Bad experience with life insurance policies bought by the parents

This consumer had bad experience with the life insurance policies that were bought by his parents. 

1. What financial product did you buy

My parents bought 2 whole life insurance policies as well as a savings plan from 3 different insurance companies for me. These  policies were cover critical illnesses, hospitalization bills and give small dividends of about $3000 every 6 years.

In the end, we still made a loss of about $12000 from each policy after cashing them out.

2. Was it good or bad for you?

We initially thought the policies were good since it gave plenty of coverage (critical illness, disability, hospitalization) for a premium of about $75 per month, back in 1995. However, the premium of each policy has since increased to be about $200+ per month. When we questioned the insurance company on why the premiums increased when we were promised back in 1993 that we would only pay $35 throughout the life span of the policy, the insurance company cited "market reasons" as the main factor for the increase in monthly premium. 

My family decided to cash out on most of the policies during the 20th year in 2013, when I was 26 years old. We lost about $12000 from each policy. 

The original agent who sold us the policy could no longer be contacted as she was no longer working in the company. Throughout the lifespan of some of the insurance policies, some our insurance agents were replaced several times by another insurance agent, making it very difficult to have a fixed contact person to look up to should we have any issues. Insurance agents in Singapore have no fiduciary requirement to their clients and therefore, can just ignore their clients after selling the policies to them. My mum even met insurance agents who became disinterested in answering my mum's questions after they had sold her the policies.

3. Would you have bought it, if you knew what it really was?

We would not have bought the policies if we knew that the premiums would increase by than nearly 10 times within a span of only 15 years! 

Critical illness coverage is nearly useless for a young person like me because the chances of a young person contracting critical illness is nearly zero. If my mum had knew this, she would NOT have bought the policies!

4. Did you continue or terminate it, and did you make a loss up to now (based on the cash value)?

We terminated most of the policies in the last few years as we did not want to continue paying $200+ per month per policy. This was a very huge strain on our financial resources, especially during the period when both my parents were unemployed. 

At one point in time, we even had to pawn some of our jewelery just to pay for the policies. The people running these insurance companies have no conscience and do not care about the welfare of their customers. They are only interested in getting their monthly premiums from common folk like us in order to fund their lavish lifestyles.

5. Would you like to attend a talk to learn about alternative ways to invest that are good for the buyers?

Yes, I would like to attend more talks to learn about alternative ways to invest. Do not trust anyone to invest for your money for you, especially when you do not know what they actually do with your money. In my opinion, learning about investment is a MUST for everyone.

HZW

Comparing three generations of leaders of Singapore

An ex Director of the Internal Security Department made this comparison between the first, second and third generation leaders of Singapore. I agree with his analysis. 
http://www.tremeritus.com/…/ex-isd-dir-compares-pm-lees-te…/

Challenge the corrupt policeman

We hear many stories about how the Police harass Singapore car owners for traffic offences on Malaysian roads in order to receive bribes.

My friend told me this story. He was stopped by the Police for driving above 110 kph. The policeman said that the fine is 150 ringgit but he could pay less "on the spot". My friend replied, "You have my particulars. Send the fine to me and I will pay it". He spent only 10 minutes in the police station.

He never received the fine. The policeman was too lazy to key the particulars into their computer system. He was only interested to receive the bribe "on the spot". Perhaps the policeman was afraid that my friend would report the attempt to collect the bribe.

How the civil service works

Someone said that this is how the civil service works:

Quote:
Do you know how government make decisions whether it’s regarding what to teach, interest rates, defense, welfare all the stuff that impacts you? Middle management hears a statement from a minister and tries to guess what he means. Doesn’t want to ask in order not to look stupid. He doesn’t know what to do, so he asks the most junior guy to write a paper. The junior guy does his best and the paper floats up to his head, it bounces back an forth a few times between them, then it bounces to a director then a few times with another higher up. There are many layers. By then, it is morph into something completely different and it gets implemented. A senior guy once told me that writing papers and second guessing your boss correctly is key to success. Practical experience, actual care for serving the interest of Singaporeans actually a detriment.”
Unquote:

The Watchman said...

Today all these whole life, endowment products border on scam and they are meant for insurance agents to make a living OFF you and to leave you under insured because you can't afford more. Why is FAIR necessary? because insurance agents are not interested to put your interest first because they are only interested in their own pockets and insurers love these agents because they bring cheap money for the insurers. FAIR's objective is to address this problem and to get rid of these agents.
You are better off buying term insurance and invest the difference.
Go to www.comparefirst.sg to check out before buying directly from the insurers . You get good deal because you don't pay commission to anyone.
Example: to insure yourself for $400K for death, TPD and critical illness until age 65 the annual premium is only $1018. This is from AXA insurance.
Buy this plan and for this amount of coverage you DON"T need another one for a very long time. It serves you till when you are married with kids.If CI or TPD strikes you first you can claim $400K and if death follows your dependants can claim another $400K and all for a premium of $1018. If you have a coverage like this, compared to $180K, I am sure you will have peace of mind and not pieces of mind which insurance agents deliberately , knowingly plan it for THEMSELVES and NOT YOU because they can have excuses to "REVIEW" your insurance needs in the future. They know the $180K is NOT enough and they create this future business opportunity for themselves to "review". To them 'review' means to sell you another policy. And with $400K coverage it will be a long time before you need a review, ie. you are adequately covered for your dependants' need if you should pass away prematurely and for your medical needs in the event of a CI. So visit www.comparefirst.sg to evaluate before making any decision.
I will post and show you why buy term invest the rest is a superior strategy than buying all those crap whole life and endowment products.I will show you great coverage at low premium and great return.. Remember , COST is the greatest enemy of return and wealth besides INFLATION.

