insurance company to change my beneficiary but was informed that I cannot nominate someone not related to me. Instead, I was asked to change my beneficiary to my estate and have to write a will. This brings about the following questions:
1. For people with no relatives, is it still necessary to have an insurance policy?
2. Does it mean I have no choice but to engage the services of a lawyer to draw up a will?
3. What is the cost involved to engage a lawyer to do a will.
REPLY
You can leave your policy money to your estate. If you do not have a will, it will be distributed according to the intestate law.
If you wish to write a will, you can use the will writing service provided by NTUC Income. You can get more details from Big Trumpet, www.bigtrumpet.com.sg
Collective Protest - Update 16 May
I received 54 signatures today, giving the cumulative total of 270 signatures. I am heartened that the forms contained more signatures. One policyholder collected 7 signatures on the same form, from several families.
Someone sent an e-mail to me yesterday, volunteering to collect signatures at MRT stations over the next two weekends. I advised him that this is not necessary. He should not collect signatures from strangers. I do not want to be accused of creating public disorder.
He was quite worried that I may fail to collect 1,000 signatures, as Singaporeans tend to be self centered. I asked him not to worry.
I have asked many policyholders, including those who submitted the signatures earlier, to get more signatures from their friends and colleagues. If we work together, we can achieve this target. You can also scan the signature form and send to me at kinlian@gmail.com.
Someone sent an e-mail to me yesterday, volunteering to collect signatures at MRT stations over the next two weekends. I advised him that this is not necessary. He should not collect signatures from strangers. I do not want to be accused of creating public disorder.
He was quite worried that I may fail to collect 1,000 signatures, as Singaporeans tend to be self centered. I asked him not to worry.
I have asked many policyholders, including those who submitted the signatures earlier, to get more signatures from their friends and colleagues. If we work together, we can achieve this target. You can also scan the signature form and send to me at kinlian@gmail.com.
ERP Charges
I try to avoid driving to work. I prefer to take the MRT. Sometimes I have to drive, due to the need to visit a few places.
There are some many gantries on many roads. Each time, I pass a gantry, there is a sum deducted from my cash card. I do not know what is the ERP charge. I only need how much cash remains on my cash card.
I suggest that the Land Transport Authority should display the charges on the gantry, next to the sign "ERP in Operation". At least the motorist will know what is the fee.
I understand that separate charges apply to different types of vehicles. Perhaps LTA only needs to display the charges for motor cars and motor cycles, as they are the most frequent road users. The charges for other types of vehicles can be set at a certain ratio to the charge for motor cars.
As the charges vary by time of day, it is only fair that the actual charges should be displayed. I hope that officials of the LTA are reading this blog.
There are some many gantries on many roads. Each time, I pass a gantry, there is a sum deducted from my cash card. I do not know what is the ERP charge. I only need how much cash remains on my cash card.
I suggest that the Land Transport Authority should display the charges on the gantry, next to the sign "ERP in Operation". At least the motorist will know what is the fee.
I understand that separate charges apply to different types of vehicles. Perhaps LTA only needs to display the charges for motor cars and motor cycles, as they are the most frequent road users. The charges for other types of vehicles can be set at a certain ratio to the charge for motor cars.
As the charges vary by time of day, it is only fair that the actual charges should be displayed. I hope that officials of the LTA are reading this blog.
I cancelled my credit card
Some banks and service providers seem to feel that it is their commercial right to impose hefty charges for late payment or other administrative oversight.
A few months ago, I received a letter from a credit card company informing me that the charge for late payment and for insufficient funds is in the order of $30 to $50. This is in addition to their interest of 2% per month. I was so angry that I called the hotline to cancel the credit card. The customer service officer was surprised at my action. He did not seem to understand why I reacted in that manner.
A few months ago, I received a letter from a credit card company informing me that the charge for late payment and for insufficient funds is in the order of $30 to $50. This is in addition to their interest of 2% per month. I was so angry that I called the hotline to cancel the credit card. The customer service officer was surprised at my action. He did not seem to understand why I reacted in that manner.
Read my FAQs
I have more than 20 FAQs in this webpage:
http://www.tankinlian.com/faq/
They cover a wide range of topics and were written over the past year. Most of them are still relevant today. They are educational and fun to read.
