The Straits Times reported that 20 insurance advisers left NTUC Income to join other insurance companies, due to unhappiness with our insurance business center.
This is true. But it does not give the complete picture.
Each year, an average of 40 insurance agents from other companies join NTUC Income. They find it easier to sell our products, which give better value to their customers. Although they earn a lower rate of commission, they are able to earn more through a higher volume of sales.
Some join as supervisors or salaried consultants on fixed salaries.
NTUC Income aims to provide a new channel for people to buy insurance. We want to educate consumers and allow them to buy insurance from our business centers.
We will continue to have insurance advisers, who sell insurance to customers through the traditional way, by visiting their home or workplace. They continue to offer good value products to our customers.
There will be two channels to serve the two different groups of customers.
Thursday, May 18, 2006
Get good leaders in government
At each general election, there is the risk that some of our experienced ministers may not get elected into Parliament. People worry that this may disrupt the smooth running of our country.
Is there a different way to "find" capable people to run the country?
The American system provides an interesting alternative.
The citizens elect their representatives into Congress, which is the equaivalent of our Parliament. Each district elect their own representative. They do not have a "group consitutency" system.
The citizens also elect their President and Vice President to run the country. The President cannot run the country on his own. He nominates capable people to be secretaries of the various departments. These secretaries perform roles that are similar to our ministers.
For example, their secretary of state is like our foreign affairs minister. The secretary of the treasury is like our finance minister.
The nominees have to be approved by Congress, which are the elected representatives of the people.
I think that Singapore can adopt this aspect of the American system. We do not need all ministers to be members of parliament at the same time. If necessary, we can appoint a minister from outside of Parliament, if they get the approval of a select committee of the Parliament.
Is there a different way to "find" capable people to run the country?
The American system provides an interesting alternative.
The citizens elect their representatives into Congress, which is the equaivalent of our Parliament. Each district elect their own representative. They do not have a "group consitutency" system.
The citizens also elect their President and Vice President to run the country. The President cannot run the country on his own. He nominates capable people to be secretaries of the various departments. These secretaries perform roles that are similar to our ministers.
For example, their secretary of state is like our foreign affairs minister. The secretary of the treasury is like our finance minister.
The nominees have to be approved by Congress, which are the elected representatives of the people.
I think that Singapore can adopt this aspect of the American system. We do not need all ministers to be members of parliament at the same time. If necessary, we can appoint a minister from outside of Parliament, if they get the approval of a select committee of the Parliament.
Wednesday, May 17, 2006
Insurance Business Center
NTUC Income now provides a new channel to service our customers.
At our new business centres, our salaried insurance consultants are on hand to assist you.
You get suitable advice on insurance and financial planning, without feeling obliged to buy the product. You enjoy a lower premium and a better return on the insurance and investment products from NTUC Income.
You can also get a modest incentive by buying through our business center.
Our business centers are conveniently located at Bras Basah Road and Tampines Point.
Call 6877-3366 for an appointment.
At our new business centres, our salaried insurance consultants are on hand to assist you.
You get suitable advice on insurance and financial planning, without feeling obliged to buy the product. You enjoy a lower premium and a better return on the insurance and investment products from NTUC Income.
You can also get a modest incentive by buying through our business center.
Our business centers are conveniently located at Bras Basah Road and Tampines Point.
Call 6877-3366 for an appointment.
More people now read my blog
My site meter said that 350 people visit my blog last Friday and 400 visit yesterday. Wow.
Previously, I received an average of 150 visitors daily.
If you like my blog, tell your friends to visit it.
Previously, I received an average of 150 visitors daily.
If you like my blog, tell your friends to visit it.
Auto-renewal of fixed deposit at poor interest rate
Dear Mr Tan,
My $50,000 FD was auto-renewed 1 month ago at 1.7%, although the same bank is offering about 3% for other customers.
Probably, after this similar incident was highlighted in your blog, the bank finally tele-invited me to renew my FD at a higher rate of 3%. But I think it is still not fair that the 3% will be effective only from the date when I made a personal request at the bank to renew it.
I trust the banks to auto renew my deposit at the best rates and yet got a lousy deal in return for my trust.
Hazel
My $50,000 FD was auto-renewed 1 month ago at 1.7%, although the same bank is offering about 3% for other customers.
Probably, after this similar incident was highlighted in your blog, the bank finally tele-invited me to renew my FD at a higher rate of 3%. But I think it is still not fair that the 3% will be effective only from the date when I made a personal request at the bank to renew it.
I trust the banks to auto renew my deposit at the best rates and yet got a lousy deal in return for my trust.
Hazel
Tuesday, May 16, 2006
Positive feedback on Insurance Business Center
Dear Mr Tan,
Having salaried insurance consultants who are not commission based at NTUC Income's Insurance Business Centre is a fantastic concept. It shows that NTUC Income understands the needs of their customers.
My expereince dealing directly with either financial consultants from banks or insurance agents has left me with a somewhat negative impression as many push products and services which may not be entirely suited for me. At the back of my mind I always question the sincereity of the agents as hitting sales targets and earning a commission will still be their priority.
I look forward to going to NTUC Income's Insurance Business Centre for a financial evaluation soon!
RT
Having salaried insurance consultants who are not commission based at NTUC Income's Insurance Business Centre is a fantastic concept. It shows that NTUC Income understands the needs of their customers.
My expereince dealing directly with either financial consultants from banks or insurance agents has left me with a somewhat negative impression as many push products and services which may not be entirely suited for me. At the back of my mind I always question the sincereity of the agents as hitting sales targets and earning a commission will still be their priority.
I look forward to going to NTUC Income's Insurance Business Centre for a financial evaluation soon!
RT
Sunday, May 14, 2006
Bank customer is unhappy with renewal of fixed deposit
FROM A BANK CUSTOMER
I wish to bring up a disgusting issue regarding the behaviour of my bank.
My fixed deposit of $50,000 with bank X matured recently. The bank auto renewed it at 1.88%.
When I found out, I was so angry that I decided to withdraw the money. This bank has been offering 3% for a new deposit. And yet, the quietly renewed my deposit at a lower rate.
I am angry on behalf of all the people out there, especially those the retirees who are not so well educated. They trust the banks to auto renew their deposit at the best rates. They get a lousy deal in return for their trust.
If they threaten to take out their money and go to another bank, they will get a higher interest rate.
Our banks seems to be playing games, trying their best to OUTWIT and take advantage of the poor, uninformed consumer with their fancy tricks.
I'd say this is blatant cheating by institutions that are supposed to be high on trust and credibility.
I wish to bring up a disgusting issue regarding the behaviour of my bank.
My fixed deposit of $50,000 with bank X matured recently. The bank auto renewed it at 1.88%.
When I found out, I was so angry that I decided to withdraw the money. This bank has been offering 3% for a new deposit. And yet, the quietly renewed my deposit at a lower rate.
I am angry on behalf of all the people out there, especially those the retirees who are not so well educated. They trust the banks to auto renew their deposit at the best rates. They get a lousy deal in return for their trust.
If they threaten to take out their money and go to another bank, they will get a higher interest rate.
Our banks seems to be playing games, trying their best to OUTWIT and take advantage of the poor, uninformed consumer with their fancy tricks.
I'd say this is blatant cheating by institutions that are supposed to be high on trust and credibility.
Make the right choice. Earn $146,000 more!
Many people are approached by their friend, who is an insurance agent, to buy a life insurance policy. They obliged. They have to pay a big premium for many years.
If they buy the wrong product, they will get a poor return. The difference can be a lot of money.
If you invest $300 a month over 30 years, the difference (between earning 2% and 6% per annum) can be as much as $146,000. Yes, you can earn $146,0000 more when you buy the right product!
Even if you buy the right product to earn 6% per annum, the difference (between buying from company A and company B) can be as much as $60,000. It depends on the charges that are taken from your investment.
Wow. That is a lot of money.
Take my advice. Attend our educational seminar. Spend 2 hours only and learn how to make the right choice. It can be worth $146,000 more to you!
You can also get advice from our salaried consultant at our Insurance Business Center.
Call 6877 3366.
If they buy the wrong product, they will get a poor return. The difference can be a lot of money.
If you invest $300 a month over 30 years, the difference (between earning 2% and 6% per annum) can be as much as $146,000. Yes, you can earn $146,0000 more when you buy the right product!
Even if you buy the right product to earn 6% per annum, the difference (between buying from company A and company B) can be as much as $60,000. It depends on the charges that are taken from your investment.
Wow. That is a lot of money.
Take my advice. Attend our educational seminar. Spend 2 hours only and learn how to make the right choice. It can be worth $146,000 more to you!
You can also get advice from our salaried consultant at our Insurance Business Center.
Call 6877 3366.
Better to invest in ILP or unit trust?
QUESTION FROM THE PUBLIC
1. According to Dr Money, he has grouped unit trust seperately from insurance (ie ILP). Please explain the difference.
Reply: An ILP is offered by an insurnce company. It combines insurance with investment. An insurance adviser sells the product.
A unit trust is operated by a fund manager and distributed by a bank or a financial adviser. Apart from the charge by the unit trust operator, the financial adviser usually add another layer of charge.
2. Does that mean that unit trust usually charges a higher sales fee as compared to an ILP. What about the returns? Which one tends to give higher returns?
Reply: Different unit trusts and ILPs have different charges. It is very difficult to generalise. Many of them (except for NTUC Income) aim to make much profit, so they give less to the investors.
3. If I were to invest in an ILP, say the ideal plan, is the insurance component compulsory? Can I opt for 100% into investment alone?
Reply: If you buy our ideal plan, it is not compulsory to pay for insurance. You can opt for 100% investment. You can buy insurance separately, if you wish. We offer low cost term insurance.
TO FIND OUT MORE.
I suggest that you attend my education talk. You can register for the "financial tips for the young" http://www.income.coop/seminar/
You can also see a salaried consultant by visiting our business center.
http://www.income.coop/businesscentre/
1. According to Dr Money, he has grouped unit trust seperately from insurance (ie ILP). Please explain the difference.
Reply: An ILP is offered by an insurnce company. It combines insurance with investment. An insurance adviser sells the product.
A unit trust is operated by a fund manager and distributed by a bank or a financial adviser. Apart from the charge by the unit trust operator, the financial adviser usually add another layer of charge.
2. Does that mean that unit trust usually charges a higher sales fee as compared to an ILP. What about the returns? Which one tends to give higher returns?
Reply: Different unit trusts and ILPs have different charges. It is very difficult to generalise. Many of them (except for NTUC Income) aim to make much profit, so they give less to the investors.
3. If I were to invest in an ILP, say the ideal plan, is the insurance component compulsory? Can I opt for 100% into investment alone?
Reply: If you buy our ideal plan, it is not compulsory to pay for insurance. You can opt for 100% investment. You can buy insurance separately, if you wish. We offer low cost term insurance.
TO FIND OUT MORE.
I suggest that you attend my education talk. You can register for the "financial tips for the young" http://www.income.coop/seminar/
You can also see a salaried consultant by visiting our business center.
http://www.income.coop/businesscentre/
Saturday, May 13, 2006
How to save for a child?
QUESTION:
I really enjoyed reading your blog. You never failed to give some of your advice and experience with your readers.
May I know if there are any investment or insurance products suitable for children?
School-going children receive pocket money from their parents. Parents usually save the money into the banks which give very little interest. Are there any suitable financial products which allow this money to grow?
MY REPLY
I suggest that you save in an Ideal plan as well, if the saving is at least $50 a month. The saving can be accumulated to meet the cost of tertiary education. I will ask my colleague to call you and explain how this works.
I really enjoyed reading your blog. You never failed to give some of your advice and experience with your readers.
May I know if there are any investment or insurance products suitable for children?
School-going children receive pocket money from their parents. Parents usually save the money into the banks which give very little interest. Are there any suitable financial products which allow this money to grow?
MY REPLY
I suggest that you save in an Ideal plan as well, if the saving is at least $50 a month. The saving can be accumulated to meet the cost of tertiary education. I will ask my colleague to call you and explain how this works.
Equity markets are "correcting"
The major equity markets (USA, Japan, Europe) have dropped by about 3% during the past week. It is described as a "correction".
This is healthy, and is to be expected. It is good to have a correction, after moving up strongly for the past 2 years.
I am getting ready to increase my investment. I will probably wait for 1 or 2 weeks before I decide. If the market falls by a further 3 to 5 percent, it will represent good value.
For my current investment, I will keep it fully invested, as a long term investment. I do not wish to get out, because I may miss the turn-around in the market.
This is healthy, and is to be expected. It is good to have a correction, after moving up strongly for the past 2 years.
I am getting ready to increase my investment. I will probably wait for 1 or 2 weeks before I decide. If the market falls by a further 3 to 5 percent, it will represent good value.
For my current investment, I will keep it fully invested, as a long term investment. I do not wish to get out, because I may miss the turn-around in the market.
Advice: Don't buy structured products
Summary of an article from Dr Money's website: www.askdrmoney.com
Structured investments, deposits and guaranteed funds are a popular investment, distributed mostly by banks.
Issuers came up with something like a customised gambling product. The product might take 20 well-known stocks, for example, and let people place bets on which three would appreciate the most over 5 years.
It is difficult to guess the outcome. The odds are structured in such a way to give you a big payout if you win. And it provides you a "guaranteed" minimum return. It looks like a good investment, with no risks and good upside potential.
But it has many negative features.
1. Distributors are mostly banks. Their standard fee is 3 per cent of the amount invested. This charge is deducted from the net asset value of your investment. If you sell your investment immediately after purchase, you would receive back 97 per cent of your investment. Ultimately, the sales commission reduces your yield.
2. Issuers are the architects who design the structured product. They invest your money, after the distributor sends it to them. It is NOT possible to know how much the issuer takes from returns. You can ask the issuer or the distributor but they won’t tell you. It could be, say a fixed 2 per cent per year when total returns are between 2 and 6 per cent.
3. The structured product is linked to return from the underlying investments. If the return is high, the issuers have found a way to give you only a part of the gain, and to keep the excess return for themselves. They cap your return.
You can never know if you are getting a fair return for your money. It depends on how the product is designed.
Structured investments, deposits and guaranteed funds are a popular investment, distributed mostly by banks.
Issuers came up with something like a customised gambling product. The product might take 20 well-known stocks, for example, and let people place bets on which three would appreciate the most over 5 years.
It is difficult to guess the outcome. The odds are structured in such a way to give you a big payout if you win. And it provides you a "guaranteed" minimum return. It looks like a good investment, with no risks and good upside potential.
But it has many negative features.
1. Distributors are mostly banks. Their standard fee is 3 per cent of the amount invested. This charge is deducted from the net asset value of your investment. If you sell your investment immediately after purchase, you would receive back 97 per cent of your investment. Ultimately, the sales commission reduces your yield.
2. Issuers are the architects who design the structured product. They invest your money, after the distributor sends it to them. It is NOT possible to know how much the issuer takes from returns. You can ask the issuer or the distributor but they won’t tell you. It could be, say a fixed 2 per cent per year when total returns are between 2 and 6 per cent.
3. The structured product is linked to return from the underlying investments. If the return is high, the issuers have found a way to give you only a part of the gain, and to keep the excess return for themselves. They cap your return.
You can never know if you are getting a fair return for your money. It depends on how the product is designed.
Friday, May 12, 2006
Insurance Business Center
FROM A CUSTOMER
Dear Mr Tan,
I applause the new initiative from NTUC Income to create the insurance business center.
While many insurance companies invest large portion of their revenue to re-invent their corporate branding, NTUC Income created this business model to benefit your policy-holders where affect them most ... pocket !
Moreover, this business model will guide insurance advisors to be more service orientated and not strictly committing to sales target. A potential customer can be assured that the recommendation by insurance advisors from Insurance Business Centres is genuinely suitable for them and, or their requirement(s).
I have no doubt that this business model will obviously take some time to materialize since this is a brand new concept that seem impossible previously. Clearly this is another resemblance of a budget terminal or budget airlines; but most importantly, does not reduce in it's coverage.
VF
Dear Mr Tan,
I applause the new initiative from NTUC Income to create the insurance business center.
While many insurance companies invest large portion of their revenue to re-invent their corporate branding, NTUC Income created this business model to benefit your policy-holders where affect them most ... pocket !
Moreover, this business model will guide insurance advisors to be more service orientated and not strictly committing to sales target. A potential customer can be assured that the recommendation by insurance advisors from Insurance Business Centres is genuinely suitable for them and, or their requirement(s).
I have no doubt that this business model will obviously take some time to materialize since this is a brand new concept that seem impossible previously. Clearly this is another resemblance of a budget terminal or budget airlines; but most importantly, does not reduce in it's coverage.
VF
Thursday, May 11, 2006
Be careful about product advertisements
Here is a product advertised by a bank: "Fixed payout of 5.5 %, 6 months after the inception date."
Here are the facts:
- Many customers think that this means 5.5% return for 6-month return, or 11 % per year. This is not correct.
- To make this payout, the fund dips into the its capital. The fund is giving back part of your own investment and calling it a "payout".
- The actual return is linked to products and events which are very difficult to forecast. In this case, "the fund is linked to 6 Asia-Pacific market indices" and their performance over a period of 4 years and 11 months. You do not know what you will get.
GET MORE INFORMATION ABOUT BANK PRODUCTS FROM:
http://www.askdrmoney.com
Here are the facts:
- Many customers think that this means 5.5% return for 6-month return, or 11 % per year. This is not correct.
- To make this payout, the fund dips into the its capital. The fund is giving back part of your own investment and calling it a "payout".
- The actual return is linked to products and events which are very difficult to forecast. In this case, "the fund is linked to 6 Asia-Pacific market indices" and their performance over a period of 4 years and 11 months. You do not know what you will get.
GET MORE INFORMATION ABOUT BANK PRODUCTS FROM:
http://www.askdrmoney.com
30,000 happy policyholders
30,700 policies will have their policies maturing in 2006. The total payout is $623 million. The average payout is $20,300 per policy.