Is it safe to leave deposit with foreign based banks?

Mat Alamak
Is it less safe, as compared to a local bank, to put even a fixed deposit in a foreign based bank here, eg one from Malaysia? Some of these banks are giving very attractive interest rates, even upfront whole interest payment some more. Whereas the local banks are paying comparatively much lower rates even for fixed deposit, and this can make a big difference in interest (even up to 4 figures) for those with big deposit sums.

REPLY
If the bank is licensed in Singapore, the depositor enjoys the same protection as local banks for a sum of up to $50,000. If you have more than this sum, you can place them in deposits of $50,000 in each bank, to enjoy the full protection. Read this FAQ for more detail.

The foreign banks are able to pay higher interest rates because they do not have a deposit base of low cost funds provided by their depositors.

Civil servants who do not take responsibility

A member sent a motion for discussion at the AGM of the Consumer Association of Singapore (CASE). He forwarded a copy to me.

He had raised the issue of the non-licensing of private schools for more than 10 years. He felt that it should be the duty of the Ministry of Education to licensed these schools and ensure that they kept to minimum standards.

In his motion, he mentioned the names of several MOE officials that refused to reply to his communication over the years. They ignored him.

This seems to be the pattern of our civil service nowadays - do not take responsibility, and refused to give a reply.Why has our civil service, under PM Lee, deteriorated to such a deplorable state?

Vivolife 180 - is it a good policy?

Hi Mr. Tan,

May I please seek your opinion - I am 28 years old and am planning to buy Vivolife 180 and pay an annual premium of $5,919 over 5 years only to get a coverage of $100,000 for death, total permanent disability, and 30 critical illnesses. NTUC tops up the coverage to $180,000 until the age of 69. I have attached the benefit illustration.

Do you think this is an attractive whole life policy?

I am not so keen on term life insurance. I also prefer finishing paying the premium of my life insurance over a short period (in this case 5 years). Hence I am considering this policy. I intend to invest my other assets in other investment forms to generate yields (Equities, bonds, etc.).

My reply is given in the attached PDF.

Perverse use of "sub judice"

Kenneth Jeyaretnam explains the concept of "sub judice" and points out that the Attorney General had used it "preversely". Read his article here.

Unnecessary and wasteful activities to "calibrate" subsidies

All the unnecessary work and trouble, just because somebody wants to "calibrate" the subsidy according to household income and type of housing. The actual amount is quite small but the cost of the work is probably a lot.

http://www.channelnewsasia.com/…/deadline-ext…/1927164.html…

When will Singapore get rid of these wasteful activities and focus on reducing cost for the people?

Life insurance agents are poorly trained - from the horse's mouth

Hi Mr Tan,
I saw your post on Facebook regarding insurance agent being poorly trained. I absolutely agree with your post. Being an agent myself, I notice several things thought doing agent and product training.

They are,
1) We are taught  that by selling some of the products, we are helping people to diversify their portfolio and hedged against inflation , ie ILP and  Savings Plan
2) Most of the product training only covers the good part and not the disadvantages. We are taught , the policies are for long term.
3)We are taught, we are the guardian angel as we are helping people. This is true, if we sell term policies.
4) We have KPI and sales target to meet, which to me contradicts point 3.

Thank You

(name removed).

Weak property market

Property developers in China had gone through a difficult time. They had high inventory of unsold houses and are now offering big discounts to sell their new properties. Will property developers in Singapore face the same pressure over the next few years?

http://www.bloomberg.com/news/articles/2015-06-17/buy-a-flat-get-a-free-porsche-as-china-developers-rush-to-sell

Host countries usually win more gold medals

The Jakarta Post showed the number of gold medals won by Indonesian during the recent SEA Games. They won 45 gold medals at the 2015 games in Singapore. But in 2011, when the SEA games were held in Palembang, Indonesia they won over 200 gold medals.

It seems that the host country usually wins more gold medals than usual. I was told that the host country could decide on the games to be played, and they chose the games where they are expected to do well.

Convert cleared land as parks

When Jokowi was governor of Jakarta, he cleared the squatters living around Pluit Reservoir in a North Jakarta. The cleared areas were converted into parks and sports play ground for use by the public. He chose not to sell the land for development which could bring a lot of money for the Jakarta government. That was a wise decision. It avoided demands from the cleared squatters for compensation.