I am not able to provide specific advice to the financial planning needs of individual visitors to my blog. It takes too much time, and is really the role of a fee-based Financial Adviser. At best, I can refer them to a specific FAQ.
Try to ready my FAQs and see if you can find the answers to your issues.
http://www.tankinlian.com/faq/
They cover a wide range of topics and were written over the past year. Most of them are still relevant today. They are educational and fun to read.
I am not able to provide specific advice to the financial planning needs of individual visitors to my blog. It takes too much time, and is really the role of a fee-based Financial Adviser. At best, I can refer them to a specific FAQ.
Try to ready my FAQs and see if you can find the answers to your issues.
Uneasy about two insurance products
Mr. Tan,
As I read your blog, I began to feel very uneasy about the two products that I purchased recently. I hope that you could advice me, because I feel apprehensive of what insurance agents are telling me now.
Recently, because of the low fixed desposit interest rate, we invested our hard-earned savings of $40K in a unit trust (100% on GROWTH combined fund). We were also advised by the agent to purchase a life insurance plan VIVOLIFE for my son.
I like your advice on the following:-
a) Is it really necessary for me to insure my son now? Does he needs it anyway?
b) Is the unit trust considered as an "Investment linked policy"?
REPLY
I usually advice parents not to take life insurance for their child. It is not needed. It is better for a parent to save for a child in a low cost investment fund. This is described in the following FAQ:
http://www.tankinlian.com/faq/child.html
Your investment in the Growth Combined Fund is made through a single premium policy, i.e. the Flexi-Link. The upfront charge is 3%. The annual charge is about 1%. I think that these charges are all right. An alternative is for you to invest in the STI ETF (StateStreet Trakker fund), where the upfront and annual charge is 0.3%.
The Flexi Link is an ILP. However, as it is a single premium, the charge is acceptable. You should avoid the regular premium ILP, where the charges are very high.
Read this FAQ:
http://www.tankinlian.com/faq/ilp.html
I hope that they help you to make the right decisions.
As I read your blog, I began to feel very uneasy about the two products that I purchased recently. I hope that you could advice me, because I feel apprehensive of what insurance agents are telling me now.
Recently, because of the low fixed desposit interest rate, we invested our hard-earned savings of $40K in a unit trust (100% on GROWTH combined fund). We were also advised by the agent to purchase a life insurance plan VIVOLIFE for my son.
I like your advice on the following:-
a) Is it really necessary for me to insure my son now? Does he needs it anyway?
b) Is the unit trust considered as an "Investment linked policy"?
REPLY
I usually advice parents not to take life insurance for their child. It is not needed. It is better for a parent to save for a child in a low cost investment fund. This is described in the following FAQ:
http://www.tankinlian.com/faq/child.html
Your investment in the Growth Combined Fund is made through a single premium policy, i.e. the Flexi-Link. The upfront charge is 3%. The annual charge is about 1%. I think that these charges are all right. An alternative is for you to invest in the STI ETF (StateStreet Trakker fund), where the upfront and annual charge is 0.3%.
The Flexi Link is an ILP. However, as it is a single premium, the charge is acceptable. You should avoid the regular premium ILP, where the charges are very high.
Read this FAQ:
http://www.tankinlian.com/faq/ilp.html
I hope that they help you to make the right decisions.
Living Endowment
Dear Sir,
I'm interested to know about the Living Endowment policy. I like to hear from an independent and unbiased views (like your good-self) on the above policy from NTUC rather than from the insurance agents.
The questions are;
> does this policy affected by the bonus change?
> does it fare better than 'Vivolife' or otherwise?
> does this policy give good value to policyholder?
> any other recommendation?
REPLY
I remember the Living Endowment was designed a long time ago. It is an endowment policy which covers critical illness and death.
I do not know how it will be impacted by the change in bonus structure and how they compare with the new plans.
My general advice on financial planning is hown in this FAQ:
http://www.tankinlian.com/faq/savings.html
I'm interested to know about the Living Endowment policy. I like to hear from an independent and unbiased views (like your good-self) on the above policy from NTUC rather than from the insurance agents.
The questions are;
> does this policy affected by the bonus change?
> does it fare better than 'Vivolife' or otherwise?
> does this policy give good value to policyholder?
