Tan Kin Lian's Blog: Give a fair return to the policyholder

Thursday, November 01, 2007

Give a fair return to the policyholder

Dear Mr Tan,

I am a regular visitor to your blog, which I find it quite informative. You have been advocating "Buy Term and Invest the rest".

Are you also saying that there is no need for one to buy whole life or endowment policies as they do not yield better returns?

If I extrapolate, does it mean that on hindsight, when you were CEO of Income, products such as Living Policies should not have been sold? I hope to see your response to this issue in your blog.

REPLY

1. NTUC Income launched its Combined Funds in 2003. I have been actively promoting these products under its Flexi-Link and Ideal plans. These investment products have low charges and give good value to the policyholder. The insurance protection can be bought seprately through term insurance. Most of my personal savings are in these products.

2. The Endowment and Living policies from NTUC Income give a fairly satisfactory return ,due to lower commission rates,. The return is higher than similar products from other insurance companies. They are suitable for policyholders who prefer to have the discipline of regular savings.

3. For most young people, who needs flexibility in their savings, "buy term and invest the difference" is a better choice. The investment should be made in large, well diversified, low cost funds. The Combined Fund from NTUC Income meet this criteria. Another option is the STI Exchange Traded Fund.

4. I have always upheld the principle that a insurance product must be designed to give a fair return to the policyholder, while leaving a fair margin to pay the expenses to market and manage the product. During my tenure, I kept the expense low, so that the policyholders can get a fairly attractive return for their long term savings.

5 comments:

Khiat Han Hwee Adrian said...: As a CEO, Mr Tan cannot change thec oompany overnight and kill all agents.
If he did that, he will be out of job within a year.
He had did well to maintain low expenses and indeed gave good value back to customers.; November 01, 2007 11:09 AM
Anonymous said...: I attended a talk given by Mr Tan himself in 2003. He explained about the Combined Fund and advised "risk is to your advantage". That gave me the courage to invest my hard earned savings in the Combined Fund.

I have made a big gain during the past three years. I want to thank Mr Tan for giving me the best investment advice that I have ever received.; November 01, 2007 1:00 PM
Thomas Phua's Blog said...: I have also invested in Combined Fund since 2003 and topped up along the way.

I have also switched the Dynamic Guaranteed Fund to Combined Fund and good thing I did, then when Mr Tan offered the way out since DGF fund manager did not manage the fund the way it was to be.

After switching over,it was so much more better.

The funds have grow more than 80% to date from inception, and average 10% pass 4 years. Best year was in 2003, 25.5% in one year as then the bull charged in.; November 01, 2007 9:59 PM
Anonymous said...: This is what I mean by customer centric. The Mr. Tan gave good value to customers. Nowadays the good value goes towards selected agents and the new management, at the expense of the loyal policyholders.; November 02, 2007 4:04 AM
Anonymous said...: Why today people are still under insured/ Answer is simple.Agents sold them cash value products at the expense of coverage. Why cash value products? Answer is high commission to the agents.Terms are good for clients but low commission to agents.
You see the conflict of interest. On top of this many people become insurance agents to make a lot of money. They sell products that give high commission. They are not interested to meet clients' needs adequately. They are also not trained properly and they have tittles that mislead the customers.
Their tittles like consultant, adviser, planner have nothing to do with what they do. They are just salesmen and women out to make the most out of the clients to achieve mdrt, cot and all the crap awards.
They are nothing but cheats , liars and swindlers and stealers of clients' dreams. Down the the road you will still hear of under insurance or investment gone awry, if the trend continues.The customers must take the actions to correct the situation and send the message to the insurance agents that you want advise and good advice.; November 09, 2007 12:17 AM