If these policyholders had taken a similar policy from another insurer, they will receive 10% to 15% less than the payout from NTUC Income. Why? The other insurers pay more commission to their agents and give more profit to their shareholders (at the expense of the policyholders).
NTUC Income is able to give a better return to our policyholders because we keep our expenses low, and give more of the surplus to our policyholders (instead of shareholders).
Our recent comparision show that our payout is 10% to 15% more than similar policies taken through our competitors. The difference could be more, for the longer term policies.
It is better to insure with NTUC Income. You will benefit in the long term.
If these policyholders had taken a similar policy from another insurer, they will receive 10% to 15% less than the payout from NTUC Income. Why? The other insurers pay more commission to their agents and give more profit to their shareholders (at the expense of the policyholders).
NTUC Income is able to give a better return to our policyholders because we keep our expenses low, and give more of the surplus to our policyholders (instead of shareholders).
Our recent comparision show that our payout is 10% to 15% more than similar policies taken through our competitors. The difference could be more, for the longer term policies.
It is better to insure with NTUC Income. You will benefit in the long term.
Good return on money market fund
NTUC Income has a money market fund. It will be invested mainly in interbank deposits, which now yield 3.15% pa to 3.38% for maturity of up to 12 months. These deposits are readily available and liquid.
We deduct 0.25% from the money market fund to cover our expenses. This will give a net yield of about 3% for investors. It is very attractive.
As the money is invested with a bank, it is quite safe. Almost like placing a fixed deposit with a bank.
How do you invest in our money market fund? We are launching the Flexi-Cash policy, which is invested in this fund. Watch out for our advertisement in two weeks' time.
We deduct 0.25% from the money market fund to cover our expenses. This will give a net yield of about 3% for investors. It is very attractive.
As the money is invested with a bank, it is quite safe. Almost like placing a fixed deposit with a bank.
How do you invest in our money market fund? We are launching the Flexi-Cash policy, which is invested in this fund. Watch out for our advertisement in two weeks' time.
Poor return from a policy sold through a bank
A client bought a policy from another insurer sold through a bank. She pays a premium of $50 a month through GIRO. The return is guaranteed to be $10,360 on the maturity date at the end of 15 years.
Is this a good return?
No. The return is 1.85% per annum.
Many people are not well educated. The older folks are being talked into buying a policy that they do not know in details.
My advice. If you are approached to buy a policy through a bank, and you do not know much about it, please ask before you get committed.
Know what you buy.
Is this a good return?
No. The return is 1.85% per annum.
Many people are not well educated. The older folks are being talked into buying a policy that they do not know in details.
My advice. If you are approached to buy a policy through a bank, and you do not know much about it, please ask before you get committed.
Know what you buy.
Client invested another $300,000 in the Combined Fund
FROM AN INSURANCE ADVISER:
I just had the opportunity to come back with a $300,000 from a client who had invested on Growth Fund with us more than a year ago. He knows the potential of this fund. I updated him with a spreadsheet of his investments.
CEO Tan Kin Lian sent this message to my client:
"I have most of my personal savings in the Combined Fund (Growth). I think that it is good for the long term.
Another good fund is Global Equity. I believe, that over 20 years, this fund is likely to earn at least 6% to 8% per annum, and quite safe. It may go up and down, but the average should be within this range. The average for the past 10 and 20 years is closer to 8%."
When I met him last evening, he told me, market seems high now, but it's okay, it is for long term. How old is he? 56.
He said, put the $300,000 in Growth Fund. Wow....
I just had the opportunity to come back with a $300,000 from a client who had invested on Growth Fund with us more than a year ago. He knows the potential of this fund. I updated him with a spreadsheet of his investments.
CEO Tan Kin Lian sent this message to my client:
"I have most of my personal savings in the Combined Fund (Growth). I think that it is good for the long term.
Another good fund is Global Equity. I believe, that over 20 years, this fund is likely to earn at least 6% to 8% per annum, and quite safe. It may go up and down, but the average should be within this range. The average for the past 10 and 20 years is closer to 8%."
When I met him last evening, he told me, market seems high now, but it's okay, it is for long term. How old is he? 56.
He said, put the $300,000 in Growth Fund. Wow....
Wednesday, May 10, 2006
Policyholder got an attractive return
AN INSURANCE ADVISER SENT THIS MESSAGE TO ME
I am writing on behalf of my prospect whose NTUC policy is about to mature on 24th June 2006.
When she bought the policy 19 yrs ago, her son was 2 yrs old so based on him going to University at age 21, the NTUC adviser recommended her the 19 year endowment.
She has been quite happy with NTUC having paid quite good bonuses over the years, even during the SARS, Sept 911 & various other difficult periods.
However, recently she was very disappointed when she received your company's letter advising her of her maturity benefit.
Her disappointed was in the vast difference between her gross maturity benefit of $41,458 and the total projected maturity of $45,012. This represents a hefty 7.89% less than the projected $45,012.
Hence, she has expressed her extreme loss of confidence towards NTUC.
-------------
HERE IS MY REPLY.
The policyholder paid a monthly premium of $102.70 for 19 years. Total premium paid for 19 years is $23,416. The maturing benefit of $41,458 represents a yield of 5.8% per annum.
You can tell the policyholder that the return of 5.8% per annum is quite attractive.
Our payout is about 10% to 15% higher than the payout offered by other insurance companies under a similar plan.
I am writing on behalf of my prospect whose NTUC policy is about to mature on 24th June 2006.
When she bought the policy 19 yrs ago, her son was 2 yrs old so based on him going to University at age 21, the NTUC adviser recommended her the 19 year endowment.
She has been quite happy with NTUC having paid quite good bonuses over the years, even during the SARS, Sept 911 & various other difficult periods.
However, recently she was very disappointed when she received your company's letter advising her of her maturity benefit.
Her disappointed was in the vast difference between her gross maturity benefit of $41,458 and the total projected maturity of $45,012. This represents a hefty 7.89% less than the projected $45,012.
Hence, she has expressed her extreme loss of confidence towards NTUC.
-------------
HERE IS MY REPLY.
The policyholder paid a monthly premium of $102.70 for 19 years. Total premium paid for 19 years is $23,416. The maturing benefit of $41,458 represents a yield of 5.8% per annum.
You can tell the policyholder that the return of 5.8% per annum is quite attractive.
Our payout is about 10% to 15% higher than the payout offered by other insurance companies under a similar plan.
Comparison of premium rates - medical plans
Incomeshield, subject to category limits
Total premium for age 20 to 80
Plan Income Co-G Co-A Co-P
P 47334 NA NA NA
A 32790 36463 42652 42670
B 19648 23127 25650 26765
Total premium for age 40 to 80
Plan Income Co-G Co-A Co-P
P 44456 NA NA NA
A 30651 34209 40265 40320
B 18464 21747 25019 24249
Enhanced Incomeshield, ie "as charged"
Total premium for age 20 to 80
Plan Income Co-V
Preferred 56405 58283
Advantage 40559 44866
Basic 22945 30267
Total premium for age 40 to 80
Plan Income Co-V
Preferred 53141 54777
Advantage 38301 42410
Basic 21511 28508
Tuesday, May 09, 2006
I moved to Global Equity
I have $120,000 of my CPF savings invested in the Combined Fund (Growth) and Singapore Equity Fund. I have just decided to switch these investments into the Global Equity fund.
Here are my reasons.
1. The forecast PE ratio of USA and UK are expected to drop by about 15% to below 16 times. This suggest that earnings may increase by 15% during the next 12 months.
2. The forecast PE ratio of Singapore is likely to increase by 15% to above 16 times. This suggest that the earnings of Singapore companies may drop by 15%.
3. The Singapore market has done very well up to now. It is moving up further, after the general election. I decided that it is time to make a switch.
I continue to have other investments in the Combined Fund (Growth) and in other funds that are invested in Singapore equities.
Here are my reasons.
1. The forecast PE ratio of USA and UK are expected to drop by about 15% to below 16 times. This suggest that earnings may increase by 15% during the next 12 months.
2. The forecast PE ratio of Singapore is likely to increase by 15% to above 16 times. This suggest that the earnings of Singapore companies may drop by 15%.
3. The Singapore market has done very well up to now. It is moving up further, after the general election. I decided that it is time to make a switch.
I continue to have other investments in the Combined Fund (Growth) and in other funds that are invested in Singapore equities.
Do you believe a broker who is driven by commission?
Some brokers and agents prefer to sell the medical or motor insurance plans offered by our competitors.
Why?
They earn a higher commission from the competitor.
Although the premium rates offered by NTUC Income are lower, they discourage consumers to buy from us by making statements such as "the service is poor; it is difficult to make a claim".
Do you believe the broker or agent? If our service is poor, why are we able to get a large market share?
Do not believe someone who is driven by their personal benefit. Check out for yourself.
Why?
They earn a higher commission from the competitor.
Although the premium rates offered by NTUC Income are lower, they discourage consumers to buy from us by making statements such as "the service is poor; it is difficult to make a claim".
Do you believe the broker or agent? If our service is poor, why are we able to get a large market share?
Do not believe someone who is driven by their personal benefit. Check out for yourself.
Enhanced Incomeshield
NTUC Income now offers the Enhanced Incomeshield. It pays for medical expenses in hospital "as charged".
A policyholder asked me, "Why is NTUC Income covering 'as charged', when I indicated earlier that this may lead to escalation in medical expenses?"
Here are three reasons.
1. Some policyholders indicate that they are willing to pay a higher premium for the "as charged" plan. We wish to meet the wishes of these policyholders.
2. Our "as charged" plan requires prior approval, except for emergency. This is to allow our medical adviser to give a second opinion of the proposed treatment and to avoid unnecessary treatment. In most cases, approval will be given within one day.
3. We will continue to offer the basic Incomeshield, which is subject to limits for each category of treatment. Our basic plan will continue to be the most affordable in the market.
Initially, the enhanced Incomeshield cost about 15% higher than the similar basic plan, but this difference may widen in the future, based on the claim experience. We will try our best to keep the premium rates at an affordable level for the enhanced plan. It depends on our ability to prevent escalation in medical expenses.
If the gap widens, some policyholders may wish to opt back into the similar basic plan (which will continue to be avaialable) to enjoy the lower premium rates.
Our strategy is to offer a choice for consumers.
A policyholder asked me, "Why is NTUC Income covering 'as charged', when I indicated earlier that this may lead to escalation in medical expenses?"
Here are three reasons.
1. Some policyholders indicate that they are willing to pay a higher premium for the "as charged" plan. We wish to meet the wishes of these policyholders.
2. Our "as charged" plan requires prior approval, except for emergency. This is to allow our medical adviser to give a second opinion of the proposed treatment and to avoid unnecessary treatment. In most cases, approval will be given within one day.
3. We will continue to offer the basic Incomeshield, which is subject to limits for each category of treatment. Our basic plan will continue to be the most affordable in the market.
Initially, the enhanced Incomeshield cost about 15% higher than the similar basic plan, but this difference may widen in the future, based on the claim experience. We will try our best to keep the premium rates at an affordable level for the enhanced plan. It depends on our ability to prevent escalation in medical expenses.
If the gap widens, some policyholders may wish to opt back into the similar basic plan (which will continue to be avaialable) to enjoy the lower premium rates.
Our strategy is to offer a choice for consumers.
Monday, May 08, 2006
Poor return from 10 year endowment
A retiree asked me, "Mr Tan, I took a 10 year endowment from another insurance company (ie not NTUC Income). I paid $1,200 a year. The policy originally projected a return of $14,000 on maturity. It matured recently and I received just $60 more than the $12,000 that was paid. Just $60. Is this a fair return?"
I replied "No. It is a poor return".
She asked, "Why is it so poor?"
I replied, "The insurance company paid high commission to the agent. The investment return during the past 10 years was low. After deducting expenses and the profit for their shareholders, they are only able to just return your premium back to you."
If the retiree had taken a 10 year endowment from NTUC Income, our payout would be 10% to 15% higher. We pay a modest commision to our agent, and our shareholders get only a modest rate of dividend. Most of the returns are given to our policyholders.
Advice: Insure with NTUC Income. We keep our expenses low. We distribute most of the profits to our policyholders. Our shareholders get a very small share of the profits. We are a cooperative society.
I replied "No. It is a poor return".
She asked, "Why is it so poor?"
I replied, "The insurance company paid high commission to the agent. The investment return during the past 10 years was low. After deducting expenses and the profit for their shareholders, they are only able to just return your premium back to you."
If the retiree had taken a 10 year endowment from NTUC Income, our payout would be 10% to 15% higher. We pay a modest commision to our agent, and our shareholders get only a modest rate of dividend. Most of the returns are given to our policyholders.
Advice: Insure with NTUC Income. We keep our expenses low. We distribute most of the profits to our policyholders. Our shareholders get a very small share of the profits. We are a cooperative society.
Are the stockmarkets too high?
Based on current interest rate, it is possible to justify a PE ratio of 20 times.
Here are the PE ratio of the various markets:
Based on estimate PE (ie for next year), Japan and Singapore looks relatively expensive, while South Korea and Thailand looks cheap.
However, at estimated PE of 16 times, the Singapore market still looks acceptable. So, there is nothing to be concerned about.
It seems that the profit is forecasted to drop for Japan, Singapore, Hong Kong, South Korea and Thailand over the next 12 months.
P/E is calculated on trailing 12 months net earnings (after tax) per share
of component stocks. Est P/E is calculated based on IBES earnings estimates.
I
Here are the PE ratio of the various markets:
World Price-Earnings
P/E Est. P/E
Japan (Nikkei 225) 43.93 49.64
Singapore (STI) 14.51 16.35
US (S&P500) 17.97 15.59
Indonesia (JCI) 20.27 15.93
Malaysia (KLCI) 15.78 15.91
Taiwan (TWSE) 19.97 15.12
Italy (MIB30) 15.19 14.29
Hong Kong (HSI) 13.32 14.21
Germany (Dax) 14.94 13.95
UK (FTSE100) 15.43 13.37
South Korea (KOSPI) 12.45 13.34
France (CAC 40) 14.68 13.33
Thailand (SET) 10.58 11.59
P/E is calculated on trailing 12 months net earnings (after tax) per share of component stocks.
Est P/E is calculated based on IBES earnings estimates.
Based on estimate PE (ie for next year), Japan and Singapore looks relatively expensive, while South Korea and Thailand looks cheap.
However, at estimated PE of 16 times, the Singapore market still looks acceptable. So, there is nothing to be concerned about.
It seems that the profit is forecasted to drop for Japan, Singapore, Hong Kong, South Korea and Thailand over the next 12 months.
P/E is calculated on trailing 12 months net earnings (after tax) per share
of component stocks. Est P/E is calculated based on IBES earnings estimates.
I
Safe Deposit Box
Many people queue for a safe deposit box provided by their bank.
Here is another option. NTUC Income has partnered with CISCO to provide a safe deposit box to our policyholders on attractive terms. Their boxes are located at Paya Lebar.
A few policyholders have taken up the offer. We interviewed 30 customers why they like the CISCO service. Here are their views:
- Longer access hours 41%
- Able to get the box immediately 21%
- CISCO branding - 15%
- Stay near to CISCO 13%
- Promotion 5%
- No fixed deposit required 5%
If you or your friend is looking for a safe deposit box, send an e-mail to edgar@income.com.sg.
Here is another option. NTUC Income has partnered with CISCO to provide a safe deposit box to our policyholders on attractive terms. Their boxes are located at Paya Lebar.
A few policyholders have taken up the offer. We interviewed 30 customers why they like the CISCO service. Here are their views:
- Longer access hours 41%
- Able to get the box immediately 21%
- CISCO branding - 15%
- Stay near to CISCO 13%
- Promotion 5%
- No fixed deposit required 5%
If you or your friend is looking for a safe deposit box, send an e-mail to edgar@income.com.sg.
Sunday, May 07, 2006
Feedback: Financial Tips for the Young
E-MAIL FROM SOMEONE WHO ATTENDED MY TALK: FINANCIAL TIPS FOR THE YOUNG.
Many thank for your interesting talk on financial tip for the young . I enjoy your talk. Due to time constraint, I was not able to get some queries answered. I hope to get the answer through e-mail .
1) You mention that the combined fund charges 1% annual fee. May I know the expense ratio of combined fund?
Reply: I am not clear what is being used to compute the expense ratio. Anyway, you can look at the comparison in this webpage by Dr Money:
http://www.askdrmoney.com/Ins_ILP_SP.htm
It shows NTUC Income's expense ratio to be 1% and other funds to be 1.5% to 2.5% per annum.
2) Other than through an insurance plan, can I invest in the combined fund directly through other distributers, such as Fundsupermart, DollarDex, etc
Reply: You can only invest through our insurance plan (Flexi-Link). Our fee is quite low. You only pay a 3.5% upfront spread. If you invest a large sum during our promotion, you give you bonus unit of up to 2%. So, this reduces the upfront fee to only 1.5%. You get some life insurance cover for free. So, the Flexi-Link plan is almost as good as any unit trust.
3) You mention that the return of combined fund since 2003 have exceed the target 6% return per year. Where can I see the information on NTUC income funds, such as benchmark, annual return since inception, turnover ratio, etc.
Reply: you can get the information from this webpage: http://www.income.coop/insurance/flexilink/
4) I understand from the talk that we shall invest in a fund that offer low cost. There is an asset class like ETF exchange traded fund, where the annual charges is only 0.3%, which is lower than 1% for the combined fund. What is your comment?
Reply: Yes, it is good for you to invest in ETF. It comes with low charges.
Actually, a portion of our Singapore Equity fund is invested in ETF. So, we are reducing our annual charge for the Singapore Equity fund to about 0.6% In my view, it is easier to invest through the FlexiLink from NTUC Income.
5) You mention that an investor should be wary of muliple layer of charges when investing in unit trust. Are you referring to a feeder fund that pass the money to mother fund? How can a retail investor find out about these charges? Most of the charges of unit trust are hidden and are not transparent to investor.
Reply: Yes, most of the funds hide this fact. It is quite difficult for you to find out. I am not able to find out myself.