> any other recommendation?
REPLY
I remember the Living Endowment was designed a long time ago. It is an endowment policy which covers critical illness and death.
I do not know how it will be impacted by the change in bonus structure and how they compare with the new plans.
My general advice on financial planning is hown in this FAQ:
http://www.tankinlian.com/faq/savings.html
Persevere
Dear Sir,
After going through your blog, I really admire your integrity. During the negative publicity of IDAC, so much injustice has been done to you.
Somehow, I could recall that, during the 50's and 60's, whoever is a champion of the man in the street, will be labeled as communist. When you try to bring down the motor insurance rate, so much bad publicity of IDAC is published.
Mr Tan!, persevere, God Bless
GW
After going through your blog, I really admire your integrity. During the negative publicity of IDAC, so much injustice has been done to you.
Somehow, I could recall that, during the 50's and 60's, whoever is a champion of the man in the street, will be labeled as communist. When you try to bring down the motor insurance rate, so much bad publicity of IDAC is published.
Mr Tan!, persevere, God Bless
GW
Policies with high terminal bonuses
Hi Mr Tan,
I heard about your collective protest on the recent changes in Income's bonus structure. I am not a par fund policyholder but I principally do not agree with such bonus structures in the market. They have the risks of investment-linked plans but do not offer the transparency and much value to policyholders.
I have managed to collate some simple statistics from MAS returns on fund solvency and investment allocations, which may help you build your case. We can clearly see that those companies using the "terminal bonus" strategy has very high solvency ratios, yet I wonder why they do not invest more in equities or vest more of the returns on their policyholders?
Hope it helps. Good luck.
T
I heard about your collective protest on the recent changes in Income's bonus structure. I am not a par fund policyholder but I principally do not agree with such bonus structures in the market. They have the risks of investment-linked plans but do not offer the transparency and much value to policyholders.
I have managed to collate some simple statistics from MAS returns on fund solvency and investment allocations, which may help you build your case. We can clearly see that those companies using the "terminal bonus" strategy has very high solvency ratios, yet I wonder why they do not invest more in equities or vest more of the returns on their policyholders?
Hope it helps. Good luck.
T
Investing in Foreign Currency Deposits
Dear Mr. Tan,
What do you think about foreign currency fixed deposts that pay about 7% to 8%? I am of investing in NZ$ and A$. The money has been in the saving account for quite some time.
REPLY
I have a lot of my own money invested in AUD and NZD. I like the high interest rate. I hope that the currency will be stable, but this is a risk that the investor has to take.
Read this FAQ:
http://www.tankinlian.com/faq/foreign.html
All the best to you!
What do you think about foreign currency fixed deposts that pay about 7% to 8%? I am of investing in NZ$ and A$. The money has been in the saving account for quite some time.
REPLY
I have a lot of my own money invested in AUD and NZD. I like the high interest rate. I hope that the currency will be stable, but this is a risk that the investor has to take.
Read this FAQ:
http://www.tankinlian.com/faq/foreign.html
All the best to you!
Managed Care
I have agreed to present a paper to a conference on "managed care". It is targetted at human resource managers.
Why are HR managers interested in "managed care"? They find the cost of providing medical benefits to employees for both outpatient and in-hospital treatment, to be increasing over the years. They hope that "managed care" can help to slow down the increase.
What is "managed care"? Under managed care, the insurance company is more active in managing the costs of treatment, e.g. to make sure that the patient gets the right treatment, avoid overcharging by the providers, avoid abuses, and most importantly, to keep the employees healthy.
If the costs can be managed, the employer pays a lower premium for the medical benefits next year. The HR manager will get a better performance rating!
Why are HR managers interested in "managed care"? They find the cost of providing medical benefits to employees for both outpatient and in-hospital treatment, to be increasing over the years. They hope that "managed care" can help to slow down the increase.
What is "managed care"? Under managed care, the insurance company is more active in managing the costs of treatment, e.g. to make sure that the patient gets the right treatment, avoid overcharging by the providers, avoid abuses, and most importantly, to keep the employees healthy.
If the costs can be managed, the employer pays a lower premium for the medical benefits next year. The HR manager will get a better performance rating!