The new governor Ahok developed six islands through reclamation in the sea off Jakarta. That brought in the funds for the city.

Company drivers

Many companies in Jakarta employ drivers for their company cars and for the managers. The salary of a driver is around $300. This is 10% of the cost of a manager.
The manager does not have to worry about driving in the congested roads in Jakarta or in finding a parking space. This is the job of the driver.
The drivers are able to find employment. They usually earn more due to overtime and tips.
It works as a win-win arrangement.

Salary of Prime Minister

Dear Mr tan 

I am a Singaporean this year 24, i am not happy with prime minister salary. Something must be wrong, Japan is richest than singapore, the prime minster is Shinzo Abe. Japan population rate is 127 million and Singapore population rate is 5.4 million

Japan prime minister salary is around usd 30,000 per month ( 127 million population ) Singapore prime minister salary is around usd183,000 person ( 5.4 million population )

I have a question 

1) Are Singaporean are going to pay more tax for the prime minister salary because japan have 127 million population and Singapore have 5.4 million?

2) Why there the cleaner job is usd 3000? than sSngaporean cleaner job is usd1000?

REPLY

1) The tax that Singaporeans have to pay is not affected by the salary of the prime minister. The prime minister gets $2 million a year. As there are 5.5 million people in Singapore, the cost to each taxpayer is less than $1 a year. But if we add the total cost of the government, and include the salaries of the ministers, members of parliament and the top civil servants, then the cost to the taxpayer could be more of a burden - but still not that serious. 

2)  Many countries (not only Japan) pay their manual workers quite well. Singapore pay our manual workers quite poorly. We should pay more.

 

Handling corruption in China

I heard this story about Robert Kuok who was the "sugar king" and the founder of the Shangri-la Hotel Group. He was among the first entrepreneurs to venture into China in the very early days .

I asked a friend who worked for RK. How did RK handle the rampant corruption in China at that time? Did he have to give bribes?

He told me this story. RK developed a golf course in Guangzhou. During the development, his manager had to get a licence from the provincial officer. The official asked his manager, "How many free golf course membership will you give to me in return for my signature?".

His manager approached RK who instructed him "You tell the provincial official that I can give him the free golf club memberships, but will he dare to accept them?".

The provincial official checked with his friends and learned that RK knew the top government officials in Beijing. He came back with his signature on the licence and dared not accept any bribes.

I was not able to verify if this story is true, but it was nice to hear it, all the same!

Situation in Indonesia is worsening

The situation in Indonesia is getting to be quite bad. The economy has been weak for several months. The popularity of President Joko Widodo had dropped significantly since he took office 8 months ago. The headlines in the Jakarta Post today says "Exports continue to weaken".

When I arrived at the immigration desk yesterday, the office asked me for my purpose. I replied "consultancy". He then said softly, "kopi kopi". I replied "no". So, he stamped my passport. This was the first time in six years that I encountered such a request.

I recalled that there was a large sign two years ago at the immigration desk "The giver and receiver of a bribe will be prosecuted". This sign has since disappeared.

How to avoid a big mistake in investing your money

Each year, over 10,000 school leavers make a big financial mistake by investing in the wrong life insurance policy which locked up their savings in a poor yielding investment for 30 years. One of them share his experience here:
http://tankinlian.blogspot.com/…/this-new-fisca-member-wish…

If you wish to avoid this mistake, you should attend this talk now. Do not delay and fall into the same trap that many fell into every year.
http://c-onyx.com/page/2274

Legislators in Hong Kong speak up for consumers

The legislators in Hong Kong are quite active in speaking for consumers who were misled into investing in bad insurance policies that cause them to lose a lot of their savings due to the upfront fees.
They spent the time to understand the problem and were able to speak up with a good knowledge of the issue.
We need our legislators in Singapore to be full time legislators who can also understand the many issues facing the people.
Read about what the legislators say in their legislative council, which is the equivalent of our Parliament in Singapore. Click here to read the article.

A personal story from a new FISCA member

This new FISCA member wishes to share his personal experience.

1. How I knew FISCA

I get to know about FISCA through a shared post in Facebook about insurance and investment. Before I get to now about FISCA, I have been doing a lot of homework in researching a bad investment link plan (ILP) which I have bought. Back then, I was not confident about terminating my ILP as I would face an immediate loss of thousands. My research did point out I should terminate the plan as I would face a potential 200k+ loss after 40 years but taking a decision to take the immediate loss was not a easy one, afterall it was my hard earned money.

On that particular Facebook post, the recommendation hit exactly to where my research has pointed. That is where I knew I must attend this talk. Most would say insurance is a necessity but who would stand out to say some of the insurance products are just out there to ripe you off. Till date, I still face questions from my friends on why are those products are not recommended. They are surprised by my explanation and gladly, they are convinced.

