Dear Mr Tan
What low cost funds do you recommend? How do I invest in them?
REPLY
I suggest the following:
1. STI Exchange Traded Fund - through the Singapore Exchange
2. Combined Fund from NTUC Income - through an adviser or the business center
3. Money market fund from NTUC Income - through an adviser or the business center
4. BIGe from Aviva
NTUC Income Business Center ... see Link 9 on the right
http://www.income.com.sg/businesscentre/
Aviva
http://www.aviva-singapore.com.sg/
If I know of other low cost funds, I shall put them in this blog. So far, the choice is rather limited.
Wednesday, October 24, 2007
Tuesday, October 23, 2007
Life annuity or money market fund?
Hi Mr Tan,
Currently, which offer better investment yield ? Money market fund or annuity (lifetime with
immediate drawdown and no refund). Please give the name of the fund or annuity.
REPLY
The life annuity provides a higher return as it is invested in long term investments, which give a higher return than short term investments innvested by the money market fund.
You can read this FAQ
http://www.tankinlian.com/faq/life.html
I suggest that you talk to an insurance adviser (call an adviser listed in my blog) or talk to a salaried consultant at the NTUC Income Business Center.
Currently, which offer better investment yield ? Money market fund or annuity (lifetime with
immediate drawdown and no refund). Please give the name of the fund or annuity.
REPLY
The life annuity provides a higher return as it is invested in long term investments, which give a higher return than short term investments innvested by the money market fund.
You can read this FAQ
http://www.tankinlian.com/faq/life.html
I suggest that you talk to an insurance adviser (call an adviser listed in my blog) or talk to a salaried consultant at the NTUC Income Business Center.
Prompt and fair settlement of claims
Hi Mr Tan
I have some question need to ask u regarding making a claim at NTUC insurance. I have heard my friend said NTUC income making a claim is quite troublesome and have a lot of procedue taking sometimes. I mean those policy which family member is dead. Isit true?
REPLY
This statement is not true. The insurance agents from other companies spread these lies, so that the customers will pay a higher premium to buy the insurance policy from their company. This has been happening for 30 years.
NTUC Income has a policy on prompt and fair settlement of claims. There were many claims that were paid without hassle by NTUC Income. Similar claims from other companies took much longer to settle.
I have some question need to ask u regarding making a claim at NTUC insurance. I have heard my friend said NTUC income making a claim is quite troublesome and have a lot of procedue taking sometimes. I mean those policy which family member is dead. Isit true?
REPLY
This statement is not true. The insurance agents from other companies spread these lies, so that the customers will pay a higher premium to buy the insurance policy from their company. This has been happening for 30 years.
NTUC Income has a policy on prompt and fair settlement of claims. There were many claims that were paid without hassle by NTUC Income. Similar claims from other companies took much longer to settle.
When should I sell?
Dear Mr Tan
I had bought a Greatlink Growth Plan using my S10K cpf money in 2000. Today, it is valued at 26k. Now, the question is when should I sell it?
REPLY.
If you are investing for the long term, you can keep the investment. If you are investing for the short time, now is a good time to sell.
I had bought a Greatlink Growth Plan using my S10K cpf money in 2000. Today, it is valued at 26k. Now, the question is when should I sell it?
REPLY.
If you are investing for the long term, you can keep the investment. If you are investing for the short time, now is a good time to sell.
Excessive charge by bank on credit card
COMMENT POSTED IN MY BLOG:
The bank did the right thing by informing customers early and proper disclosures.
Consumers also have their own responsibility in managing their own cash flow. What the banks did was to create convenience for consumers so that they do not have to carry large amounts of cash and at some places, enjoy discounts and rebates.
If they did not set up the framework, consumers would still be carrying large bundles of cash with them all the time.
If you are expecting everything to come without cost, then you have to carry your own bank with you all the time.
Banks do not owe consumers a living. If consumers make use of their services, please expect to pay.
I have never been late in my credit card payment - even with banks where I do not have a GIRO arrangement. Why? It is simple - I make sure honour the rules, and am not tardy nor procrastinate my payment.
Perhaps consumers can consider practicing not delaying payment and avoid unnecessary penalties.
REPLY:
It is all right for the bank to incur a charge to cover its actual cost of handling the late payment. I believe that the cost should be less than $5. It is not correct for the bank to levy an excessive charge (just like imposing a fine) and make a profit on it.
Already, the bank is making a profit on the following:
1. Charge paid by the merchant
2. Annual fee for the credit card (although it is usually waived)
3. Interet on late payment.
I am worried that many businesses are aiming to increase their profit all the time, and they adopt are willing to business practices that are unfair to consumers. I urge consumers to reject these types of business practices.
The bank did the right thing by informing customers early and proper disclosures.
Consumers also have their own responsibility in managing their own cash flow. What the banks did was to create convenience for consumers so that they do not have to carry large amounts of cash and at some places, enjoy discounts and rebates.
If they did not set up the framework, consumers would still be carrying large bundles of cash with them all the time.
If you are expecting everything to come without cost, then you have to carry your own bank with you all the time.
Banks do not owe consumers a living. If consumers make use of their services, please expect to pay.
I have never been late in my credit card payment - even with banks where I do not have a GIRO arrangement. Why? It is simple - I make sure honour the rules, and am not tardy nor procrastinate my payment.
Perhaps consumers can consider practicing not delaying payment and avoid unnecessary penalties.
REPLY:
It is all right for the bank to incur a charge to cover its actual cost of handling the late payment. I believe that the cost should be less than $5. It is not correct for the bank to levy an excessive charge (just like imposing a fine) and make a profit on it.
Already, the bank is making a profit on the following:
1. Charge paid by the merchant
2. Annual fee for the credit card (although it is usually waived)
3. Interet on late payment.
I am worried that many businesses are aiming to increase their profit all the time, and they adopt are willing to business practices that are unfair to consumers. I urge consumers to reject these types of business practices.
Guarantee of 4% per annum?
Dear Mr Tan,
Does the insurance company guarantee at least 4% long term? It may not be realised even after waiting for the long term, right? Or do you based the 4% on past performance and think future will be the same?
REPLY:
The fund or insurance company does not provide this guarantee of 4% return.
If you are investing over a period of 10 years or longer in equities, you are likely to get an average of more than 4% per year, based on past records.
For some periods, the average return can be higher, e.g. close to 8% per year. For other periods, it may be lower, i.e. closer to 4% per year.
Take the investment risk and get a better return. Invest for 10 years or more, so that you can average out the good and bad years.
Invest in a large, well diversified, low cost fund, so that most of the return are given to you (and not taken away as expenses and charges).
I am quite confident that the return in the future will be higher than other types of investments. I am making most of my personal investment in this type of fund.
Does the insurance company guarantee at least 4% long term? It may not be realised even after waiting for the long term, right? Or do you based the 4% on past performance and think future will be the same?
REPLY:
The fund or insurance company does not provide this guarantee of 4% return.
If you are investing over a period of 10 years or longer in equities, you are likely to get an average of more than 4% per year, based on past records.
For some periods, the average return can be higher, e.g. close to 8% per year. For other periods, it may be lower, i.e. closer to 4% per year.
Take the investment risk and get a better return. Invest for 10 years or more, so that you can average out the good and bad years.
Invest in a large, well diversified, low cost fund, so that most of the return are given to you (and not taken away as expenses and charges).
I am quite confident that the return in the future will be higher than other types of investments. I am making most of my personal investment in this type of fund.
Monday, October 22, 2007
How to avoid over-insurance
Mr Tan,
Can you give some tips on how to avoid over-insurance? How much is adequate? How much is excessive?
REPLY:
You have to distinguish between the following:
* insurance - to protect against loss of earnings or to pay for expenses
* investment - to get an attractive return on your savings
If it is for insurance only, you should spend not more than 2% of your income. If you annual income is $40,000, you should spend not more than $800 to cover for the insurance of your life, medical expenses and your home and for your family members. (You may have to pay more, if you wish to insure your car).
If you buy insurance as a form of investment, you must look at the return. For long term investment, you must aim for a return of at least 4%.
If you are paying 10% of your earnings as insurance premium (and many people are), and you get a return of les than 2% per annum on your insurance policy, then you are getting a poor deal.
This is why I advise to buy term and invest the difference. Read this FAQ:
http://www.tankinlian.com/faq/fptips.html
Can you give some tips on how to avoid over-insurance? How much is adequate? How much is excessive?
REPLY:
You have to distinguish between the following:
* insurance - to protect against loss of earnings or to pay for expenses
* investment - to get an attractive return on your savings
If it is for insurance only, you should spend not more than 2% of your income. If you annual income is $40,000, you should spend not more than $800 to cover for the insurance of your life, medical expenses and your home and for your family members. (You may have to pay more, if you wish to insure your car).
If you buy insurance as a form of investment, you must look at the return. For long term investment, you must aim for a return of at least 4%.
If you are paying 10% of your earnings as insurance premium (and many people are), and you get a return of les than 2% per annum on your insurance policy, then you are getting a poor deal.
This is why I advise to buy term and invest the difference. Read this FAQ:
http://www.tankinlian.com/faq/fptips.html
Letter from Lawyer Claiming for the Other Party
Dear Mr Tan,
I receive a threatening letter from a lawyer acting for the other driver involved in an accident a few months ago. I have reported the accident to my insurance company. It is a minor accident.
Why did the insurance company fail to settle this claim with the other party? What should I do?
REPLY:
You can give a reply to the lawyer to tell them to make their claim directly against your insurance company. At the same time, you can pass the lawyer's letter to your insurance company to handle.
It is wrong for the lawyer to sent the letter to you, especially as they can lodge it with your insurance company. Some lawyers, acting on a third party claim, use this approach to intimidate the public.
Perhaps you should make a complaint to the Law Society against this type of behaviour.
I receive a threatening letter from a lawyer acting for the other driver involved in an accident a few months ago. I have reported the accident to my insurance company. It is a minor accident.
Why did the insurance company fail to settle this claim with the other party? What should I do?
REPLY:
You can give a reply to the lawyer to tell them to make their claim directly against your insurance company. At the same time, you can pass the lawyer's letter to your insurance company to handle.
It is wrong for the lawyer to sent the letter to you, especially as they can lodge it with your insurance company. Some lawyers, acting on a third party claim, use this approach to intimidate the public.
Perhaps you should make a complaint to the Law Society against this type of behaviour.
Learning Powerpoint
In the past, I send the key points of my paper to a colleague to create a powerpoint.
Recently, I had to create some powerpoint myself, as my former colleague was not available. I had to learn how to use Powerpoint.
I asked an expert to show me how to create my powerpoint slides. It was quite easy to use. After a few minutes, I am able to create the slides. But they are just basic slides with words (in different sizes, fonts and colours).
I will still use an artist to do the touch-ups, add the effects and nice pictures.
Lesson: There are still many interesting things to learn, even for someone of my age.
Recently, I had to create some powerpoint myself, as my former colleague was not available. I had to learn how to use Powerpoint.
I asked an expert to show me how to create my powerpoint slides. It was quite easy to use. After a few minutes, I am able to create the slides. But they are just basic slides with words (in different sizes, fonts and colours).
I will still use an artist to do the touch-ups, add the effects and nice pictures.
Lesson: There are still many interesting things to learn, even for someone of my age.
Search for information from the internet
I use the Google search to access information through the internet. It is easy to use and works extremely well.
Here are some examples of my search:
* CPF Minimum Sum
* La Vie En Rose (title of a song)
* O Sole Mio (title of a song)
* Euthanasia
* CPF contribution
* Transit Link (name of company)
The Google search return a list of title that matches the search. If all the words match, the item appears at the time. If some words match, it appear lower down.
I use this to search for information that is needed to research for my articles in my blog or to send to newspapers.
Here are some examples of my search:
* CPF Minimum Sum
* La Vie En Rose (title of a song)
* O Sole Mio (title of a song)
* Euthanasia
* CPF contribution
* Transit Link (name of company)
The Google search return a list of title that matches the search. If all the words match, the item appears at the time. If some words match, it appear lower down.
I use this to search for information that is needed to research for my articles in my blog or to send to newspapers.
High cost of borrowing
Here are some tips, which I hope will be helpful to the young people.
Many people are not aware about the high cost of borrowing. They may not be aware that they are borrowing at all.
Buying a product on 12 or 24 months of "interest free" installments is actually borrowing. If you pay cash, you can easily a 5% or 10% discount on the price.
What is the borrowing cost, over a 24 month period?
If you pay interest at 1% per month, the total payment over 24 months is an additional 12%. If you pay interest at 2% per month (i.e. the rate the credit cards normally charged on rolled over balances), you will pay an additional 27%.
If the merchant that gives you "interest free installment" incurs an interest cost of 1% per month (i.e. the cost of funds provided by the financing company), this merchant will give you a cash discount of up to 12% on the product.
You can negotiate for this cash discount. The merchant has probably added this financing cost to the cost of the product.
Suppose you like something now, and does not have the cash to pay for it?
My advice. Start to save now for the things that you may need in the future. By paying cash, you can save up to 12% to 24% on the financing cost of the product. It is a lot of money to save.
Here is another option. Ask yourself? Do you really need to buy that product now? Can you save first and buy it 2 years later?
By that time, the product will come down in price and you save on the financing cost as well. You will get double benefit! You may also get a better product, as products are being improved all the time.
Many people are not aware about the high cost of borrowing. They may not be aware that they are borrowing at all.
Buying a product on 12 or 24 months of "interest free" installments is actually borrowing. If you pay cash, you can easily a 5% or 10% discount on the price.
What is the borrowing cost, over a 24 month period?
If you pay interest at 1% per month, the total payment over 24 months is an additional 12%. If you pay interest at 2% per month (i.e. the rate the credit cards normally charged on rolled over balances), you will pay an additional 27%.
If the merchant that gives you "interest free installment" incurs an interest cost of 1% per month (i.e. the cost of funds provided by the financing company), this merchant will give you a cash discount of up to 12% on the product.
You can negotiate for this cash discount. The merchant has probably added this financing cost to the cost of the product.
Suppose you like something now, and does not have the cash to pay for it?
My advice. Start to save now for the things that you may need in the future. By paying cash, you can save up to 12% to 24% on the financing cost of the product. It is a lot of money to save.
Here is another option. Ask yourself? Do you really need to buy that product now? Can you save first and buy it 2 years later?
By that time, the product will come down in price and you save on the financing cost as well. You will get double benefit! You may also get a better product, as products are being improved all the time.
Sunday, October 21, 2007
Tips on how to play Sudoku (Logic9)
90% of people in Singapore are still not familiar with Sudoku, although it has appeared in the newspapers for two years.
Those who are familiar with this puzzle work on it every day. It keeps the mind alert.
I have four tips to help you solve Sudoku puzzles at all levels, including the difficult (four star) puzzles.
It can be found in this webpage:
http://project.bestsimulation.sg/logic9v4/tips.asp
It takes only TEN minutes to learn the four tips. You can practice on the puzzles. You will be an expert within 2 weeks.
Try it.
Those who are familiar with this puzzle work on it every day. It keeps the mind alert.
I have four tips to help you solve Sudoku puzzles at all levels, including the difficult (four star) puzzles.
It can be found in this webpage:
http://project.bestsimulation.sg/logic9v4/tips.asp
It takes only TEN minutes to learn the four tips. You can practice on the puzzles. You will be an expert within 2 weeks.
Try it.
Individual Home Delivery
The retail cooperatives in Japan has successfully operated a system of individual home delivery of groceries for more than 20 years.
It operates as follows:
* the customer places an order
* the groceries are delivered to their homes at specified times
It works well for the following:
* special products (e.g. organic) not available from the supermarkets
* heavy items
* for busy customers
Several businesses have tried to provide this service in Singapore. It does not seem to work well. What are the reasons?
It operates as follows:
* the customer places an order
* the groceries are delivered to their homes at specified times
It works well for the following:
* special products (e.g. organic) not available from the supermarkets
* heavy items
* for busy customers
Several businesses have tried to provide this service in Singapore. It does not seem to work well. What are the reasons?
Monthly withdrawals from Growth Combined Fund
A policyholder had about 47,500 units units of the Growth Combined Fund with a value of $87,700.
She wished to make monthly withdrawal of $400 opr $500 from this fund. Assuming that the investment grows at 5% per annum, the money will last as follows
monthly withdrawal $400 - total of 45.7 years
monthly withdrawal $500 - total of 25.6 years
By increasing the payount by 25% (from $400 to $500), the payout period is reduced by 44%. It could be due to the effect of a shorter period of compounding.