International Health Plan
Dear Mr. Tan,
My work requires me to travel around the Asian region and to visit many cities. If I fall sick in any city, how can I get medical treatment? Is there an international plan that provides wide coverage?
REPLY
A few international insurance companies offer this type of plan. It offers access to a large number of hospitals around the world and pays for the cost of medical treatment (except for a small co-payment).
In the globalised world, more people are working in other countries. Many Singaporeans are now working overseas. Many expatriates work in Singapore. There is a need for this type of international health plan.
Apart from paying the bills, these international plans provide easy access to the quality hospital. For example, they know which is a good hospital to be admitted and will pay the bill. It is "cashless payment" for the customer.
If you do not have an international health plan, you have the option to fly back to Singapore and be treated here and be covered by the Shield plan. This may be suitable for non-emergency situations.
My work requires me to travel around the Asian region and to visit many cities. If I fall sick in any city, how can I get medical treatment? Is there an international plan that provides wide coverage?
REPLY
A few international insurance companies offer this type of plan. It offers access to a large number of hospitals around the world and pays for the cost of medical treatment (except for a small co-payment).
In the globalised world, more people are working in other countries. Many Singaporeans are now working overseas. Many expatriates work in Singapore. There is a need for this type of international health plan.
Apart from paying the bills, these international plans provide easy access to the quality hospital. For example, they know which is a good hospital to be admitted and will pay the bill. It is "cashless payment" for the customer.
If you do not have an international health plan, you have the option to fly back to Singapore and be treated here and be covered by the Shield plan. This may be suitable for non-emergency situations.
Cover for Natural Disasters
Dear Mr. Tan
Does a life insurance policy cover death by earthquake, such as happened in Sichuan? I am told that "acts of God" are excluded. Is earthquake considered an "act of God"?
REPLY
A life insurance policy, e.g. whole life, endowment or term insurance policy, covers death by earthquake and other natural disasters. It actually covers death from all causes, except for suicide during the first year.
Natural disasters are usually excluded for property insurance, i.e. insuring your home, factory, shop or motor vehicle. These natural disasters are specifically excluded in the policy, e.g. earthquake, windstorm, volcanic eruptions, etc. You can buy specific cover for these events by paying an additional premium.
I am not sure if these natural disasters are excluded from personal accident insurances. You have to enquire about it. It is better to pay a slightly higher premium and have these events included in the cover.
The terms "act of God" or "natural disaster" are not specifically used in the policy. The specific events are named in the Exclusion clause.
Does a life insurance policy cover death by earthquake, such as happened in Sichuan? I am told that "acts of God" are excluded. Is earthquake considered an "act of God"?
REPLY
A life insurance policy, e.g. whole life, endowment or term insurance policy, covers death by earthquake and other natural disasters. It actually covers death from all causes, except for suicide during the first year.
Natural disasters are usually excluded for property insurance, i.e. insuring your home, factory, shop or motor vehicle. These natural disasters are specifically excluded in the policy, e.g. earthquake, windstorm, volcanic eruptions, etc. You can buy specific cover for these events by paying an additional premium.
I am not sure if these natural disasters are excluded from personal accident insurances. You have to enquire about it. It is better to pay a slightly higher premium and have these events included in the cover.
The terms "act of God" or "natural disaster" are not specifically used in the policy. The specific events are named in the Exclusion clause.
Thursday, May 15, 2008
Reduce commuting - view from NZ
Dear Mr. Tan,
I read your article titled "Reducing commuting time - national effort needed" in The Online Citizen. Here Are my observations, based on my working experience in both Spore and NZ:
1) When I was in Spore, I subscribed to the idea of buying a flat. With that, I lost the freedom to live near my work place which changes on average once every few years. I spent between 1 to 1.5 hours commuting one way daily, and it's not a pleasant journey because of the crowded public transport.
2) Since I do not plan to live for the long term in NZ, I'm renting now, and I managed to find an apartment that's a 5 mins walk from my office, right at the heart of the city. It's very convenient with everything within 15 mins walking, and many people are quite surprised to learn that I don't own a car here. One problem though, rental can fluctuate a lot, I was recently hit by a 25% increment. I believe it's the same situation in Spore.