2.  Talks I have attended in

I have attended one of Mr Tan's talk on on Financial Planning at the cost of $30 and I strongly recommend all individuals to attend this talk.

3.  Why I recommend you to attend this talk

1) You should managed your own financials instead of being lead by financial adviser.  

2) Low cost at $30, compared to the thousands I lost - If only I attended this talk a year earlier.

3) The speakers are very sincere and the purpose of the talk is purely on educating the public.

4) Prevent yourself to be a victim like me.

I have seen many young working adults wouldn't mind spending hundreds of dollars a month in insurance products (protection + savings). The problem is that they do not have a full knowledge of how what these products actually are and they will eventually pay >100k until they are old. It will be like a drug where it is difficult to get out of this plan due to the losses and you have to continue paying the premium. Thanks to Mr Tan, I got myself out of this and started my own savings plan. This will be much simpler than you would think.

Please do attend Mr Tan's talk. The talk is sincere with lots of takeaways. You can also take it as a educational tool to upgrade yourself and learning how to manage your own financials.

BYC

Learn from Apple to make it easy for user

A few years ago, I was given the SingTel internet dongle as part of my subscription to the fiber network in the office.

Initially, I tried to set up the dongle. It was a complicated process and was most discouraging. They provided too many facilities that I did not need, but had to provide to complete the process. Finally, I managed to get it set up, but with a lot of trouble.

Since then, I hardly used the dongle, as Wifi is now widely available. On the few occasions that I used it, I had some trouble or another, in spite of the "seamless connection" that was provided.

Most people used the dongle to connect to the Internet. They would not want to use the added facilities provided by SingTel. It is better to provide a setup of the basic facility, so that the setup is made easy.

For those who need the added facilities, they can go through an "Advanced" tab and learn how to use it.

SingTel should not impose the full facility on users who do not require it. I find the SingTel approach to be quite common in Singapore. Somehow, they make things more complicated than necessary. We should learn to follow Apple - they really know how to make things easy for the user.

A confusing pop-up message

I used the SingTel dongle to connect to the Internet. The process was complicated (in spite of their Seamless Connection) and the response was slow - probably due to some environmental conditions. Finally, I got the "Connect" button. When I clicked on this button, I got a pop-up to say "Connected" with a "Cancel" button.

I was confused. If I clicked on "Cancel", would it cancel my connection that I took some pain to set up? I looked for some other way to remove the pop-up without risking the connection, but there was none. I finally clicked on "Cancel". It removed the pop-up and kept the connection.

SingTel could have given a better message "OK" rather than "Cancel".

Expensive training courses on investments

Hi Mr, Tan

Here is something I would like to share regarding all those overhyped, overpriced and unregulated financial training courses out there.

'Rich Dad Poor Dad' Robert Kiyosaki Exposed - Part 1 of 3 Investigative Report
https://www.youtube.com/watch?v=HE6nT0oyPt8
'Rich Dad Poor Dad' Robert Kiyosaki Exposed - Part 2 of 3 Investigative Report
https://www.youtube.com/watch?v=dv6feHB0AE4
'Rich Dad Poor Dad' Robert Kiyosaki Exposed - Part 3 of 3 Investigative Report
https://www.youtube.com/watch?v=9iimvyVCEGA

In the videos, reporters went undercover by posing as one of the participants in a training programme endorsed by famous financial author, Robert Kiyosaki. It can be seen from the videos that most of the trainers are unqualified people trying to teach harmful information to the public.

Even in Singapore, I see a lot of people falling victim to such seminars and I strongly feel that all these must stop. Most of the trainers conducting these training courses are nothing more than salesmen (I would even go as far as to call them conmen) masquerading as financial gurus. 

The participants getting cheated in these courses come from all walks of life including businessmen, retirees, teachers, engineers, housewives and even school children, so anyone can fall prey to them.

HZW

Confusing Terms and Conditions on the use of NETS CashCard

I bought a NETS cash card and it failed within a month. DBS Bank told me that I could get the refund of the deposit of $5 but I had to complete a form.
After submitting the form, NETS replied that the $5 is not refundable. The staff explained that it was refundable only for a faulty card found at the time of the first purchase.

I asked for the terms and conditions and they gave me this link to their website. The terms and conditions confused me and seemed to be overlapping and contradictory. Here are some of the relevant clauses:

8 REFUND AND REPLACEMENT

8.2 Subject to these Terms, the Cardholder shall be entitled to a refund of the Deposit, if any, and the Stored Value of the NETS CashCard effected pursuant to Clause 8.5 hereof within four years after the Validity Period, PROVIDED THAT if a refund of the Deposit, if any, and the Stored Value of the NETS CashCard is requested or effected more than two years after the Validity Period, NETS shall be entitled:
a) to forfeit the Deposit, if any; and
b) to levy a service charge of S$1.00 per month or such other amount as NETS may determine from time to time, such levy to be deducted monthly from the Stored Value commencing the month after the end of the aforesaid two years until the refund of the Stored Value (less such service charge) of the NETS CashCard or when the Stored Value is fully depleted, whichever is the earlier.