The policyholder was happy with the return on the Growth Combined Fund, and the long period for which the payout is projected to be available. She thinks that this scheme is suitable for retirees.
She wished to make monthly withdrawal of $400 opr $500 from this fund. Assuming that the investment grows at 5% per annum, the money will last as follows
monthly withdrawal $400 - total of 45.7 years
monthly withdrawal $500 - total of 25.6 years
By increasing the payount by 25% (from $400 to $500), the payout period is reduced by 44%. It could be due to the effect of a shorter period of compounding.
The policyholder was happy with the return on the Growth Combined Fund, and the long period for which the payout is projected to be available. She thinks that this scheme is suitable for retirees.
Saturday, October 20, 2007
Adequate coverage for critical illness
An insurance adviser said that the coverage for critical illness should be adequate to cover the cost of treatment and the loss of earnings.
I know of many cases of critical illness claims, where the claimant was able to continue to work, after the illness had been treated.
If the critical illness results in death, a claim can be made under an ordinary life insurance policy (which is less costly).
My preference is for the critical illness policy to cover the cost of treatment and not to include the potential loss of earnings. This allows more of the savings to be used to earn a higher rate of return in other low-cost investment products.
I know of many cases of critical illness claims, where the claimant was able to continue to work, after the illness had been treated.
If the critical illness results in death, a claim can be made under an ordinary life insurance policy (which is less costly).
My preference is for the critical illness policy to cover the cost of treatment and not to include the potential loss of earnings. This allows more of the savings to be used to earn a higher rate of return in other low-cost investment products.
Euthanasia
A friend asked me to express my views about euthanasia in my blog. He argued that euthanasia should be made legal, and that each individual in poor health should be given the right to pass away peacefully, rather than spend a lot of money on medical treatment (which, in his opinion, enrich the doctors).
Here is my reply to him:
1. This is a highly emotive issue
2. In practice, those who do not wish to be treated, can reject treatment anyway.
Here is the definition of euthanasia:
Euthanasia (from Ancient Greek: ευθανασία, "good death"[I]) is the practice of ending the life of a human or animal who is incurably ill in a painless or minimally painful way, for the purpose of limiting suffering.
Laws around the world vary greatly with regard to euthanasia, and are constantly subject to change as cultural values shift and better palliative care, or treatments become available. It is legal in some nations, while in others it may be criminalized.
Euthanasia can be conducted in various ways. In order to distinguish certain methods, more specific terminology may be used when discussing euthanasia.
Even though it seems like a very humain way of putting a person out of pain, some times doctors put patients to death without their consent. In addition, in Holand, 8,100 patients died because doctors deliberately gave them overdoses of medications, for the purpose of hastening the patient's death. In 61% of these cases (4,941 patients), the overdose was given without the patient's consent.
Here is my reply to him:
1. This is a highly emotive issue
2. In practice, those who do not wish to be treated, can reject treatment anyway.
Here is the definition of euthanasia:
Euthanasia (from Ancient Greek: ευθανασία, "good death"[I]) is the practice of ending the life of a human or animal who is incurably ill in a painless or minimally painful way, for the purpose of limiting suffering.
Laws around the world vary greatly with regard to euthanasia, and are constantly subject to change as cultural values shift and better palliative care, or treatments become available. It is legal in some nations, while in others it may be criminalized.
Euthanasia can be conducted in various ways. In order to distinguish certain methods, more specific terminology may be used when discussing euthanasia.
Even though it seems like a very humain way of putting a person out of pain, some times doctors put patients to death without their consent. In addition, in Holand, 8,100 patients died because doctors deliberately gave them overdoses of medications, for the purpose of hastening the patient's death. In 61% of these cases (4,941 patients), the overdose was given without the patient's consent.
Lee Kum Tatt's Blog
After a period of absence, due to other committments, Dr Lee Kum Tatt and his wife have contributed the following articles:
Secret of Singapore' Success
What Do We Believe in.
http://www.leekumtatt.blogspot.com/
Secret of Singapore' Success
What Do We Believe in.
http://www.leekumtatt.blogspot.com/
Friday, October 19, 2007
Excessive charges
I received a letter from a credit card company. It announced the "administration fee" for the following:
1. Late payment - $40
2. No money in the bank account for GIRO deduction - $50
These fees are in additional to the high rate of interest levied on the overdue balances.
These fees are excessive. I do not mind paying a fee that covers the additional cost to the company due to the oversight. But it is morally wrong for them to impose an excessive fee to increase their profit.
At one time, only the Government had the right to impose fines. Now, it seems that businesses feel that they have the same right!
I called the credit card company and cancelled the card immediately.
1. Late payment - $40
2. No money in the bank account for GIRO deduction - $50
These fees are in additional to the high rate of interest levied on the overdue balances.
These fees are excessive. I do not mind paying a fee that covers the additional cost to the company due to the oversight. But it is morally wrong for them to impose an excessive fee to increase their profit.
At one time, only the Government had the right to impose fines. Now, it seems that businesses feel that they have the same right!
I called the credit card company and cancelled the card immediately.
Look after interest of consumers
In a speech to the International Cooperative Alliance meeting in Singapore, minister Lim Boon Heng said that the share of value added earned by shareholders is higher than the share to the workers.
I think that he was probably referring to international figures, although I suspect that this remark applies to Singapore as well.
What does this mean?
1. Worker wages are depressed, due to global competion
2. Businesses are able to make excessive profit, in spite of global competition.
Where does the excessive profit come from? I suspect that they come from unethical practices, such as creating sub-prime products, structured financial products, excessive charges and questionable marketing practices.
What does this really mean?
Consumers are being exploited. Consumer protection has been weak in many countries. This is an area of attention for governments, regulators and consumer bodies.
The prevailing idea was that the free market can take care of these matters. This is a wrong notion. Businesses know how to make excessive profit at the expense of consumers, and get away with it.
I think that he was probably referring to international figures, although I suspect that this remark applies to Singapore as well.
What does this mean?
1. Worker wages are depressed, due to global competion
2. Businesses are able to make excessive profit, in spite of global competition.
Where does the excessive profit come from? I suspect that they come from unethical practices, such as creating sub-prime products, structured financial products, excessive charges and questionable marketing practices.
What does this really mean?
Consumers are being exploited. Consumer protection has been weak in many countries. This is an area of attention for governments, regulators and consumer bodies.
The prevailing idea was that the free market can take care of these matters. This is a wrong notion. Businesses know how to make excessive profit at the expense of consumers, and get away with it.
More capacity for public transport
Here are my views.
1. The public transport operators should be required to put more trains and buses, to reduce the waiting time and provide more comfortable rides (i.e. seats) for the commuters.
2. The existing fares allows them to increase the capacity and still make a good rate of return. Currently, they are making excessive profits at the expense of commuters.
3. We need a better system of feeder buses to bring people to the MRT stations or bus terminals.
4. More improving public transport, there will be less demand for private cars and less congestion on the roads.
I hope that the Public Transport Council will hear and act on this view, which has been expressed by many commuters.
1. The public transport operators should be required to put more trains and buses, to reduce the waiting time and provide more comfortable rides (i.e. seats) for the commuters.
2. The existing fares allows them to increase the capacity and still make a good rate of return. Currently, they are making excessive profits at the expense of commuters.
3. We need a better system of feeder buses to bring people to the MRT stations or bus terminals.
4. More improving public transport, there will be less demand for private cars and less congestion on the roads.
I hope that the Public Transport Council will hear and act on this view, which has been expressed by many commuters.
Advantages of public transport
I have been taking public transport (i.e. bus and train) for the past 6 months. Here are my experiences.
Advnantages of public transport:
1. Better than driving. No worry about congested roads or finding a parking space.
2. More economical. No need to pay expensive ERP and parking charges
3. More relaxing, especially if I can find a seat. If not, I can rest standing up.
4. Taxis are expensive, especially due to the peak hour and other surcharges.
What are the disadvantages of public transport?
1. Overcrowding.
2. Long waiting time.
Considering the advantages and disadvantages, my preference is still public transport.
Advnantages of public transport:
1. Better than driving. No worry about congested roads or finding a parking space.
2. More economical. No need to pay expensive ERP and parking charges
3. More relaxing, especially if I can find a seat. If not, I can rest standing up.
4. Taxis are expensive, especially due to the peak hour and other surcharges.
What are the disadvantages of public transport?
1. Overcrowding.
2. Long waiting time.
Considering the advantages and disadvantages, my preference is still public transport.
Spirit of Enterprise Award, 2007
.JPG)
Here is a photo of the honorees at the Spirit of Enterprise Award 2007.
Russell Miller and I started this organisation several years ago. The purpose was to identify and honour small enterprises set up by ordinary people who wanted to build a business.
This is how the honorees are selected. We ask the public to send in their nominations. We arrange for a student to interview the nominee. Their case study is submitted for voting through the internet. A selection panel make the final judgement.
The guest of honour was Mdm Yu Foo Yee Shoon. She is very helpful and always supportive of the ordinary people.
I was not able to attend this Award ceremony, as I was in Brussels. I was told that the event went very well.
Thursday, October 18, 2007
The economics of public transport
Public tranport is more convenient and efficient. A big bus can take many people. The passengers have the comfort of being driven to their destination. The buses can move around to carry passengers all the time.
Private cars are costly and congest the roads. They require parking spaces when they are not being used.
In many cities, due to inadequate attention to public transport, many people opted to buy a private car. More roads have to be built and they still get too congested. The parking spaces are insufficient. Life is inconvenient for everyone.
We need a bold approach. We have to make public transport more convenient and more comfortable. There should be sufficient buses and trains to offer shorter waiting times and a comfortable ride, including a seat.
To the country, there is more cost saving if more people take public transport.
Can our transport authority in Singapore take a bold step? Can we increase the capacity of our buses and trains two or three times (by more buses and trains operating at shorter intervals)? Can we offer a better choice for people to take public transport? Can we have convenient feeder services to support our trains and express buses?
People take planes for long distance travel. They can opt for first or businss class. They do not need to fly a private plane. We should offer this type of choice for our public transport as well.
Private cars are costly and congest the roads. They require parking spaces when they are not being used.
In many cities, due to inadequate attention to public transport, many people opted to buy a private car. More roads have to be built and they still get too congested. The parking spaces are insufficient. Life is inconvenient for everyone.
We need a bold approach. We have to make public transport more convenient and more comfortable. There should be sufficient buses and trains to offer shorter waiting times and a comfortable ride, including a seat.
To the country, there is more cost saving if more people take public transport.
Can our transport authority in Singapore take a bold step? Can we increase the capacity of our buses and trains two or three times (by more buses and trains operating at shorter intervals)? Can we offer a better choice for people to take public transport? Can we have convenient feeder services to support our trains and express buses?
People take planes for long distance travel. They can opt for first or businss class. They do not need to fly a private plane. We should offer this type of choice for our public transport as well.
New concept in town planning
I have a new concept in town planning.
Each town comprise of 100,000 residents. It has the facilities, such as a schools, malls, medical facilities, restaurants, services, offices and workplaces.
Several clubs are available in the town. You can join a club to enjoy its sporting and social activies. You get to make more friends and get to know your neighbours.
The unique feature is that all transport within the town will be by elevated light rail transport. Adequate trains are provided, so that the waiting time is less. There are no internal roads. Private cars are not allowed.
People can work or cycle at ground levels, and sheltered. They can move by travelletors. Bicylces belong to the town and can be rented for hourly use.
The internal transport will take the residents to the MRT stations, bus terminus or car parks that are located at the fringe of the towns. Some people do not need to own cars, as they can rent a car for a day.
This concept allows a higher density of development. It may be possible to have 50% more usage of the land.
It can support a good quality of life. Children can move around the town, without the fear of being knocked down by traffic. They can study in a nearby school in the town.
The entire town is a real estate investment trust (REIT). Each resident owns units of the REIT and has the prioirty to rent an apartment at its market rate. The dividend from the REIT can be used to offset the rental.
If the owner wants to work in another town, it is easy to rent an apartment in that town, and reinvest in that REIT. They do not have to incur a high cost of selling an indivual property. It gives flexibility for people to change jobs and make a new life, with new friends, in another town.
This concept will encourage more people to work in their town. It will reduce traffic congestion on the main roads in Singapore that connect the various towns.
I hope to get more people to like this idea. It may be suitable for Singapore, due to our limited land.
Each town comprise of 100,000 residents. It has the facilities, such as a schools, malls, medical facilities, restaurants, services, offices and workplaces.
Several clubs are available in the town. You can join a club to enjoy its sporting and social activies. You get to make more friends and get to know your neighbours.
The unique feature is that all transport within the town will be by elevated light rail transport. Adequate trains are provided, so that the waiting time is less. There are no internal roads. Private cars are not allowed.
People can work or cycle at ground levels, and sheltered. They can move by travelletors. Bicylces belong to the town and can be rented for hourly use.
The internal transport will take the residents to the MRT stations, bus terminus or car parks that are located at the fringe of the towns. Some people do not need to own cars, as they can rent a car for a day.
This concept allows a higher density of development. It may be possible to have 50% more usage of the land.
It can support a good quality of life. Children can move around the town, without the fear of being knocked down by traffic. They can study in a nearby school in the town.
The entire town is a real estate investment trust (REIT). Each resident owns units of the REIT and has the prioirty to rent an apartment at its market rate. The dividend from the REIT can be used to offset the rental.
If the owner wants to work in another town, it is easy to rent an apartment in that town, and reinvest in that REIT. They do not have to incur a high cost of selling an indivual property. It gives flexibility for people to change jobs and make a new life, with new friends, in another town.
This concept will encourage more people to work in their town. It will reduce traffic congestion on the main roads in Singapore that connect the various towns.
I hope to get more people to like this idea. It may be suitable for Singapore, due to our limited land.
Adequate cover for critical illness
Someone argued against my suggetion to insure $50,000 for critical illness. He said that the correct cover should be determined by a financial needs analysis.
In my view, $50,000 in critical illness coverage is adequate for most poeple.
Most illnesses do not cost a lot of money to treat, especially if they have access to subsidised wards in Singapore.
If they need more than $50,000, they can draw down on your savings from other sources. They should invest a large portion of their savings in more productive assets, and not over-commit all their savings in a low return, critical illness cover.
If a financial adviser tell you that you need more than $100,000 for critical illness coverage, you should ask the following questions:
1. What percentage of people make a critical illness claim?
2. What is the average cost of treating the critical illness? (Do not allow them quote you an isolated case that occurs once in 20 years)?
3. How much commission do they earn by selling a big critical illness policy to you?
In my view, $50,000 in critical illness coverage is adequate for most poeple.
Most illnesses do not cost a lot of money to treat, especially if they have access to subsidised wards in Singapore.
If they need more than $50,000, they can draw down on your savings from other sources. They should invest a large portion of their savings in more productive assets, and not over-commit all their savings in a low return, critical illness cover.
If a financial adviser tell you that you need more than $100,000 for critical illness coverage, you should ask the following questions:
1. What percentage of people make a critical illness claim?
2. What is the average cost of treating the critical illness? (Do not allow them quote you an isolated case that occurs once in 20 years)?
3. How much commission do they earn by selling a big critical illness policy to you?
Can legal issues be simplified?
My friend told me that his son graduated with a law degree. He decided not to practice law, as many lawyers had to work long hours into the late night.
Why is it necessary?
Lawyers spend countless hours producing bundles of legal documents that are hardly needed. The chance of a dispute is small.
Even so, when there is a legal dispute, they produce even more bundles of documents that take a lot of time for the court and the parties to deal with. The issues are made more complicated than really necessary.
Why? Lawyers are paid by the time that they spent. If they spend more time to produce more documents, they can send a larger bill.
I hope that, in today's age, it is possible for the legal practice to be made more sensible. Many issues can be simplified and dealt with more expeditiously.
Why is it necessary?
Lawyers spend countless hours producing bundles of legal documents that are hardly needed. The chance of a dispute is small.
Even so, when there is a legal dispute, they produce even more bundles of documents that take a lot of time for the court and the parties to deal with. The issues are made more complicated than really necessary.
Why? Lawyers are paid by the time that they spent. If they spend more time to produce more documents, they can send a larger bill.
I hope that, in today's age, it is possible for the legal practice to be made more sensible. Many issues can be simplified and dealt with more expeditiously.
Wednesday, October 17, 2007
Nearly 50 years ago
This is a photograph of my primary 4 class, nearly 50 years ago. I am grateful to my teacher, Henry Phang, who kept this photograph.
I was surprised to see that none of the students in my class wore spectacles in those days. Actually, I was already short sighted at that age. Today, many children wear spectacles at a much younger age.
For those who know me, can you guess where I was in that picture?