3) Living near one's work place has many benefits, for example, more sleep, less stressful commuting, better concentration and productivity at work. A healthier lifestyle too, because I can go home for lunch instead of eating out (the cost saving is not significant in Spore's context, but it makes sense in NZ). Not to forget the savings in transport cost, as mentioned in your article. A lot of things can happen in a 1 to 1.5 hrs commute, eg. MRT break down, accident on the road causing massive jams, which add to the stress(knowing one will be late for work).
4) For the majority of Singaporeans, it probably makes more financial sense to buy a HDB flat at the 2.5% mortgage rate, because it makes the mortgage payment very affordable than the average rental. In NZ, the mortage rate is over 9%, so renting can be more attractive.
5) The differences in the culture, especially in the mindset of most employers. In the 3 jobs I have held in Spore, most of the time I'm expected to be on call 24/7, this is very disruptive to my personal life. In NZ, although I'm in the same line, the expectation is 40 hours a week, and it's up to us to adjust our daily hours. I tend to believe that Sporean employers need to see their employees working at their desks in the office, and one feels uneasy to leave on the dot. Telecommuting is also very common in NZ. People work from home at times for various reasons, like to take care of their children.
It's a pity that the public transport in Auckland is not very well implemented and expensive, low demand leads low frequency. Even so, the buses seldom reach their full seating capacity. If only they are better, I'll definitely live in the suburbs.
HL
I read your article titled "Reducing commuting time - national effort needed" in The Online Citizen. Here Are my observations, based on my working experience in both Spore and NZ:
1) When I was in Spore, I subscribed to the idea of buying a flat. With that, I lost the freedom to live near my work place which changes on average once every few years. I spent between 1 to 1.5 hours commuting one way daily, and it's not a pleasant journey because of the crowded public transport.
2) Since I do not plan to live for the long term in NZ, I'm renting now, and I managed to find an apartment that's a 5 mins walk from my office, right at the heart of the city. It's very convenient with everything within 15 mins walking, and many people are quite surprised to learn that I don't own a car here. One problem though, rental can fluctuate a lot, I was recently hit by a 25% increment. I believe it's the same situation in Spore.
3) Living near one's work place has many benefits, for example, more sleep, less stressful commuting, better concentration and productivity at work. A healthier lifestyle too, because I can go home for lunch instead of eating out (the cost saving is not significant in Spore's context, but it makes sense in NZ). Not to forget the savings in transport cost, as mentioned in your article. A lot of things can happen in a 1 to 1.5 hrs commute, eg. MRT break down, accident on the road causing massive jams, which add to the stress(knowing one will be late for work).
4) For the majority of Singaporeans, it probably makes more financial sense to buy a HDB flat at the 2.5% mortgage rate, because it makes the mortgage payment very affordable than the average rental. In NZ, the mortage rate is over 9%, so renting can be more attractive.
5) The differences in the culture, especially in the mindset of most employers. In the 3 jobs I have held in Spore, most of the time I'm expected to be on call 24/7, this is very disruptive to my personal life. In NZ, although I'm in the same line, the expectation is 40 hours a week, and it's up to us to adjust our daily hours. I tend to believe that Sporean employers need to see their employees working at their desks in the office, and one feels uneasy to leave on the dot. Telecommuting is also very common in NZ. People work from home at times for various reasons, like to take care of their children.
It's a pity that the public transport in Auckland is not very well implemented and expensive, low demand leads low frequency. Even so, the buses seldom reach their full seating capacity. If only they are better, I'll definitely live in the suburbs.
HL
Collective Protest - Update 15 May
I have just returned from a 4 day business trip to Jakarta. After clearing my stack of incoming mail, I have now obtained a total of 210 signatures for the Collective Protest. It is quite tedious work as many of the forms contain only 1 or 2 signatures.
There are many individual messages of support from policyholders. I apologise for not being able to reply to you individually.
Some of the sigantures are now being sent by pdf to me at kinlian@gmail.com. A few forms contained many signatures (which is what I need most!)
I hope that those who have responded earlier to me, can help to get more signatures from your family, friends and colleagues. You can scan and send by e-mail to me. I need your help to achieve the target of 1,000 signatures by 25 May (which is just 10 days away).
There are many individual messages of support from policyholders. I apologise for not being able to reply to you individually.