8.3 The Cardholder shall not be entitled to a refund of the Stored Value after the lapse of four years after the Validity Period whereupon the Cardholder shall have no claim whatsoever against NETS and the Approved Banks.

8.7 In the event a NETS CashCard is defective (not through any fault or act of the Cardholder) during its first use for payment for, or a transaction of, NETS CashCard Services, NETS shall replace the defective NETS CashCard with a new NETS CashCard. No replacement shall be made by NETS for any NETS CashCard found to be defective at any second or subsequent use.

REMARKS
I am totally confused. Am I entitled to a refund of the deposit of $5? The NETS staff replied that there is no refund for a faulty card after the first purchase. (She must be reading clause 8.7). But clause 8.2 and 8.3 suggest that I am entitled to a refund.

You should read the entire Terms and Conditions to get the feeling that this is a badly written document that is confusing to consumers. How can the Monetary Authority of Singapore allow NETS to get a license to operate a public financial service based on such Terms and Conditions?

Does NETS staff read their own terms and conditions?

I received this reply from NETS regarding my request for a refund of the deposit of $5 on a faulty card. 

Dear Sir/Madam

Thank you for your e-mail dated 13 June 2015. We are sorry to learn of your experience.
However, we would like to reiterate that all NETS CashCard comes with a card cost of $5.00 which is non-refundable.
Replacement of faulty NETS CashCard will only be given if it’s faulty upon first purchase.
You may refer to the terms and conditions governing the use of the NETS CashCard on our website at
http://www.nets.com.sg/cashcard-tnc
If you wish to speak to us or require further assistance, please call our NETS Customer Service Hotline at6274 1212 (24/7). Kindly quote your enquiry/request reference number: 756968. Our Customer Relations Officers will be glad to assist you.
Yours sincerely
Claira Lim
Customer Relations Officer
NETS Contact Centre

When I read the terms and conditions, it stated clearly that the customer is entitled to a refund if the card is faulty. I could not find any condition that stated that it is refundable only "if it is faulty upon first purchase". The terms indicate that it is refundable due to normal wear and tear and is not caused by the fault of the card holder.

LKY said Singaporeans are economic digits

Hi Mr. Tan,
I read your remarks that you respected Mr. LKY for what he did for Singapore. Have you considered the harm that he had done? He considered Singaporeans to be economic "digits" and not as people. His policies are framed to treat Singaporeans without recognizing their human rights. This is probably the reason for the selfish and uncultured behavior of many Singaporeans, e.g. joining long queues for "freebies".
Do you agree with his methods, and do you still respect him considering the negative aspects of his policies

REPLY
I do not like his treatment of Singaporeans as economic "digits" and the bad consequences that it had produced.
On the other hand, he did look into the real problems of the people, and found effective measures to rectify them. The results have been positive. They were much better than the leaders that followed him.
On balance, I still respect Mr. LKY for the good that he has done for Singapore, after deducting the negative aspects.

Amos Yee is recognized by Amnesty International as a Prisoner of Conscience

Kenneth Jeyaretnam has fought for Amos Yee to be recognized as a Prisoner of Conscience and he has succeeded. Amnesty International will be issuing a statement soon. Read KJ's article here.

Amnesty International said that Amos Yee's video does not constitute incitement and should not have led to criminal charges.

Dear Kenneth,
Well, the IS has considered it and judge that he is indeed a POC by Amnesty’s definition. What he said falls under the kind of edgy and sharp expression of opinions that may annoy or insult, but it was peacefully said and doesn’t fall under the definition of incitement etc and is not grounds for criminalization. WE will speak out and expect to issue a statement ahead of the 23 June court hearing.

High speed rail between Singapore and Kuala Lumpur

Here are some interesting facts about the high speed rail between Singapore and Kuala Lumpur. It is expected to be ready by 2022. Financing of this project is likely to be a challenge and its economic viability is uncertain, judging by the experience of similar projects in other countries. Read this article.

I hope that they can bring down the cost of the project. The contractors from China are able to bring down the cost by 50% compared to the Japanese proposal. This could make the project more feasible. 

Long queue for $50 transport voucher

I continue to be amazed at the unproductive work that is being created to distribute a small amount of incentive. This seems to be the trademark of the LHL government. A lot of time must be wasted in queuing for a small amount of incentive and to administer the distribution of the incentive.

it would have been much better to give seniors free ride for a few months.

http://www.straitstimes.com/…/sms-senior-citizens-having-cl…

Make a realistic financial projection

Hi Mr. Tan
A financial planner did a projection for me for the next 40 years. The trouble is, I see big figures, such as several million dollars by the time that I retire. But these figures are not meaningful, because of inflation. By that time, how much is $1 million worth? During my grandpas' time, he could buy a house of $15,000. Today,it cost $1.5 million. Is there any financial planning tool  that can show meaningful figures?