Disability income insurance
Hi Mr Tan,
I've indeed learnt a lot about financial planning via your blog. Thank you very much for your valuable advice to all the readers.
Is it advisable to have critical illness coverage against the 30 major illness or is it more important to buy disability income insurance?
REPLY
Unfortunately, most insurers do not provide disabilty income insurance on competitive terms.
So, you should buy a critical illness cover. I think that $50,000 is sufficient. The insurance agent will try to get you to buy more, especially a whole life policy.
Try to ask them to give you a critical illness policy that stops at 60. Beyond 60, you have sufficient savings (by saving through an investment fund, to take care of your medical needs.
Read the FAQ in my website, www.tankinlian.com/faq
I've indeed learnt a lot about financial planning via your blog. Thank you very much for your valuable advice to all the readers.
Is it advisable to have critical illness coverage against the 30 major illness or is it more important to buy disability income insurance?
REPLY
Unfortunately, most insurers do not provide disabilty income insurance on competitive terms.
So, you should buy a critical illness cover. I think that $50,000 is sufficient. The insurance agent will try to get you to buy more, especially a whole life policy.
Try to ask them to give you a critical illness policy that stops at 60. Beyond 60, you have sufficient savings (by saving through an investment fund, to take care of your medical needs.
Read the FAQ in my website, www.tankinlian.com/faq
Life in China, Singapore and America
MESSAGE FROM A CHINA STUDENT STUDYING IN AMERICA
The life here is pretty different with China or Singapore. I do enjoy the life here, but I do not like some aspect of the American style life.
Most Americans will drive even there is only five minutes walk. They use dryer to dry clothes instead of natural sunlight, even in New Mexico, where there are strong sunlight in 360 days a year!
They drive instead of walking, use washer instead of washing clothes by hands, but they pay a lot of money to go to the gym!
They also eat too much and consume too much energy. I read from somewhere that the energy consumed by an American is 7 times of an Asian.
If you do not have a car, your life will be hard here. You even can not go to supermarket to buy groceries! The public transportation is very poor and the distance from one place to another is very far. It is very different from what I used to in China.
In many aspects, Singapore is more advanced than the States. Most of the system in Singapore is always very simple and user friendly.
In America, it is not always the case, but still much better than China. About the life style, the Singaporean style is also more economic efficient and environmental friendly.
I think the MRT in Singapore may be the best in the world. Singapore is like a small lab and many smart people are trying smart ideas there. I may go back to Singapore after I work 3-5 years in the States.
All the best!
The life here is pretty different with China or Singapore. I do enjoy the life here, but I do not like some aspect of the American style life.
Most Americans will drive even there is only five minutes walk. They use dryer to dry clothes instead of natural sunlight, even in New Mexico, where there are strong sunlight in 360 days a year!
They drive instead of walking, use washer instead of washing clothes by hands, but they pay a lot of money to go to the gym!
They also eat too much and consume too much energy. I read from somewhere that the energy consumed by an American is 7 times of an Asian.
If you do not have a car, your life will be hard here. You even can not go to supermarket to buy groceries! The public transportation is very poor and the distance from one place to another is very far. It is very different from what I used to in China.
In many aspects, Singapore is more advanced than the States. Most of the system in Singapore is always very simple and user friendly.
In America, it is not always the case, but still much better than China. About the life style, the Singaporean style is also more economic efficient and environmental friendly.
I think the MRT in Singapore may be the best in the world. Singapore is like a small lab and many smart people are trying smart ideas there. I may go back to Singapore after I work 3-5 years in the States.
All the best!
About Money
Dear Kin Lian
1. With Money you can buy a house but not a home.
2. With Money you can buy a clock, but not time.
3. With Money you can buy a bed but not sleep.
4. With Money you can buy a book but not knowledge.
5. With Money you can see a doctor but not good health.
6. With Money you can buy a position but not respect.
7. With Money you can buy blood but not life.
8. With Money you can buy sex but not love.
I am sending you good wishes for good luck which money cannot buy.
Lee Kum Tatt
MY REPLY
I am spreading your good luck to all the visitors of my blog.
1. With Money you can buy a house but not a home.
2. With Money you can buy a clock, but not time.
3. With Money you can buy a bed but not sleep.
4. With Money you can buy a book but not knowledge.
5. With Money you can see a doctor but not good health.
6. With Money you can buy a position but not respect.
7. With Money you can buy blood but not life.
8. With Money you can buy sex but not love.
I am sending you good wishes for good luck which money cannot buy.
Lee Kum Tatt
MY REPLY
I am spreading your good luck to all the visitors of my blog.
Convert from Medishield to Incomeshield
Questions:
I am considering whether to upgrade from Medishield to NTUC Enhanced shield. If I were to buy the enhanced shield and it excludes some pre-existing illness which are presently covered by Medishield, will the expenses incurred from these illness still be covered by Medishield even after the upgrading?
MY REPLY:
I suggest that you should ask this question to the management of NTUC Income. They will be able to give you an answer. I cannot give you an answer, as it does not carry the authority.
I am considering whether to upgrade from Medishield to NTUC Enhanced shield. If I were to buy the enhanced shield and it excludes some pre-existing illness which are presently covered by Medishield, will the expenses incurred from these illness still be covered by Medishield even after the upgrading?
MY REPLY:
I suggest that you should ask this question to the management of NTUC Income. They will be able to give you an answer. I cannot give you an answer, as it does not carry the authority.
Investing tips for a young person
Dear Mr Tan,
I attended your talk organised by the Teacher's Co-Operative Society. You mentioned that its best for young investors to invest in equities. How do I go about it?
MY REPLY
I hope that these FAQs will give you the answers:
http://www.tankinlian.com/faq/fptips.html
http://www.tankinlian.com/faq/august.html
http://www.tankinlian.com/faq/returns.html
There is some concern that the stockmarkets may be too high now. If you are investing a monthly sum, it is all right to get invested at any time.
However, if you are investing a lump sum, it may be better to avoid investing in equities at this time. You can choose a balanced fund or in the money market.
I suggest that you talk to an adviser. Or call the business center in NTUC Income.
I attended your talk organised by the Teacher's Co-Operative Society. You mentioned that its best for young investors to invest in equities. How do I go about it?
MY REPLY
I hope that these FAQs will give you the answers:
http://www.tankinlian.com/faq/fptips.html
http://www.tankinlian.com/faq/august.html
http://www.tankinlian.com/faq/returns.html
There is some concern that the stockmarkets may be too high now. If you are investing a monthly sum, it is all right to get invested at any time.
However, if you are investing a lump sum, it may be better to avoid investing in equities at this time. You can choose a balanced fund or in the money market.
I suggest that you talk to an adviser. Or call the business center in NTUC Income.
Personal Rapid Transport - for the future
Dear Mr Tan,
I read your description of the personal rapid transport. Are there any examples of personal rapid transport that is successful in other countries?
MY REPLY:
From the examples quoted in Wikipedia, it seems that the closest to personal rapid transport is used in airports. London Heathrow is introducing this system soon.
The nearest example in Singapore is the sky train at Changi Airport. It is still a public transport, rather than a personal transport. However, it has some elements of the personal system. For example, the same train serves two sections of each terminal, i.e. before and after immigration.
If you take the train before immigration at one terminal, it brings you to the section before immigration in the other terminal. If you take it after immigration, it brings you to the section after immigration. Hence, the sky train is intelligent.
This intelligence can be incorporated in a future, large scale transport system. By entering the destination, the personal vehicle should be able to take you to the destination using the best route (avoiding congestion) and safely.
I read your description of the personal rapid transport. Are there any examples of personal rapid transport that is successful in other countries?
MY REPLY:
From the examples quoted in Wikipedia, it seems that the closest to personal rapid transport is used in airports. London Heathrow is introducing this system soon.
The nearest example in Singapore is the sky train at Changi Airport. It is still a public transport, rather than a personal transport. However, it has some elements of the personal system. For example, the same train serves two sections of each terminal, i.e. before and after immigration.
If you take the train before immigration at one terminal, it brings you to the section before immigration in the other terminal. If you take it after immigration, it brings you to the section after immigration. Hence, the sky train is intelligent.
This intelligence can be incorporated in a future, large scale transport system. By entering the destination, the personal vehicle should be able to take you to the destination using the best route (avoiding congestion) and safely.
Tuesday, October 16, 2007
Investing in an residential REIT
Mr Tan
I refer to your posting about a new concept in town planning. Can you explain the difference between investing in a residential REIT and an individual property? Most people like to invest directly in a specific property.
MY REPLY:
If you own a property and you wish to sell it, you have to incur the legal and agent's fees. This can take up to 4 percent of the total selling price. The selling price depends on the condition of your property, its facing, floor level and other factors. You also have to deal with the agent and the buyer.
If you invest in a REIT that owns a pool of properties, you enjoy the pooling of all the investments. The properties are professionally managed. For example, you may own 1% of a pool of 100 apartments. This is better than owning 1 specific property. You can even rent an apartment from the REIT at its market rental.
The cost of selling an investment in a REIT is less than 0.5%, compared to 4% for selling a property. I hope that the concept of a residential REIT will be more popular in the future.
I refer to your posting about a new concept in town planning. Can you explain the difference between investing in a residential REIT and an individual property? Most people like to invest directly in a specific property.
MY REPLY:
If you own a property and you wish to sell it, you have to incur the legal and agent's fees. This can take up to 4 percent of the total selling price. The selling price depends on the condition of your property, its facing, floor level and other factors. You also have to deal with the agent and the buyer.
If you invest in a REIT that owns a pool of properties, you enjoy the pooling of all the investments. The properties are professionally managed. For example, you may own 1% of a pool of 100 apartments. This is better than owning 1 specific property. You can even rent an apartment from the REIT at its market rental.
The cost of selling an investment in a REIT is less than 0.5%, compared to 4% for selling a property. I hope that the concept of a residential REIT will be more popular in the future.
Personal Rapid Transit - better than taxi
I have described the Personal Rapid Transit system. Someone observed that it is like calling a taxi. Why build this system, when we can use taxis?
The PRT system operates like a taxi. You can book for a vehicle to come to your place, and ask for it to take you to your destination. You do not have to drive or park.
Here are the advantages of PRT, compared to taxis:
1. No need for taxi drivers - no shortage problem. No need to pay surcharges to get drivers to work during peak period.
2. The computerised system knows how to get the destination (and some taxi drivers don't know)
3. No traffic congestion - i.e. no crowding of private cars
4. Greater reliabiilty. If no vehicle is available, the computer system will notify you immediately.
I hope that Singapore will experiment with this PRT system, especially in the new town.
The PRT system operates like a taxi. You can book for a vehicle to come to your place, and ask for it to take you to your destination. You do not have to drive or park.
Here are the advantages of PRT, compared to taxis:
1. No need for taxi drivers - no shortage problem. No need to pay surcharges to get drivers to work during peak period.
2. The computerised system knows how to get the destination (and some taxi drivers don't know)
3. No traffic congestion - i.e. no crowding of private cars
4. Greater reliabiilty. If no vehicle is available, the computer system will notify you immediately.
I hope that Singapore will experiment with this PRT system, especially in the new town.
Monday, October 15, 2007
How to invest $100,000
Dear Mr Tan
My friend has $100,000 in his CPF account. He intends to put $60k in his CPF account and the remaining $40k in avivadirect which promises to give 3.5% every year.
Is this the best alternative? Also is Aviva Direct really so good that it does not have any hidden admin charges,no lock up period and other charges? Appreciate your feedback please.
REPLY:
That is a wonderful idea. I would have done the same, if I were in your friend's position.
My friend has $100,000 in his CPF account. He intends to put $60k in his CPF account and the remaining $40k in avivadirect which promises to give 3.5% every year.
Is this the best alternative? Also is Aviva Direct really so good that it does not have any hidden admin charges,no lock up period and other charges? Appreciate your feedback please.
REPLY:
That is a wonderful idea. I would have done the same, if I were in your friend's position.
Legal fee paid to Jonathan Lock
Dear Mr Tan
NTUC Income paid $40,000 to Jonathan Lock to cover his legal expenses with his lawyer. Mr Lock has now settled with his lawyer for a "nominal" fee of $5,000. Does this mean that Mr Lock can keep the $35,000?
REPLY:
I do not know the condition on which the payment of $40,000 was made. From what I read in the newspapers, I guess Mr Lock is entitled to keep the remaining $35,000. The whole episode turns out to be financially to his advantage. However, he did suffer a lot of anguish during this period.
http://www.straitstimes.com/Video+News/Singapore/STIVodcast_2763.html?playid=2763&type=Top10
http://sg.news.yahoo.com/cna/20071013/tap-305487-231650b.html
NTUC Income paid $40,000 to Jonathan Lock to cover his legal expenses with his lawyer. Mr Lock has now settled with his lawyer for a "nominal" fee of $5,000. Does this mean that Mr Lock can keep the $35,000?
REPLY:
I do not know the condition on which the payment of $40,000 was made. From what I read in the newspapers, I guess Mr Lock is entitled to keep the remaining $35,000. The whole episode turns out to be financially to his advantage. However, he did suffer a lot of anguish during this period.
http://www.straitstimes.com/Video+News/Singapore/STIVodcast_2763.html?playid=2763&type=Top10
http://sg.news.yahoo.com/cna/20071013/tap-305487-231650b.html
Determine liability for an accident
QUESTION:
How can I dispute a case of where I am positive that the other vehicle was speeding. Do insurance company do investigation on the damages to ascertain the speed of the vehicle?
Scenario:
I was filtering left. Signalled, checked side mirror. After the last vehicle passed on the left, the next one is about 40m away (evidently from small headlight). I filtered and the next thing i know the car crashed onto my left wheel and everything around it. I understand that this case is not exactly favourable since I'm the one filtering.
MY REPLY:
The best way is to get an independent witness to testify that the other vehicle was speeding.
In most cases, the fault is determined by the party that caused the impact. If you knock into another car, you are likely to be liable.
For example, if the vehicle in front slowed down suddenly and you knocked into its back, you cannot claim that the accident was caused by that action. You should have kept a safe distance and be ready to stop on time.
How can I dispute a case of where I am positive that the other vehicle was speeding. Do insurance company do investigation on the damages to ascertain the speed of the vehicle?
Scenario:
I was filtering left. Signalled, checked side mirror. After the last vehicle passed on the left, the next one is about 40m away (evidently from small headlight). I filtered and the next thing i know the car crashed onto my left wheel and everything around it. I understand that this case is not exactly favourable since I'm the one filtering.
MY REPLY:
The best way is to get an independent witness to testify that the other vehicle was speeding.
In most cases, the fault is determined by the party that caused the impact. If you knock into another car, you are likely to be liable.
For example, if the vehicle in front slowed down suddenly and you knocked into its back, you cannot claim that the accident was caused by that action. You should have kept a safe distance and be ready to stop on time.
Sunday, October 14, 2007
Personal Rapid Transit
From Wikipedia, the free encyclopedia
Personal rapid transit (PRT), also called personal automated transport (PAT) is a public transportation concept that offers automated on-demand non-stop transportation, on a network of specially-built guideways.
The first public PRT installation, ULTra, is currently under construction at Heathrow Airport in London, and scheduled to open for public use in 2008.
PRT is a system of small vehicles under independent or semi-independent automatic control, running on fixed guideways. The idea attempts to address a number of perceived weaknesses of public mass transit including fixed timetabling, limited routes, and sharing travel space with unrelated travelers.
In 1988, The Advanced Transit Association (ATRA), a group which advocates the use of technological solutions to transit problems, published a definition for PRT as follows:
* Fully automated vehicles capable of operation without human drivers.
* Vehicles use a reserved guideway.
* Small vehicles available for exclusive use by an individual or a small group, typically 1 to 6 passengers, traveling together by choice and available 24 hours a day.
* Small guideways that can be located aboveground, at ground level or underground.
* Vehicles able to use all guideways and stations on a fully coupled PRT network.
* Direct origin to destination service, without a necessity to transfer or stop at intervening stations.
* Service available on demand rather than on fixed schedules.
Proponents say that the low weight of small vehicles has the important benefit of allowing smaller guideways and support structures compared to other mass transit systems like light rail, translating into lower construction cost, smaller easements, and less visually obtrusive infrastructure.
The concept has been independently reinvented many times since the 1960s. It is considered controversial, and the city-wide deployment with many closely-spaced stations envisaged by proponents has yet to be constructed.
Past projects have failed due to lack of financing, cost overruns, regulatory conflicts, political issues and flaws in engineering or design.