Some of the sigantures are now being sent by pdf to me at kinlian@gmail.com. A few forms contained many signatures (which is what I need most!)
I hope that those who have responded earlier to me, can help to get more signatures from your family, friends and colleagues. You can scan and send by e-mail to me. I need your help to achieve the target of 1,000 signatures by 25 May (which is just 10 days away).
Inconsiderate Practices
I have encountered many businesses with these inconsiderate practices:
1. Detailed survey form containing more than 30 questions
2. Do not reply to your feedback or questions, submitted through their feedback channel.
These businesses are not genuinely interested in their customers. They only want to make a "show".
Some businesses require a lot of details to be provided in their business form and website forms. They take a long time to complete. Often, several of the information are not necessary for the transaction. It creates an unncessary hassle for the customer.
1. Detailed survey form containing more than 30 questions
2. Do not reply to your feedback or questions, submitted through their feedback channel.
These businesses are not genuinely interested in their customers. They only want to make a "show".
Some businesses require a lot of details to be provided in their business form and website forms. They take a long time to complete. Often, several of the information are not necessary for the transaction. It creates an unncessary hassle for the customer.
Low cost Investment Linked Policy
Dear Mr. Tan
You mentioned few attributes of good financial products, can you recommend specially those available in the market? I received a brochure from an insurance company that sells a financial product that is similar to what you mentioned, low fee. What do you think of that?
REPLY
You have to check the "allocation rates" of the investment linked policy, which is a form of upfront charge.
Read this FAQ:
http://www.tankinlian.com/faq/ilp.html
You mentioned few attributes of good financial products, can you recommend specially those available in the market? I received a brochure from an insurance company that sells a financial product that is similar to what you mentioned, low fee. What do you think of that?
REPLY
You have to check the "allocation rates" of the investment linked policy, which is a form of upfront charge.
Read this FAQ:
http://www.tankinlian.com/faq/ilp.html
Term Insurance
1) For term insurance, does the insurance company take into account the health condition of the insured?
Reply: The life insurance company will increase the premium rate for a person who is in poor health. The standard rate apply to a healthy person.
2) I've bought a 10-year term insurance in place of a mortagage insurance just to cover my loan in case of mishap. But i've read somewhere that term insurance should be around 20 - 25 years, is my 10-year term, which is in line with my loan tenure, too short? I'm almost 40.
Reply: It is all right to buy a term insurance policy for the duration to cover a mortgage loan. You can buy a separate term insurance policy to cover the loss of earnings up to, say ,age 65 years.
Reply: The life insurance company will increase the premium rate for a person who is in poor health. The standard rate apply to a healthy person.
2) I've bought a 10-year term insurance in place of a mortagage insurance just to cover my loan in case of mishap. But i've read somewhere that term insurance should be around 20 - 25 years, is my 10-year term, which is in line with my loan tenure, too short? I'm almost 40.
Reply: It is all right to buy a term insurance policy for the duration to cover a mortgage loan. You can buy a separate term insurance policy to cover the loss of earnings up to, say ,age 65 years.
Buy a life annuity later
Dear Mr. Tan,
I am 48 yr of age. I am comtemplating to buy an annuity now, the payout to start from, maybe 55 or 60 yrs onwards. I found the payout be be exceedingly low. For a $100K annuity, the guarantee payout is about $400 per month plus an non-guaranteed amount for the rest of the life. A little calculation shows the breakeven for the investment is about 25 to 30yrs, hardly seemed worthwhile, not factoring inflation yet. May I have your advise on the investment?
REPLY
I suggest that you invest in a low cost investment fund for the next 10 to 20 years and find a right time, when the market is high, to convert into a life annuity when you are older, say from age 60 to 70 years.
Read this FAQ:http://www.tankinlian.com/faq/savings.html
I am 48 yr of age. I am comtemplating to buy an annuity now, the payout to start from, maybe 55 or 60 yrs onwards. I found the payout be be exceedingly low. For a $100K annuity, the guarantee payout is about $400 per month plus an non-guaranteed amount for the rest of the life. A little calculation shows the breakeven for the investment is about 25 to 30yrs, hardly seemed worthwhile, not factoring inflation yet. May I have your advise on the investment?
REPLY
I suggest that you invest in a low cost investment fund for the next 10 to 20 years and find a right time, when the market is high, to convert into a life annuity when you are older, say from age 60 to 70 years.
