Saturday, October 20, 2007

Adequate coverage for critical illness

An insurance adviser said that the coverage for critical illness should be adequate to cover the cost of treatment and the loss of earnings.

I know of many cases of critical illness claims, where the claimant was able to continue to work, after the illness had been treated.

If the critical illness results in death, a claim can be made under an ordinary life insurance policy (which is less costly).

My preference is for the critical illness policy to cover the cost of treatment and not to include the potential loss of earnings. This allows more of the savings to be used to earn a higher rate of return in other low-cost investment products.


A friend asked me to express my views about euthanasia in my blog. He argued that euthanasia should be made legal, and that each individual in poor health should be given the right to pass away peacefully, rather than spend a lot of money on medical treatment (which, in his opinion, enrich the doctors).

Here is my reply to him:

1. This is a highly emotive issue
2. In practice, those who do not wish to be treated, can reject treatment anyway.

Here is the definition of euthanasia:

Euthanasia (from Ancient Greek: ευθανασία, "good death"[I]) is the practice of ending the life of a human or animal who is incurably ill in a painless or minimally painful way, for the purpose of limiting suffering.

Laws around the world vary greatly with regard to euthanasia, and are constantly subject to change as cultural values shift and better palliative care, or treatments become available. It is legal in some nations, while in others it may be criminalized.

Euthanasia can be conducted in various ways. In order to distinguish certain methods, more specific terminology may be used when discussing euthanasia.

Even though it seems like a very humain way of putting a person out of pain, some times doctors put patients to death without their consent. In addition, in Holand, 8,100 patients died because doctors deliberately gave them overdoses of medications, for the purpose of hastening the patient's death. In 61% of these cases (4,941 patients), the overdose was given without the patient's consent.

Lee Kum Tatt's Blog

After a period of absence, due to other committments, Dr Lee Kum Tatt and his wife have contributed the following articles:

Secret of Singapore' Success
What Do We Believe in.

Friday, October 19, 2007

Excessive charges

I received a letter from a credit card company. It announced the "administration fee" for the following:

1. Late payment - $40
2. No money in the bank account for GIRO deduction - $50

These fees are in additional to the high rate of interest levied on the overdue balances.

These fees are excessive. I do not mind paying a fee that covers the additional cost to the company due to the oversight. But it is morally wrong for them to impose an excessive fee to increase their profit.

At one time, only the Government had the right to impose fines. Now, it seems that businesses feel that they have the same right!

I called the credit card company and cancelled the card immediately.

Look after interest of consumers

In a speech to the International Cooperative Alliance meeting in Singapore, minister Lim Boon Heng said that the share of value added earned by shareholders is higher than the share to the workers.

I think that he was probably referring to international figures, although I suspect that this remark applies to Singapore as well.

What does this mean?

1. Worker wages are depressed, due to global competion
2. Businesses are able to make excessive profit, in spite of global competition.

Where does the excessive profit come from? I suspect that they come from unethical practices, such as creating sub-prime products, structured financial products, excessive charges and questionable marketing practices.

What does this really mean?

Consumers are being exploited. Consumer protection has been weak in many countries. This is an area of attention for governments, regulators and consumer bodies.

The prevailing idea was that the free market can take care of these matters. This is a wrong notion. Businesses know how to make excessive profit at the expense of consumers, and get away with it.

More capacity for public transport

Here are my views.

1. The public transport operators should be required to put more trains and buses, to reduce the waiting time and provide more comfortable rides (i.e. seats) for the commuters.

2. The existing fares allows them to increase the capacity and still make a good rate of return. Currently, they are making excessive profits at the expense of commuters.

3. We need a better system of feeder buses to bring people to the MRT stations or bus terminals.

4. More improving public transport, there will be less demand for private cars and less congestion on the roads.

I hope that the Public Transport Council will hear and act on this view, which has been expressed by many commuters.

Advantages of public transport

I have been taking public transport (i.e. bus and train) for the past 6 months. Here are my experiences.

Advnantages of public transport:

1. Better than driving. No worry about congested roads or finding a parking space.
2. More economical. No need to pay expensive ERP and parking charges
3. More relaxing, especially if I can find a seat. If not, I can rest standing up.
4. Taxis are expensive, especially due to the peak hour and other surcharges.

What are the disadvantages of public transport?

1. Overcrowding.
2. Long waiting time.

Considering the advantages and disadvantages, my preference is still public transport.