From 2002–2005, the EDICT project, sponsored by the European Union, conducted a study on the feasibility of PRT in four European cities. The study involved 12 research organizations, and concluded that PRT:
* Would provide future cities "a highly accessible, user-responsive, environmental friendly transport system which offers a sustainable and economic solution."
* Could "cover its operating costs, and provide a return which could pay for most, if not all, of its capital costs."
* Would provide "a level of service which is superior to that available from conventional public transport"
* Would be "well received by the public, both public transport and car users."
The report also concluded that, despite these advantages, public authorities will not commit to building PRT because of the risks associated with being the first public implementation.
Personal rapid transit (PRT), also called personal automated transport (PAT) is a public transportation concept that offers automated on-demand non-stop transportation, on a network of specially-built guideways.
The first public PRT installation, ULTra, is currently under construction at Heathrow Airport in London, and scheduled to open for public use in 2008.
PRT is a system of small vehicles under independent or semi-independent automatic control, running on fixed guideways. The idea attempts to address a number of perceived weaknesses of public mass transit including fixed timetabling, limited routes, and sharing travel space with unrelated travelers.
In 1988, The Advanced Transit Association (ATRA), a group which advocates the use of technological solutions to transit problems, published a definition for PRT as follows:
* Fully automated vehicles capable of operation without human drivers.
* Vehicles use a reserved guideway.
* Small vehicles available for exclusive use by an individual or a small group, typically 1 to 6 passengers, traveling together by choice and available 24 hours a day.
* Small guideways that can be located aboveground, at ground level or underground.
* Vehicles able to use all guideways and stations on a fully coupled PRT network.
* Direct origin to destination service, without a necessity to transfer or stop at intervening stations.
* Service available on demand rather than on fixed schedules.
Proponents say that the low weight of small vehicles has the important benefit of allowing smaller guideways and support structures compared to other mass transit systems like light rail, translating into lower construction cost, smaller easements, and less visually obtrusive infrastructure.
The concept has been independently reinvented many times since the 1960s. It is considered controversial, and the city-wide deployment with many closely-spaced stations envisaged by proponents has yet to be constructed.
Past projects have failed due to lack of financing, cost overruns, regulatory conflicts, political issues and flaws in engineering or design.
From 2002–2005, the EDICT project, sponsored by the European Union, conducted a study on the feasibility of PRT in four European cities. The study involved 12 research organizations, and concluded that PRT:
* Would provide future cities "a highly accessible, user-responsive, environmental friendly transport system which offers a sustainable and economic solution."
* Could "cover its operating costs, and provide a return which could pay for most, if not all, of its capital costs."
* Would provide "a level of service which is superior to that available from conventional public transport"
* Would be "well received by the public, both public transport and car users."
The report also concluded that, despite these advantages, public authorities will not commit to building PRT because of the risks associated with being the first public implementation.
New Urbanism - a movement
From Wikipedia.
New urbanism is an American urban design movement that arose in the early 1980s. Its goal is to reform all aspects of real estate development and urban planning, from urban retrofits to suburban infill. New urbanist neighborhoods are designed to contain a diverse range of housing and jobs, and to be walkable.
New Urbanism is also is known as traditional neighborhood design, neotraditional design, and transit-oriented development. A more idealistic variant of New Urbanism, founded in 1999 by Michael E. Arth, is known as New Pedestrianism. The ideas of New Urbanism also are embraced by the European Urban Renaissance movement.
The Local Government Commission, a private nonprofit group in Sacramento, California, invited architects Peter Calthorpe, Michael Corbett, Andrés Duany, Elizabeth Moule, Elizabeth Plater-Zyberk, Stefanos Polyzoides, and Daniel Solomon in 1991 to develop a set of community principles for land use planning. Named the Ahwahnee Principles (after Yosemite National Park's Ahwahnee Hotel), the commission presented the principles to about one hundred government officials in the fall of 1991, at its first Yosemite Conference for Local Elected Officials.
Market Street, downtown Celebration, FloridaCalthorpe, Duany, Moule, Plater-Zyberk, Polyzoides, and Solomon founded the Chicago-based Congress for the New Urbanism in 1993. The CNU has grown to more than 2,000 members, and is the leading international organization promoting new urbanist design principles. It held its fifteenth congress in 2007 in Philadelphia, Pennsylvania, which included applying New Urbanist principles to older cities.
The CNU's Charter of the New Urbanism says:
“ We advocate the restructuring of public policy and development practices to support the following principles: neighborhoods should be diverse in use and population; communities should be designed for the pedestrian and transit as well as the car; cities and towns should be shaped by physically defined and universally accessible public spaces and community institutions; urban places should be framed by architecture and landscape design that celebrate local history, climate, ecology, and building practice. ”
New urbanists support regional planning for open space, appropriate architecture and planning, and the balanced development of jobs and housing. They believe their strategies are the best way to reduce traffic congestion, increase the supply of affordable housing, and rein in urban sprawl. The Charter of the New Urbanism also covers issues such as historic preservation, safe streets, green building, and the renovation of brownfield land.
New urbanism is an American urban design movement that arose in the early 1980s. Its goal is to reform all aspects of real estate development and urban planning, from urban retrofits to suburban infill. New urbanist neighborhoods are designed to contain a diverse range of housing and jobs, and to be walkable.
New Urbanism is also is known as traditional neighborhood design, neotraditional design, and transit-oriented development. A more idealistic variant of New Urbanism, founded in 1999 by Michael E. Arth, is known as New Pedestrianism. The ideas of New Urbanism also are embraced by the European Urban Renaissance movement.
The Local Government Commission, a private nonprofit group in Sacramento, California, invited architects Peter Calthorpe, Michael Corbett, Andrés Duany, Elizabeth Moule, Elizabeth Plater-Zyberk, Stefanos Polyzoides, and Daniel Solomon in 1991 to develop a set of community principles for land use planning. Named the Ahwahnee Principles (after Yosemite National Park's Ahwahnee Hotel), the commission presented the principles to about one hundred government officials in the fall of 1991, at its first Yosemite Conference for Local Elected Officials.
Market Street, downtown Celebration, FloridaCalthorpe, Duany, Moule, Plater-Zyberk, Polyzoides, and Solomon founded the Chicago-based Congress for the New Urbanism in 1993. The CNU has grown to more than 2,000 members, and is the leading international organization promoting new urbanist design principles. It held its fifteenth congress in 2007 in Philadelphia, Pennsylvania, which included applying New Urbanist principles to older cities.
The CNU's Charter of the New Urbanism says:
“ We advocate the restructuring of public policy and development practices to support the following principles: neighborhoods should be diverse in use and population; communities should be designed for the pedestrian and transit as well as the car; cities and towns should be shaped by physically defined and universally accessible public spaces and community institutions; urban places should be framed by architecture and landscape design that celebrate local history, climate, ecology, and building practice. ”
New urbanists support regional planning for open space, appropriate architecture and planning, and the balanced development of jobs and housing. They believe their strategies are the best way to reduce traffic congestion, increase the supply of affordable housing, and rein in urban sprawl. The Charter of the New Urbanism also covers issues such as historic preservation, safe streets, green building, and the renovation of brownfield land.
New Urbanism
Here is a comment regarding my blog of a new concept of town planning.
The concept you talked about is very similar to a movement in the early 1980s called "New Urbanism". New Urbanist neighborhoods are designed to contain a diverse range of housing and jobs, and to be walkable.
The main features of New Urbanism include:
1. Walkable. Most of the dwellings are within a five-minute walk of the center, an average of roughly 2,000 feet.
2. Diverse landuse. i.e. housing, offices etc.
3. Traditional "neighbourhood" design.
For more more this concept, read this (http://en.wikipedia.org/wiki/New_Urbanism#Old_and_new_urbanism)
The ideas for "New Urbanism" arose from an earlier movement called the "Garden City Movement" (http://en.wikipedia.org/wiki/Garden_city_movement)
The concept you talked about is very similar to a movement in the early 1980s called "New Urbanism". New Urbanist neighborhoods are designed to contain a diverse range of housing and jobs, and to be walkable.
The main features of New Urbanism include:
1. Walkable. Most of the dwellings are within a five-minute walk of the center, an average of roughly 2,000 feet.
2. Diverse landuse. i.e. housing, offices etc.
3. Traditional "neighbourhood" design.
For more more this concept, read this (http://en.wikipedia.org/wiki/New_Urbanism#Old_and_new_urbanism)
The ideas for "New Urbanism" arose from an earlier movement called the "Garden City Movement" (http://en.wikipedia.org/wiki/Garden_city_movement)
Saturday, October 13, 2007
Compensation for Traffic Accident
Compensation for Traffic Accident
In 2006, about 8,400 accidents happened on the roads involving injuries to people. 190 people died, 104 were seriously injured and 9,600 suffered other injuries.
How do the victims claim for compensation for their medical expenses, loss of wages and permanent disablement?
In most cases, the victim has to look for an lawyer to submit the injury claim. The case can take many years to settle. The legal fees can take away about one third of the total compensation.
Some insurance companies offer to make direct settlement with the injured person. However, there is a suspicion that the compensation may be inadequate. The victim may prefer to engage a lawyer to settle the claim on his or her behalf.
Is there a better way to handle the settlement of injuries caused by traffic accidents?
Sweden has operated an alternative system for about 70 years. The results have been quite satisfactory.
A person who suffers injury caused by a traffic accident can claim for compensation according to the Swedish Traffic Damage Act.
To ensure that the compensation is reasonable and as just and uniform as possible, the law required the insurance company to consult the Swedish Road Traffic Injuries Commission for an advisory opinion before reaching a final settlement with the claimant.
The commission issues its opinion on compensation for personal injury and also for loss of support (i.e. compensation to family on death of the breadwinner).
Where the case is taken to court, the commission will, on request, issue its opinion concerning personal injury.
The courts, lawyers and insurance companies regularly complied with the practice of the commission. About 5,300 cases are tried by the commission in 2006.
It is compulsory for the insurance companies to consult the commission on compensation for loss of support, for loss of income where the medical disability is 10 per cent or more or has exceeded a certain sum or compensation for the personal injury and associated costs.
If the case is to be heard by the commission, the insurance company supplies the commission with the complete dossier, all available documents and a brief summary including the standpoints of both parties. The claimant can look at the summary and is free to add any further commentary to the views.
The majority of the cases are presented to the commission by a legal advisor employed by the commission. If different opinions prevail in a case, the commission’s opinion is given after voting. The commission has access to highly qualified medical experts who may be consulted on medical matters.
The commission’s opinion in a case is sent to the insurance company which in turn forwards it to the claimant. As the opinion is only advisory the parties may settle the case in accordance with the commission’s recommendation, agree on some other solution or bring the case to court.
In more than ninety per cent of the cases that have been tried by the commission the parties agree to settle in accordance with the commission’s recommendation.
The rules regarding the commission and changes to the rules have been approved by the government. The chairman of the commission is appointed by the government and the other members are appointed by the Swedish Financial Supervisory Authority.
The chairman or deputy chairman chair meetings of the commission. They are highly qualified lawyers from the judiciary. They may not be employed by an insurance company.
Twelve members of the commission are laymen representing professional organizations and another twelve members represent the insurance companies. A representative of an insurance company may not participate in the discussion or vote in a case in which his company is involved.
Normally the commission meets with six members; two members from each member category. Less complicated cases may be decided by one member from each member category. In a few cases one chairman alone may decide what the commission’s recommendation should be. The insurance companies covers the costs of the commission.
The system has worked very well over a long period of time. Some of the advantages are:
- Makes court proceedings unnecessary in most cases
- Provides earlier settlement of the compensation
- Establishes a uniform standard of compensation
- The claimant has access to an independent professional opinion, free of charge
The Swedish system of compensation is based on “no-fault”. The injured persons are entitled to receive compensation without having to prove the fault of the driver of the vehicle. This has helped to simplify the settlement of the compensation.
The Commission operates with a set of tables. Compensation is based on such parameters as degree and type of disablement, age, income and other factors. The Commission does not make public the average amount they have awarded.
The findings of the Commission are generally slightly higher than the amount offered by the insurance company. In 2006, the Commission awarded the same amount in 74% of the cases, up to 10% more for 10.4% of cases, 10 to 25% more for 9.5% of cases, and less for 6.1% of the cases. There proportions have remained quite steady in recent years.
If a claimant is not happy with the outcome, the claimant can still have the option to go to court.
I hope that the award of compensation for traffic accidents in Singapore can be reviewed to provide payment to accident victims more promptly and at lower legal cost. It will provide relief to the victims and the family members. This can be based on the model in Sweden.
Tan Kin Lian
The writer was the former chief executive of NTUC Income.
In 2006, about 8,400 accidents happened on the roads involving injuries to people. 190 people died, 104 were seriously injured and 9,600 suffered other injuries.
How do the victims claim for compensation for their medical expenses, loss of wages and permanent disablement?
In most cases, the victim has to look for an lawyer to submit the injury claim. The case can take many years to settle. The legal fees can take away about one third of the total compensation.
Some insurance companies offer to make direct settlement with the injured person. However, there is a suspicion that the compensation may be inadequate. The victim may prefer to engage a lawyer to settle the claim on his or her behalf.
Is there a better way to handle the settlement of injuries caused by traffic accidents?
Sweden has operated an alternative system for about 70 years. The results have been quite satisfactory.
A person who suffers injury caused by a traffic accident can claim for compensation according to the Swedish Traffic Damage Act.
To ensure that the compensation is reasonable and as just and uniform as possible, the law required the insurance company to consult the Swedish Road Traffic Injuries Commission for an advisory opinion before reaching a final settlement with the claimant.
The commission issues its opinion on compensation for personal injury and also for loss of support (i.e. compensation to family on death of the breadwinner).
Where the case is taken to court, the commission will, on request, issue its opinion concerning personal injury.
The courts, lawyers and insurance companies regularly complied with the practice of the commission. About 5,300 cases are tried by the commission in 2006.
It is compulsory for the insurance companies to consult the commission on compensation for loss of support, for loss of income where the medical disability is 10 per cent or more or has exceeded a certain sum or compensation for the personal injury and associated costs.
If the case is to be heard by the commission, the insurance company supplies the commission with the complete dossier, all available documents and a brief summary including the standpoints of both parties. The claimant can look at the summary and is free to add any further commentary to the views.
The majority of the cases are presented to the commission by a legal advisor employed by the commission. If different opinions prevail in a case, the commission’s opinion is given after voting. The commission has access to highly qualified medical experts who may be consulted on medical matters.
The commission’s opinion in a case is sent to the insurance company which in turn forwards it to the claimant. As the opinion is only advisory the parties may settle the case in accordance with the commission’s recommendation, agree on some other solution or bring the case to court.
In more than ninety per cent of the cases that have been tried by the commission the parties agree to settle in accordance with the commission’s recommendation.
The rules regarding the commission and changes to the rules have been approved by the government. The chairman of the commission is appointed by the government and the other members are appointed by the Swedish Financial Supervisory Authority.
The chairman or deputy chairman chair meetings of the commission. They are highly qualified lawyers from the judiciary. They may not be employed by an insurance company.
Twelve members of the commission are laymen representing professional organizations and another twelve members represent the insurance companies. A representative of an insurance company may not participate in the discussion or vote in a case in which his company is involved.
Normally the commission meets with six members; two members from each member category. Less complicated cases may be decided by one member from each member category. In a few cases one chairman alone may decide what the commission’s recommendation should be. The insurance companies covers the costs of the commission.
The system has worked very well over a long period of time. Some of the advantages are:
- Makes court proceedings unnecessary in most cases
- Provides earlier settlement of the compensation
- Establishes a uniform standard of compensation
- The claimant has access to an independent professional opinion, free of charge
The Swedish system of compensation is based on “no-fault”. The injured persons are entitled to receive compensation without having to prove the fault of the driver of the vehicle. This has helped to simplify the settlement of the compensation.
The Commission operates with a set of tables. Compensation is based on such parameters as degree and type of disablement, age, income and other factors. The Commission does not make public the average amount they have awarded.
The findings of the Commission are generally slightly higher than the amount offered by the insurance company. In 2006, the Commission awarded the same amount in 74% of the cases, up to 10% more for 10.4% of cases, 10 to 25% more for 9.5% of cases, and less for 6.1% of the cases. There proportions have remained quite steady in recent years.
If a claimant is not happy with the outcome, the claimant can still have the option to go to court.
I hope that the award of compensation for traffic accidents in Singapore can be reviewed to provide payment to accident victims more promptly and at lower legal cost. It will provide relief to the victims and the family members. This can be based on the model in Sweden.
Tan Kin Lian
The writer was the former chief executive of NTUC Income.