6) You recommended iYoung plan. If I buy iYoung at age 27, can I still remain cover after age 30. If not, what is the alternative cheap term insurance ?
Reply: I suggest that you buy our low cost term assurance now, rather than i-Young (which is intended for someone in the early 20s.
You should make a financial plan now and invest in the Ideal plan with low cost term assurance.
7) Thank you for providing your time, effort and resource to educate the public like me. I enjoyed your talk .
Reply: Please encourage your friends and colleagues to attend my educational talks. A list of talks is given in our website:
http://www.income.coop/seminar/
Many thank for your interesting talk on financial tip for the young . I enjoy your talk. Due to time constraint, I was not able to get some queries answered. I hope to get the answer through e-mail .
1) You mention that the combined fund charges 1% annual fee. May I know the expense ratio of combined fund?
Reply: I am not clear what is being used to compute the expense ratio. Anyway, you can look at the comparison in this webpage by Dr Money:
http://www.askdrmoney.com/Ins_ILP_SP.htm
It shows NTUC Income's expense ratio to be 1% and other funds to be 1.5% to 2.5% per annum.
2) Other than through an insurance plan, can I invest in the combined fund directly through other distributers, such as Fundsupermart, DollarDex, etc
Reply: You can only invest through our insurance plan (Flexi-Link). Our fee is quite low. You only pay a 3.5% upfront spread. If you invest a large sum during our promotion, you give you bonus unit of up to 2%. So, this reduces the upfront fee to only 1.5%. You get some life insurance cover for free. So, the Flexi-Link plan is almost as good as any unit trust.
3) You mention that the return of combined fund since 2003 have exceed the target 6% return per year. Where can I see the information on NTUC income funds, such as benchmark, annual return since inception, turnover ratio, etc.
Reply: you can get the information from this webpage: http://www.income.coop/insurance/flexilink/
4) I understand from the talk that we shall invest in a fund that offer low cost. There is an asset class like ETF exchange traded fund, where the annual charges is only 0.3%, which is lower than 1% for the combined fund. What is your comment?
Reply: Yes, it is good for you to invest in ETF. It comes with low charges.
Actually, a portion of our Singapore Equity fund is invested in ETF. So, we are reducing our annual charge for the Singapore Equity fund to about 0.6% In my view, it is easier to invest through the FlexiLink from NTUC Income.
5) You mention that an investor should be wary of muliple layer of charges when investing in unit trust. Are you referring to a feeder fund that pass the money to mother fund? How can a retail investor find out about these charges? Most of the charges of unit trust are hidden and are not transparent to investor.
Reply: Yes, most of the funds hide this fact. It is quite difficult for you to find out. I am not able to find out myself.
6) You recommended iYoung plan. If I buy iYoung at age 27, can I still remain cover after age 30. If not, what is the alternative cheap term insurance ?
Reply: I suggest that you buy our low cost term assurance now, rather than i-Young (which is intended for someone in the early 20s.
You should make a financial plan now and invest in the Ideal plan with low cost term assurance.
7) Thank you for providing your time, effort and resource to educate the public like me. I enjoyed your talk .
Reply: Please encourage your friends and colleagues to attend my educational talks. A list of talks is given in our website:
http://www.income.coop/seminar/
Saturday, May 06, 2006
FAQ: Flexi Cash
1. What is this plan
Technically, it is an investment-linked plan that invests your savings in a money market fund. But to you, it may look more like a savings account that pays high interest.
But like a savings account, you can withdraw your money at any time. You are not locked in for one or two years, with a penalty for early withdrawal.
Flexi-Cash is a safe investment that pays a high rate of interest.
2. What is the expected return?
The current return on the money market is about 3.3%. After deducting 0.25% per annum for this fund, the net return to the investor is likely to be slightly more than 3%.
As the return on the money market is a floating rate, the return on this plan will also fluctuate. As interest rate is likely to increase in the near future, the return on this plan will similarly improve. You enjoy an attractive, floating rate. You are not locked in to the current rate for one year or longer.
It is possible that interest rate may come down some time in the future. The return from the fund will reduce accordingly.
3. What is the upfront spread and annual fee?
The spread is 0.25%. It is much lower than the spread for equity or bond funds, which vary from 3.5% to 5%.
During the promotion period (ie for the launch of this product), the spread is reduced to 0.1%. Yes, it is just one-tenth of 1 percent.
The annual fee is 0.25 %. It is subtracted from the inter-bank yield. You will be paid the difference, which is now about 3 %.
4. Is there any penalty on withdrawal?
There is no penalty. You can withdraw your savings at any time, based on the bid price (ie net asset value) of the money market fund.
The net asset value should be quite close to your invested capital, less the upfront spread (of only 0.1% during the promotion period), plus the interest earned on the money market (less the annual charge of 0.25%). This is almost like getting an interest rate of 3% on your savings.
5. What is the minimum amount of investment?
For an initial investment, the minimum is $5,000. For topping up
and withdrawal, the minimum is $500.
6. Are the fees subject to change?
Yes. We will give at least 30 days notice of any change. We are likely to
change the initial spread to 0.25% after the promotion period.
We will try to keep the annual fee to the very low rate of 0.25%.
We will only increase it in the future, if the fee is insufficient to meet our
operating expenses, and the interest rate on the money market
exceeds 3.5%.
Our aim is to give an net return that is attractive to our policyholders,
and higher than other types of similar investments.
7. What is the risk of losing my capital?
The risk is very small, almost negligible. The fund is invested in the
interbank market. The borrowers of the funds are the banks. A small
portion is invested in A-rated floating rate notes issued by corporate
bodies. As the rating is A or better, the risk of loss is quite small.
8. Is there any capital guarantee?
The basic product does not come with any capital guarantee.
The investor can buy a capital guarantee separately at the cost of 0.5%
per annum. By paying this cost, the investor is guaranteed that the
principal at the end of 12 months will not be lower than the principal at
the start of the guarantee period.
Effectively this reduces the return by 0.5%. So, if the return is 3%, the
net return after paying for the guarantee is 2.5%.
In my view, there is no need to buy this guarantee, as the risk is
negligible. Even if there is a loss, the amount of capital loss will be
very small.
9. Is there any insurance cover?
The basic policy provides a very nominal insurance cover.
It guarantee that in the event of death, the sum assured will not be lower
than the amount that has been invested. This means that any capital loss
(which is most unlikely) will be insured in the event of death.
If you wish to buy additional cover, we recommend that it be purchased
through a separate low cost term assurance plan.
10. How do I buy this plan?
You can come to our insurance business center (located at Bras Basah Road
and Tampoines Point). You can also see our insurance adviser.
Tentatively, the plan will be available from 1 June 2006.
Technically, it is an investment-linked plan that invests your savings in a money market fund. But to you, it may look more like a savings account that pays high interest.
But like a savings account, you can withdraw your money at any time. You are not locked in for one or two years, with a penalty for early withdrawal.
Flexi-Cash is a safe investment that pays a high rate of interest.
2. What is the expected return?
The current return on the money market is about 3.3%. After deducting 0.25% per annum for this fund, the net return to the investor is likely to be slightly more than 3%.
As the return on the money market is a floating rate, the return on this plan will also fluctuate. As interest rate is likely to increase in the near future, the return on this plan will similarly improve. You enjoy an attractive, floating rate. You are not locked in to the current rate for one year or longer.
It is possible that interest rate may come down some time in the future. The return from the fund will reduce accordingly.
3. What is the upfront spread and annual fee?
The spread is 0.25%. It is much lower than the spread for equity or bond funds, which vary from 3.5% to 5%.
During the promotion period (ie for the launch of this product), the spread is reduced to 0.1%. Yes, it is just one-tenth of 1 percent.
The annual fee is 0.25 %. It is subtracted from the inter-bank yield. You will be paid the difference, which is now about 3 %.
4. Is there any penalty on withdrawal?
There is no penalty. You can withdraw your savings at any time, based on the bid price (ie net asset value) of the money market fund.
The net asset value should be quite close to your invested capital, less the upfront spread (of only 0.1% during the promotion period), plus the interest earned on the money market (less the annual charge of 0.25%). This is almost like getting an interest rate of 3% on your savings.
5. What is the minimum amount of investment?
For an initial investment, the minimum is $5,000. For topping up
and withdrawal, the minimum is $500.
6. Are the fees subject to change?
Yes. We will give at least 30 days notice of any change. We are likely to
change the initial spread to 0.25% after the promotion period.
We will try to keep the annual fee to the very low rate of 0.25%.
We will only increase it in the future, if the fee is insufficient to meet our
operating expenses, and the interest rate on the money market
exceeds 3.5%.
Our aim is to give an net return that is attractive to our policyholders,
and higher than other types of similar investments.
7. What is the risk of losing my capital?
The risk is very small, almost negligible. The fund is invested in the
interbank market. The borrowers of the funds are the banks. A small
portion is invested in A-rated floating rate notes issued by corporate
bodies. As the rating is A or better, the risk of loss is quite small.
8. Is there any capital guarantee?
The basic product does not come with any capital guarantee.
The investor can buy a capital guarantee separately at the cost of 0.5%
per annum. By paying this cost, the investor is guaranteed that the
principal at the end of 12 months will not be lower than the principal at
the start of the guarantee period.
Effectively this reduces the return by 0.5%. So, if the return is 3%, the
net return after paying for the guarantee is 2.5%.
In my view, there is no need to buy this guarantee, as the risk is
negligible. Even if there is a loss, the amount of capital loss will be
very small.
9. Is there any insurance cover?
The basic policy provides a very nominal insurance cover.
It guarantee that in the event of death, the sum assured will not be lower
than the amount that has been invested. This means that any capital loss
(which is most unlikely) will be insured in the event of death.
If you wish to buy additional cover, we recommend that it be purchased
through a separate low cost term assurance plan.
10. How do I buy this plan?
You can come to our insurance business center (located at Bras Basah Road
and Tampoines Point). You can also see our insurance adviser.
Tentatively, the plan will be available from 1 June 2006.
Educational Talk - Financial Tips for the Young
In my educational talk, I give 3 tips to young people. They are worth at least $20,000. It could be worth as much as $150,000.
By choosing the right investment product, i.e. safe, well managed, low charges, a young person can earn up to $150,000 EXTRA over 30 years. This is the additional return, compared to investing in a low yielding investment.
The secret? Invest in a large, well-diversified, low charge fund. Invest in global equity. Invest for the long term.
I conduct a 2 hour educational talk every week. Here are the dates and venue. Just 2 hours, and you can earn $20,000 more. Or maybe, $150,000 more.
Title of talk: Financial Tips for the Young
09-05 7-9 pm Fengshan Community Club, Bedok North
13-05 2-4 pm NTUC Income Center, Bras Basah Road
25-05 7-9 pm HDB Hub, Toa Payoh (Chinese)
27-05 2-4 pm NTUC Income Center, Bras Basah Road
To attend: call 6877 3366. Bring your friend along.
By choosing the right investment product, i.e. safe, well managed, low charges, a young person can earn up to $150,000 EXTRA over 30 years. This is the additional return, compared to investing in a low yielding investment.
The secret? Invest in a large, well-diversified, low charge fund. Invest in global equity. Invest for the long term.
I conduct a 2 hour educational talk every week. Here are the dates and venue. Just 2 hours, and you can earn $20,000 more. Or maybe, $150,000 more.
Title of talk: Financial Tips for the Young
09-05 7-9 pm Fengshan Community Club, Bedok North
13-05 2-4 pm NTUC Income Center, Bras Basah Road
25-05 7-9 pm HDB Hub, Toa Payoh (Chinese)
27-05 2-4 pm NTUC Income Center, Bras Basah Road
To attend: call 6877 3366. Bring your friend along.
My own flexible annuity
I have created my own flexible annuity.
I invest my savings in the Flexi-Link plan. It is invested in the combined fund (growth) and in Singapore equity. I may switch a portion into Global equity within two years.
I have started to make monthly withdrawal from my Flexilink. Since I am still working, I just make a token withdrawal of $100 each month. It is deducted from my Flexi-Link and credited to my bank account during the first week of each month.
This is working well. I get an e-mail each month saying that $100 is credited credited to my bank account, and x number of units are encashed. I checked my bank account (through the internet) and found the $100 has been credited.
When I retire in a few years time, I will increase the monthly withdrawal to $3,000. I may change it to a larger or smaller sum, according to my needs. It is flexible.
My investments produced a yield of about 15% per annum for the past three years. Wow!
Looking towards the future, I hope to get between 6% to 8% per annum over the long term. This is possible, based on the benchmark return on equity for the past 10, 20 and 30 years.
I invest my savings in the Flexi-Link plan. It is invested in the combined fund (growth) and in Singapore equity. I may switch a portion into Global equity within two years.
I have started to make monthly withdrawal from my Flexilink. Since I am still working, I just make a token withdrawal of $100 each month. It is deducted from my Flexi-Link and credited to my bank account during the first week of each month.
This is working well. I get an e-mail each month saying that $100 is credited credited to my bank account, and x number of units are encashed. I checked my bank account (through the internet) and found the $100 has been credited.
When I retire in a few years time, I will increase the monthly withdrawal to $3,000. I may change it to a larger or smaller sum, according to my needs. It is flexible.
My investments produced a yield of about 15% per annum for the past three years. Wow!
Looking towards the future, I hope to get between 6% to 8% per annum over the long term. This is possible, based on the benchmark return on equity for the past 10, 20 and 30 years.
Lifestyle funds
Some fund managers advocate investing in lifestyle funds. For example:
- for young investors: high proportion of equities
- for older investors: high proportion of bonds
In my view, if the investment is for retirement needs, it is better to invest in equities, even for older people.
If you are now 60, the average lifespan is 20 years. If you draw down your retirement funds in monthly instalments, the average duration of your investments is more than 10 years. So, an equity fund is quite suitable.
When you reach age 70, you can consider to move some of the investments into a bond fund. At that time, you should choose the right time to make a switch. The stockmarket goes in cycles of 3 to 5 years. If you choose the right time during this cycle, you can get an attractive return.
Alternatively, you can cash out and invest in a life annuity.
- for young investors: high proportion of equities
- for older investors: high proportion of bonds
In my view, if the investment is for retirement needs, it is better to invest in equities, even for older people.
If you are now 60, the average lifespan is 20 years. If you draw down your retirement funds in monthly instalments, the average duration of your investments is more than 10 years. So, an equity fund is quite suitable.
When you reach age 70, you can consider to move some of the investments into a bond fund. At that time, you should choose the right time to make a switch. The stockmarket goes in cycles of 3 to 5 years. If you choose the right time during this cycle, you can get an attractive return.
Alternatively, you can cash out and invest in a life annuity.
Create a flexible annuity
Here is a simple way to create your own flexible annuity.
Invest your savings in a global equity fund. It should earn you between 6% to 8% per annum over the long term.
You can make a regular withdrawal of your investments, representing 6% to 10% of your principal.
Assume you invest $500,000 and you wish to withdraw 6%, ie $30,000 a year or $2,500 a month.
If your investments earn 6% or more, you capital will not deplete. In fact, it may grow after allowing for your withdrawal.
If you draw out more than the amount earned, your capital may reduce gradually. But if the excess withdrawal is small, the capital can last for a lifetime.
On death, there is a balance of the capital that can be distributed to your family.
You can have the flexibility to draw out a larger or smaller monthly sum to meet y our needs. You can also draw out an once off amount to meet medical expenses or for a vacation.
At any time, you can calculate how long your capital will last. You can make sure that it will last until you reach (say) 100 years old.
The Flexi-Link plan from NTUC Income allows you to specify a monthly withdrawal from your investments. It also allow you the change the amount.
Invest your savings in a global equity fund. It should earn you between 6% to 8% per annum over the long term.
You can make a regular withdrawal of your investments, representing 6% to 10% of your principal.
Assume you invest $500,000 and you wish to withdraw 6%, ie $30,000 a year or $2,500 a month.
If your investments earn 6% or more, you capital will not deplete. In fact, it may grow after allowing for your withdrawal.
If you draw out more than the amount earned, your capital may reduce gradually. But if the excess withdrawal is small, the capital can last for a lifetime.
On death, there is a balance of the capital that can be distributed to your family.
You can have the flexibility to draw out a larger or smaller monthly sum to meet y our needs. You can also draw out an once off amount to meet medical expenses or for a vacation.
At any time, you can calculate how long your capital will last. You can make sure that it will last until you reach (say) 100 years old.
The Flexi-Link plan from NTUC Income allows you to specify a monthly withdrawal from your investments. It also allow you the change the amount.
Friday, May 05, 2006
Choose a low cost fund and earn $55,000 more!
Some equity funds charge an annual fee of 1%. Some charge 1.5% or even 2%. In some cases, the financial adviser charge a separate layer of fee (say 0.5%) in additional to the fee charged by the fund.
If you invest $100,000 for 20 years, the difference of 1% in annual fee can amount to $55,400. Here is how it works out.
Assume that the average yield on the fund is 7%.
If the net yield is 6% (ie deduct 1% fee), you will get $320,700.
If the net yield is 5% (ie deduct 2% fee), you will get $265,300.
The difference is $55,400.
Wow! That is a lot of money!
Is there a difference in the quality of fund managers?
If you invest in a large, well diversified and properly managed fund, the different funds should earn nearly the same yield over a long period. The higher fee goes to increase profits for shareholders.
So, take my advice. Choose a fund that charges an annual fee of 1% (instead of 2%).
-----------------------
Here are the figures available from the website: www.askdrmoney.com
Best ILP (single premium)
Average Expense Ratio of equity fund
If you invest $100,000 for 20 years, the difference of 1% in annual fee can amount to $55,400. Here is how it works out.
Assume that the average yield on the fund is 7%.
If the net yield is 6% (ie deduct 1% fee), you will get $320,700.
If the net yield is 5% (ie deduct 2% fee), you will get $265,300.
The difference is $55,400.
Wow! That is a lot of money!
Is there a difference in the quality of fund managers?