REPLY
To carry out a meaningful projection, you need to take care of:
1). Remove the effect of inflation
2)  Use realistic projection of the rate of return. (Some planners assume a yield of 10% or 15%, but this is not realistic).

I recommend this financial planning tool that handle both of the above points. You can read (?) for an explanation of the parameters that you have to provide. You get a clear explanation of how to read the projection. Click here

A new FISCA member shares his views about the talks organized by FISCA

A new FISCA member share his experience of attending the FISCA talks

1. HOW I KNEW FISCA

I knew FISCA sometime last year when I was hunting around looking for advice on how to manage my money.

 

During this time, I had also been approached by many insurance agents (many whom were friends), who offered to manage my money for me. I had heard of many people getting ripped off by insurance companies and therefore, I was not ready to trust any insurance agent just yet. My family themselves were also victims of insurance policies which gave poor returns.

 

I went for many investment seminars as well. Most of the organisers in the seminars promised high returns, but could not back up their claims with any proper evidence.

 

This was when I stumbled upon FISCA through Mr Tan's Facebook page. Mr Tan writes a lot about financial matters which I felt were very useful.

 

2.  TALKS I HAVE ATTENDED IN FISCA

 

A. Talk on Financial Planning

B. Invest with Confidence series - Fundamentals/ABCs of Stock Investing

C. Financial literacy - dollar & sense way

D. Issues affecting consumers on property and renovation

E. Invest with Confidence series – Exchange Traded Funds (ETFs)

 

3. I find the talks very informative.The speakers were very sincere in wanting to educate the public on financial matters. They also do not boost about their accomplishments or sell overpriced courses, unlike many other financial educators out there. No NLP techniques used also. The audience is always given time to ask questions or think about issues.

 

4. Yes, I recommend more young people to attend the talks, especially once they have started working. With the proper financial education we can stop young people from being ripped off by investment scams or insurance companies.

 

HZW

Hong Kong bans upfront commision

Hong Kong banned the payment of indemnity commission on life insurance policies from the start of 2015.

Indemnity commission are high upfront commission paid during the first few years, and are considered as advanced payment of commission for premiums paid in subsequent years. The regulators banned indemnity commission as it has led to the mis-selling of life insurance policies by agents who were motivated by the high commission.

The background and reason for this ban are explained in this article. After the ban came into force, the sale of ILAS (investment linked life assurance) had dropped by 50% since the start of this year.

Singapore has the same practice of paying high upfront commission on the sale of investment-linked and traditional life insurance policies. However, the regulators still allow high commission or indemnity commissions to be paid on these policies. The incidence of mis-selling is just as bad in Singapore.

A misleading headline?

Did the Straits Times mislead the public about the United Nations Awards? The headline seems to give sole credit to Singapore when Thailand share the same award and Singapore did not win in the other categories. 
http://statestimesreview.com/…/the-straits-times-mislead-r…/

Visit this website and read what the author writes about the ILAS (investment linked assurance scheme) in Hong Kong. The ILAS is similar to the ILP (investment linked policies that are sold in Singapore.

The author is direct in criticizing the insurance companies for creating these products to "rip off" consumers by charging high fees at the start of the policy, and not telling the consumers about them. When the consumers find out, it is too late, A large part of their savings had been taken away.

He also criticized the regulators (i.e. Office of the Insurance Commissioner and the Securities and Futures Commission) for neglecting their duty to protect consumers from these bad products.

His criticisms apply to the practice in Singapore as well.

GST continues to be troublesome

For a long time, I have considered that GST to be a "nonsense tax". It is creating so much trouble for many people. Even today, when it has been implemented for more than two decades, there are still confusion and argument about what why it should be charged on certain items, and what is the amount that it is to be based on.
Read this letter in the Straits Times

We should recognize that it is a troublesome tax, and find other ways to get the revenue that is needed.

Here are my suggestions on how to replace GST with a better source of income for the government.
Read this article

Make the best use of your time

It is important to make the best use of our time.

When I was the top man in a large company, I had a driver for my company car. The company was not financially strong during its earlier days, so I used a 7 year old car.

But, I employed a driver (paid by the company) to drive me. The driver can worry about driving the car and finding a parking space, while I can sit back and do some thinking and planning. While not driving the car, the driver worked in the mail room.

Now that I have retired, I prefer to take a bus, rather than drive. I am able to do some thinking or read the news in my tablet while I wait for the bus or on the journey. Although the bus journey takes a longer time, the time was not wasted because I could put it into productive use. This is how I could get many ideas to be developed.

As travelling is time consuming, I avoid travelling to meet people. There are other ways to communicate with business associates, e.g. by e-mail and by telephone. There will be opportunities to socialize, e.g. to go to sports or business events.

This is my suggestion to young people. If you can do some errand for your boss, e.g. to make coffee or clean the office, you should volunteer to do the work, even though it does not fit into your job description. If you can save 1 hour of your boss time, that time is more valuable than your own time. So, you are trading your 1 hour, which is less valuable, for 1 hour of your boss; time which is more valuable. You are making better use of your time.