Friday, October 12, 2007
Traffic Accident – How to claim on your Insurance
If you drive a car and you meet with an accident, you face a dilemma. Which party is at fault? Do you want to settle the liability on the spot, or leave it to your insurance company to handle?
In the case of a minor accident, it is best that both parties agree to have a private settlement and not to make any claim on the insurance policy. One party may agree to pay a sum of money to the other party to repair any damage.
The private settlement should be recorded in writing and be signed by an independent witness. Some insurance companies have issued a simple form that can be used to record a private settlement. If you do not have this form, a simple agreement can be written. In fact, if both parties are honorable, a verbal agreement will be adequate.
Some years ago, another car hit my car in the car park. The driver was a young lady, who was obviously an inexperienced driver. Her father called me on the mobile phone and agreed to bear the repair cost of my car.
In case they do not keep their word, I reported the accident to my insurance company but indicated that I had made a private settlement. The other party paid the repair bill, which amounted to more than $1,000. The accident never became an insurance claim.
If you make a private settlement, both parties will keep their No Claim Discount.
If private settlement cannot be reached, you have to make an insurance claim. Both parties can, on the spot, record down the circumstances of the accident and the extent of the damages to the vehicle. Photographs can be taken. If most or all of the facts are agreed, the insurance companies for both vehicles can settle the claim quite easily.
The insurance companies have issued a form called the Singapore Accident Statement, which can be used for this purpose.
Only a small percentage of motorists used the Singapore Accident Statement. This is due to the lack of awareness and to the disputes over the facts of the accident.
Insurance companies are partly to blame. Many years ago, I saw an advisory from an insurance company to its policyholders never to admit liability for an accident. This could be a reason for the many disputes involved in motor accidents.
A better advisory is for the policyholder to use the best judgment and agree to the facts of the accident.
If you cannot reach a private settlement or get a Singapore Accident Statement agreed on the spot, with photographs of damages, what is the next best approach for you to take?
You have to make a report the accident to your insurance company as soon as possible. You have to bring the vehicle to the reporting center, so that photographs of the damages can be taken. These will be useful to settle the repair cost, and also to establish the party that bears the liability for the accident.
Some insurance companies used the service of Idac centers (i.e. independent damage assessment centers). These Idac centers have long operating hours, up to a late time at night, and are located in various parts of Singapore. Most motorists find the reporting at an Idac center to be quite convenient.
After reporting, some insurance companies ask you to send your vehicle to their authorized workshops to carry out the repair. Some allow you to find your own workshop.
Some undertake to arrange the repair for you and ensure that the repair is carried out to a satisfactory repair standard.
It is best for the policyholder to let the insurance company arrange the repair. They can find a suitable workshop to repair the damages at a fair price. They can ensure that the repair is carried out to the quality standard. The policyholder is freed from the hassle of arranging the repair. In some cases, they are given a courtesy car to use during the period of the repair.
By reporting at an Idac center, you will have a good record of the damages. This may be useful to defend against an inflated or aggravated claim that may be submitted by the other party against you.
In past years, many insurance companies did not have a system of prior assessment of damages. They allowed their policyholders to send their vehicle to any workshop. The workshop submits a report of the damages and estimate of the repair cost.
This has led to inflated claims. Some workshops aggravated the damages to the vehicle to submit a large repair bill.
The workshop entices the customer by giving some incentive, such as replacing the old tires, or to repaint the vehicle. The repair bill can easily be more than three times of the fair repair cost.
Some workshops use touts to look for the accident cases and bring the vehicle to their workshop.
Inflated claims will result in higher premiums to be paid by all motorists, including those that did not make any claim.
If you wish to make a third party claim against the other vehicle, which you deem to be at fault in the accident, you should submit your claim directly to the insurance company of the other vehicle.
You should not let your workshop handle your third party claim, as they may inflate the repair cost. They will be using your name to lodge the fraudulent claim. This may cause legal problem to you, as you may be held to be a party to the fraud. It is best to avoid this potential problem. Indeed, it is quite common for third party claims to be inflated or fraudulent.
In the case of a minor accident, it is best that both parties agree to have a private settlement and not to make any claim on the insurance policy. One party may agree to pay a sum of money to the other party to repair any damage.
The private settlement should be recorded in writing and be signed by an independent witness. Some insurance companies have issued a simple form that can be used to record a private settlement. If you do not have this form, a simple agreement can be written. In fact, if both parties are honorable, a verbal agreement will be adequate.
Some years ago, another car hit my car in the car park. The driver was a young lady, who was obviously an inexperienced driver. Her father called me on the mobile phone and agreed to bear the repair cost of my car.
In case they do not keep their word, I reported the accident to my insurance company but indicated that I had made a private settlement. The other party paid the repair bill, which amounted to more than $1,000. The accident never became an insurance claim.
If you make a private settlement, both parties will keep their No Claim Discount.
If private settlement cannot be reached, you have to make an insurance claim. Both parties can, on the spot, record down the circumstances of the accident and the extent of the damages to the vehicle. Photographs can be taken. If most or all of the facts are agreed, the insurance companies for both vehicles can settle the claim quite easily.
The insurance companies have issued a form called the Singapore Accident Statement, which can be used for this purpose.
Only a small percentage of motorists used the Singapore Accident Statement. This is due to the lack of awareness and to the disputes over the facts of the accident.
Insurance companies are partly to blame. Many years ago, I saw an advisory from an insurance company to its policyholders never to admit liability for an accident. This could be a reason for the many disputes involved in motor accidents.
A better advisory is for the policyholder to use the best judgment and agree to the facts of the accident.
If you cannot reach a private settlement or get a Singapore Accident Statement agreed on the spot, with photographs of damages, what is the next best approach for you to take?
You have to make a report the accident to your insurance company as soon as possible. You have to bring the vehicle to the reporting center, so that photographs of the damages can be taken. These will be useful to settle the repair cost, and also to establish the party that bears the liability for the accident.
Some insurance companies used the service of Idac centers (i.e. independent damage assessment centers). These Idac centers have long operating hours, up to a late time at night, and are located in various parts of Singapore. Most motorists find the reporting at an Idac center to be quite convenient.
After reporting, some insurance companies ask you to send your vehicle to their authorized workshops to carry out the repair. Some allow you to find your own workshop.
Some undertake to arrange the repair for you and ensure that the repair is carried out to a satisfactory repair standard.
It is best for the policyholder to let the insurance company arrange the repair. They can find a suitable workshop to repair the damages at a fair price. They can ensure that the repair is carried out to the quality standard. The policyholder is freed from the hassle of arranging the repair. In some cases, they are given a courtesy car to use during the period of the repair.
By reporting at an Idac center, you will have a good record of the damages. This may be useful to defend against an inflated or aggravated claim that may be submitted by the other party against you.
In past years, many insurance companies did not have a system of prior assessment of damages. They allowed their policyholders to send their vehicle to any workshop. The workshop submits a report of the damages and estimate of the repair cost.
This has led to inflated claims. Some workshops aggravated the damages to the vehicle to submit a large repair bill.
The workshop entices the customer by giving some incentive, such as replacing the old tires, or to repaint the vehicle. The repair bill can easily be more than three times of the fair repair cost.
Some workshops use touts to look for the accident cases and bring the vehicle to their workshop.
Inflated claims will result in higher premiums to be paid by all motorists, including those that did not make any claim.
If you wish to make a third party claim against the other vehicle, which you deem to be at fault in the accident, you should submit your claim directly to the insurance company of the other vehicle.
You should not let your workshop handle your third party claim, as they may inflate the repair cost. They will be using your name to lodge the fraudulent claim. This may cause legal problem to you, as you may be held to be a party to the fraud. It is best to avoid this potential problem. Indeed, it is quite common for third party claims to be inflated or fraudulent.
Bad idea to drive to CBD
I drove to CBD for a meeting at Cecil Court. I had a lot of trouble to find the car park in the building. There were two many one way street. After turning a few rounds, I decided to park at Market Street car park.
After 4 hours, I had to pay a parking fee of $16. It was expensive and a hassle to drive. It was a bad idea to drive to CDB.
I would have preferred to take a train, if there was a good feeder service. I hope that the public transport system can be improved.
After 4 hours, I had to pay a parking fee of $16. It was expensive and a hassle to drive. It was a bad idea to drive to CDB.
I would have preferred to take a train, if there was a good feeder service. I hope that the public transport system can be improved.
Ramadhan in Jakarta
I was in Jakarta during the past four days. The traffic was light. Many people returned to their home town, i.e. not in Jakarta, to celebrate Ramadhan.
It was the first time that I found no traffic congestion in most parts of Jarkarta, although some of the roads are still croweded.
I visited several large malls in Jakarta. They are well patronised. They are of similar quality to the malls in Singapore.
Prices of property in Jakarta are still quite inexpensive, compared to most other cities in South East Asia. The economy is growing well.
It was the first time that I found no traffic congestion in most parts of Jarkarta, although some of the roads are still croweded.
I visited several large malls in Jakarta. They are well patronised. They are of similar quality to the malls in Singapore.
Prices of property in Jakarta are still quite inexpensive, compared to most other cities in South East Asia. The economy is growing well.
Non Guaranteed Rates
Dear Mr Tan
From your years of experience, do you have any statistics which indicate how far insurance companies (e.g NTUC income) deviate in their charges of yearly premiums compared to what had been indicated to the customer at the time of sale years back?
I am considering to buy a policy with non-guaranteed premium compared to one with guarateed premium, since the one with non-guranteed premium seem to be cheaper.
I worry that some years down the road they just jack up the premium... sales gimmick right from the start!!!!
MY REPLY:
When I managed NTUC Income in the past, I hold strongly the principle of fairness to policyholders.
Some other insurance companies were more interested to more profit at the expense of their policyholders. It is a difficult judgement between fairness and profits ( i.e. self interest).
I am not able to comment on the behaviour of other CEOs.
In your case, you should ask this question to the company that you intend to buy the product with non-guaranteed rates. See if they have any statement regarding how they intend to adjust the rates in the future.
From your years of experience, do you have any statistics which indicate how far insurance companies (e.g NTUC income) deviate in their charges of yearly premiums compared to what had been indicated to the customer at the time of sale years back?
I am considering to buy a policy with non-guaranteed premium compared to one with guarateed premium, since the one with non-guranteed premium seem to be cheaper.
I worry that some years down the road they just jack up the premium... sales gimmick right from the start!!!!
MY REPLY:
When I managed NTUC Income in the past, I hold strongly the principle of fairness to policyholders.
Some other insurance companies were more interested to more profit at the expense of their policyholders. It is a difficult judgement between fairness and profits ( i.e. self interest).
I am not able to comment on the behaviour of other CEOs.
In your case, you should ask this question to the company that you intend to buy the product with non-guaranteed rates. See if they have any statement regarding how they intend to adjust the rates in the future.
Non Guaranteed Benefits
Dear Mr Tan
Is there any governing body that will monitor how far insurance companies depart, historically, from the "non-guaranteed" bonus payouts?
If I were to establish an insurance company, the first thing I would do is to inflate the "non-guaranteed" values hugely, it is sure-draw and attract the gullible.
There is nothing to lose, after all I just say they are "projected" "nonguaranteed", these kind of stuffs should be made illegal, how can you sell something on such basis.
MY REPLY:
You can refer this question to the regulatory authority, that is, the Monetary Authority of Singapore.
It is important that the insurance company exercise fairness in giving out the non-guaranteed benefits. The appointed actuary is required to look after this matter.
Is there any governing body that will monitor how far insurance companies depart, historically, from the "non-guaranteed" bonus payouts?
If I were to establish an insurance company, the first thing I would do is to inflate the "non-guaranteed" values hugely, it is sure-draw and attract the gullible.
There is nothing to lose, after all I just say they are "projected" "nonguaranteed", these kind of stuffs should be made illegal, how can you sell something on such basis.
MY REPLY:
You can refer this question to the regulatory authority, that is, the Monetary Authority of Singapore.
It is important that the insurance company exercise fairness in giving out the non-guaranteed benefits. The appointed actuary is required to look after this matter.
Does insurance policy cover terrorism?
Dear Mr Tan
Many insurance policies exclude payments for death/hospitalisation due to terrorist activities. This is unfair.
If I have lunch at Macdonald on a perfectly normal day and a terrorist suicide bomber detonated a bomb and killed me, or maimed me, the insurance policies exclude such incident from death benefit and hospitalisation claims.
As far as I am concerned, such incident is no different from being killed by a flying brick while crossing Punggol Track 22 Road. Why am i paying insurance premium if I am not covered?
REPLY:
Life insurance policies do not exclude death due to terrorist attack. In this event, the sum insured plus bonus are paid in full.
Terrorist attacks are usually excluded from personal accident insurance, as the premium rate is very low. In a terrorist attack, many people are likely to be killed or injured at one time. This is different from being hit by a flying brick on an islated road.
Some personal accident policies do cover terrorist attack, to a limited or full extent.
Many insurance policies exclude payments for death/hospitalisation due to terrorist activities. This is unfair.
If I have lunch at Macdonald on a perfectly normal day and a terrorist suicide bomber detonated a bomb and killed me, or maimed me, the insurance policies exclude such incident from death benefit and hospitalisation claims.
As far as I am concerned, such incident is no different from being killed by a flying brick while crossing Punggol Track 22 Road. Why am i paying insurance premium if I am not covered?
REPLY:
Life insurance policies do not exclude death due to terrorist attack. In this event, the sum insured plus bonus are paid in full.
Terrorist attacks are usually excluded from personal accident insurance, as the premium rate is very low. In a terrorist attack, many people are likely to be killed or injured at one time. This is different from being hit by a flying brick on an islated road.
Some personal accident policies do cover terrorist attack, to a limited or full extent.
Medication to relieve pain from gout
I had pain in my foot due probably to gout caused by high uric acid. I visited a hospital in Jakarta. The doctor prescribed Zoletrol to me.
I told him that I was prescribed with Difnal diclofenac in Singapore. He referred to a drug book and told me that Difnal is a pain killer.
I checked Google and found the following:
Diclofenac (marketed as Voltaren, Voltarol, Diclon, Dicloflex Difen, Difene, Cataflam, Pennsaid, Rhumalgan, Modifenac, Abitren, Arthrotec and Zolterol, with various drug dose combinations) is a non-steroidal anti-inflammatory drug (NSAID) taken to reduce inflammation and an analgesic reducing pain in conditions such as in arthritis or acute injury. It can also be used to reduce menstrual pain, dysmenorrhea.
Diclofenac is available as a generic drug in a number of formulations. Over the counter (OTC) use is approved in some countries for minor aches and pains and fever associated with common infections.
I also found that Difnal is another brand name for diclofenac.
Lesson: Learn about the drugs that you are prescribed with. You can check with Google. Usually, it refers to Wikipedia.
I told him that I was prescribed with Difnal diclofenac in Singapore. He referred to a drug book and told me that Difnal is a pain killer.
I checked Google and found the following:
Diclofenac (marketed as Voltaren, Voltarol, Diclon, Dicloflex Difen, Difene, Cataflam, Pennsaid, Rhumalgan, Modifenac, Abitren, Arthrotec and Zolterol, with various drug dose combinations) is a non-steroidal anti-inflammatory drug (NSAID) taken to reduce inflammation and an analgesic reducing pain in conditions such as in arthritis or acute injury. It can also be used to reduce menstrual pain, dysmenorrhea.
Diclofenac is available as a generic drug in a number of formulations. Over the counter (OTC) use is approved in some countries for minor aches and pains and fever associated with common infections.
I also found that Difnal is another brand name for diclofenac.
Lesson: Learn about the drugs that you are prescribed with. You can check with Google. Usually, it refers to Wikipedia.
Buy an immediate life annuity with $200,000
Dear Mr Tan,
I like to buy a Life Annuity without refund from NTUC Income with my hard cash of $200,000. I am single without dependent and wish to have a higher payment monthly.
May I find out from you what will be my monthly payout? I need this monthly sum to tie over my personal expenses, household bill and HDB loan. I do not intend to put this $200,000 in fixed desposit or do investment which I am not familiar.
Moreover, I am quite a generous and spendthrift person. I am afraid one day all my savings will be parted due to poor financial planning.
I approached an agent from NTUC Income in Aug 2007. She told me that there is no such Life Annuity without refund in NTUC Income. She offered me the Guaranteed Life Annuity (immediate cash). However, this is not what I want. Hence, I did not commit it.
Fortunately, I read your article on The Straits Times dated 24 Sep 07 and is very pleased that you have offered your advices for us to seek help and clarification.