If you invest in a large, well diversified and properly managed fund, the different funds should earn nearly the same yield over a long period. The higher fee goes to increase profits for shareholders.
So, take my advice. Choose a fund that charges an annual fee of 1% (instead of 2%).
-----------------------
Here are the figures available from the website: www.askdrmoney.com
Best ILP (single premium)
Average Expense Ratio of equity fund
NTUC Income 1.0%
Company G 1.4 %
Company P 1.5 %
Company A 1.9 %
Other insurers 1.7%-2.2%
Flexi-Cash gets good response
I posted some details of an innovative new plan, called Flexi Cash. I received 3 e-mails from readers of my blog within one day. They were interested to find our more details. Wow!
Actually, the Flexi Cash plan will only be available from 1 June 2006. But, as there is strong interest, I shall try to speed it up.
Some details will appear soon in the website www.income.coop. If you are interested, you can register your name at the website. We will come back to you as soon as the details are ready.
Actually, the Flexi Cash plan will only be available from 1 June 2006. But, as there is strong interest, I shall try to speed it up.
Some details will appear soon in the website www.income.coop. If you are interested, you can register your name at the website. We will come back to you as soon as the details are ready.
Thursday, May 04, 2006
Tips for the Young: Educational Talks
Learn about Tips for the Young.
The tips will be worth more than $20,000
Can be as much as $150,000!
Talks will be held on:
9 May
13 May
27 May
Call 6788 3366 (Act now - it is your financial future!)
The tips will be worth more than $20,000
Can be as much as $150,000!
Talks will be held on:
9 May
13 May
27 May
Call 6788 3366 (Act now - it is your financial future!)
Flexi-Cash: Earn 3% or more for your savings (low risk)
NOTE: This is a preliminary announcement. This product
is targetted to be available by 1 Jun3 2006. More
details will be provided later.
--------------------------------------------------------------
An innovate plan from NTUC Income.
Allows you to earn an attractive rate of interest.
Currently, around 3% per annum.
The interest rate will adjust according to the market.
You can earn more, as interest rate is expected to increase.
Very low risk - as the fund is invested in interbank and well rated floating rate notes.
No lock-in period - can withdraw at any time, without penalty.
Footnote:
The return will be based on the money market fund, less 0.25% p.a
Initial spread of only 0.1% (during launch promotion)
Minimum investment of $5,000
is targetted to be available by 1 Jun3 2006. More
details will be provided later.
--------------------------------------------------------------
An innovate plan from NTUC Income.
Allows you to earn an attractive rate of interest.
Currently, around 3% per annum.
The interest rate will adjust according to the market.
You can earn more, as interest rate is expected to increase.
Very low risk - as the fund is invested in interbank and well rated floating rate notes.
No lock-in period - can withdraw at any time, without penalty.
Footnote:
The return will be based on the money market fund, less 0.25% p.a
Initial spread of only 0.1% (during launch promotion)
Minimum investment of $5,000
Monday, May 01, 2006
Tip for the Young: You can get $48,000 more
You can get $48,000 more by investing in a fund with low charges. So pay attention.
You should invest in a large, well diversified fund, and for the long term. This allows you get an attractive rate of return.
You should choose a fund fund that charges you 1% per annum or less. Most funds have charges that amount to 1.5% or 2% per annum. Some funds have double layer of charges that can take away 2% or more.
If your fund earns an average of 7% per annum (before charges), and the fund charge is 1%, you will get a net return of 6%. If the fund charge is 2%, you get a net return of 5%.
What is the difference?
Assume that you save $300 per month over 30 years. The total saving is $108,000.
If the net return of 6% (ie 1% charge), your total amount will be $294,000. If the net return of 5% (ie 2% charge), your total amount will be $246,000. The difference is $48,000.
You can get $48,000 more, just by choosing a low charge fund. The gross earnings in both fund should be the same, as they are large, well diversified and managed by good fund managers.
Why do some funds charge 2%? They want to make more profit for their shareholders. So they pay less to the investors.
Look at the comparison in this website:
http://www.askdrmoney.com/Ins_ILP_SP.htm
Who provies a low cost fund of 1%? NTUC Income!
You should invest in a large, well diversified fund, and for the long term. This allows you get an attractive rate of return.
You should choose a fund fund that charges you 1% per annum or less. Most funds have charges that amount to 1.5% or 2% per annum. Some funds have double layer of charges that can take away 2% or more.
If your fund earns an average of 7% per annum (before charges), and the fund charge is 1%, you will get a net return of 6%. If the fund charge is 2%, you get a net return of 5%.
What is the difference?
Assume that you save $300 per month over 30 years. The total saving is $108,000.
If the net return of 6% (ie 1% charge), your total amount will be $294,000. If the net return of 5% (ie 2% charge), your total amount will be $246,000. The difference is $48,000.
You can get $48,000 more, just by choosing a low charge fund. The gross earnings in both fund should be the same, as they are large, well diversified and managed by good fund managers.
Why do some funds charge 2%? They want to make more profit for their shareholders. So they pay less to the investors.
Look at the comparison in this website:
http://www.askdrmoney.com/Ins_ILP_SP.htm
Who provies a low cost fund of 1%? NTUC Income!
Tip for the Young: This tip is worth at least $20,000
This tip is worth at least $20,000. So, pay attention.
If you save invest in an investment-linked product (ILP), you should study the distribution cost. This is the amount of your savings that is taken away from you to pay the insurance agent.
The distribution charge is not told to you directly. Instead, the insurance company tells you that 20% (say) of your savings is invested for the 1st year, 60% is invested for the second and third year and 100% from the fourth year onwards.
In the above example, a total of 160% of your annual savings (ie 19 months) is used to pay for the distribution cost during the first 3 years.
Take a look at an analysis done in this website:
http://www.askdrmoney.com/Ins_ILP_RP.htm
The distribution cost varies from 7 months (ie NTUC Income) to 19 months (for most other insurers). The difference can be up to 12 months.
NTUC Income takes away less from your savings to pay our agents. A difference of 12 months means that we are investing an additional 12 months of your savings for you, compared to other insurers.
If you save $300 a month, you will get an additional $3,600 in savings by going through NTUC Income. Assuming an average investment yield of 6% per annum for the next 30 years, the additional savings of $1,800 will accumumulate to $20,600 on maturity.
Yes, this tip is worth $20,000 to you.
Here is another valuable tip. If you have recently committed to an expensive ILP plan that takes away up to 18 months of your savings, you have the choice to terminate that plan now. As the distribution cost is being taken away from your savings over 3 years, the actual "loss" to you by terminating now, is much less than 18 months.
You can move to a better plan from NTUC Income. Send an e-mail to me at tankl@income.com.sg.
If you save invest in an investment-linked product (ILP), you should study the distribution cost. This is the amount of your savings that is taken away from you to pay the insurance agent.
The distribution charge is not told to you directly. Instead, the insurance company tells you that 20% (say) of your savings is invested for the 1st year, 60% is invested for the second and third year and 100% from the fourth year onwards.
In the above example, a total of 160% of your annual savings (ie 19 months) is used to pay for the distribution cost during the first 3 years.
Take a look at an analysis done in this website:
http://www.askdrmoney.com/Ins_ILP_RP.htm
The distribution cost varies from 7 months (ie NTUC Income) to 19 months (for most other insurers). The difference can be up to 12 months.
NTUC Income takes away less from your savings to pay our agents. A difference of 12 months means that we are investing an additional 12 months of your savings for you, compared to other insurers.
If you save $300 a month, you will get an additional $3,600 in savings by going through NTUC Income. Assuming an average investment yield of 6% per annum for the next 30 years, the additional savings of $1,800 will accumumulate to $20,600 on maturity.
Yes, this tip is worth $20,000 to you.
Here is another valuable tip. If you have recently committed to an expensive ILP plan that takes away up to 18 months of your savings, you have the choice to terminate that plan now. As the distribution cost is being taken away from your savings over 3 years, the actual "loss" to you by terminating now, is much less than 18 months.
You can move to a better plan from NTUC Income. Send an e-mail to me at tankl@income.com.sg.
Avoid investing in Complex Structured Products
Many banks are offering various variety of complex structured products. They advertise these products aggressively - to bring out the attractive features. But the advertisments do not tell the risk and the negative aspects of these products.
Dr Money (a financial columnist who writes for The New Paper) analyses these products and presents his views in his website:
http://www.askdrmoney.com/Bank_Products_analysis1.htm
It is probably the only place where people can go to find out the facts behind these complex structured products -- (which are practically impossible for the average person to understand).
Take the advice of the a top investment guru over the past decades, Warren Buffet:
"If you can't understand it, don't buy it" -- Warren Buffett
Dr Money (a financial columnist who writes for The New Paper) analyses these products and presents his views in his website:
http://www.askdrmoney.com/Bank_Products_analysis1.htm
It is probably the only place where people can go to find out the facts behind these complex structured products -- (which are practically impossible for the average person to understand).
Take the advice of the a top investment guru over the past decades, Warren Buffet:
"If you can't understand it, don't buy it" -- Warren Buffett
Tips for the Young: Earn $146,000 more on your savings
If you save $300 a month for 30 years, your total saving is $108,000.
The interest that you can earn depends on how your invest your savings.
If you invest in a low risk investment, such as bank deposit, and you earn 2% per annum, you will get $148,000.
If you invest in a large, well diversified fund, with low charges, and you earn 6% per annum, you will be $294,000.
The difference is $146,000. You can get $146,000 more, just by choosing the right type of investment.
If you look at the historical record of the return on equities for the past 10, 20 or 30 years, the average return is actually much higher than 6% per annum. In my view, it is quite safe to assume an average return of 6%, provided that you choose the right fund.
What is the right fund?
- choose a large, well diversified fund (preferably $500 million or more)
- preferably, invest in global equities
- choose a fund with low charges, say 1% per annum or less
- invest for the long term, say 10 to 30 years
- choose a right time to realise your investment (if necessary, wait 1, 2 or 3 years)
- choose an investment fund that acts in the interest of the investors and not the shareholders
Attend an educational seminar conducted by NTUC Income. Visit, http://www.income.coop/seminar/
The interest that you can earn depends on how your invest your savings.
If you invest in a low risk investment, such as bank deposit, and you earn 2% per annum, you will get $148,000.
If you invest in a large, well diversified fund, with low charges, and you earn 6% per annum, you will be $294,000.
The difference is $146,000. You can get $146,000 more, just by choosing the right type of investment.
If you look at the historical record of the return on equities for the past 10, 20 or 30 years, the average return is actually much higher than 6% per annum. In my view, it is quite safe to assume an average return of 6%, provided that you choose the right fund.
What is the right fund?
- choose a large, well diversified fund (preferably $500 million or more)
- preferably, invest in global equities
- choose a fund with low charges, say 1% per annum or less
- invest for the long term, say 10 to 30 years
- choose a right time to realise your investment (if necessary, wait 1, 2 or 3 years)
- choose an investment fund that acts in the interest of the investors and not the shareholders
Attend an educational seminar conducted by NTUC Income. Visit, http://www.income.coop/seminar/
Wednesday, April 26, 2006
Aggressive competition in Motor Insurance
QUESTION FROM JOURNALIST
REPLY BY TAN KIN LIAN
I am writing a story based on what the MAS said last month that motor insurers need to maintain underwriting and pricing discipline.
- Is maintainng underwriting and pricing discipline a challenge for the industry?
Reply: Yes. It is a challenge. Some insurers, with a small volume of risks, do not have adequate statistics on their own claims experience. They use the premium rates charged by other insurers and even give a discount. Their premium rates may not be adequate to cover their claims and expenses, especially if they cannot manage the inflated claims. The shortfall can be as much as 30%. They will suffer a loss and will have to increase their premium rates significantly in the future.
- What has NTUC done in this area?
Reply: NTUC Income review our claim experience every six months. We use the claim experiences to revise our premium rates. We are pro-activly in managing inflated claims and can bring down the claims to a lower level, compared to our competitors. We keep our expenses low and add a modest margin. We are generally able to offer the most competitive rates, and still keep to a modest profit.
- What is NTUC's average motor premium today and is it likely to go lower?
Reply: The average premium for private cars today is $807. This is a reduction of 15% compared to the average premium of 1 year ago.
- Why is there strong competition in motor?
Reply: There is strong competition in motor insurance. Several insurers are charging premium rates below their cost of claims and expenses. The difference can be as much as 30%. This is unsustainable and unsound. They will have to revise their premium rates significantly in the future. Their policyholders will be hit.
- What is NTUC's market share in terms of premiums and vehicles?
Reply: Our market share is now about 35%.
REPLY BY TAN KIN LIAN
I am writing a story based on what the MAS said last month that motor insurers need to maintain underwriting and pricing discipline.
- Is maintainng underwriting and pricing discipline a challenge for the industry?
Reply: Yes. It is a challenge. Some insurers, with a small volume of risks, do not have adequate statistics on their own claims experience. They use the premium rates charged by other insurers and even give a discount. Their premium rates may not be adequate to cover their claims and expenses, especially if they cannot manage the inflated claims. The shortfall can be as much as 30%. They will suffer a loss and will have to increase their premium rates significantly in the future.
- What has NTUC done in this area?
Reply: NTUC Income review our claim experience every six months. We use the claim experiences to revise our premium rates. We are pro-activly in managing inflated claims and can bring down the claims to a lower level, compared to our competitors. We keep our expenses low and add a modest margin. We are generally able to offer the most competitive rates, and still keep to a modest profit.
- What is NTUC's average motor premium today and is it likely to go lower?
Reply: The average premium for private cars today is $807. This is a reduction of 15% compared to the average premium of 1 year ago.
- Why is there strong competition in motor?
Reply: There is strong competition in motor insurance. Several insurers are charging premium rates below their cost of claims and expenses. The difference can be as much as 30%. This is unsustainable and unsound. They will have to revise their premium rates significantly in the future. Their policyholders will be hit.
- What is NTUC's market share in terms of premiums and vehicles?
Reply: Our market share is now about 35%.
Can a bankrupt buy an insurance policy?
QUESTION
I came across your blog recently, and found out your contact. I would like to take this opportunity to clarify some doubts about certain insurance matters.
If one is declared bankrupt, is he still eligible to purchase insurance? Or does he need to seek permission from the relevant authority (Official Assignee) before doing so?
If one purchased insurance without the permission, what are the possible consequences? e.g. in the event of claims, would his claims be confiscated?
-------------------------
REPLY
When a person becomes a bankrupt in law everything he owns (including his insurance policies) becomes the property of the Official Assignee.
He cannot buy an insurance policy without the permission of the Official Assignee.
The Official Assignee can and may give permission to a Bankrupt to buy a reasonable protection policy (i.e. a Term Policy) for the benefit of the bankrupt’s family. This permission has to be given in writing.
A simpler way to address the problem is to get the spouse to buy a policy on the life of the bankrupt. In which case the policy will be owned by the spouse and not the bankrupt and the official assignee will have no say over the policy.
I came across your blog recently, and found out your contact. I would like to take this opportunity to clarify some doubts about certain insurance matters.
If one is declared bankrupt, is he still eligible to purchase insurance? Or does he need to seek permission from the relevant authority (Official Assignee) before doing so?
If one purchased insurance without the permission, what are the possible consequences? e.g. in the event of claims, would his claims be confiscated?
-------------------------
REPLY
When a person becomes a bankrupt in law everything he owns (including his insurance policies) becomes the property of the Official Assignee.
He cannot buy an insurance policy without the permission of the Official Assignee.
The Official Assignee can and may give permission to a Bankrupt to buy a reasonable protection policy (i.e. a Term Policy) for the benefit of the bankrupt’s family. This permission has to be given in writing.
A simpler way to address the problem is to get the spouse to buy a policy on the life of the bankrupt. In which case the policy will be owned by the spouse and not the bankrupt and the official assignee will have no say over the policy.
Tuesday, April 25, 2006
Why do Singaporeans save so little for their retirement?
QUESTION FROM STRAITS TIMES JOURNALIST
A new survey shows that Singaporeans might not have enough money to last them through their retirement years. The research conducted with 1,000 working adults indicated that only one in ten Singaporeans has actively saved for retirement in the last year. The study also shows that 61 per cent are seriously concerned about having too little money during retirement, while 64 per cent of Singaporeans feel they themselves should bear the financial costs of their retirement.
Why do singaporeans save so little? Are singaporeans in deep trouble for their golden years?
REPLY
Ten years ago or earlier, the contribution to the Central Provident Fund was at a high rate. Most people could rely on the CPF for their retirement. Housing prices was at a more affordable level. After paying for their HDB flat, there was sufficient savings left for retirement.
The situation changed during the recent ten years. CPF contribution was reduced. A higher proportion of the contribution was set aside for medical expenses. Repayment for housing take a major portion of the CPF savings.
Many people did not realise the need to make additional savings. The financial products available to them was not satisfactory. The saving in a traditional life insurance product did not give a good return, as a proportion of the premium has to be set aside for the insurance coverage and to pay commission to the insurance agent.
Today, consumers have a better choice.
NTUC Income has launched our Ideal plan. It is an investment-linked plan that encourages regular savings. The savings can be invested in our large, well diversified fund to earn an attractive rate of return. The return during the past three years was exceptionally good, averaging about 15% per annum.
Looking towards the future, we hope that the fund can earn an average of 5% to 7% per annum over the long term. This is not guaranteed. The average return earned over a balanced fund of equity and bond over the past ten years has been about 6% per annum.
Another advantage of our Ideal plan is the flexibility. The consumer can change the amount of regular savings based on their personal circumstances. They can increase or reduce the regular savings, or to stop savings for a short period without suffering any penalty. They can even make cash withdrawals from the plan.
Other insurance companies offer similar products. However, the key advantage of our Ideal plan is the low distribution cost. It works out to an average of 7 months of premium, compared to between 11 to 19 months for similar plans from other insurers.
More details can be found in this website: http://www.askdrmoney.com/Ins_ILP_RP.htm
Our Ideal plan is now actively purchased by consumers as a means to make additional savings for their retirement. The sale of this product has inceased significantly in the past two years.