Some people may think that it is demeaning to be running errands for the boss. But it should be seen as a good strategy to trade up the value of your time.

I also encourage people to find a job that is near their home. This is to reduce the travelling time. If the job is far away from their home, they should consider moving their home to be near their workplace.

New agent or marketing staff was not properly trained

Consumers blame the insurance agent for not giving them the full facts about the life insurance policy sold to them. They believed that the agent deliberately hid the facts from them, as they wanted to earn a high commission for selling the policy.

Some agents told me that they were new in the field, and were not aware about the poor surrender values or the risk of investing in some funds. Their trainers did not tell them the full facts. Otherwise, they would not have sold the policies to their family members and friends.

The same challenge applies to marketing staff of banks who sold the structured products to their customers and family members. They were not aware of the risks of the structured products, which were complicated. These risks were not adequately covered and explained to them during their training.

If you have been an agent or marketing staff, and have encountered this problem of not being properly trained on the products, and you are willing to share your experience on a confidential basis, send an email to kinlian@gmail.com.

Jardine Smith - Eaton Bray, UK

Hi Mr Tan,
I have just paid a 10% deposit to Jardine Smith International on a UK land somewhere in Eaton Bray. Kindly share your experience whether it is a good idea to invest in the scheme.
Everything seems to be order, they have a trustee registered with SSM Malaysia authorities.

REPLY
Please send details of your documents to me.
Scan into PDF and forward to me.
After that, you can call me at 66599611 to discuss it.

How I was conned into losing $2,500 in an investment linked policy

Hi Mr Tan,

I wish to share my experiences of how I lose SGD 2.5k on my investment link plan - which I have terminated in a year. The reason for the termination is not due to the affordability but to the actual realisation that the policy is different from what was told by my agent. Even though I had been very careful with the benefit illustration and being educated in the finance area, I still entered into this trap by my agent who is also my friend.

After six months of working after graduation, I supported my friend by agreeing to listen to his insurance sales talk. He explained to me the needs of insurance, which I agreed that is important. More details of the ILP (investment link plan) are being illustrated and it sounds good. I was disinterested after he showed me the benefit illustration (BI) because the BI did not take account into the inflation. Breaking even after 12 years without taking into consideration of inflation is not ideal - much less the returns after 40 years.

The second meeting, he showed me the fund fact sheet which has a return of about 13%. He explains to me that the fund manager has changed and the fund will continue to perform very well. The 4% to 8% on the BI is very conservative and I have a good 7% spread from the average of 6% return from the BI. That's where I say, well since the 7% spread will be sufficient to cover my doubt on the inflation, I accepted.

On the day I received the policy booklet, I glance through the summary page noting that my fund value is about $500. I assumed $2300 went into protection.

After a few months, another friend sold me hospital plans. The premium are surprising cheap at 300/year and this raised concerns over my ILP which I have been paying at 2800 per year. Then I took out my ILP booklet and read through with a lot of questions raised, particularly about the missing dollars. In total, I read through at least five times, cross referencing terms which I don't understand and compared every tables in the booklet.

That is where I understood perfectly what I am actually buying with many points I am not aware of in the first place and they are,
1) Allocation
2) Actual returns on fund spread sheet does not equal to your actual returns
3) Effects of deductions

Then I ask my agent to show me where every dollars and cents go. This took him many months and he is unable to give me an answer. It was until I decided to visit AXA customer service, which they have brilliant service, and they tell me I can log in online to see the transactions. In short, I know exactly how the transaction works and the surrender value shown on the BI is the value I should look at instead.

After which, I spent months researching on term insurance and manage to do a full based calculation of return projection. That's where I decided I should not continue my plan and pay more to the allocation cost. the surrender value is $250+, a loss of $2550 excluding a $260+ insurance charges if I were to buy a term plan.

That's the experience of my first ILP, a painful learning experience. I take it as a positive lesson and now I am proud to say I am fully aware of how savings-investments should be.

Penalty on early surrender of a life insurance policy

A few people have told me that they bought a life insurance policy from an agent at a "road show".

The agent told them that it is a savings plan, but did not tell them that the policy is a long term contact and they would suffer a large loss in their savings when the policy is terminated or surrendered during the first few years. They were shocked that it would take more than 10 or 15 years for the policy to "break even".

Some young agents were probably not aware about this feature, or they were trained not to tell the prospective policyholders about it, as the policyholders would avoid buying the policy.

Most policyholders were sought my advice were quite clear in stating that they were not told about the loss on surrender, but they felt shy that they did not read the benefit illustration which stated this fact. They wished that they had been more careful before signing on the dotted line.

I wonder if these policyholders who now cry foul are the majority or just a small minority? If you were told about the surrender loss and bought the policy willingly, then you are properly advised. If this was not told to you at the point of sale, then the agent had not been fair to the customer.

Share your experience.