I know you are a very reliable and reputable ex-CEO of NTUC Income. I trust you will help me to check and let me know how much I will get from NTUC Income per month pay-out (Life Annuity without refund) if I cash in my $200,000.
MY REPLY:
As NTUC Income does not offer a "no refund" annuity, the next best option is to buy a Guaranteed Life annuity with a 5 or 10 year guarantee.
I will ask the manager of the business center, to contact you and advise the payout for this annuity.
It is a participating annuity which gives you a bonus each year (the rate of bonus is not guaranteed) and it will enhance your monthly payment.
You can start the annuity at your current age while you are still working part time. If you do not spend all of the money, you can save it in a bank account.
I like to buy a Life Annuity without refund from NTUC Income with my hard cash of $200,000. I am single without dependent and wish to have a higher payment monthly.
May I find out from you what will be my monthly payout? I need this monthly sum to tie over my personal expenses, household bill and HDB loan. I do not intend to put this $200,000 in fixed desposit or do investment which I am not familiar.
Moreover, I am quite a generous and spendthrift person. I am afraid one day all my savings will be parted due to poor financial planning.
I approached an agent from NTUC Income in Aug 2007. She told me that there is no such Life Annuity without refund in NTUC Income. She offered me the Guaranteed Life Annuity (immediate cash). However, this is not what I want. Hence, I did not commit it.
Fortunately, I read your article on The Straits Times dated 24 Sep 07 and is very pleased that you have offered your advices for us to seek help and clarification.
I know you are a very reliable and reputable ex-CEO of NTUC Income. I trust you will help me to check and let me know how much I will get from NTUC Income per month pay-out (Life Annuity without refund) if I cash in my $200,000.
MY REPLY:
As NTUC Income does not offer a "no refund" annuity, the next best option is to buy a Guaranteed Life annuity with a 5 or 10 year guarantee.
I will ask the manager of the business center, to contact you and advise the payout for this annuity.
It is a participating annuity which gives you a bonus each year (the rate of bonus is not guaranteed) and it will enhance your monthly payment.
You can start the annuity at your current age while you are still working part time. If you do not spend all of the money, you can save it in a bank account.
Investing in Australian and New Zealand deposits
Questions:
I like to ask your opinion about foreign currency deposit. They promise about 8% on Australian or NZ deposits placed for 6 months.
It seems to me that conversion back and forth to local currency, plus exchange rate fluctuations over a mere 6 months, would not wipe out the benefits of such high interest rate offered?
It seems quite safe to get at least 4% even in the worst case? Has someone ever done any retrospective desk study to prove the profitability and viability of such schemes on an average situation basis.
MY REPLY:
The exchange rate between Singapore dollar and Australian or New Zealand dollar can fluctuate by more than 5% over a 6 month period. It can wipe out the difference in interest rate between the two currencies. If Australian or New Zealand dollar appreciate, it will add to your return even further
Currently, these two currencies are at a high level, compared to other currencies. It may be risky to invest in them now, unless you are sure that it can maintain its current value or even go higher.
I have written on this matter in one of my blog posting. Go to my blog, www.tankinlian.blogspot.com and search for "foreign currency".
I like to ask your opinion about foreign currency deposit. They promise about 8% on Australian or NZ deposits placed for 6 months.
It seems to me that conversion back and forth to local currency, plus exchange rate fluctuations over a mere 6 months, would not wipe out the benefits of such high interest rate offered?
It seems quite safe to get at least 4% even in the worst case? Has someone ever done any retrospective desk study to prove the profitability and viability of such schemes on an average situation basis.
MY REPLY:
The exchange rate between Singapore dollar and Australian or New Zealand dollar can fluctuate by more than 5% over a 6 month period. It can wipe out the difference in interest rate between the two currencies. If Australian or New Zealand dollar appreciate, it will add to your return even further
Currently, these two currencies are at a high level, compared to other currencies. It may be risky to invest in them now, unless you are sure that it can maintain its current value or even go higher.
I have written on this matter in one of my blog posting. Go to my blog, www.tankinlian.blogspot.com and search for "foreign currency".
The wealthy need medical insurance
Dear Mr Tan,
I have read your article in MyPaper. I felt there were several important factors that you did not take into account when giving the advice to your wealthy client.
I feel that as a person giving financial advice in the papers, which is also read by people with absolutely no financial background, it is important for you to justify your stance and to explain clearly the mitigating factors in this situation.
1. The person mentioned may have assets amounting to several million but they could be tied down in investments that are difficult to liquidate, for instance in properties. As such, he might not have sufficient cash at hand should a medical emergency arise if he does not have any medical insurance.
2. By not buying medical insurance, the person must now always have a fairly decent sum of cash at hand, pehaps $100,000. This would mean opportunity costs as the person could have generated interest had he placed his money into investments. In a decent mutual fund or stock portfolio with a return rate of 15%, this would mean losing $15,000 per year in potential interest. (I obtained this figure because the average annual stock market return is 15% for the past consecutive years, and I obtained the interest rate figure for mutual fund based on a Straits Times article on funds)
3. The person mentioned is likely to be even more affected if he is a retired/non-working individual who is dependent on the return from his assets. Should he not have sufficient cash at hand and is forced to liquidate one or two of his investements to pay for medical fees, he then loses a source of income. In the worst scenario should he be diagnosed with a condition that requires monthly medical payments (like diabetes), his financial situation is made worse as his income has fallen and his expenses have increased.
4. When a medical emergency arises, the person (and perhaps the family) will not be in a sound mind to make financial decisions. Having medical insurance would lift this burden from him.
It is hence a wiser decision to buy medical insurance and pay at most a hundred a month, rather than be caught unprepared when the situation arises.
Just for the record, I would like to clarify that I am NOT a financial advisor and this letter is not written to support the general insurance industry.
MY REPLY:
Thank you for expressing an alternative piece of view. I think that there are many people who agree with you, whle there are others who agree with me.
I have read your article in MyPaper. I felt there were several important factors that you did not take into account when giving the advice to your wealthy client.
I feel that as a person giving financial advice in the papers, which is also read by people with absolutely no financial background, it is important for you to justify your stance and to explain clearly the mitigating factors in this situation.
1. The person mentioned may have assets amounting to several million but they could be tied down in investments that are difficult to liquidate, for instance in properties. As such, he might not have sufficient cash at hand should a medical emergency arise if he does not have any medical insurance.
2. By not buying medical insurance, the person must now always have a fairly decent sum of cash at hand, pehaps $100,000. This would mean opportunity costs as the person could have generated interest had he placed his money into investments. In a decent mutual fund or stock portfolio with a return rate of 15%, this would mean losing $15,000 per year in potential interest. (I obtained this figure because the average annual stock market return is 15% for the past consecutive years, and I obtained the interest rate figure for mutual fund based on a Straits Times article on funds)
3. The person mentioned is likely to be even more affected if he is a retired/non-working individual who is dependent on the return from his assets. Should he not have sufficient cash at hand and is forced to liquidate one or two of his investements to pay for medical fees, he then loses a source of income. In the worst scenario should he be diagnosed with a condition that requires monthly medical payments (like diabetes), his financial situation is made worse as his income has fallen and his expenses have increased.
4. When a medical emergency arises, the person (and perhaps the family) will not be in a sound mind to make financial decisions. Having medical insurance would lift this burden from him.
It is hence a wiser decision to buy medical insurance and pay at most a hundred a month, rather than be caught unprepared when the situation arises.
Just for the record, I would like to clarify that I am NOT a financial advisor and this letter is not written to support the general insurance industry.
MY REPLY:
Thank you for expressing an alternative piece of view. I think that there are many people who agree with you, whle there are others who agree with me.
Sunday, October 07, 2007
Independent financial service
Hi Mr Tan,
I was looking to set up a website that provide independent advisory services, comparing across personal insurance products.
This is targetted at young people who are knowledgeable and wish to take greater control of their own financial planning.
As an experienced professional in the insurance line of business, do you think it is possible to obtain the data for performing independent analysis on similar insurance products?
MY REPLY:
It will be quite difficult to get the data for this analysis. Some insurance companies may not be willing to cooperate with you.
Dr Money spent a lot of time on this matter. His publised his findings in his website www.askdrmoney.com. He had a lot of problem due to the complexity of the product (which makes them difficult to compare).
I was looking to set up a website that provide independent advisory services, comparing across personal insurance products.
This is targetted at young people who are knowledgeable and wish to take greater control of their own financial planning.
As an experienced professional in the insurance line of business, do you think it is possible to obtain the data for performing independent analysis on similar insurance products?
MY REPLY:
It will be quite difficult to get the data for this analysis. Some insurance companies may not be willing to cooperate with you.
Dr Money spent a lot of time on this matter. His publised his findings in his website www.askdrmoney.com. He had a lot of problem due to the complexity of the product (which makes them difficult to compare).
Source for your housing loan
Hi Mr Tan,
I understood that there is a trend towards independent morgage advisers in some countries. The independent advisors source quotes from the banks and provide them for the client to compare and decide.
In the event the client signs a contract, the adviser gets a cut from the company or charges the client a fee.
Do you know of any such companies in Singapore? Can you give me some contacts.
MY REPLY
I found this website using Google search. Is this what you are looking for?
http://www.housingloansg.com/
I understood that there is a trend towards independent morgage advisers in some countries. The independent advisors source quotes from the banks and provide them for the client to compare and decide.
In the event the client signs a contract, the adviser gets a cut from the company or charges the client a fee.
Do you know of any such companies in Singapore? Can you give me some contacts.
MY REPLY
I found this website using Google search. Is this what you are looking for?
http://www.housingloansg.com/
Adjustible premiums
Dear Mr Tan,
I am offered a valueplus plan which extends the benefit under Eldeshield from 72 months to 120 months. It looks attractive. The premium is quite low at the younger ages, but increase sharply at the older ages.
Furthermore, the insurance company stated that the premium rates may be subject to adjustment in the future. Is it safe to buy such a plan?
REPLY:
Generally, it is all right to buy an insurance plan that have premium rates that are adjustible according to the actual claim experience. This allows the insurance company to offer competitive rates, as they do not have to guarantee the current rates in the future.
The problem is, will the adjustment be carried out fairly? If the insurance company is profit driven, they may take advantage of this right to adjust the premium to make more profits, at the expense of the consumers.
If there is transparency and consumer oversight over the adjustment, or if the insurance company is operated on a non-profit basis, then this arrangement is all right.
Tip: Insure with an organisation that acts fairly in the interest of consumers.
I am offered a valueplus plan which extends the benefit under Eldeshield from 72 months to 120 months. It looks attractive. The premium is quite low at the younger ages, but increase sharply at the older ages.
Furthermore, the insurance company stated that the premium rates may be subject to adjustment in the future. Is it safe to buy such a plan?
REPLY:
Generally, it is all right to buy an insurance plan that have premium rates that are adjustible according to the actual claim experience. This allows the insurance company to offer competitive rates, as they do not have to guarantee the current rates in the future.
The problem is, will the adjustment be carried out fairly? If the insurance company is profit driven, they may take advantage of this right to adjust the premium to make more profits, at the expense of the consumers.
If there is transparency and consumer oversight over the adjustment, or if the insurance company is operated on a non-profit basis, then this arrangement is all right.
Tip: Insure with an organisation that acts fairly in the interest of consumers.
Time to switch from equity funds?
Mr Tan,
I have bought some Prime and Trust fund from NTUC for sometime already. The funds already in market for many years and the prices are high now and I am thinking to let go and switch to another fund with higher potential in longer period.
Questions;
1. Should I continue to invest in the current funds? Are they at their peak?
Reply: I do not know. In my case, I decided to keep my investments in the combined growth fund.
2. Should I switch to another fund? Which fund will you recommend?
Reply: If you decide to move out of these funds, you can put them in the money market fund, which earns about 2% to 2.5%.
3. What do you think is the market benchmark to sell?
Reply: I think that the current market is rather high. If you wish to take profit and wait for a further time to re-invest, perhaps now is a good time. But, really, it is difficult to say.
I hope that this FAQ may be helpful to you.
http://www.tankinlian.com/faq/august.html
I have bought some Prime and Trust fund from NTUC for sometime already. The funds already in market for many years and the prices are high now and I am thinking to let go and switch to another fund with higher potential in longer period.
Questions;
1. Should I continue to invest in the current funds? Are they at their peak?
Reply: I do not know. In my case, I decided to keep my investments in the combined growth fund.
2. Should I switch to another fund? Which fund will you recommend?
Reply: If you decide to move out of these funds, you can put them in the money market fund, which earns about 2% to 2.5%.
3. What do you think is the market benchmark to sell?
Reply: I think that the current market is rather high. If you wish to take profit and wait for a further time to re-invest, perhaps now is a good time. But, really, it is difficult to say.
I hope that this FAQ may be helpful to you.
http://www.tankinlian.com/faq/august.html
Financing MBA degree
Hello Mr Tan,
I have been reading your blog for quite sometime and find it very enlightening. Thank you for educating the public about personal finance.
I am a fresh graduate from a local university, who has just started work in the financial sector. I would intend to pursue an overseas MBA in the states in perhaps 2-3year's time. Is it more advisable to accumulate money to fund the MBA or take up a loan?
If I were to accumulate money, where can I invest in to generate better returns for financing the MBA?
I have been searching online for information but the MBA education websites are mostly catered for Americans. Is there any website that has more information for Singaporean graduates who would want to fund their studies abroad and the estimated fees for the MBA?
MY REPLY
You can read this FAQ about investing your money ....
http://www.tankinlian.com/faq/august.html
http://www.tankinlian.com/faq/fptips.html
For your MBA course, see if you can get some info from this website
www.askdrmoney.com
Many people who spend time and money to pursue a MBA degree. If they do not get the degree from a prestigious university or study full time, they may find the degree to be not well recognised. You should talk to those who have taken the MBA degree in this manner, and see if they can advise you.
If you can get a place at a prestigious American university, such as Harvard, you will find it easy to get a good job from prospective employers. Many of them recruit from the graduates of these top tier universities. I know of a few people who pursued this option. They make very good progress.
Wish you all the best.
I have been reading your blog for quite sometime and find it very enlightening. Thank you for educating the public about personal finance.
I am a fresh graduate from a local university, who has just started work in the financial sector. I would intend to pursue an overseas MBA in the states in perhaps 2-3year's time. Is it more advisable to accumulate money to fund the MBA or take up a loan?
If I were to accumulate money, where can I invest in to generate better returns for financing the MBA?
I have been searching online for information but the MBA education websites are mostly catered for Americans. Is there any website that has more information for Singaporean graduates who would want to fund their studies abroad and the estimated fees for the MBA?
MY REPLY
You can read this FAQ about investing your money ....
http://www.tankinlian.com/faq/august.html
http://www.tankinlian.com/faq/fptips.html
For your MBA course, see if you can get some info from this website
www.askdrmoney.com
Many people who spend time and money to pursue a MBA degree. If they do not get the degree from a prestigious university or study full time, they may find the degree to be not well recognised. You should talk to those who have taken the MBA degree in this manner, and see if they can advise you.
If you can get a place at a prestigious American university, such as Harvard, you will find it easy to get a good job from prospective employers. Many of them recruit from the graduates of these top tier universities. I know of a few people who pursued this option. They make very good progress.
Wish you all the best.
Role for insurance advisers
Several people sent e-mails to me to seek my advice on what they should do with their financial planning.
I am not able to provide this advise to them, as will take a lot of my time (which I am not able to spare).
I usually advise them to read the FAQ in my website, http://www.tankinlian.com/faq/
If they need specific advice, I usually refer them to an insurance adviser. The adviser will recommend the following:
1. Buy term insurance
2. Invest in a low cost, well diversified investment fund
The adviser does earn a modest rate of commission on these products, which gives good value to the customer (compared to high cost products available in the market). As the consumer is already aware about the options (after reading my FAQ), the adviser is not likely to push any high cost product.
I hope that this approach will be helpful.
I am not able to provide this advise to them, as will take a lot of my time (which I am not able to spare).
I usually advise them to read the FAQ in my website, http://www.tankinlian.com/faq/
If they need specific advice, I usually refer them to an insurance adviser. The adviser will recommend the following:
1. Buy term insurance
2. Invest in a low cost, well diversified investment fund
The adviser does earn a modest rate of commission on these products, which gives good value to the customer (compared to high cost products available in the market). As the consumer is already aware about the options (after reading my FAQ), the adviser is not likely to push any high cost product.
I hope that this approach will be helpful.
Saturday, October 06, 2007
Eldershield Valueplus
Mr Tan,
Do you advise me to buy the Valueplus plan for Eldershield. The annual premium is $45 at the younger ages and increases to $1,825 at age 100.