Spirit of Enterprise Award, 2007

Here is a photo of the honorees at the Spirit of Enterprise Award 2007.

Russell Miller and I started this organisation several years ago. The purpose was to identify and honour small enterprises set up by ordinary people who wanted to build a business.

This is how the honorees are selected. We ask the public to send in their nominations. We arrange for a student to interview the nominee. Their case study is submitted for voting through the internet. A selection panel make the final judgement.

The guest of honour was Mdm Yu Foo Yee Shoon. She is very helpful and always supportive of the ordinary people.

I was not able to attend this Award ceremony, as I was in Brussels. I was told that the event went very well.

Thursday, October 18, 2007

The economics of public transport

Public tranport is more convenient and efficient. A big bus can take many people. The passengers have the comfort of being driven to their destination. The buses can move around to carry passengers all the time.

Private cars are costly and congest the roads. They require parking spaces when they are not being used.

In many cities, due to inadequate attention to public transport, many people opted to buy a private car. More roads have to be built and they still get too congested. The parking spaces are insufficient. Life is inconvenient for everyone.

We need a bold approach. We have to make public transport more convenient and more comfortable. There should be sufficient buses and trains to offer shorter waiting times and a comfortable ride, including a seat.

To the country, there is more cost saving if more people take public transport.

Can our transport authority in Singapore take a bold step? Can we increase the capacity of our buses and trains two or three times (by more buses and trains operating at shorter intervals)? Can we offer a better choice for people to take public transport? Can we have convenient feeder services to support our trains and express buses?

People take planes for long distance travel. They can opt for first or businss class. They do not need to fly a private plane. We should offer this type of choice for our public transport as well.

New concept in town planning

I have a new concept in town planning.

Each town comprise of 100,000 residents. It has the facilities, such as a schools, malls, medical facilities, restaurants, services, offices and workplaces.

Several clubs are available in the town. You can join a club to enjoy its sporting and social activies. You get to make more friends and get to know your neighbours.

The unique feature is that all transport within the town will be by elevated light rail transport. Adequate trains are provided, so that the waiting time is less. There are no internal roads. Private cars are not allowed.

People can work or cycle at ground levels, and sheltered. They can move by travelletors. Bicylces belong to the town and can be rented for hourly use.

The internal transport will take the residents to the MRT stations, bus terminus or car parks that are located at the fringe of the towns. Some people do not need to own cars, as they can rent a car for a day.

This concept allows a higher density of development. It may be possible to have 50% more usage of the land.

It can support a good quality of life. Children can move around the town, without the fear of being knocked down by traffic. They can study in a nearby school in the town.

The entire town is a real estate investment trust (REIT). Each resident owns units of the REIT and has the prioirty to rent an apartment at its market rate. The dividend from the REIT can be used to offset the rental.

If the owner wants to work in another town, it is easy to rent an apartment in that town, and reinvest in that REIT. They do not have to incur a high cost of selling an indivual property. It gives flexibility for people to change jobs and make a new life, with new friends, in another town.

This concept will encourage more people to work in their town. It will reduce traffic congestion on the main roads in Singapore that connect the various towns.

I hope to get more people to like this idea. It may be suitable for Singapore, due to our limited land.

Adequate cover for critical illness

Someone argued against my suggetion to insure $50,000 for critical illness. He said that the correct cover should be determined by a financial needs analysis.

In my view, $50,000 in critical illness coverage is adequate for most poeple.

Most illnesses do not cost a lot of money to treat, especially if they have access to subsidised wards in Singapore.

If they need more than $50,000, they can draw down on your savings from other sources. They should invest a large portion of their savings in more productive assets, and not over-commit all their savings in a low return, critical illness cover.

If a financial adviser tell you that you need more than $100,000 for critical illness coverage, you should ask the following questions:

1. What percentage of people make a critical illness claim?
2. What is the average cost of treating the critical illness? (Do not allow them quote you an isolated case that occurs once in 20 years)?
3. How much commission do they earn by selling a big critical illness policy to you?

Can legal issues be simplified?

My friend told me that his son graduated with a law degree. He decided not to practice law, as many lawyers had to work long hours into the late night.

Why is it necessary?

Lawyers spend countless hours producing bundles of legal documents that are hardly needed. The chance of a dispute is small.

Even so, when there is a legal dispute, they produce even more bundles of documents that take a lot of time for the court and the parties to deal with. The issues are made more complicated than really necessary.