With a more attractive product, we believe that more people will make additional savings for their retirement. Our insurance advisers are reaching out to educate them on this need.
We also invite the public to learn about insurance in our educational website: www.knowyourinsurance.com.sg
I have another suggestion.
It will be helpful if the government allow a higher amount of tax relief for people to make additional savings for their retirement. Currently, the tax relief is $5,000 per year, inclusive of CPF contributions. If the tax relief is kept at $5,000 and is separate from CPF contribution, it will encourage more people to make this additional savings.
A new survey shows that Singaporeans might not have enough money to last them through their retirement years. The research conducted with 1,000 working adults indicated that only one in ten Singaporeans has actively saved for retirement in the last year. The study also shows that 61 per cent are seriously concerned about having too little money during retirement, while 64 per cent of Singaporeans feel they themselves should bear the financial costs of their retirement.
Why do singaporeans save so little? Are singaporeans in deep trouble for their golden years?
REPLY
Ten years ago or earlier, the contribution to the Central Provident Fund was at a high rate. Most people could rely on the CPF for their retirement. Housing prices was at a more affordable level. After paying for their HDB flat, there was sufficient savings left for retirement.
The situation changed during the recent ten years. CPF contribution was reduced. A higher proportion of the contribution was set aside for medical expenses. Repayment for housing take a major portion of the CPF savings.
Many people did not realise the need to make additional savings. The financial products available to them was not satisfactory. The saving in a traditional life insurance product did not give a good return, as a proportion of the premium has to be set aside for the insurance coverage and to pay commission to the insurance agent.
Today, consumers have a better choice.
NTUC Income has launched our Ideal plan. It is an investment-linked plan that encourages regular savings. The savings can be invested in our large, well diversified fund to earn an attractive rate of return. The return during the past three years was exceptionally good, averaging about 15% per annum.
Looking towards the future, we hope that the fund can earn an average of 5% to 7% per annum over the long term. This is not guaranteed. The average return earned over a balanced fund of equity and bond over the past ten years has been about 6% per annum.
Another advantage of our Ideal plan is the flexibility. The consumer can change the amount of regular savings based on their personal circumstances. They can increase or reduce the regular savings, or to stop savings for a short period without suffering any penalty. They can even make cash withdrawals from the plan.
Other insurance companies offer similar products. However, the key advantage of our Ideal plan is the low distribution cost. It works out to an average of 7 months of premium, compared to between 11 to 19 months for similar plans from other insurers.
More details can be found in this website: http://www.askdrmoney.com/Ins_ILP_RP.htm
Our Ideal plan is now actively purchased by consumers as a means to make additional savings for their retirement. The sale of this product has inceased significantly in the past two years.
With a more attractive product, we believe that more people will make additional savings for their retirement. Our insurance advisers are reaching out to educate them on this need.
We also invite the public to learn about insurance in our educational website: www.knowyourinsurance.com.sg
I have another suggestion.
It will be helpful if the government allow a higher amount of tax relief for people to make additional savings for their retirement. Currently, the tax relief is $5,000 per year, inclusive of CPF contributions. If the tax relief is kept at $5,000 and is separate from CPF contribution, it will encourage more people to make this additional savings.
Monday, April 24, 2006
Guess who says that NTUC Income don't pay claims?
For the past 30 years, our competitors' agents have been trained by their sales managers to tell the customers, "NTUC Income does NOT pay claims".
Is this true? Of course, NOT.
NTUC Income has paid several hundred thousand of claims over the past years, and quite promptly. Our motto is: "Prompt and Fair Settlement of Claims".
Why do these competitors' agents target NTUC Income?
The answer is simple. NTUC Income offers better terms to our customers. It is a fact. The only way to get customers to buy their expensive products (ie pay higher premium to the competitor products) is to tell a lie.
Unfortunately, many Singaporeans believe the lie. They pay a higher premium for the privilege of being served by a more expensive insurance company.
But many more Singaporeans are savvy. They ignore the lie and take their insurance with NTUC Income. We have 1,200,000 policyholders who fit into this category. They know the real facts and make the right choice.
Is this true? Of course, NOT.
NTUC Income has paid several hundred thousand of claims over the past years, and quite promptly. Our motto is: "Prompt and Fair Settlement of Claims".
Why do these competitors' agents target NTUC Income?
The answer is simple. NTUC Income offers better terms to our customers. It is a fact. The only way to get customers to buy their expensive products (ie pay higher premium to the competitor products) is to tell a lie.
Unfortunately, many Singaporeans believe the lie. They pay a higher premium for the privilege of being served by a more expensive insurance company.
But many more Singaporeans are savvy. They ignore the lie and take their insurance with NTUC Income. We have 1,200,000 policyholders who fit into this category. They know the real facts and make the right choice.
I repaired my new car at a quality workshop
I bought a new Mercedes E240 three months ago.
Someone knocked into my car at the car park. It damaged the door. He volunteered to pay for the repair under a private settlement.
I sent it for repair at our quality workshop. It cost $1,400 to change the front passenger door and paint work the side mirror. If my car were to be sent to the distributor, it would have cost $2,700 for the same scope of work.
Although the other party is paying for the repair, I did not send my car to the distributor.
I am not worried about the potential loss of warranty. I think that the distributor cannot enforce it.
Someone knocked into my car at the car park. It damaged the door. He volunteered to pay for the repair under a private settlement.
I sent it for repair at our quality workshop. It cost $1,400 to change the front passenger door and paint work the side mirror. If my car were to be sent to the distributor, it would have cost $2,700 for the same scope of work.
Although the other party is paying for the repair, I did not send my car to the distributor.
I am not worried about the potential loss of warranty. I think that the distributor cannot enforce it.
Is an equity fund appropriate for a retiree?
FROM POLICYHOLDER
I have $150,000 of CPF OA in your Growth fund. I am 61 years old and will not be needing my CPF money.
At the same time I don't know whether it is appropriate for an older person who will be retiring in 6 months time to take risk. I do have additional income from rental and interests from fixed deposits.
I am thinking of switching $20,000 at least to your global equity fund as I think that bonds are not performing well at the moment. I know that the risk is lower with your Growth fund as it is a balanced fund.
Would you advise me to remain with the Growth fund or would you advise me to switch to both Global Equity Fund and Spore Equity Fund or just Global Equity Fund which I think is more diversified.
------------------------------------
MY REPLY
I am 58 years old, and I keep most of my investments in the Growth Fund as well. I intend to invest for the next 20 years, and to withdraw a small sum each month after I retire.
It should be all right to invest in a fund that is largely in equity. By investing for the long term, we diversify our risk.
You can also attend my educational talk. Details of my talks are shown in this weblink: http://www.income.coop/seminar/
I think that this is a good idea to switch part of your investments into an equity fund.
A few months ago, I switched about $100,000 of my investments from the Growth Fund (which is 70% equity and 30% bond) to the Singapore Equity fund. This turned out to be a good decision at that time.
For investors who look towards the long term, I think that the Global Equity Fund may be more appropriate than the Growth Fund.
For the immediate future, there is some uncertainty about the impact of high oil prices on equities, so one has to take this into account.
I have $150,000 of CPF OA in your Growth fund. I am 61 years old and will not be needing my CPF money.
At the same time I don't know whether it is appropriate for an older person who will be retiring in 6 months time to take risk. I do have additional income from rental and interests from fixed deposits.
I am thinking of switching $20,000 at least to your global equity fund as I think that bonds are not performing well at the moment. I know that the risk is lower with your Growth fund as it is a balanced fund.
Would you advise me to remain with the Growth fund or would you advise me to switch to both Global Equity Fund and Spore Equity Fund or just Global Equity Fund which I think is more diversified.
------------------------------------
MY REPLY
I am 58 years old, and I keep most of my investments in the Growth Fund as well. I intend to invest for the next 20 years, and to withdraw a small sum each month after I retire.
It should be all right to invest in a fund that is largely in equity. By investing for the long term, we diversify our risk.
You can also attend my educational talk. Details of my talks are shown in this weblink: http://www.income.coop/seminar/
I think that this is a good idea to switch part of your investments into an equity fund.
A few months ago, I switched about $100,000 of my investments from the Growth Fund (which is 70% equity and 30% bond) to the Singapore Equity fund. This turned out to be a good decision at that time.
For investors who look towards the long term, I think that the Global Equity Fund may be more appropriate than the Growth Fund.
For the immediate future, there is some uncertainty about the impact of high oil prices on equities, so one has to take this into account.
Sunday, April 23, 2006
Visit to Italy
I spent four days in Italy to attend a conference and also to visit Venice for a holiday. Italy is expensive. This must be due to their economic progress, since joining Europe
Thirty years ago, Italy was known to be cheap. Many people took a holiday in Italy for art, culture and to buy cheap things. How things have changed!
I had to pass through immigration in Frankfurt Germany. After that, I am allowed to move freely into Italy and back, without passing through immigration.
I hope that the countries of South East Asia can work together to simplify travel within the region.
Maybe, by working together in a larger economic zone, our countries can make better economic progress, similar to Europe.
Thirty years ago, Italy was known to be cheap. Many people took a holiday in Italy for art, culture and to buy cheap things. How things have changed!
I had to pass through immigration in Frankfurt Germany. After that, I am allowed to move freely into Italy and back, without passing through immigration.
I hope that the countries of South East Asia can work together to simplify travel within the region.
Maybe, by working together in a larger economic zone, our countries can make better economic progress, similar to Europe.
Sunday, April 16, 2006
Have adequate insurance
For the past 25 years, I have the following insurance:
$1,000,000 in personal accident cover
$500,000 in term insurance cover
Each year, I paid $800 for the personal accident insurance and $1,000 for the term insurance.
Nothing happened to me for 25 years. That's good. I do not expect to get the premium back.
I am glad that I paid the premium for the 25 years, as it provided security for my family. If something did happen, my family would have been well taken care of.
$1,000,000 in personal accident cover
$500,000 in term insurance cover
Each year, I paid $800 for the personal accident insurance and $1,000 for the term insurance.
Nothing happened to me for 25 years. That's good. I do not expect to get the premium back.
I am glad that I paid the premium for the 25 years, as it provided security for my family. If something did happen, my family would have been well taken care of.
Leave something for your grandchilren
Someone suggested to me that we should leave something for our grandchildren in our will. This will make them remember us.
Another way is to name them as beneficiary in a life insurance policy. You can also take a single premium policy to give the maturity benefit to a grandchild, when the beneficiary reaches a certain age.
Another way is to name them as beneficiary in a life insurance policy. You can also take a single premium policy to give the maturity benefit to a grandchild, when the beneficiary reaches a certain age.
Thursday, April 13, 2006
Pay less for your travel insurance
NTUC Income charges the lowest premium rates for
comparable benefits.
All plans pay for 100% of emergency medical evacuation
and also cover terrorism. NTUC Income has just removed
the 15% cost-sharing.
The above is the cost per person. If the diffence is
$30, a family of 5 people will have to pay $150
to the other insurer. You can save this sum by
insuring with NTUC Income.
Call 6332 3456.
comparable benefits.
PREMIER PLAN
Benefit Income Co-A Co-X
Death/PTD $200k $200k $250k
Medical Expenses $500k $500k $300k
Premium (Asia - 7 days) $41 $66 $56
Premium (Europe -7days) $68 $80 $76
BASIC PLAN
Death/PTD $100k $150k $150k
Medical Expenses $250k $250k $150k
Premium (Asia - 7 days) $29 $46 $42
Premium (Europe -7days) $51 $70 $61
All plans pay for 100% of emergency medical evacuation
and also cover terrorism. NTUC Income has just removed
the 15% cost-sharing.
The above is the cost per person. If the diffence is
$30, a family of 5 people will have to pay $150
to the other insurer. You can save this sum by
insuring with NTUC Income.
Call 6332 3456.
ILP vs. Unit Trust – which is best?
Editor
Business Times
I refer to the article by Genevieve Cua, “What clients are not told about ILPs” (BT, April 12).
The article does a good job of pointing out the problems of unit trusts and ILPs which are sold by two life insurance companies: Aviva and Manulife. The ILPs and unit trusts offered by these two insurers are nearly identical. Yet the ILPs cost slightly more than the unit trusts.
The conclusion of the article is give by Mr Ben Fok from IPAC financial planners. He says: “My personal opinion is, if you can avoid investing in ILPs, don't invest. Just go for a unit trust.”
Is this good advice? Are unit trusts really cheaper than ILPs?
To find out, it would be useful to compare expense ratios of unit trusts vs. ILPs.
This has been done. A study recently compiled the expense ratios of both and compared them. To standardise, the study excluded bond funds and considered only equity (stock) funds.
For ILPs, the median expense ratio was 1.8 per cent. For unit trusts, it was slightly higher at 2.1 per cent. The difference is a small one.
Of equal importance is that among the 11 insurers, the median expense ratios of their ILPs ranged from a low of 1.0 per cent to a high of 2.2. The range is important since people typically don’t buy an average fund. They buy one or more funds from a single insurer.
The study found the insurers with the lowest expense ratios for ILPs are NTUC Income (1.0 per cent), GreatEastern Life (1.4 per cent) and Prudential (1.5 per cent).
Indeed there are bargains to be found among ILPs.
Source: www.AskDrMoney.com “Best ILPs -- single premium”.
Tan Kin Lian
Chief Executive Officer
NTUC Income
Business Times
I refer to the article by Genevieve Cua, “What clients are not told about ILPs” (BT, April 12).
The article does a good job of pointing out the problems of unit trusts and ILPs which are sold by two life insurance companies: Aviva and Manulife. The ILPs and unit trusts offered by these two insurers are nearly identical. Yet the ILPs cost slightly more than the unit trusts.
The conclusion of the article is give by Mr Ben Fok from IPAC financial planners. He says: “My personal opinion is, if you can avoid investing in ILPs, don't invest. Just go for a unit trust.”
Is this good advice? Are unit trusts really cheaper than ILPs?
To find out, it would be useful to compare expense ratios of unit trusts vs. ILPs.
This has been done. A study recently compiled the expense ratios of both and compared them. To standardise, the study excluded bond funds and considered only equity (stock) funds.
For ILPs, the median expense ratio was 1.8 per cent. For unit trusts, it was slightly higher at 2.1 per cent. The difference is a small one.
Of equal importance is that among the 11 insurers, the median expense ratios of their ILPs ranged from a low of 1.0 per cent to a high of 2.2. The range is important since people typically don’t buy an average fund. They buy one or more funds from a single insurer.
The study found the insurers with the lowest expense ratios for ILPs are NTUC Income (1.0 per cent), GreatEastern Life (1.4 per cent) and Prudential (1.5 per cent).
Indeed there are bargains to be found among ILPs.
Source: www.AskDrMoney.com “Best ILPs -- single premium”.
Tan Kin Lian
Chief Executive Officer
NTUC Income
Reply: What clients are not told about ILPs
Editor
Business Times
I refer to the article entitled “What clients are not told about ILPs” by Genevieve Cua (BT, 12 April).
The article does a good job of highlighting a serious problem: Funds in Singapore cost too much. More than any other insurer, NTUC Income has been fighting this problem with its low-cost funds.
The article concludes with Mr Ben Fok of IPAC saying, “…if you can avoid investing in ILPs, don’t invest. Insurance is for protection, just go for a Unit Trust".
I hold a different view.
In choosing the right investment plan, the investor should consider the following:
- the risk profile of the fund
- the distribution charges
- the fund management fees
- the charges for the insurance protection (in the case of an investment-linked plan)
Many investment plans (ie unit trusts or ILPs) have high distribution charges and fund management fees which are not properly disclosed to the investor. The advisers earn a large share of these fees, and are required to disclose this fact. In spite of it, many layman continue to be confused.
There is an independent comparision of these charges in the website, www.askdrmoney.com.
NTUC Income keeps our charges at a competitive level, so that most of the returns are given back to our investors. Our charges for our ILP funds are generally lower than the unit trusts.
Our fund management fee is about 1% per annum. This fee for most similar funds, including unit trusts, is 1.5% to 2% per annum. Some financial advisers charge a separate level of advisory fee which is additional to the fund management fees at the unit trust level.
Our distribution charges are generally lower than for similar products. Our spread is 3.5%, compared to 5% for similar funds. During our sales promotion, we give a bonus units of up to 2%, which reduces the spread to 1.5%.
Our distribution charge for a regular saving plan is about one third of the cost of similar ILP offered by other insurance plans.
Our total expense ratio is among the lowest for all funds and unit trusts in the market. As the expense ratio is an annual charge, it has the most significant impact in determining the net return to the investor, for a similar risk profile of the investments.
The insurance protection embedded in our ILP plan is offered free of charge. It is funded by the margin in our modest charges.
We provide a low-cost term assurance plan to be bought separately as a rider. The premium is extremely low, and is kept level for the duration of the rider. The cost does not increase with age.
We advise long-term investors to select our combined fund, which is a large, well diversified fund of $3,800 million. It is invested in 900 good quality equity and bond invesments. It is managed by 9 top fund managers around the world. It has earned an attractive return for our investors during the past three years. The fees are among the lowest, ie 1% per annum.
We educate consumers to make the right choice. We invite them to visit our educational website, www.knowyourinsurance.com.sg
Tan Kin Lian
Chief Executive Officer
NTUC Income
Business Times
I refer to the article entitled “What clients are not told about ILPs” by Genevieve Cua (BT, 12 April).
The article does a good job of highlighting a serious problem: Funds in Singapore cost too much. More than any other insurer, NTUC Income has been fighting this problem with its low-cost funds.
The article concludes with Mr Ben Fok of IPAC saying, “…if you can avoid investing in ILPs, don’t invest. Insurance is for protection, just go for a Unit Trust".
I hold a different view.
In choosing the right investment plan, the investor should consider the following:
- the risk profile of the fund
- the distribution charges
- the fund management fees
- the charges for the insurance protection (in the case of an investment-linked plan)
Many investment plans (ie unit trusts or ILPs) have high distribution charges and fund management fees which are not properly disclosed to the investor. The advisers earn a large share of these fees, and are required to disclose this fact. In spite of it, many layman continue to be confused.