Clarity in our laws

Kenneth Jeyaretnam writes about the need to have clear rules not only on LBGT issues (i.e. homosexual issues) but on many other aspects of governance in Singapore. To achieve greater clarity, there is a need for our law makers to debate laws that are submitted to be passed in parliament. I find the quality of debate in our parliament to be unsatisfactory. I express the wish that this shortcoming be addressed.

http://sonofadud.com/…/vague-rules-and-tough-consequences-…/

Should elderly people continue to work or to retire?

Some ministers said that it is a good idea for elderly people to continue to work, rather than to idle at home or at the void decks of their HDB flats. By working, they can stay healthier and live longer.

This statement ignores the experience in other countries where the retirees had more options to live their life. For example,

a) In Hong Kong and China, many retirees spend their mornings in yumcha restaurants or exercising in the parks or in other social activities.
b) In the western countries, many retirees are able to do volunteer work or be actively engaged in some hobbies or social activities.

In these countries, the retirees receive a modest pension that is sufficient for them to live on. Some have personal savings that can give them a fairly good lifestyle.

It is quite sad that many of the elderly in Singapore do not have personal savings (as they receive inadequate wages when they were young) and they do not receive a state pension when they are old. They have to continue to work to earn a small income to live on. Many of them have to do heavy physical work, such as cleaning and in security work.

Many other elderly people, especially those who are not well educated, do not have any alternative lifestyle or hobby to live on. After retirement, they do not know how to spend their time, apart from idling or watching television.

Although these are some associations that cater to the needs of retirees, they do not seem to reach out to many people. We need to develop more options for the retirees.

A coalition government is good for Singapore

A grassroots leader made this statement - "Even if the PAP were to lose more than  four GRCs and more than 50% of the seats in Parliament, they will still form the government. The other parties are not united and they will be unable to form a coalition government without the PAP.

I agree with his view. But, it will be a very different PAP when they do not have the absolute control of Parliament. They will be more consultative and will listen more to the voices of the people.

I envisage that the following changes will be made - National Service and reservists obligations will be shortened. GST will be abolished. Immigration will be further restricted.

That would be a good outcome for Singapore.

Increase the birth rate - a paradigm shift

Many countries face the problem of a declining birth rate. Singapore fares among the worst having one of the lowest birth rate in the world. These countries, including Singapore, have introduced many incentives and baby bonus schemes to increase the birth rate, but the results have been disappointing.

We need a new approach - a paradigm shift. If we keep repeating the old methods, we will get the same results. Albert Einstein said that only mad people continue the same methods and expect different results!

Underlying cause

What is the underlying cause of the declining birth rate? Women like to work. Many of them study to get suitable qualification and join the workforce. The high cost of living make it difficult for the traditional family (where there is one breadwinner) to earn enough to pay for the cost of raising a family.

This is a simple fact. It applies to most families. Wealthy families can afford to act differently. But the majority of the population cannot afford to live on one income.

Paradigm shift

The paradigm shift is to move the cost of raising children from the family to the state. It is in the interest of the state to have its citizens produce children for the next generation. If the citizens cannot afford this burden, the state must come in to take care of the financial burden.

This means free maternity care, medical care, child care and education for the child. If the mother does not work and takes care of the child, the mother should also receive an allowance from the state up to a certain age of the child, e.g. until the child is 6 years old.

Cost to the state

Someone will point out that this is costly to the state and means more taxes. My answer is - not necessarily. The state is already spending a lot of money on their current baby bonuses and other incentives, which are not working. We should be using the budget more wisely to get the result that we want.

It is likely that a higher budget is required under my proposal. But this can be calculated and the decision makers can consider if this higher budget is worth spending. I think that this is a priority issue, and is necessary for the future of our country.

Abuse of this scheme

I have also considered the possibility of abuse. What if some families wish to produce many children? Will this be a burden to the state?

This matter can be easily resolved. The funding by the state will apply to two or three children in each family. If the family opts to have more children, they should bear the cost of the additional children on their own. The policy can also address the issue of single mothers and for unexpected child births.

I do not profess to have all the answers, but I know that the lawmakers or the people at large can find out the practical answers to these issues through discussion and voting for their choices.

Mothering as an occupation

If there are adequate incentives, some women may prefer to be a mother as an "occupation" and join the workforce when the children have started schooling. As the mother receives an allowance from the state and the cost of raising the child is largely borne by the state, it is possible for the family to live well on one income.

Some women may prefer to be educated and join the workforce. But other women, who are not academically strong, may opt to be a mother initially and join the workforce later.

Women are most productively when they are below 30 years. This scheme gives a choice for women to opt to be mothers, without creating a burden on the family finances.

Conclusion

We have to adopt a paradigm shift to increase the birth rate. My proposal is that the state should recognize that it is a priority to encourage citizens to have children and to remove the financial burden from the family for up to two or three children. We should also offer an option for women to adopt "raising a family" as an occupation, at least for a certain number of years.

Tan Kin Lian