Why? Lawyers are paid by the time that they spent. If they spend more time to produce more documents, they can send a larger bill.

I hope that, in today's age, it is possible for the legal practice to be made more sensible. Many issues can be simplified and dealt with more expeditiously.

Wednesday, October 17, 2007


I like this photograph of Vera.

Nearly 50 years ago

This is a photograph of my primary 4 class, nearly 50 years ago. I am grateful to my teacher, Henry Phang, who kept this photograph.

I was surprised to see that none of the students in my class wore spectacles in those days. Actually, I was already short sighted at that age. Today, many children wear spectacles at a much younger age.

For those who know me, can you guess where I was in that picture?

Disability income insurance

Hi Mr Tan,

I've indeed learnt a lot about financial planning via your blog. Thank you very much for your valuable advice to all the readers.

Is it advisable to have critical illness coverage against the 30 major illness or is it more important to buy disability income insurance?


Unfortunately, most insurers do not provide disabilty income insurance on competitive terms.

So, you should buy a critical illness cover. I think that $50,000 is sufficient. The insurance agent will try to get you to buy more, especially a whole life policy.

Try to ask them to give you a critical illness policy that stops at 60. Beyond 60, you have sufficient savings (by saving through an investment fund, to take care of your medical needs.

Read the FAQ in my website,

Life in China, Singapore and America


The life here is pretty different with China or Singapore. I do enjoy the life here, but I do not like some aspect of the American style life.

Most Americans will drive even there is only five minutes walk. They use dryer to dry clothes instead of natural sunlight, even in New Mexico, where there are strong sunlight in 360 days a year!

They drive instead of walking, use washer instead of washing clothes by hands, but they pay a lot of money to go to the gym!

They also eat too much and consume too much energy. I read from somewhere that the energy consumed by an American is 7 times of an Asian.

If you do not have a car, your life will be hard here. You even can not go to supermarket to buy groceries! The public transportation is very poor and the distance from one place to another is very far. It is very different from what I used to in China.

In many aspects, Singapore is more advanced than the States. Most of the system in Singapore is always very simple and user friendly.

In America, it is not always the case, but still much better than China. About the life style, the Singaporean style is also more economic efficient and environmental friendly.

I think the MRT in Singapore may be the best in the world. Singapore is like a small lab and many smart people are trying smart ideas there. I may go back to Singapore after I work 3-5 years in the States.

All the best!

About Money

Dear Kin Lian

1. With Money you can buy a house but not a home.
2. With Money you can buy a clock, but not time.
3. With Money you can buy a bed but not sleep.
4. With Money you can buy a book but not knowledge.
5. With Money you can see a doctor but not good health.
6. With Money you can buy a position but not respect.
7. With Money you can buy blood but not life.
8. With Money you can buy sex but not love.

I am sending you good wishes for good luck which money cannot buy.
Lee Kum Tatt

I am spreading your good luck to all the visitors of my blog.

Convert from Medishield to Incomeshield


I am considering whether to upgrade from Medishield to NTUC Enhanced shield. If I were to buy the enhanced shield and it excludes some pre-existing illness which are presently covered by Medishield, will the expenses incurred from these illness still be covered by Medishield even after the upgrading?


I suggest that you should ask this question to the management of NTUC Income. They will be able to give you an answer. I cannot give you an answer, as it does not carry the authority.

Investing tips for a young person

Dear Mr Tan,

I attended your talk organised by the Teacher's Co-Operative Society. You mentioned that its best for young investors to invest in equities. How do I go about it?


I hope that these FAQs will give you the answers:

There is some concern that the stockmarkets may be too high now. If you are investing a monthly sum, it is all right to get invested at any time.

However, if you are investing a lump sum, it may be better to avoid investing in equities at this time. You can choose a balanced fund or in the money market.

I suggest that you talk to an adviser. Or call the business center in NTUC Income.

Personal Rapid Transport - for the future

Dear Mr Tan,

I read your description of the personal rapid transport. Are there any examples of personal rapid transport that is successful in other countries?


From the examples quoted in Wikipedia, it seems that the closest to personal rapid transport is used in airports. London Heathrow is introducing this system soon.

The nearest example in Singapore is the sky train at Changi Airport. It is still a public transport, rather than a personal transport. However, it has some elements of the personal system. For example, the same train serves two sections of each terminal, i.e. before and after immigration.