Read this FAQ:http://www.tankinlian.com/faq/savings.html
Monday, May 12, 2008
Travel and term insurance
Dear Mr Tan
Even though you have retired, you still make yourself available for help for those who need you.
For my family year end vacation, I usually purchase travel insurance from either AIA or NTUC. Can I buy both? Is it an offence to do so?
When someone buy life or term insurance for many years, will the insurance firm pay when he is sentenced to death for capital offences?
Many American insurance websites offer cheap term life from reliable insurance firms. Can Singaporeans purchase these insurance? Is there any laws prohibiting us to buy from them?
REPLY
There is no point to buy travel insurance from two insurance companies. You can only claim for the actual amount of the loss. You cannot claim two times, even though you pay two premiums for travel insurance.
A term or life insurance policy pays for death from any reason, except for suicide in the first year. The family can claim for the death benefit on a term or life insurance policy for a person who is sentenced to death for capital punishment.
You can buy term insurance from the American website. Be sure that you have checked the reliability of the insurance firm. However, you may find some difficulty in making a claim due to difference in law. It is better to buy term insurance from a Singapore insurance company, even if the premium is slightly higher.
Even though you have retired, you still make yourself available for help for those who need you.
For my family year end vacation, I usually purchase travel insurance from either AIA or NTUC. Can I buy both? Is it an offence to do so?
When someone buy life or term insurance for many years, will the insurance firm pay when he is sentenced to death for capital offences?
Many American insurance websites offer cheap term life from reliable insurance firms. Can Singaporeans purchase these insurance? Is there any laws prohibiting us to buy from them?
REPLY
There is no point to buy travel insurance from two insurance companies. You can only claim for the actual amount of the loss. You cannot claim two times, even though you pay two premiums for travel insurance.
A term or life insurance policy pays for death from any reason, except for suicide in the first year. The family can claim for the death benefit on a term or life insurance policy for a person who is sentenced to death for capital punishment.
You can buy term insurance from the American website. Be sure that you have checked the reliability of the insurance firm. However, you may find some difficulty in making a claim due to difference in law. It is better to buy term insurance from a Singapore insurance company, even if the premium is slightly higher.
Sunday, May 11, 2008
Blog: Suggestions for improvements
I am posting suggestions for improvements through my blog. There are directed at various organisations, such as:
Starhub
Central Depository (CDP) or Singapore Exchange
Land Transport Authority
DBS
... and others
I hope that some employees of these organisations read my blog and will bring it up to their management. You can take it as your own suggestion. Let us together, reduce wastefulness, reduce cost and improve service.
I invite other readers to send their suggestions for improvements for posting in my blog. I also invite the respective organisations to send a reply to me for posting in my blog.
Starhub
Central Depository (CDP) or Singapore Exchange
Land Transport Authority
DBS
... and others
I hope that some employees of these organisations read my blog and will bring it up to their management. You can take it as your own suggestion. Let us together, reduce wastefulness, reduce cost and improve service.
I invite other readers to send their suggestions for improvements for posting in my blog. I also invite the respective organisations to send a reply to me for posting in my blog.
Suggestions for Central Depository (CDP)
At present, the CDP sends 2 statements for each share transaction. They arrive a few days after the transaction and are usually ignored. It is perhaps cheaper for them to send the details by SMS or e-mail, and save on the cost of mailing and postage. The stockbroker also send their statements, which is another layer of duplication.
I hope that CDP and the stockbrokers can work together to reduce the wastage in reporting on the share transactions. Immediate notification can be done by SMS or email. The other details can be sent in a monthly statement.
I hope that CDP and the stockbrokers can work together to reduce the wastage in reporting on the share transactions. Immediate notification can be done by SMS or email. The other details can be sent in a monthly statement.
Wastefulness
Starhub sends a self -addressed pre-paid envelope to their customers, even for those who pay through GIRO. The envelope is hardly used. It goes into the waste bin. I hope that Starhub will reduce this wastefulness, and maybe reduce their charges for customers.
Different access numbers for hotlines
Whenever I call Starhub, I am asked for the language (2 options) and the type of service (3 options).