MY REPLY:
The Valueplus plan pays $400 per month after 72 months of disability, to a maximum of 120 months (i.e. an additional 48 months).
To my knowledge, most people who are severely disabled are not expected to live beyond 6 years. The chance of making a claim during the extended period is quite small.
It is best to delay buying this plan for the time being, until it beocmes clearer that more people are likely to need this extended payment.
Do you advise me to buy the Valueplus plan for Eldershield. The annual premium is $45 at the younger ages and increases to $1,825 at age 100.
MY REPLY:
The Valueplus plan pays $400 per month after 72 months of disability, to a maximum of 120 months (i.e. an additional 48 months).
To my knowledge, most people who are severely disabled are not expected to live beyond 6 years. The chance of making a claim during the extended period is quite small.
It is best to delay buying this plan for the time being, until it beocmes clearer that more people are likely to need this extended payment.
Eldershield
Dear Mr Tan,
Recently I received an ElderShield policy from an insurer (appointed by MOH). I already have my own endowment and life policies. Do you think it is necessary for me to take up the ElderShield and ElderShield Supplement policies?
REPLY:
I have extracted the following information from NTUC Income's website.
* 1 in 12 people is expected to make a claim (due to severe disability)
* the benefit is $400 a month for 60 months (but some elderly people may die before collecting for 60 months).
If you have sufficient savings that can take care of a severe disability, you do not need to buy the Eldershield plan. You can carry the risk on you own. The total payout under Elderhsield is a maximum of $24,000 over 60 months.
If you cannot take the risk of a severe disability, then you need to buy this insurance.
You can read more from this website.
-------------------------
Premium payable at age 40 for 26 years:
Male $174.96
Female $217.76
Total premium paid, plus interest accumulated at 4% to age 80:
Male $13,964
Female $17,376
This is nearly 48% (male) and 60% (female) of the maximum payout of $28,800.
Recently I received an ElderShield policy from an insurer (appointed by MOH). I already have my own endowment and life policies. Do you think it is necessary for me to take up the ElderShield and ElderShield Supplement policies?
REPLY:
I have extracted the following information from NTUC Income's website.
* 1 in 12 people is expected to make a claim (due to severe disability)
* the benefit is $400 a month for 60 months (but some elderly people may die before collecting for 60 months).
If you have sufficient savings that can take care of a severe disability, you do not need to buy the Eldershield plan. You can carry the risk on you own. The total payout under Elderhsield is a maximum of $24,000 over 60 months.
If you cannot take the risk of a severe disability, then you need to buy this insurance.
You can read more from this website.
-------------------------
Premium payable at age 40 for 26 years:
Male $174.96
Female $217.76
Total premium paid, plus interest accumulated at 4% to age 80:
Male $13,964
Female $17,376
This is nearly 48% (male) and 60% (female) of the maximum payout of $28,800.
Look after the interest of others
Dear Mr Tan
I helped out in a polling for the Lift Upgrading of my block. The Member of Parliament urged residents to cast in their "YES" votes.
Sadly, one resident committee member went round to urge the residents not to do so. He wanted HDB to guarantee that they will make good any damages caused by the upgrading. HDB agreed to try their best, but is not able to match his full demand. Upgrading work involves thousands of residents. How could HDB meet everybody's need?
I have respected him as a RC committee member all these years. I have now changed my view on him.
MY REPLY
I think that the resident committee member should put the interest of the residents above his personal interest.
I helped out in a polling for the Lift Upgrading of my block. The Member of Parliament urged residents to cast in their "YES" votes.
Sadly, one resident committee member went round to urge the residents not to do so. He wanted HDB to guarantee that they will make good any damages caused by the upgrading. HDB agreed to try their best, but is not able to match his full demand. Upgrading work involves thousands of residents. How could HDB meet everybody's need?
I have respected him as a RC committee member all these years. I have now changed my view on him.
MY REPLY
I think that the resident committee member should put the interest of the residents above his personal interest.
Keep your money in the CPF Special Account
Dear Mr Tan
One insurance agent pesters me to put my special account into his insurance product, citing that it would give a x% of return which will be sufficent to see me through my old age.
I told him that nothing is absolute. I could not take his words simply because there are too many insurance products in the market, with so many agents eager "to close a deal".
I would rather be prudent and let my money remains in the CPF until I fully understand the product. Any comment?
MY REPLY:
I agree with you. It is best to keep your money in the special account to earn 4% plus 1%. Most insurance products cannot give this type of return, due to the high distribution cost, expense and profit margin of the insurer.
One insurance agent pesters me to put my special account into his insurance product, citing that it would give a x% of return which will be sufficent to see me through my old age.
I told him that nothing is absolute. I could not take his words simply because there are too many insurance products in the market, with so many agents eager "to close a deal".
I would rather be prudent and let my money remains in the CPF until I fully understand the product. Any comment?
MY REPLY:
I agree with you. It is best to keep your money in the special account to earn 4% plus 1%. Most insurance products cannot give this type of return, due to the high distribution cost, expense and profit margin of the insurer.
How to decide on the Eldershield offer
Dear Mr Tan
I am 40 years old. I received a brochure from an insurer about Eldershield plan. I have the following 3 options:
1. No Eldershield, ie. poor value, low probability to claim. Better to keep premium in Medisave to grow @ 5%pa ?
2. Eldershield @ $400/mth, max 72 mths. Pay $217.76/yr to age 65.
3. Vplus 400 plan @ $400/mth, max 120 mths. Pay $45/yr increasing up to $1826 at age 100.
I am confused and will appreciate your expert advice. What should I do?
MY REPLY
I suggest that you ask insurance company to give you the following answers for each of their plan (i.e. basic and value plan):
1. What is the total premium that you are likely to pay for the plan?
2. What is the interest that can be earned on the premium for the next 40 years, using the interest rate on Medisave account (e.g. 5%)
3. What is the likelihood of making an Elderhield claim during your lifetime?
4. What is the expected total benefit, (taking into account that most claimants may not live to receive the full 6 years of payment)
5. What is the amount of distribution cost and other charges taken away from your premiums to pay the agent or the insurance company?
If they are able to provide the answers, and they are clear to you, you will be able to make a better judgement. I hope that this general advice is helpful to you.
Lesson: Ask the right question. Be sure that you understand before you buy. Do not buy, if you do not undertstand what is the cost and the benefit.
I am 40 years old. I received a brochure from an insurer about Eldershield plan. I have the following 3 options:
1. No Eldershield, ie. poor value, low probability to claim. Better to keep premium in Medisave to grow @ 5%pa ?
2. Eldershield @ $400/mth, max 72 mths. Pay $217.76/yr to age 65.
3. Vplus 400 plan @ $400/mth, max 120 mths. Pay $45/yr increasing up to $1826 at age 100.
I am confused and will appreciate your expert advice. What should I do?
MY REPLY
I suggest that you ask insurance company to give you the following answers for each of their plan (i.e. basic and value plan):
1. What is the total premium that you are likely to pay for the plan?
2. What is the interest that can be earned on the premium for the next 40 years, using the interest rate on Medisave account (e.g. 5%)
3. What is the likelihood of making an Elderhield claim during your lifetime?
4. What is the expected total benefit, (taking into account that most claimants may not live to receive the full 6 years of payment)
5. What is the amount of distribution cost and other charges taken away from your premiums to pay the agent or the insurance company?
If they are able to provide the answers, and they are clear to you, you will be able to make a better judgement. I hope that this general advice is helpful to you.
Lesson: Ask the right question. Be sure that you understand before you buy. Do not buy, if you do not undertstand what is the cost and the benefit.
Insurance takes care of your worry
Most people think about insurance as paying claims. Insurance play another important role, that is, to take care of the settlement of the claim.
For example, if you meet with a traffic accident, and you are sued for negligence, the insurance company handles the settlement of the claim. It frees you from the worry about settling the claim. And the insurance company also pays the claim.
As the insurer's claim officers are more experienced on the settlement, they can handle it better than the consumer.
Similarly, under a medical insurance policy, the insurer's doctor can provide a second opinion to make sure that you are getting the right treatment.
For insurance company to play this wider role well, a few conditions are necessary:
1. The claim officer and the policyholder must have the same goal - to seek the most cost effective way to settle the claim.
2. There must be trust between the two parties
3. The policyholder should seek the advice of the insurer earlier, for example, before getting the medical treatment or repairing the car. The insurer should be organised to provide this wider service.
The current state of affairs in insurance companies in Singapore is not up to this standard. More needs to be done to improve the claim process.
For example, if you meet with a traffic accident, and you are sued for negligence, the insurance company handles the settlement of the claim. It frees you from the worry about settling the claim. And the insurance company also pays the claim.
As the insurer's claim officers are more experienced on the settlement, they can handle it better than the consumer.
Similarly, under a medical insurance policy, the insurer's doctor can provide a second opinion to make sure that you are getting the right treatment.
For insurance company to play this wider role well, a few conditions are necessary:
1. The claim officer and the policyholder must have the same goal - to seek the most cost effective way to settle the claim.
2. There must be trust between the two parties
3. The policyholder should seek the advice of the insurer earlier, for example, before getting the medical treatment or repairing the car. The insurer should be organised to provide this wider service.
The current state of affairs in insurance companies in Singapore is not up to this standard. More needs to be done to improve the claim process.
$5 million cover under a Shield plan
Some Shield plan offers a cover of $5 million. This is a marketing gimmick.
To my knowledge, out of 2 million people who are insured for the past 10 years, nobody has ever accumulated a lifetime bill of more than $300,000. Most of the large bills are probably less than $100,000.
Do not be frightened into buying a Shield plan because you have have to incur $5 million in medical bills. This is not possible.
To my knowledge, out of 2 million people who are insured for the past 10 years, nobody has ever accumulated a lifetime bill of more than $300,000. Most of the large bills are probably less than $100,000.
Do not be frightened into buying a Shield plan because you have have to incur $5 million in medical bills. This is not possible.
Mother not eligble for medical insurance
Hi Mr Tan
I recently discovered that my mother is not covered under any Shield plan. I have difficulty having her insured as she had a medical condition, but has recovered from it. The insurance company rejected her application.
Do you think I should go for another test to prove that she has fully recovered?
She is 63 years old, well and active. I am concerned that she is aging. Should she be hospitalised, we are not sure if we can cope with it.
MY REPLY:
See if you can get your mother insured, with the exclusion of the specific medical condition. She can still be covered for other illness.
If this is not possible, do not worry. Many older folks are not covered under a Shield plan. If they go to hospital, they can stay in a B2 ward, which is not costly. B2 is suitable for old folks. The bill can be paid under Medisave.
I hope that your mother does not need to be hospitalised.
I recently discovered that my mother is not covered under any Shield plan. I have difficulty having her insured as she had a medical condition, but has recovered from it. The insurance company rejected her application.
Do you think I should go for another test to prove that she has fully recovered?
She is 63 years old, well and active. I am concerned that she is aging. Should she be hospitalised, we are not sure if we can cope with it.
MY REPLY:
See if you can get your mother insured, with the exclusion of the specific medical condition. She can still be covered for other illness.
If this is not possible, do not worry. Many older folks are not covered under a Shield plan. If they go to hospital, they can stay in a B2 ward, which is not costly. B2 is suitable for old folks. The bill can be paid under Medisave.
I hope that your mother does not need to be hospitalised.
Use Google Search
Dear Mr Tan,
I have read in your blog sometime ago on the subject of weight loss programme with the so-called income 3 day diet plan programme. Would you be kind enough to reproduce this for me.
MY REPLY:
I found the formula from this website
http://www.webmd.com/diet/features/the-3-day-diet.
It is the same diet promoted by NTUC Income a few years ago.
Secret? use Google Search.
----------------------------
Dear Mr Tan,
I am very grateful that you took great pains to find out for me. Thank
you a million. Best regards.
I have read in your blog sometime ago on the subject of weight loss programme with the so-called income 3 day diet plan programme. Would you be kind enough to reproduce this for me.
MY REPLY:
I found the formula from this website
http://www.webmd.com/diet/features/the-3-day-diet.
It is the same diet promoted by NTUC Income a few years ago.
Secret? use Google Search.
----------------------------
Dear Mr Tan,
I am very grateful that you took great pains to find out for me. Thank
you a million. Best regards.
Friday, October 05, 2007
Increase in bonus rates
Hi mr tan,
I had bought a life policy for my baby in 2006 which has a protection value at $100k.
Cash value guaranteed @ 65 yrs = $70000
Non guaranteed @65 yrs = $ 231642
I compared with this year 2007 quotation which has the same protection value of $100k and same cash guaranteed @ $70000 BUT...
Non guaranteed @65 yrs = $ 311399
Difference $311399-$231642= $79757
For 1 year there is about $80k difference in the non-guaranteed portion which i think that is a very big amount. I also understand that it is NON-Guaranteed.
My agent explained to me that this is a marketing gimmick, is that true? So the value of non-guaranteed portion is dervied based on what conditions?
How closely is the non-guaranteed portion being matched? My main concern is at the end of the 65 years, will i be able to collecting less payout than compared to buying 1 year later ?
MY REPLY:
NTUC Income increased its bonus rates in 2007. Based on the higher bonus rates, the projected maturity value at 65 has increased significantly.
Here is the good news. The higher bonus rate is also given to policies issued in the past. The policy that you took in 2006 will enjoy the higher bonus rate as well. It is likely that the projected maturity value will increase to match what is shown in the 2007 policy.
I had bought a life policy for my baby in 2006 which has a protection value at $100k.
Cash value guaranteed @ 65 yrs = $70000
Non guaranteed @65 yrs = $ 231642
I compared with this year 2007 quotation which has the same protection value of $100k and same cash guaranteed @ $70000 BUT...
Non guaranteed @65 yrs = $ 311399
Difference $311399-$231642= $79757
For 1 year there is about $80k difference in the non-guaranteed portion which i think that is a very big amount. I also understand that it is NON-Guaranteed.
My agent explained to me that this is a marketing gimmick, is that true? So the value of non-guaranteed portion is dervied based on what conditions?
How closely is the non-guaranteed portion being matched? My main concern is at the end of the 65 years, will i be able to collecting less payout than compared to buying 1 year later ?
MY REPLY:
NTUC Income increased its bonus rates in 2007. Based on the higher bonus rates, the projected maturity value at 65 has increased significantly.
Here is the good news. The higher bonus rate is also given to policies issued in the past. The policy that you took in 2006 will enjoy the higher bonus rate as well. It is likely that the projected maturity value will increase to match what is shown in the 2007 policy.
Visit other countries
When I travel to foreign courntries, I hvae to complete a few forms - entry, customs, health and currency controls.
Some of these forms asked for repeat or unnecessary information, such as address in that country, reason for the visit, etc.
I suspect that most information is hardly used, except for statistical analysis for tourism purpose.
Surely, it is time to discontinue most of these forms?
Visitors into Singapore are required to complete some forms. Are they really necessary? Even tourism statistics can be obtained from other sources or through a sample survey.
I hope that Singapore can set an example and get rid of the unnecessary forms, that are a burden to visitors. This may start a process for other countries to simplify their entry procedures.
When I visited Europe, I recalled that I was not required to complete any form at all. That is most welcomed!
Some of these forms asked for repeat or unnecessary information, such as address in that country, reason for the visit, etc.
I suspect that most information is hardly used, except for statistical analysis for tourism purpose.
Surely, it is time to discontinue most of these forms?
Visitors into Singapore are required to complete some forms. Are they really necessary? Even tourism statistics can be obtained from other sources or through a sample survey.
I hope that Singapore can set an example and get rid of the unnecessary forms, that are a burden to visitors. This may start a process for other countries to simplify their entry procedures.
When I visited Europe, I recalled that I was not required to complete any form at all. That is most welcomed!
Taking the MRT for a gala dinner
I was invited to a gala dinner. The dress code was lounge suit.
I had the option to drive to Raffles City. I decided not to. I was not sure if the road was congested or it was difficult to find a parking space.
My wife drove me to the station to take the MRT. To avoid being out of place, I carried the jacket in my hand. In the evening, the train was half filled. It was a comfortable and fast ride.
The return journey was also quite pleasant.
I was probably among the very few guests at the gala dinner that came by train.
I had the option to drive to Raffles City. I decided not to. I was not sure if the road was congested or it was difficult to find a parking space.
My wife drove me to the station to take the MRT. To avoid being out of place, I carried the jacket in my hand. In the evening, the train was half filled. It was a comfortable and fast ride.
The return journey was also quite pleasant.
I was probably among the very few guests at the gala dinner that came by train.
Do you really need the insurance?