There is an independent comparision of these charges in the website, www.askdrmoney.com.
NTUC Income keeps our charges at a competitive level, so that most of the returns are given back to our investors. Our charges for our ILP funds are generally lower than the unit trusts.
Our fund management fee is about 1% per annum. This fee for most similar funds, including unit trusts, is 1.5% to 2% per annum. Some financial advisers charge a separate level of advisory fee which is additional to the fund management fees at the unit trust level.
Our distribution charges are generally lower than for similar products. Our spread is 3.5%, compared to 5% for similar funds. During our sales promotion, we give a bonus units of up to 2%, which reduces the spread to 1.5%.
Our distribution charge for a regular saving plan is about one third of the cost of similar ILP offered by other insurance plans.
Our total expense ratio is among the lowest for all funds and unit trusts in the market. As the expense ratio is an annual charge, it has the most significant impact in determining the net return to the investor, for a similar risk profile of the investments.
The insurance protection embedded in our ILP plan is offered free of charge. It is funded by the margin in our modest charges.
We provide a low-cost term assurance plan to be bought separately as a rider. The premium is extremely low, and is kept level for the duration of the rider. The cost does not increase with age.
We advise long-term investors to select our combined fund, which is a large, well diversified fund of $3,800 million. It is invested in 900 good quality equity and bond invesments. It is managed by 9 top fund managers around the world. It has earned an attractive return for our investors during the past three years. The fees are among the lowest, ie 1% per annum.
We educate consumers to make the right choice. We invite them to visit our educational website, www.knowyourinsurance.com.sg
Tan Kin Lian
Chief Executive Officer
NTUC Income
Monday, April 10, 2006
Reduced special bonus for Prime Life
Several insurers (not NTUC Income) sold large numebrs of Prime Life policies about 20 years ago. They paid a low rate of annual bonus, but promises special bonus of 300%, 400% and 500% of the accunmulated bonus on the 20th, 25th and 30th year.
They were not able to meet their projection. In reality, special bonus rates were something reduced to 100%, 150%, 200% respectively.
The policyhoholders who bought these plans suffered several cuts in their expected bonus payouts.
NTUC Income refused to issue this type of policy. We prefer to pay a higher rate of annual bonus, and to keep our special bonus at 25%. Our policyholders have enjoyed much better bonus compared to Prime Life plans.
They were not able to meet their projection. In reality, special bonus rates were something reduced to 100%, 150%, 200% respectively.
The policyhoholders who bought these plans suffered several cuts in their expected bonus payouts.
NTUC Income refused to issue this type of policy. We prefer to pay a higher rate of annual bonus, and to keep our special bonus at 25%. Our policyholders have enjoyed much better bonus compared to Prime Life plans.
Sunday, April 09, 2006
Special bonus maintained at 25%
NTUC Income pays a special bonus on maturity and death. This is computed at 25% of the accumulated bonus.
We are probably the only insurer that maintains the special bonus even in difficult times. Other insurers has cut their special bonus on several occasions in past years. Their policyholders will suffer a big cut, if their policies matured in these years. The amount of the cut can be more than 10% of the policy proceeds. That is a lot of money.
NTUC Income prefer to adjust the annual bonus to reflect changes in our investment earnings. This ensures that the adjustment applies fairly to all policyholders and is not borne by the policyholders whose policies mature in the current year.
Our policyholders have found our method to be fairer. We are also able to give a higher return to our policyholders in the past years.
We are probably the only insurer that maintains the special bonus even in difficult times. Other insurers has cut their special bonus on several occasions in past years. Their policyholders will suffer a big cut, if their policies matured in these years. The amount of the cut can be more than 10% of the policy proceeds. That is a lot of money.
NTUC Income prefer to adjust the annual bonus to reflect changes in our investment earnings. This ensures that the adjustment applies fairly to all policyholders and is not borne by the policyholders whose policies mature in the current year.
Our policyholders have found our method to be fairer. We are also able to give a higher return to our policyholders in the past years.
Saturday, April 08, 2006
Technology Fund performed well during past 3 years
The Technology Fund managed by NTUC Income started in 2001 and had two bad years.
It performed well during past 3 years (2003 to 2005), as follows:
- actual return (net of manager fee): 18.2%
- benchmark: 17.2% pa.
- outperformance: 1.0% p.a
It continued to perform well during the first quarter of 2006:
- actual return (net of manager fee) 6.4%
- benchmark's 3.4%.
- outperforamnce: 3.0%
During my educational talk for the past year, I was often asked by a participant, "Should I move out of Technology Fund? What is your advice?".
My answer was, "I also invested in the Technology Fund. I have decided to stay invested. The Fund will recover".
My view turned out to be right.
It performed well during past 3 years (2003 to 2005), as follows:
- actual return (net of manager fee): 18.2%
- benchmark: 17.2% pa.
- outperformance: 1.0% p.a
It continued to perform well during the first quarter of 2006:
- actual return (net of manager fee) 6.4%
- benchmark's 3.4%.
- outperforamnce: 3.0%
During my educational talk for the past year, I was often asked by a participant, "Should I move out of Technology Fund? What is your advice?".
My answer was, "I also invested in the Technology Fund. I have decided to stay invested. The Fund will recover".
My view turned out to be right.
Friday, April 07, 2006
Adequate provision for motor claims
Some companies make a low provision for their outstanding claims. This gives the impression that their motor insurance is profitable. This allows them to reduce their premium rates.
Here are the claim provision for three large insurers during 2004:
NTUC Income: 101%
Company A: 60%
Company X: 72%
NTUC Income makes adequate provision for our claims. This means that we will be able to keep our competitive premium rates for a longer period.
The insurers who have inadequate provision will have to increase their premium rates in the near future.
Insure with NTUC Income, to enjoy lower premiums over the next few years.
Here are the claim provision for three large insurers during 2004:
NTUC Income: 101%
Company A: 60%
Company X: 72%
NTUC Income makes adequate provision for our claims. This means that we will be able to keep our competitive premium rates for a longer period.
The insurers who have inadequate provision will have to increase their premium rates in the near future.
Insure with NTUC Income, to enjoy lower premiums over the next few years.
Additional Cover for Renting a car overseas
NTUC Income is providing an extended benefit for its motor policyholders who has to drive a rented car overseas. This extension will covers the additional third party liability for death, bodily injury or damage to property over the limited cover provided by the rental car company. The additional premium charged by NTUC Income for a similar coverage is likely to be lower than the market.
This cover is for US$1 million and covers the policyholder against third party liability that exceeds the basic cover provided by the car rental company. The premium rate that is charged by NTUC Income will be 50% of the normal market rate and is available only to a policyholder who has a No Claim Discount of 20% or more.
If the policyholder does not meet the requirement, the policyholder can purchase the cover from the overseas insurer of the rental company.
This cover is for US$1 million and covers the policyholder against third party liability that exceeds the basic cover provided by the car rental company. The premium rate that is charged by NTUC Income will be 50% of the normal market rate and is available only to a policyholder who has a No Claim Discount of 20% or more.
If the policyholder does not meet the requirement, the policyholder can purchase the cover from the overseas insurer of the rental company.
Thursday, April 06, 2006
Quite a hassle to file my income tax returns through internet
Many people said that it is easy to file the income tax return to IRAS through the internet. I have a different experience. It was quite difficult time for me.
Here are the problems:
- my Singpass is not accepted
- I am required to use exactly 8 character for my RAS password (no more, no less)
- it rejected my new password, bacause "it was used before".
- the website was very, very slow
- it was quite difficult to enter my income from property
- it was quite difficult to navigate.
Why is this the case? IRAS has designed a system that is convenient for them, but NOT for the taxpayer.
It is easier for me to fill a form and to fax to IRAS.
Here are the problems:
- my Singpass is not accepted
- I am required to use exactly 8 character for my RAS password (no more, no less)
- it rejected my new password, bacause "it was used before".
- the website was very, very slow
- it was quite difficult to enter my income from property
- it was quite difficult to navigate.
Why is this the case? IRAS has designed a system that is convenient for them, but NOT for the taxpayer.
It is easier for me to fill a form and to fax to IRAS.
Wednesday, April 05, 2006
Do not rent your car to a stranger
For the last three months, we have four cases where the owner rent their car to a stranger for a certain period.
Later, the hirer disappears without a trace leaving the car owner in a lurch. The car was reported as "stolen" but the insurance policy does not cover the lost of the vehicle while it is being illegally rented out.
We suspect that the rented cars were driven across the Causeway to be sold.
We wish to warn the public that it is illegal to rent your vehicle without a proper permit and insurance coverage. Most importantly, you should not fall victim to this criminal act.
Later, the hirer disappears without a trace leaving the car owner in a lurch. The car was reported as "stolen" but the insurance policy does not cover the lost of the vehicle while it is being illegally rented out.
We suspect that the rented cars were driven across the Causeway to be sold.
We wish to warn the public that it is illegal to rent your vehicle without a proper permit and insurance coverage. Most importantly, you should not fall victim to this criminal act.
Tuesday, April 04, 2006
Banks charge differently from what they say
I refer to the letter from Gan Siok Bin, “Why do existing customers pay a higher 2nd-year rate?” (ST March 31)
Gan Siok Bin took a floating rate home-loan from United Overseas Bank (UOB). The loan is now in its second year and it costs 4.05 per cent. However, UOB’s advertised second year rate is only 3.5 per cent.
The 3 local banks offer identical home-loan rates and our family had a similar experience with a different bank. Our year 2 home loan rate shot up to 3.85 per cent while the quoted rate is also 3.5 per cent.
I looked into this and found there is no relation between the rates banks quote and the rates they charge. In fact, a loan officer told me, "The variable rates we tell customers does not obligate the bank in any way."
It turns out that how much you pay depends on the bank’s "board rate". Each bank has many board rates and can re-set them at any time. This determines how much a borrower must pay for a variable rate home-loan. It is independent of a bank’s advertised rates.
Larry Haverkamp
Gan Siok Bin took a floating rate home-loan from United Overseas Bank (UOB). The loan is now in its second year and it costs 4.05 per cent. However, UOB’s advertised second year rate is only 3.5 per cent.
The 3 local banks offer identical home-loan rates and our family had a similar experience with a different bank. Our year 2 home loan rate shot up to 3.85 per cent while the quoted rate is also 3.5 per cent.
I looked into this and found there is no relation between the rates banks quote and the rates they charge. In fact, a loan officer told me, "The variable rates we tell customers does not obligate the bank in any way."
It turns out that how much you pay depends on the bank’s "board rate". Each bank has many board rates and can re-set them at any time. This determines how much a borrower must pay for a variable rate home-loan. It is independent of a bank’s advertised rates.
Larry Haverkamp
Monday, April 03, 2006
Annuity plans needs improvement
Editor
Lianhe Zaobao
I refer to the letter, 'Annuity plans need improvements', by Mr Yang Song Jian, (Zaobao, 23 March).
Mr Yang asked insurance companies to improve the annuity plans to better take care of the elderly. More should be done educate Singaporeans on the importance of financial planning and savings.
I agree.
In a recent survey, we found out that 50 percent of the respondents wanted to increase their regular savings for their retirement. They know that their current savings in the Central Provident Fund is inadequate.
As a general guide, each person should set aside 10 to 15 percent of the regular earnings as savings for the future. They can use the savings for their retirement or to meet emergencies, in they lose their jobs or have to pay a large medical bill.
They should invest these savings in a flexible plan that can give an attractive rate of return, by investing for the long term.
NTUC Income offers a choice of attractive annuity plans. We handle 65 percent of all life annuities sold in Singapore. Our annuities offer an attractive return, an annual bonus (in most years) to supplement the guaranteed return, and a refund of the balance of the capital on death.
There are a few ways for the public to learn about financial planning:
- see an insurance adviser;
- attend an educational talk;
- visit an educational website.
NTUC Income holds an educational talk every week. The topics include retirement plans, medical insurance, financial planning, reverse mortgage scheme, etc. Schedule of the talks can be found at www.income.coop/seminar. Admission to these talks is free.
We also manage an educational website at www.KnowYourInsurance.com.sg. It is available in English, Chinese and Malay versions. The website covers a wide range of insurance topics, such as: personal accident, medical insurance, financial planning, travel insurance and saving for education.
Tan Kin Lian
Chief Executive Officer
NTUC Income
Lianhe Zaobao
I refer to the letter, 'Annuity plans need improvements', by Mr Yang Song Jian, (Zaobao, 23 March).
Mr Yang asked insurance companies to improve the annuity plans to better take care of the elderly. More should be done educate Singaporeans on the importance of financial planning and savings.
I agree.
In a recent survey, we found out that 50 percent of the respondents wanted to increase their regular savings for their retirement. They know that their current savings in the Central Provident Fund is inadequate.
As a general guide, each person should set aside 10 to 15 percent of the regular earnings as savings for the future. They can use the savings for their retirement or to meet emergencies, in they lose their jobs or have to pay a large medical bill.
They should invest these savings in a flexible plan that can give an attractive rate of return, by investing for the long term.
NTUC Income offers a choice of attractive annuity plans. We handle 65 percent of all life annuities sold in Singapore. Our annuities offer an attractive return, an annual bonus (in most years) to supplement the guaranteed return, and a refund of the balance of the capital on death.
There are a few ways for the public to learn about financial planning:
- see an insurance adviser;
- attend an educational talk;
- visit an educational website.
NTUC Income holds an educational talk every week. The topics include retirement plans, medical insurance, financial planning, reverse mortgage scheme, etc. Schedule of the talks can be found at www.income.coop/seminar. Admission to these talks is free.
We also manage an educational website at www.KnowYourInsurance.com.sg. It is available in English, Chinese and Malay versions. The website covers a wide range of insurance topics, such as: personal accident, medical insurance, financial planning, travel insurance and saving for education.
Tan Kin Lian
Chief Executive Officer
NTUC Income
Tips on Financial Planning
My daughter asked me to give three important tips for financial planning to her. Here is my reply:
Tip 1. Save 10% to 20% of your regular earnings. This is in addition to CPF.
Tip 2. Invest in an investment-linked policy (ILP). It allows you to adjust your regular savings. Choose an ILP with low distribution charges.
Tip 3. Invest in global equities or Singapore equities. They are likely to give a better return than bonds. You can get a better return. Risk is an advantage.
After listening to my explanation, she became quite convinced. It makes a lot of sense.
Tip 1. Save 10% to 20% of your regular earnings. This is in addition to CPF.
Tip 2. Invest in an investment-linked policy (ILP). It allows you to adjust your regular savings. Choose an ILP with low distribution charges.
Tip 3. Invest in global equities or Singapore equities. They are likely to give a better return than bonds. You can get a better return. Risk is an advantage.
After listening to my explanation, she became quite convinced. It makes a lot of sense.
Assessment on the spot
Editor
Straits Times
I refer to the letters, 'Pictures can help settle insurance claims' by Mr Sin Chee Kharn and 'Refusal to submit report foils claim' by Mr Goh Khee Kuan (ST, March 29).
Mr Sin shared the usefulness of submitting photographs of a motor accident scene in the claims process.
Each month, NTUC Income handles about 2,000 motor accident claims. About 10 per cent of these are disputed by the parties, who give conflicting versions of the accident.
Since Dec 15 last year, we have introduced the 'assessment-on-the-spot' service. This service provides roadside assistance to motorists at the scene of accident. Motorists who need help after an accident can call 67886616. Once the service is activated, our appointed assessor will arrive at the accident scene in about 15 minutes.
The assessor helps our policyholder and the third party driver to assess the damage at the scene of the accident. He also helps them fill in Singapore Accident Statement (SAS) forms, and takes photographs of the damaged vehicles. Disputes can be minimised if both parties to the accident agree to sign the SAS on the spot.
If anyone is injured, the assessor calls an ambulance and reports to the police. All documents, particulars and photographs will be forwarded to Income for follow-up by its claims officer.
The officer is usually able to come to a decision on the appropriate apportionment of liability. We are fair in our assessment and do not favour any side. If any party disagrees with our assessment, they can ask for an independent expert to review the case or take the case to court.
We have a simple service to leverage on technology to allow a speedy motor claims process. During an accident, motorists are encouraged to use their mobile phone to take photographs of the damage and send them to us via MMS on 93885992 or e-mail photo@income.com.sg
This initiative has received a favourable response and has resulted in a more professional and efficient way of handling liability disputes. An average of 35 cases each month are successfully resolved because photographs were sent to us via MMS.
Freddy Neo
General Manager
NTUC Income
Straits Times
I refer to the letters, 'Pictures can help settle insurance claims' by Mr Sin Chee Kharn and 'Refusal to submit report foils claim' by Mr Goh Khee Kuan (ST, March 29).
Mr Sin shared the usefulness of submitting photographs of a motor accident scene in the claims process.
Each month, NTUC Income handles about 2,000 motor accident claims. About 10 per cent of these are disputed by the parties, who give conflicting versions of the accident.
Since Dec 15 last year, we have introduced the 'assessment-on-the-spot' service. This service provides roadside assistance to motorists at the scene of accident. Motorists who need help after an accident can call 67886616. Once the service is activated, our appointed assessor will arrive at the accident scene in about 15 minutes.
The assessor helps our policyholder and the third party driver to assess the damage at the scene of the accident. He also helps them fill in Singapore Accident Statement (SAS) forms, and takes photographs of the damaged vehicles. Disputes can be minimised if both parties to the accident agree to sign the SAS on the spot.
If anyone is injured, the assessor calls an ambulance and reports to the police. All documents, particulars and photographs will be forwarded to Income for follow-up by its claims officer.
The officer is usually able to come to a decision on the appropriate apportionment of liability. We are fair in our assessment and do not favour any side. If any party disagrees with our assessment, they can ask for an independent expert to review the case or take the case to court.