It will be helpful if Starhub can give 6 different access numbers, so that it will be directly straight to the 6 groups of hotline staff (and avoid making the customer waste time to listen and press button two times).
The specific number can be given to the customer according to their type of service and language preference.
It will be helpful if Starhub can give 6 different access numbers, so that it will be directly straight to the 6 groups of hotline staff (and avoid making the customer waste time to listen and press button two times).
The specific number can be given to the customer according to their type of service and language preference.
Collective Protest - update at 11 May
I received about 60 envelopes with 107 signatures this morning. Thank you for your support.
Most signature lists contain just 1 or 2 signatures. It will be helpful if you can round up your neighbours, work colleagues and friends and fill up the signature page (or several pages) before you mail them to me. This will save on the work of individual persons and reduce the number of envelopes and postages. It will also reduce my work.
Alternatively, you can scan the signature list and e-mail to kinlian@gmail.com
Most signature lists contain just 1 or 2 signatures. It will be helpful if you can round up your neighbours, work colleagues and friends and fill up the signature page (or several pages) before you mail them to me. This will save on the work of individual persons and reduce the number of envelopes and postages. It will also reduce my work.
Alternatively, you can scan the signature list and e-mail to kinlian@gmail.com
Earn a good yield on Medisave
Dear Mr. Tan,
Someone told me that you recommend paying premium for Shield out of pocket, instead of Medisave. You also said to pay the co-payment using cash, instead of claiming against Medisave. Why?
REPLY
If you have the cash, it sits in the bank earning less than 1% per annum. You can use it to pay the Shield premium and the co-payment (for hospitalisation).
If you do not touch your Medisave savings, it will earn interest at 4% plus 1% bonus, making a total of 5%. This is a good yield.
You will need your Medisave savings to pay for the insurance premium and hospital co-payments when you grow old. If you do not use it, the excess, above the cap, can be transferred into your retirement account to be paid out monthly.
The Medisave account is a good form of investment earning 5% without any risk.
Read this FAQ for more explanation:
http://www.tankinlian.com/faq/shield.html
Someone told me that you recommend paying premium for Shield out of pocket, instead of Medisave. You also said to pay the co-payment using cash, instead of claiming against Medisave. Why?
REPLY
If you have the cash, it sits in the bank earning less than 1% per annum. You can use it to pay the Shield premium and the co-payment (for hospitalisation).
If you do not touch your Medisave savings, it will earn interest at 4% plus 1% bonus, making a total of 5%. This is a good yield.
You will need your Medisave savings to pay for the insurance premium and hospital co-payments when you grow old. If you do not use it, the excess, above the cap, can be transferred into your retirement account to be paid out monthly.
The Medisave account is a good form of investment earning 5% without any risk.
Read this FAQ for more explanation:
http://www.tankinlian.com/faq/shield.html
Term and critical illness
Dear Tan Kin Lian,
Beside accidental, natural death and Total Permanent Disability, does Term Life Insurance cover the 36 critical Illness?Example: If someone purchase Term Life Insurance and unfortunately he die because of kidney failure (one of the 36 critical Illnesses).
REPLY
Term insurance pays on death for all causes, including death from all the critical illnesses (i.e. natural death).
A critical illness policy pays immediately on the covered critical illness (i.e. does not need to wait until death occurs). Hence, the critical illness pays earlier. The money can be used to treat the critical illness. The premium for cricial illness is higher than for term insurance, usually by about 50%.
If you are covered under a medical insurance policy, which can take care of the treatment of critical illness, you can buy a term insurance to cover death (instead of a critical illness policy).
Beside accidental, natural death and Total Permanent Disability, does Term Life Insurance cover the 36 critical Illness?Example: If someone purchase Term Life Insurance and unfortunately he die because of kidney failure (one of the 36 critical Illnesses).
REPLY
Term insurance pays on death for all causes, including death from all the critical illnesses (i.e. natural death).
A critical illness policy pays immediately on the covered critical illness (i.e. does not need to wait until death occurs). Hence, the critical illness pays earlier. The money can be used to treat the critical illness. The premium for cricial illness is higher than for term insurance, usually by about 50%.
If you are covered under a medical insurance policy, which can take care of the treatment of critical illness, you can buy a term insurance to cover death (instead of a critical illness policy).
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