If you take the train before immigration at one terminal, it brings you to the section before immigration in the other terminal. If you take it after immigration, it brings you to the section after immigration. Hence, the sky train is intelligent.

This intelligence can be incorporated in a future, large scale transport system. By entering the destination, the personal vehicle should be able to take you to the destination using the best route (avoiding congestion) and safely.

Tuesday, October 16, 2007

Investing in an residential REIT

Mr Tan

I refer to your posting about a new concept in town planning. Can you explain the difference between investing in a residential REIT and an individual property? Most people like to invest directly in a specific property.


If you own a property and you wish to sell it, you have to incur the legal and agent's fees. This can take up to 4 percent of the total selling price. The selling price depends on the condition of your property, its facing, floor level and other factors. You also have to deal with the agent and the buyer.

If you invest in a REIT that owns a pool of properties, you enjoy the pooling of all the investments. The properties are professionally managed. For example, you may own 1% of a pool of 100 apartments. This is better than owning 1 specific property. You can even rent an apartment from the REIT at its market rental.

The cost of selling an investment in a REIT is less than 0.5%, compared to 4% for selling a property. I hope that the concept of a residential REIT will be more popular in the future.

Personal Rapid Transit - better than taxi

I have described the Personal Rapid Transit system. Someone observed that it is like calling a taxi. Why build this system, when we can use taxis?

The PRT system operates like a taxi. You can book for a vehicle to come to your place, and ask for it to take you to your destination. You do not have to drive or park.

Here are the advantages of PRT, compared to taxis:

1. No need for taxi drivers - no shortage problem. No need to pay surcharges to get drivers to work during peak period.

2. The computerised system knows how to get the destination (and some taxi drivers don't know)

3. No traffic congestion - i.e. no crowding of private cars

4. Greater reliabiilty. If no vehicle is available, the computer system will notify you immediately.

I hope that Singapore will experiment with this PRT system, especially in the new town.

Monday, October 15, 2007

How to invest $100,000

Dear Mr Tan

My friend has $100,000 in his CPF account. He intends to put $60k in his CPF account and the remaining $40k in avivadirect which promises to give 3.5% every year.

Is this the best alternative? Also is Aviva Direct really so good that it does not have any hidden admin charges,no lock up period and other charges? Appreciate your feedback please.


That is a wonderful idea. I would have done the same, if I were in your friend's position.

Legal fee paid to Jonathan Lock

Dear Mr Tan

NTUC Income paid $40,000 to Jonathan Lock to cover his legal expenses with his lawyer. Mr Lock has now settled with his lawyer for a "nominal" fee of $5,000. Does this mean that Mr Lock can keep the $35,000?


I do not know the condition on which the payment of $40,000 was made. From what I read in the newspapers, I guess Mr Lock is entitled to keep the remaining $35,000. The whole episode turns out to be financially to his advantage. However, he did suffer a lot of anguish during this period.

Determine liability for an accident


How can I dispute a case of where I am positive that the other vehicle was speeding. Do insurance company do investigation on the damages to ascertain the speed of the vehicle?

I was filtering left. Signalled, checked side mirror. After the last vehicle passed on the left, the next one is about 40m away (evidently from small headlight). I filtered and the next thing i know the car crashed onto my left wheel and everything around it. I understand that this case is not exactly favourable since I'm the one filtering.


The best way is to get an independent witness to testify that the other vehicle was speeding.

In most cases, the fault is determined by the party that caused the impact. If you knock into another car, you are likely to be liable.

For example, if the vehicle in front slowed down suddenly and you knocked into its back, you cannot claim that the accident was caused by that action. You should have kept a safe distance and be ready to stop on time.

Sunday, October 14, 2007

Personal Rapid Transit

From Wikipedia, the free encyclopedia

Personal rapid transit (PRT), also called personal automated transport (PAT) is a public transportation concept that offers automated on-demand non-stop transportation, on a network of specially-built guideways.

The first public PRT installation, ULTra, is currently under construction at Heathrow Airport in London, and scheduled to open for public use in 2008.

PRT is a system of small vehicles under independent or semi-independent automatic control, running on fixed guideways. The idea attempts to address a number of perceived weaknesses of public mass transit including fixed timetabling, limited routes, and sharing travel space with unrelated travelers.