We have a simple service to leverage on technology to allow a speedy motor claims process. During an accident, motorists are encouraged to use their mobile phone to take photographs of the damage and send them to us via MMS on 93885992 or e-mail photo@income.com.sg
This initiative has received a favourable response and has resulted in a more professional and efficient way of handling liability disputes. An average of 35 cases each month are successfully resolved because photographs were sent to us via MMS.
Freddy Neo
General Manager
NTUC Income
Sunday, April 02, 2006
You can change a nomination
QUESTION FROM POLICYHOLDER
What happens if I have made a nomination for my insurance policy, and many years later when I made a will, I decide to add or change the nominee of the policy in the will.
REPLY
You can change the nomination (by submitting a new nomination) or by cancelling it. If you have a specific nomination in force, we will pay according to the nomination, and not according to the will.
What happens if I have made a nomination for my insurance policy, and many years later when I made a will, I decide to add or change the nominee of the policy in the will.
REPLY
You can change the nomination (by submitting a new nomination) or by cancelling it. If you have a specific nomination in force, we will pay according to the nomination, and not according to the will.
Policyholder ask for supplementary liability cover
Our policyholder wish to rent a car in the USA for 11 days. His rented car pays for third party liability up to about US$50,000. He has to pay US$11 a day to buy supplementary cover for US$1 million.
He asked us to provide this cover to you at a lower rate.
We offer to reduce the rate to US$5 a day, as he already enjoys a 50% no claim discount. The policyholder is delighted to have this offer.
Tentative. We intend to extend this privilage to other policyholders who are insured with NTUC Income. If you rent a car in another country, eg USA, UK, Europe, Australia, you can get this supplementary cover at a discount of 50% from the rate that is normally charged in the respective country.
This will be offered only to a policyholder who now enjoys a NCD of 20% or higher.
He asked us to provide this cover to you at a lower rate.
We offer to reduce the rate to US$5 a day, as he already enjoys a 50% no claim discount. The policyholder is delighted to have this offer.
Tentative. We intend to extend this privilage to other policyholders who are insured with NTUC Income. If you rent a car in another country, eg USA, UK, Europe, Australia, you can get this supplementary cover at a discount of 50% from the rate that is normally charged in the respective country.
This will be offered only to a policyholder who now enjoys a NCD of 20% or higher.
Saturday, April 01, 2006
Car Sharing Scheme
NTUC Income operates a car sharing scheme with more than 3,000 paying members. This scheme is growing in popularity. Here is a feedback from a member:
FEEDBACK
You have got a great team and based on my experience with your team (guys like Kendrick, Dave and Yusoff and Han), are really proactive and go out of their way to support members like us.
Kendrick especially has supported me with the various issues that I faced eg. over the recent weekend, I had a car that was having some continuous sound coming from the back of the car.
Kendrick offered to return back to the office to look into arranging another courtesy car for me. Fortunately, the sound disappeared after an hour later.
Another time, again over the weekend, my car broke down and engine failed to start. Kendrick made altenate arrangement and that really helped a lot
As a result of such positive experience, I have thus always endeavour to recommend to people around me without a car to try out carcoop and refer them to
your website to sign up for trial services.
FEEDBACK
You have got a great team and based on my experience with your team (guys like Kendrick, Dave and Yusoff and Han), are really proactive and go out of their way to support members like us.
Kendrick especially has supported me with the various issues that I faced eg. over the recent weekend, I had a car that was having some continuous sound coming from the back of the car.
Kendrick offered to return back to the office to look into arranging another courtesy car for me. Fortunately, the sound disappeared after an hour later.
Another time, again over the weekend, my car broke down and engine failed to start. Kendrick made altenate arrangement and that really helped a lot
As a result of such positive experience, I have thus always endeavour to recommend to people around me without a car to try out carcoop and refer them to
your website to sign up for trial services.
Friday, March 31, 2006
Reverse Mortgage on HDB Flat - 4th loan
Brief profile: case 4
Mdm X, aged 72 years old is a widow. Her 2 children migrated overseas and now give her a monthly allowance of $400. Her 2-room HDB flat in Jln Bukit Merah has a market valuation of $105k. There is no outstanding loan.
At her request, we have exceptionally approved a lumpsum of $28k over 10 years. Lumpsum is granted to settle outstanding policy loan taken under our Guaranteed Life Annuity.
Mdm X, aged 72 years old is a widow. Her 2 children migrated overseas and now give her a monthly allowance of $400. Her 2-room HDB flat in Jln Bukit Merah has a market valuation of $105k. There is no outstanding loan.
At her request, we have exceptionally approved a lumpsum of $28k over 10 years. Lumpsum is granted to settle outstanding policy loan taken under our Guaranteed Life Annuity.
Tuesday, March 28, 2006
Save for your child's education
The cost of university education can be quite high. The average cost is:
Singapore $40,000
Australia $160,000
USA $280,000
The cost is expected to increase in future years.
Are you saving for your child's education?
If you save $300 a month over 16 years, the total savings with interest will be:
2% per annum: $68,000
6% per annum: $95,000
You can get 40% more, if you can invest in a plan that gives you a higher return, and risk reduced through diversification.
Singapore $40,000
Australia $160,000
USA $280,000
The cost is expected to increase in future years.
Are you saving for your child's education?
If you save $300 a month over 16 years, the total savings with interest will be:
2% per annum: $68,000
6% per annum: $95,000
You can get 40% more, if you can invest in a plan that gives you a higher return, and risk reduced through diversification.
Are Singaporeans working too hard?
In my view, the answer is "yes". Look at the people who work late hours most days of the week.
It is better to work "smart". One can be more effective by working less, and to work on the right priorities.
Here are my tips:
- communicate more
- do the easy things that produce quick results
- act promptly
- ask advice from other people
- do by trial and error
- think, use your judgement
- do not rely on your boss to tell you what to do.
These tips will lead you to more results with less work. It is working "smart".
It is better to work "smart". One can be more effective by working less, and to work on the right priorities.
Here are my tips:
- communicate more
- do the easy things that produce quick results
- act promptly
- ask advice from other people
- do by trial and error
- think, use your judgement
- do not rely on your boss to tell you what to do.
These tips will lead you to more results with less work. It is working "smart".
Advantage of a Nomination
NTUC Income allows a policyholder to make a specific nomination for each insurance policy. This allows the proceeds to be paid to the nominees named in the nomination.
If there is no nomination, the proceeds (up to $150,000) will be paid to a "rightful claimant" which is defined in the Insurance Act as the spouse or a family member. The rightful claimant receive the money and distribute it in an appropriate member among the family members.
The policy proceeds will be part of the estate. There will be other assets as well, such as shares, property and cash.
If there is a will, the estate will be distributed according to the will. If not, it will be distributed according to the intestate law.
However, in most cases, the family members will agree on how the estate is to be distributed. They do not need to follow the formula in the intestate law.
The advantage of a nomination is for the policyholder to set aside a sum of money to be distributed specifically to the nominees. This is useful, if the policyholder has a specific intent. Otherwise, the distribution according to the will or intestate law is a fairer way.
If there is no nomination, the proceeds (up to $150,000) will be paid to a "rightful claimant" which is defined in the Insurance Act as the spouse or a family member. The rightful claimant receive the money and distribute it in an appropriate member among the family members.
The policy proceeds will be part of the estate. There will be other assets as well, such as shares, property and cash.
If there is a will, the estate will be distributed according to the will. If not, it will be distributed according to the intestate law.
However, in most cases, the family members will agree on how the estate is to be distributed. They do not need to follow the formula in the intestate law.
The advantage of a nomination is for the policyholder to set aside a sum of money to be distributed specifically to the nominees. This is useful, if the policyholder has a specific intent. Otherwise, the distribution according to the will or intestate law is a fairer way.
Inflation rate over 50 years
50 years ago, the Reader's Digest magazine cost $1. Now, it cost $9.50.
What is the inflation rate over the past 50 years, for this magazine?
My financial calculator showed 4.6% per annum.
What is the inflation rate over the past 50 years, for this magazine?
My financial calculator showed 4.6% per annum.
An inappropriate request
A customer was unhappy with his interaction with my manager. He lodged a complaint about his "poor professionalism".
I replied that I have taken note of your feedback and that it was probably a misunderstanding.
The customer asked, "I suppose NTUC has in some way going to compensate me for the unnecessary and inconvenience caused?"
I replied that we will not be making any compensation and that his request was inappropriate.
He withdrew his request and closed the matter.
I replied that I have taken note of your feedback and that it was probably a misunderstanding.
The customer asked, "I suppose NTUC has in some way going to compensate me for the unnecessary and inconvenience caused?"
I replied that we will not be making any compensation and that his request was inappropriate.
He withdrew his request and closed the matter.
Saturday, March 25, 2006
Reverse mortage on HDB flats - 3 loans granted
The government recently approved granting of reverse mortgage on HDB flats. We received about 250 enquiries during the first few days.
We have since approved 3 reverse mortgage loans on HDB flats. All applicants are above 70 years old (condition set by NTUC Income). The names given below are not the real name.
CASE #1
Mr & Mrs Chan have no dependents. Their 3-room HDB Flat is situated at Marine Parade with a current market valuation of $240k. There is no outstanding loan on the
flat.
We have approved a monthly advance of $300 over 16 years at a modest loan to valuation ratio of 40%. We may eventually extend to a monthly advance of $540 (within acceptable loan to valuation ratio of 70%), pending borrower's decision.
CASE #2
Mr & Mrs Cheong have no dependents. Their 3-room HDB Flat (23 yrs old) is situated at Jurong East with a current market valuation of $160k. There is no outstanding loan on the flat.
We have approved a monthly advance of $295 over 18 years at maximum loan to
valuation ratio of 70%.
CASE #3
Mr Teo is currently staying with his wife. He is receiving some allowances from his 3 children. His 4-room HDB Flat (18 yrs old) is situated at Simei with a current market valuation of $250k. There is no outstanding loan on the flat.
At his request, we have approved a monthly advance of $400 over 12 years at
a modest loan to valuation ratio of 34%. He has intention to either sell
or downgrade the flat again (previously downgraded fr 5-room) at the end of
the loan period.
We have since approved 3 reverse mortgage loans on HDB flats. All applicants are above 70 years old (condition set by NTUC Income). The names given below are not the real name.
CASE #1
Mr & Mrs Chan have no dependents. Their 3-room HDB Flat is situated at Marine Parade with a current market valuation of $240k. There is no outstanding loan on the
flat.
We have approved a monthly advance of $300 over 16 years at a modest loan to valuation ratio of 40%. We may eventually extend to a monthly advance of $540 (within acceptable loan to valuation ratio of 70%), pending borrower's decision.
CASE #2
Mr & Mrs Cheong have no dependents. Their 3-room HDB Flat (23 yrs old) is situated at Jurong East with a current market valuation of $160k. There is no outstanding loan on the flat.
We have approved a monthly advance of $295 over 18 years at maximum loan to
valuation ratio of 70%.
CASE #3
Mr Teo is currently staying with his wife. He is receiving some allowances from his 3 children. His 4-room HDB Flat (18 yrs old) is situated at Simei with a current market valuation of $250k. There is no outstanding loan on the flat.
At his request, we have approved a monthly advance of $400 over 12 years at
a modest loan to valuation ratio of 34%. He has intention to either sell
or downgrade the flat again (previously downgraded fr 5-room) at the end of
the loan period.
Friday, March 24, 2006
Special features of loans from NTUC Income
NTUC Income plans to offer loans with the following special features:
- competitive rates
- fixed rates for first 3 or 5 years
- repayment start after one year
- lower rates for "preferred" policyholders
- deferment of installments due to loss of employment
- rebate on prompt payment of installments
We hope that our loans will be more suited to our policyholders.
- competitive rates
- fixed rates for first 3 or 5 years
- repayment start after one year
- lower rates for "preferred" policyholders
- deferment of installments due to loss of employment
- rebate on prompt payment of installments
We hope that our loans will be more suited to our policyholders.
Payment of death claims under DPS
24 March 2006
Editor
Forum Page
Straits Times
I refer to the article by Lorna Tan entitled "Key difference in two DPS options not highlighted: Case" (Straits Times, 23 March 2006)
The article highlighted some concern about how the benefit under the Dependent Protection Scheme that is insured with NTUC Income and Great Eastern will be paid out.
The sum involved is only $46,000 or slightly more. In the event of death and the absence of a nomination or will, the benefit will be paid to the family members (ie spouse, children, parents) according to the Insurance Act. It is usually quite straight forward.
NTUC has paid out 300 DPS claims since being appointed one of the insurer. More than 95% of these claims were paid to the proper claimants according to the Insurance Act, who were either executors of wills for those who have made a will or family members for those without a will. The remaining 5% are paid according to specific
nomination submitted by the policyholder. The nominees are usually family members.
Most policyholders will thus find this arrangement to be suitable.
A policyholder of NTUC Income can submit a specific nomination, if they wish to distribute the proceeds in a different manner. The forms are available on request.
Tan Kin Lian
Chief Executive Officer
NTUC Income
Editor
Forum Page
Straits Times
I refer to the article by Lorna Tan entitled "Key difference in two DPS options not highlighted: Case" (Straits Times, 23 March 2006)
The article highlighted some concern about how the benefit under the Dependent Protection Scheme that is insured with NTUC Income and Great Eastern will be paid out.
The sum involved is only $46,000 or slightly more. In the event of death and the absence of a nomination or will, the benefit will be paid to the family members (ie spouse, children, parents) according to the Insurance Act. It is usually quite straight forward.
NTUC has paid out 300 DPS claims since being appointed one of the insurer. More than 95% of these claims were paid to the proper claimants according to the Insurance Act, who were either executors of wills for those who have made a will or family members for those without a will. The remaining 5% are paid according to specific
nomination submitted by the policyholder. The nominees are usually family members.
Most policyholders will thus find this arrangement to be suitable.
A policyholder of NTUC Income can submit a specific nomination, if they wish to distribute the proceeds in a different manner. The forms are available on request.
Tan Kin Lian
Chief Executive Officer
NTUC Income
Reply: Annuity plans need improvements
24 March 2006
Editor
Zaobao
I refer to the letter, 'Annuity plans need improvements', by Mr Yang Song Jian, (Zaobao, 23 March).
Mr Yang asked insurance companies to improve the annuity plans to better take care of the elderly. More should be done educate Singaporeans on the importance of financial planning and savings.
I agree.
In a recent survey, we found out that 50 percent of the respondents wanted to increase their regular savings for their retirement. They know that their current savings in the Central Provident Fund is inadequate.
As a general guide, each person should set aside 10 to 15 percent of the regular earnings as savings for the future. They can use the savings for their retirement or to meet emergencies, in they lose their jobs or have to pay a large medical bill.
They should invest these savings in a flexible plan that can give an attractive rate of return, by investing for the long term.
NTUC Income offers a choice of attractive annuity plans. We handle 65 percent of all life annuities sold in Singapore. Our annuities offer an attractive return, an annual bonus (in most years) to supplement the guaranteed return, and a refund of the balance of the capital on death.
There are a few ways for the public to learn about financial planning:
- see an insurance adviser;
- attend an educational talk;
- visit an educational website.
NTUC Income holds an educational talk every week. The topics include retirement plans, medical insurance, financial planning, reverse mortgage scheme, etc. Schedule of the talks can be found at www.income.coop/seminar. Admission to these talks is free.
We also manage an educational website at www.KnowYourInsurance.com.sg. It is available in English, Chinese and Malay versions. The website covers a wide range of insurance topics, such as: personal accident, medical insurance, financial planning, travel insurance and saving for education.
Tan Kin Lian
Chief Executive Officer
NTUC Income
Editor
Zaobao
I refer to the letter, 'Annuity plans need improvements', by Mr Yang Song Jian, (Zaobao, 23 March).
Mr Yang asked insurance companies to improve the annuity plans to better take care of the elderly. More should be done educate Singaporeans on the importance of financial planning and savings.
I agree.
In a recent survey, we found out that 50 percent of the respondents wanted to increase their regular savings for their retirement. They know that their current savings in the Central Provident Fund is inadequate.
As a general guide, each person should set aside 10 to 15 percent of the regular earnings as savings for the future. They can use the savings for their retirement or to meet emergencies, in they lose their jobs or have to pay a large medical bill.
They should invest these savings in a flexible plan that can give an attractive rate of return, by investing for the long term.
NTUC Income offers a choice of attractive annuity plans. We handle 65 percent of all life annuities sold in Singapore. Our annuities offer an attractive return, an annual bonus (in most years) to supplement the guaranteed return, and a refund of the balance of the capital on death.
There are a few ways for the public to learn about financial planning:
- see an insurance adviser;
- attend an educational talk;
- visit an educational website.
NTUC Income holds an educational talk every week. The topics include retirement plans, medical insurance, financial planning, reverse mortgage scheme, etc. Schedule of the talks can be found at www.income.coop/seminar. Admission to these talks is free.
We also manage an educational website at www.KnowYourInsurance.com.sg. It is available in English, Chinese and Malay versions. The website covers a wide range of insurance topics, such as: personal accident, medical insurance, financial planning, travel insurance and saving for education.
Tan Kin Lian
Chief Executive Officer
NTUC Income
Tuesday, March 21, 2006
Pensioners lost money on their investments ?
Recently, I saw a news article with this headline. It refers to another country. This can be a frightening prospect.
Here are some suggestions on how to invest your retirement money and not face the same risk:
- invest for the long term
- invest in a professionally managed and well diversified fund
It does not matter that the value of the investments can go up or down. They do not concern you. If you are investing for the long term in equities, you should get a better return compared to bonds.
Based on past record, the average return over 10 or 20 years is likely to be 6% to 9%.
The combined fund from NTUC Income is structured to give a good return, with little risk. In fact, risk can be turned to an advantage.
If are keen to learn more, you can call us to attend an educational talk.
Here are some suggestions on how to invest your retirement money and not face the same risk:
- invest for the long term
- invest in a professionally managed and well diversified fund
It does not matter that the value of the investments can go up or down. They do not concern you. If you are investing for the long term in equities, you should get a better return compared to bonds.
Based on past record, the average return over 10 or 20 years is likely to be 6% to 9%.
The combined fund from NTUC Income is structured to give a good return, with little risk. In fact, risk can be turned to an advantage.
If are keen to learn more, you can call us to attend an educational talk.
Monday, March 20, 2006
Participating or adjustible annuity?
NTUC Income holds a 60% market share in life annuity. Our key product is the participating annuity.
PARTICIPATING ANNUITY
A male annuitant investing $100,000 at age 62 in a immediate life annuity (with no
capital refund) receives $524 per month.
This represents a payout of 6.3% per annum, comparising of a guaranteed return of 2.5% with the balance being a consumption of the capital.
If we earn a net investment return over 2.5%, we will add a bonus to the annuity. We expect an average bonus of 2.5% per annum over the future years, but this is not guaranteed.
If the annuitant wish to have a refund of the balance of capital on death, the annuity payment reduces to $446 per month (ie 5.3% p.a).
ADJUSTIBLE ANNUITY
Some annuitants prefer to have a larger payout, instead of an increasing payout.
We are considering to offer an adjustible annuity that comprise of a guaranteed amount of $524 per month, plus an non-guaranteed amount of $136, making a total payment of $660 per month. The annual payout is 7.9%
The non-guaranteed amount may be adjusted up or down, according to our investment return. If the net investment return is 5%, the amount will not be changed. If it is higher, the non-guaratneed amount will be increased. If it is lower, the amount will be reduced. Any adjustment is expected to be in small gradual steps.
The guaranteed amount will always be payable.
We may offer the option of the adjustible annuity, if there is interest in this product.
If the annuitant wish to have a refund of the balance of capital on death, the annuity payment reduces to $602 per month (ie 7.2% p.a).
PARTICIPATING ANNUITY
A male annuitant investing $100,000 at age 62 in a immediate life annuity (with no
capital refund) receives $524 per month.
This represents a payout of 6.3% per annum, comparising of a guaranteed return of 2.5% with the balance being a consumption of the capital.
If we earn a net investment return over 2.5%, we will add a bonus to the annuity. We expect an average bonus of 2.5% per annum over the future years, but this is not guaranteed.
If the annuitant wish to have a refund of the balance of capital on death, the annuity payment reduces to $446 per month (ie 5.3% p.a).
ADJUSTIBLE ANNUITY
Some annuitants prefer to have a larger payout, instead of an increasing payout.
We are considering to offer an adjustible annuity that comprise of a guaranteed amount of $524 per month, plus an non-guaranteed amount of $136, making a total payment of $660 per month. The annual payout is 7.9%
The non-guaranteed amount may be adjusted up or down, according to our investment return. If the net investment return is 5%, the amount will not be changed. If it is higher, the non-guaratneed amount will be increased. If it is lower, the amount will be reduced. Any adjustment is expected to be in small gradual steps.
The guaranteed amount will always be payable.
We may offer the option of the adjustible annuity, if there is interest in this product.
If the annuitant wish to have a refund of the balance of capital on death, the annuity payment reduces to $602 per month (ie 7.2% p.a).
Sunday, March 19, 2006
Why NTUC Income supports Idac
19 March 2006
Editor
Forum Page
Straits Times
I refer to the report entitled "Only 11 insurers left on Idac accident scheme" (St Times, 18 March).
The report covered the reasons why several insurers left the Idac scheme. I wish to tell the other side of the story - why NTUC Income choose to remain in the scheme.
Each day, about 60 of our policyholders and 30 third party claimants reported their accidents to an Idac center.
It is easy for claimants to visit any of 12 Idac centers located in various parts of Singapore. They can get the address by calling 6788 6616.
The accident report and damage assessment is usually completed within 20 minutes. There is no undue delay and hassle.
Most policyholders are willing to leave their vehicles at the Idac center for the repairs to be arranged by us. The repairs are usually completed within five days. If they are covered under our Quality Plus plan, we provide a courtesy car for their use.
We carry out an inspection of the vehicle after the repair, to ensure that the repair is carried out to a satisfactory standard. We also provide six month warranty on the repair.
If the policyholder prefers his regular workshop to repair the vehicle, we offer a cash settlement based on our best estimate of the repair cost. Less than 5% of policyholder choose this option.
We carry out a survey of our policyholders after the repair. We have consistently obtained high scores:
- 98% are satisfied with the service provided by Idac center
- 96% are satisfied with the quality of the repair
We have a small percentage of disputes, usually not involving Idac services. They involve the determination of the party responsible for the accident, potential loss of no-claim discount, and replacement of "wear and tear" parts. We try our best to resolve these disputes.
By using the Idac scheme, we are able to reduce our repair bill by about 15%, representing about 6% of total claims. We pass the saving to our policyholders through lower premium. We are able to offer premium rates that are 10% to 15% lower than the market.
Your report alleged that "Idac was feeding a top insurer early information about cases". This is an unfair statement. I wish to give our perspective.
The Idac scheme allows for immediate reporting of all cases into a centralised computer system. We use this information to contact third party claimants and make direct settlement with them. This helps us to reduce the cost of third party claims. We believe that this information is available to any other insurers, if they choose to use it pro-actively.
Finally, I wish to state that NTUC Income has a sufficient volume of business to start an assessment system on our own. We have decided to support an industry wide scheme, as it is the best way to overcome the inflated repair bills that have troubled the insurance industry in many countries over the past decades.
Tan Kin Lian
Chief Executive Officer
NTUC Income
Editor
Forum Page
Straits Times
I refer to the report entitled "Only 11 insurers left on Idac accident scheme" (St Times, 18 March).
The report covered the reasons why several insurers left the Idac scheme. I wish to tell the other side of the story - why NTUC Income choose to remain in the scheme.
Each day, about 60 of our policyholders and 30 third party claimants reported their accidents to an Idac center.
It is easy for claimants to visit any of 12 Idac centers located in various parts of Singapore. They can get the address by calling 6788 6616.
The accident report and damage assessment is usually completed within 20 minutes. There is no undue delay and hassle.
Most policyholders are willing to leave their vehicles at the Idac center for the repairs to be arranged by us. The repairs are usually completed within five days. If they are covered under our Quality Plus plan, we provide a courtesy car for their use.
We carry out an inspection of the vehicle after the repair, to ensure that the repair is carried out to a satisfactory standard. We also provide six month warranty on the repair.
If the policyholder prefers his regular workshop to repair the vehicle, we offer a cash settlement based on our best estimate of the repair cost. Less than 5% of policyholder choose this option.
We carry out a survey of our policyholders after the repair. We have consistently obtained high scores:
- 98% are satisfied with the service provided by Idac center
- 96% are satisfied with the quality of the repair
We have a small percentage of disputes, usually not involving Idac services. They involve the determination of the party responsible for the accident, potential loss of no-claim discount, and replacement of "wear and tear" parts. We try our best to resolve these disputes.
By using the Idac scheme, we are able to reduce our repair bill by about 15%, representing about 6% of total claims. We pass the saving to our policyholders through lower premium. We are able to offer premium rates that are 10% to 15% lower than the market.
Your report alleged that "Idac was feeding a top insurer early information about cases". This is an unfair statement. I wish to give our perspective.
The Idac scheme allows for immediate reporting of all cases into a centralised computer system. We use this information to contact third party claimants and make direct settlement with them. This helps us to reduce the cost of third party claims. We believe that this information is available to any other insurers, if they choose to use it pro-actively.
Finally, I wish to state that NTUC Income has a sufficient volume of business to start an assessment system on our own. We have decided to support an industry wide scheme, as it is the best way to overcome the inflated repair bills that have troubled the insurance industry in many countries over the past decades.
Tan Kin Lian
Chief Executive Officer
NTUC Income
Friday, March 17, 2006
How to pass your wealth to your children
The baby boomer generation, who are now in their 50s and 60s, benefitted from the economic growth and are generally quite wealthy.
Some of them are thinking of how best to transfer a portion of their wealth to their children.
I suggest that they should make a partial transfer now, when their children are in their 20s. The children need the mney now, rather than 20 years later (when their parents pass away).
NTUC Income will organise seminars to cover will writing, annuity plan, term annuity, trust, estate duty and similar topics.
More details will be announced later.
Some of them are thinking of how best to transfer a portion of their wealth to their children.
I suggest that they should make a partial transfer now, when their children are in their 20s. The children need the mney now, rather than 20 years later (when their parents pass away).
NTUC Income will organise seminars to cover will writing, annuity plan, term annuity, trust, estate duty and similar topics.
More details will be announced later.
Preferred policyholder
NTUC Income plans to register a "preferred policyholder". They will be allowed to have a loan in the future (for car, house, and other purpose) at a preferential interest rate and more attractive terms.
This will be specially useful for young policyholders. The saving on interest can amount to a lot of money.
We will communicate to our policyholders soon.
This will be specially useful for young policyholders. The saving on interest can amount to a lot of money.
We will communicate to our policyholders soon.
High cost of living
I read a news report that young people find the cost of living to be high in Singapore.
I agree.
When I was young, the HDB flats and shops were at a subsidisied and controlled price. This helps to keep the cost of living low, and make Singapore competitive.
During the late 1980s, the HDB flats were allowed to appreciate to the "market price". This benefitted the HDB flat owners, but increased the cost of living for the next generation.
Looking back, it would have been better for Singapore, if HDB flats had been kept at the controlled prices. But, it is too late to turn back the clock.
At the current high prices, property will be just like any other investment. One has to think carefully before investing in property. Is the price right?
For some people, it may be better to rent a property. The rental may be lower than the cost of owning the property.
The capital sum can be invested in other means, eg in unit trusts or the combined fund from NTUC Income. These investments may give a better return in the long run.
Get advice. Make the right choice.
I agree.
When I was young, the HDB flats and shops were at a subsidisied and controlled price. This helps to keep the cost of living low, and make Singapore competitive.
During the late 1980s, the HDB flats were allowed to appreciate to the "market price". This benefitted the HDB flat owners, but increased the cost of living for the next generation.
Looking back, it would have been better for Singapore, if HDB flats had been kept at the controlled prices. But, it is too late to turn back the clock.
At the current high prices, property will be just like any other investment. One has to think carefully before investing in property. Is the price right?
For some people, it may be better to rent a property. The rental may be lower than the cost of owning the property.
The capital sum can be invested in other means, eg in unit trusts or the combined fund from NTUC Income. These investments may give a better return in the long run.
Get advice. Make the right choice.
Thursday, March 16, 2006
Incomeshield Unlimited
Someone suggested that we should call our medical plan as "Incomeshield Unlimited".
This plan now provides unlimited lifetime coverage. The total claimable amount is subject to certain specific and annual limits, but is unlimited in the amount that can be claimed during a lifetime.
Our coverage is better than the $5,100,000 limit that is advertised by another medical plan (which charge much higher premium than Incomeshield).
This plan now provides unlimited lifetime coverage. The total claimable amount is subject to certain specific and annual limits, but is unlimited in the amount that can be claimed during a lifetime.
Our coverage is better than the $5,100,000 limit that is advertised by another medical plan (which charge much higher premium than Incomeshield).
Logic9 National Competition
Here is an interesting competition to find the faster players to solve the Logic9 (Sudoku) puzzle. Registration is free.
Click on the following link to get details of the competition and to register
http://www.logic9.com.sg.
You have a chance to win up to 36,000 worth of prizes. The top prize for each age group is an IBM Thinkpad notebook worth $4,000.
You stand a better chance of winning, if you practice for this competition. You can buy a Logic9 CD or booklet for $5 only at selected NTUC Fairprice supermarkets.
Click on the following link to get details of the competition and to register
http://www.logic9.com.sg.
You have a chance to win up to 36,000 worth of prizes. The top prize for each age group is an IBM Thinkpad notebook worth $4,000.
You stand a better chance of winning, if you practice for this competition. You can buy a Logic9 CD or booklet for $5 only at selected NTUC Fairprice supermarkets.
Tuesday, March 14, 2006
Growth plan gives a fairly attractive return
A policyholder invested $50,000 in a Growth plan in 2001. It matured 5 years later with a maturity value of $58,000.
The policyholder earned a net return of 3.1% over the past 5 years on the Growth policy.
As the Growth policy has to be invested mostly in short term secure bonds, the return of 3.1% is quite attractive. During the past five years, Government bonds provide a return of around 3%.
Apart from giving a fairly good return, our Growth plan also give life insurance cover, which is built into the contract and not charged separately.
Our aim is to invest the funds prudently, get a fairly attractive return, and return most of the return to our policyholders.
Here is the good news for our policyholders of our Growth plan. The bonus rate has been increased recently. We expect to give better than 3.1% return in future years, based on the higher bonus rates. For a Growth plan that is invested for more than 10 years, the return should be higher than 4% per annum, based on our current bonus rates.
The policyholder earned a net return of 3.1% over the past 5 years on the Growth policy.
As the Growth policy has to be invested mostly in short term secure bonds, the return of 3.1% is quite attractive. During the past five years, Government bonds provide a return of around 3%.
Apart from giving a fairly good return, our Growth plan also give life insurance cover, which is built into the contract and not charged separately.
Our aim is to invest the funds prudently, get a fairly attractive return, and return most of the return to our policyholders.
Here is the good news for our policyholders of our Growth plan. The bonus rate has been increased recently. We expect to give better than 3.1% return in future years, based on the higher bonus rates. For a Growth plan that is invested for more than 10 years, the return should be higher than 4% per annum, based on our current bonus rates.
Survey of Young People
2,140 young people responded to the survey.
Which is more important to you?
* Get a better return on your savings 86%
* Make regular savings from salary 52%
* Adequate insurance cover 42%
* Get preferential terms for a loan in the future 19%
NTUC Income is planning to offer special terms for a loan "preferred policyholder". Which do you prefer?
* Lower interest rate 92%
* Hassle free application 50%
* Longer repayment period 29%
* Higher loan amount 27%
* Pre-approval of loan 15%
Which type of loan is likely to be attractive to you?
* To buy a home 66%
* For education 43%
* To buy a car or motor cycle 41%
* Loan for marriage 20%
* Other purpose 26%
To be a "preferred policyholder", you will need to be insured for at least 2 years and have total regular saving of more than $5,000. Do you find these conditions acceptable?
* I am interested to qualify in 2 years time 41%
* I already meet them 35%
* I am not interested at all 24%
Which is more important to you?
* Get a better return on your savings 86%
* Make regular savings from salary 52%
* Adequate insurance cover 42%
* Get preferential terms for a loan in the future 19%
NTUC Income is planning to offer special terms for a loan "preferred policyholder". Which do you prefer?
* Lower interest rate 92%
* Hassle free application 50%
* Longer repayment period 29%
* Higher loan amount 27%
* Pre-approval of loan 15%
Which type of loan is likely to be attractive to you?
* To buy a home 66%
* For education 43%
* To buy a car or motor cycle 41%
* Loan for marriage 20%
* Other purpose 26%
To be a "preferred policyholder", you will need to be insured for at least 2 years and have total regular saving of more than $5,000. Do you find these conditions acceptable?
* I am interested to qualify in 2 years time 41%
* I already meet them 35%
* I am not interested at all 24%
Switch and save on part of the 150%
Some people invested in a regular premium investment linked product from another insurer and have to incur up a distribution cost. Up to 150% of the annual premium may be taken away from their investment during the first few years.
A policyholder who has bought an expensive policy recently, and who was not told clearly about the high distribution cost, may find it better to switch to NTUC Income now.
They do not have to incur the distribution cost for the remaining period (usually up to three years) and can take a similar ILP policy from NTUC Income (Ideal 5) where 100% of the saving is invested from the first month.
There is a small catch. We impose $20 more in policy fee each year. You can see our adviser or visit our business center.
A policyholder who has bought an expensive policy recently, and who was not told clearly about the high distribution cost, may find it better to switch to NTUC Income now.
They do not have to incur the distribution cost for the remaining period (usually up to three years) and can take a similar ILP policy from NTUC Income (Ideal 5) where 100% of the saving is invested from the first month.
There is a small catch. We impose $20 more in policy fee each year. You can see our adviser or visit our business center.
Get 150% more
NTUC Income advertise our Ideal plan, which invests 100% of the monthly premium from the start. Similar plans from other insurers take away as much as 150% of the annual premium during the first few years.
Some insurers are unhappy with our advertisement. They expressed that our advertisement denigrates their product.
Here is my reply.
We wish to educate the general public that they have an option to buy a regular investment linked plan that does not carry a large front end load.
We do not intend to denigrate the products of other member companies. I am
sure that they are capable of convincing the consumers about the necessity
and value of paying the front end load.
Some insurers are unhappy with our advertisement. They expressed that our advertisement denigrates their product.
Here is my reply.
We wish to educate the general public that they have an option to buy a regular investment linked plan that does not carry a large front end load.
We do not intend to denigrate the products of other member companies. I am
sure that they are capable of convincing the consumers about the necessity
and value of paying the front end load.
Monday, March 13, 2006
Internet portal reduce front end charges
The Straits Times reported that two internet portals have reduced their front end charges for investing in unit trusts. The charges have been reduced to 1% and 2.5% respectively.
The unit trusts sold by these portals have high annual charges, typically from 1.5% to 2.5% per annum.
These high annual charges can reduce your return over a 10 year period.
By comparison, the combined fund from NTUC Income has modest charges, as follows:
- initial spread: 1.5% to 3.5%, depending on amount invested
- annual charge: about 1% per annum.
By investing with NTUC Income, you can get a return of about 3% to 12% more over 10 years, assuming that the performance of the fund is similar. This better return comes mainly from our lower annual charge.
The unit trusts sold by these portals have high annual charges, typically from 1.5% to 2.5% per annum.
These high annual charges can reduce your return over a 10 year period.
By comparison, the combined fund from NTUC Income has modest charges, as follows:
- initial spread: 1.5% to 3.5%, depending on amount invested
- annual charge: about 1% per annum.
By investing with NTUC Income, you can get a return of about 3% to 12% more over 10 years, assuming that the performance of the fund is similar. This better return comes mainly from our lower annual charge.
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