In 1988, The Advanced Transit Association (ATRA), a group which advocates the use of technological solutions to transit problems, published a definition for PRT as follows:

* Fully automated vehicles capable of operation without human drivers.
* Vehicles use a reserved guideway.
* Small vehicles available for exclusive use by an individual or a small group, typically 1 to 6 passengers, traveling together by choice and available 24 hours a day.
* Small guideways that can be located aboveground, at ground level or underground.
* Vehicles able to use all guideways and stations on a fully coupled PRT network.
* Direct origin to destination service, without a necessity to transfer or stop at intervening stations.
* Service available on demand rather than on fixed schedules.

Proponents say that the low weight of small vehicles has the important benefit of allowing smaller guideways and support structures compared to other mass transit systems like light rail, translating into lower construction cost, smaller easements, and less visually obtrusive infrastructure.

The concept has been independently reinvented many times since the 1960s. It is considered controversial, and the city-wide deployment with many closely-spaced stations envisaged by proponents has yet to be constructed.

Past projects have failed due to lack of financing, cost overruns, regulatory conflicts, political issues and flaws in engineering or design.

From 2002–2005, the EDICT project, sponsored by the European Union, conducted a study on the feasibility of PRT in four European cities. The study involved 12 research organizations, and concluded that PRT:

* Would provide future cities "a highly accessible, user-responsive, environmental friendly transport system which offers a sustainable and economic solution."

* Could "cover its operating costs, and provide a return which could pay for most, if not all, of its capital costs."

* Would provide "a level of service which is superior to that available from conventional public transport"

* Would be "well received by the public, both public transport and car users."

The report also concluded that, despite these advantages, public authorities will not commit to building PRT because of the risks associated with being the first public implementation.

New Urbanism - a movement

From Wikipedia.

New urbanism is an American urban design movement that arose in the early 1980s. Its goal is to reform all aspects of real estate development and urban planning, from urban retrofits to suburban infill. New urbanist neighborhoods are designed to contain a diverse range of housing and jobs, and to be walkable.

New Urbanism is also is known as traditional neighborhood design, neotraditional design, and transit-oriented development. A more idealistic variant of New Urbanism, founded in 1999 by Michael E. Arth, is known as New Pedestrianism. The ideas of New Urbanism also are embraced by the European Urban Renaissance movement.

The Local Government Commission, a private nonprofit group in Sacramento, California, invited architects Peter Calthorpe, Michael Corbett, Andrés Duany, Elizabeth Moule, Elizabeth Plater-Zyberk, Stefanos Polyzoides, and Daniel Solomon in 1991 to develop a set of community principles for land use planning. Named the Ahwahnee Principles (after Yosemite National Park's Ahwahnee Hotel), the commission presented the principles to about one hundred government officials in the fall of 1991, at its first Yosemite Conference for Local Elected Officials.

Market Street, downtown Celebration, FloridaCalthorpe, Duany, Moule, Plater-Zyberk, Polyzoides, and Solomon founded the Chicago-based Congress for the New Urbanism in 1993. The CNU has grown to more than 2,000 members, and is the leading international organization promoting new urbanist design principles. It held its fifteenth congress in 2007 in Philadelphia, Pennsylvania, which included applying New Urbanist principles to older cities.

The CNU's Charter of the New Urbanism says:

“ We advocate the restructuring of public policy and development practices to support the following principles: neighborhoods should be diverse in use and population; communities should be designed for the pedestrian and transit as well as the car; cities and towns should be shaped by physically defined and universally accessible public spaces and community institutions; urban places should be framed by architecture and landscape design that celebrate local history, climate, ecology, and building practice. ”

New urbanists support regional planning for open space, appropriate architecture and planning, and the balanced development of jobs and housing. They believe their strategies are the best way to reduce traffic congestion, increase the supply of affordable housing, and rein in urban sprawl. The Charter of the New Urbanism also covers issues such as historic preservation, safe streets, green building, and the renovation of brownfield land.

New Urbanism

Here is a comment regarding my blog of a new concept of town planning.

The concept you talked about is very similar to a movement in the early 1980s called "New Urbanism". New Urbanist neighborhoods are designed to contain a diverse range of housing and jobs, and to be walkable.

The main features of New Urbanism include:

1. Walkable. Most of the dwellings are within a five-minute walk of the center, an average of roughly 2,000 feet.
2. Diverse landuse. i.e. housing, offices etc.
3. Traditional "neighbourhood" design.

For more more this concept, read this (

The ideas for "New Urbanism" arose from an earlier movement called the "Garden City Movement" (

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