A very wealthy person told me that all the members of her family has just bought a Shield plan. She was very glad that they are insured.
I told her that this is not really necessary. They are able to pay for the medical expenses out of pocket. They do not really need insurance.
She was surprised. She never thought about it in this perspective.
Here are my reasons.
The chance of incurring a very big hospital bill is quite small. Only a few people are likely to likely to be hit. Even if the bill is $100,000, it should not pose a big problem to a person who has several million dollars of assets.
There is a choice to go for treatment in the restructured hospitals in Singapore. The charges are modest, even in the class A wards.
Buying insurance requires a rational decision.
Do I need it?
What does it pay?
What is the chance of making a claim of this magnitured?
How much does it cost?
Can I afford to self-insure?
I told her that this is not really necessary. They are able to pay for the medical expenses out of pocket. They do not really need insurance.
She was surprised. She never thought about it in this perspective.
Here are my reasons.
The chance of incurring a very big hospital bill is quite small. Only a few people are likely to likely to be hit. Even if the bill is $100,000, it should not pose a big problem to a person who has several million dollars of assets.
There is a choice to go for treatment in the restructured hospitals in Singapore. The charges are modest, even in the class A wards.
Buying insurance requires a rational decision.
Do I need it?
What does it pay?
What is the chance of making a claim of this magnitured?
How much does it cost?
Can I afford to self-insure?
Thursday, October 04, 2007
Insurance agents - the bad and the good
Someone has been posting strong comments that are critical of insurance agents. According to him, the insurance agents:
* Offer products that are not suitable for the customer
* These products provide poor value to the customers
* The agents will not buy these products for themselves
* The agent are only interested in the high commission from selling the product.
This is true to a certain extent. The blame is not with the insurance agents only. The insurance companies share in the blame for not serving the public well.
We must not overlook the fact that there are insurance agents who operate ethically, as follows:
* They educate the customer about their financial needs
* They offer products that suit these needs
* These products give better value, compared to other similar products available in the market
* They earn a modest rate of commission for their time and service.
Customers need the insurance agents or advisers to help them find the suitable products. There is a role for the adviser.
* Offer products that are not suitable for the customer
* These products provide poor value to the customers
* The agents will not buy these products for themselves
* The agent are only interested in the high commission from selling the product.
This is true to a certain extent. The blame is not with the insurance agents only. The insurance companies share in the blame for not serving the public well.
We must not overlook the fact that there are insurance agents who operate ethically, as follows:
* They educate the customer about their financial needs
* They offer products that suit these needs
* These products give better value, compared to other similar products available in the market
* They earn a modest rate of commission for their time and service.
Customers need the insurance agents or advisers to help them find the suitable products. There is a role for the adviser.
Life annuity and the poor
Editor
Today Paper
I refer to the letter from Dr Vincent Chia Wei Meng entitled "The numbers tell the story" (Today, 4 Oct 2007).
Dr Chia argued that life annuity is a disadvantage for the poor. He quoted studies that showed poor people have a shorter life expectancy, compared to people who are better off.
This is probably correct, but in a general sense. There are poor people who are healthy and can live longer. It depends on each individual.
If a person knows that his or her health is poor, and is like to have a shorter life expectancy, then this person should avoid buying a life annuity, or should buy a life annuity that provides a partial refund on early death.
The majority, who are in normal good health for their age, should buy a life annuity.
Poor people need the pooling of longevity risk in a life annuity more than the wealthy. The wealthy people have sufficient money to last for more than a lifetime and do not need to pool this risk.
The advantages of a life annuity outweigh the perceived disadvantage, even for poor people. Here are the benefits:
* They do not have to manage their money. The annuity provider takes care of this matter.
* By investing in an annuity fund, the annuitant can get a better return on their money, compared to investing on their own
* They participate in the pooling of longevity risk.
Those who are very poor probably do not have sufficient money to buy a life annuity that can give an adequate income for a life time. With a small capital sum, they can only buy a small payout. They will still need some financial assistance to top up this small payout.
Tan Kin Lian
Today Paper
I refer to the letter from Dr Vincent Chia Wei Meng entitled "The numbers tell the story" (Today, 4 Oct 2007).
Dr Chia argued that life annuity is a disadvantage for the poor. He quoted studies that showed poor people have a shorter life expectancy, compared to people who are better off.
This is probably correct, but in a general sense. There are poor people who are healthy and can live longer. It depends on each individual.
If a person knows that his or her health is poor, and is like to have a shorter life expectancy, then this person should avoid buying a life annuity, or should buy a life annuity that provides a partial refund on early death.
The majority, who are in normal good health for their age, should buy a life annuity.
Poor people need the pooling of longevity risk in a life annuity more than the wealthy. The wealthy people have sufficient money to last for more than a lifetime and do not need to pool this risk.
The advantages of a life annuity outweigh the perceived disadvantage, even for poor people. Here are the benefits:
* They do not have to manage their money. The annuity provider takes care of this matter.
* By investing in an annuity fund, the annuitant can get a better return on their money, compared to investing on their own
* They participate in the pooling of longevity risk.
Those who are very poor probably do not have sufficient money to buy a life annuity that can give an adequate income for a life time. With a small capital sum, they can only buy a small payout. They will still need some financial assistance to top up this small payout.
Tan Kin Lian
Presenting views in "words"
Someone posted in comment in my blog: "How can your views benefit other people, if you just write in words"?
Apparently, this person thinks that I should be using more tables, graphs and pictures.
Here is my reply:
1. Do do present tables, in a simple format.
2. I am not familiar in creating graphics using other software. But I will try to learn how. It may take some time.
3. I hope that there are sufficient people who find my views in "words" to be useful.
Apparently, this person thinks that I should be using more tables, graphs and pictures.
Here is my reply:
1. Do do present tables, in a simple format.
2. I am not familiar in creating graphics using other software. But I will try to learn how. It may take some time.
3. I hope that there are sufficient people who find my views in "words" to be useful.
Investing in Foreign Currency Deposit
Hi Mr Tan,
I like to ask about Foreign Currency Time Deposits.
What are the risks involved if I put my money in Foreign Currency Time Deposits?
MY REPLY:
The risk is in the currency exchange rate.
For example, if you put $10,000 in New Zealand dollars for 1 year to earn 7% interest (compared to 2% in fixed deposit in S$), you will earn 5% more in the interest for 1 year.
At the end of 1 year, if the NZ$ depreciated by 5% against the S$ during the 1 year period, you are in a neutral position (compared to keeping in S$ deposit).
If NZ$ depreciates by more than 5%, then you will lose on the NZ$ deposit.
If NZ$ depreciates by less than 5%, you will still be better off, by investing in NZ$ deposit.
If NZ$ appreciates against the S$, you will get double benefit, first from the higher interest rate (i.e. difference of 5%) and second from the higher exchange rate.
The challenge is to know what is the likely trend of the NZ$. No one can help you to make this decision. The currency experts do not know, especially in 1 year's time. I do not know.
If you study the trend of NZ$ over the past few years, you will find that it has the potential to move up or down 10% within a short period.
The same remark applies to investing in any other foreign currency deposit.
I like to ask about Foreign Currency Time Deposits.
What are the risks involved if I put my money in Foreign Currency Time Deposits?
MY REPLY:
The risk is in the currency exchange rate.
For example, if you put $10,000 in New Zealand dollars for 1 year to earn 7% interest (compared to 2% in fixed deposit in S$), you will earn 5% more in the interest for 1 year.
At the end of 1 year, if the NZ$ depreciated by 5% against the S$ during the 1 year period, you are in a neutral position (compared to keeping in S$ deposit).
If NZ$ depreciates by more than 5%, then you will lose on the NZ$ deposit.
If NZ$ depreciates by less than 5%, you will still be better off, by investing in NZ$ deposit.
If NZ$ appreciates against the S$, you will get double benefit, first from the higher interest rate (i.e. difference of 5%) and second from the higher exchange rate.
The challenge is to know what is the likely trend of the NZ$. No one can help you to make this decision. The currency experts do not know, especially in 1 year's time. I do not know.
If you study the trend of NZ$ over the past few years, you will find that it has the potential to move up or down 10% within a short period.
The same remark applies to investing in any other foreign currency deposit.
Wednesday, October 03, 2007
Insurance agents
There is a regular visitor who post repeated comments in my blog to attack insurance agents.
I allowed some comments to be posted - to reflect his point of view. But I had to block some comments that are unfairly critical.
I allowed some comments to be posted - to reflect his point of view. But I had to block some comments that are unfairly critical.
Real estate agents
There is a news report about moves to upgrade the professionalism of real estate agents. This follows complaints from the public about the unethical practices of some agents.
Will it work?
It is difficult. But it is a step in the right direction.
Is there another alternative?
Yes. We can educate the consumers and empower the consumers (owners or buyers of the property) on the steps to take to handle the transcations on their own.
When there is a real alternative, i.e. do it yourself, then the real estate agents will become be more efficient and bring down the cost to the consumers.
Will it work?
It is difficult. But it is a step in the right direction.
Is there another alternative?
Yes. We can educate the consumers and empower the consumers (owners or buyers of the property) on the steps to take to handle the transcations on their own.
When there is a real alternative, i.e. do it yourself, then the real estate agents will become be more efficient and bring down the cost to the consumers.
Compensation for injury
There is a report in the newspaper today about the foreman who died during the collapse of Nicoll Highway. The widow had to sue the employer, who agreed to pay $410,000. The incident occurred 3 years ago.
Victims of traffic accidents face a similar problem in Singapore. They have to engage a lawyer to claim compensation for the injury. This can take a few years, and result in high legal cost, which can take away about one third of the award.
In some countries, there is a faster way to assess compensation for injuries and death.
It is based on a no-fault system and awards compensation based on the actual expenses and loss of earnings. It applies to accidents at the workplace and on the road.
The award is given quite quickly and the amount is generally fair.
It is useful to have a similar system in Singapore. Actually, the workman compensation system in Singapore is based on this approach. We can extend its operations to cover a larger scope and also to pay higher compensation.
Victims of traffic accidents face a similar problem in Singapore. They have to engage a lawyer to claim compensation for the injury. This can take a few years, and result in high legal cost, which can take away about one third of the award.
In some countries, there is a faster way to assess compensation for injuries and death.
It is based on a no-fault system and awards compensation based on the actual expenses and loss of earnings. It applies to accidents at the workplace and on the road.
The award is given quite quickly and the amount is generally fair.
It is useful to have a similar system in Singapore. Actually, the workman compensation system in Singapore is based on this approach. We can extend its operations to cover a larger scope and also to pay higher compensation.
Monthly income benefit
Dear Mr Tan,
You mentioned in your blog that a decreasing term is suitable as an insurance protection.
While I agree with you, I think it may not be the best solution if the beneficiaries are not financially savvy to handle such a big amount of money. It may be better if they to receive a fixed monthly stipend.
NTUC Income has an Income Benefit rider under the Family Insurance Plan, which pays out a monthly benefit when the life assured dies. Do you think this is an equivalently good financial protection as well?
MY REPLY:
I agree with you that a monthly income benefit is more suitable for dependants who are not able to handle a large lump sum.
You mentioned in your blog that a decreasing term is suitable as an insurance protection.
While I agree with you, I think it may not be the best solution if the beneficiaries are not financially savvy to handle such a big amount of money. It may be better if they to receive a fixed monthly stipend.
NTUC Income has an Income Benefit rider under the Family Insurance Plan, which pays out a monthly benefit when the life assured dies. Do you think this is an equivalently good financial protection as well?
MY REPLY:
I agree with you that a monthly income benefit is more suitable for dependants who are not able to handle a large lump sum.
Tuesday, October 02, 2007
Single premium endowment invested in CDOs
Dear Mr Tan,
I like to get your advice on this investment product: a single premium investment linked plan with annual payout of up to 4% over a 5 year term and return of 100% of the principal invested at maturity. Also get additional life insurance coverage of up to 110% of the amount of investment.
It invests into a Collateralised Debt Obligation (CDO) tranche of corporate credits with credit rating of AA by S&P's. Min. single premium of $5K.
MY REPLY:
Are you sure that the return on maturity is guaranteed? Who provides the guarantee?
Usually, when the issuer states that the money is invested in a certain class of assets, there is a statement that, in the event of default of the assets, the investor has to suffer a loss. You should check this point carefully.
Collateralised debt obligation are a risky class of asset now, even if they are rated as AA. Some of these assets have depreciated in value.
I like to get your advice on this investment product: a single premium investment linked plan with annual payout of up to 4% over a 5 year term and return of 100% of the principal invested at maturity. Also get additional life insurance coverage of up to 110% of the amount of investment.
It invests into a Collateralised Debt Obligation (CDO) tranche of corporate credits with credit rating of AA by S&P's. Min. single premium of $5K.
MY REPLY:
Are you sure that the return on maturity is guaranteed? Who provides the guarantee?
Usually, when the issuer states that the money is invested in a certain class of assets, there is a statement that, in the event of default of the assets, the investor has to suffer a loss. You should check this point carefully.
Collateralised debt obligation are a risky class of asset now, even if they are rated as AA. Some of these assets have depreciated in value.
Private settlement for motor accident
A taxi driver met with a minor accident. He was at fault.
His taxi company advised to make a private settlement with the other party (also another taxi), as the claim is minor. He has taken photographs of the damages.
The other party delayed in giving a reply. Later, he sent a bill of $3,500 to the taxi driver. This was excessive.
The taxi driver was in a dilemma. He did not make a claim under his insurance, as he intended to make a private settelemnt. The claim of $3,500 was excessive.
I advised him to lodge a claim under the insurance, although he reported a few days late. He only need to explain the circumstances of the delay.
Lesson: If you wish to make a private settlement, you have to get an agreement on the spot. Both parties have to sign the private settlement form. If there is delay, you should abandon the private settlement and let the insurance company to handle it. They are more experienced in this matter.
His taxi company advised to make a private settlement with the other party (also another taxi), as the claim is minor. He has taken photographs of the damages.
The other party delayed in giving a reply. Later, he sent a bill of $3,500 to the taxi driver. This was excessive.
The taxi driver was in a dilemma. He did not make a claim under his insurance, as he intended to make a private settelemnt. The claim of $3,500 was excessive.
I advised him to lodge a claim under the insurance, although he reported a few days late. He only need to explain the circumstances of the delay.
Lesson: If you wish to make a private settlement, you have to get an agreement on the spot. Both parties have to sign the private settlement form. If there is delay, you should abandon the private settlement and let the insurance company to handle it. They are more experienced in this matter.
Advice on buying insurance
Some people asked for my advice on the need to buy certain types of insurance. I told them to ask the following questions:
1. What is the risk that is being insured?
2. What is the amount that can be payable under the insurance?
3. What is the chance of a claim arising?
4. What is the premium payable for the risk?
Look at the ratio of claim to premium for the class of insurance. If the ratio is 70%, then the insurance is giving good value to the customers. If the ratio is less than 50%, then the insurance company is making excessive profits, i.e. they are over-charging the premium.
You should also consider the following:
1. Do you really need the insurance?
2. Can you carry your own risk, e.g. for the deductible under medical insurance?
1. What is the risk that is being insured?
2. What is the amount that can be payable under the insurance?
3. What is the chance of a claim arising?
4. What is the premium payable for the risk?
Look at the ratio of claim to premium for the class of insurance. If the ratio is 70%, then the insurance is giving good value to the customers. If the ratio is less than 50%, then the insurance company is making excessive profits, i.e. they are over-charging the premium.
You should also consider the following:
1. Do you really need the insurance?
2. Can you carry your own risk, e.g. for the deductible under medical insurance?
Life annuity with no refund
Many people think that it is better to buy a life annuity that provides a refund. They were not aware that there is a cost to the refund. An annuity with a refund can pay out 10% to 20% less in payout, for a given invested sum.
An annuitant who bought a "with refund" annuity previously asked me if it is possible to convert to a "no refund" annuity. She has no dependents and wish to have a higher payout.
I expect, in the future, more people to opt for the "no refund" annuity.
An annuitant who bought a "with refund" annuity previously asked me if it is possible to convert to a "no refund" annuity. She has no dependents and wish to have a higher payout.
I expect, in the future, more people to opt for the "no refund" annuity.
Monday, October 01, 2007
Tips on investing $60,000
Hi Tan,
I have about 60k in my ordinary account and no dependents. Taking into
consideration of the new interest rate government had annouced, kindly advise what alternate investment I should buy in order to increase wealth.
MY REPLY:
Please read the FAQS in
http://www.tankinlian.com/faq/
I have about 60k in my ordinary account and no dependents. Taking into
consideration of the new interest rate government had annouced, kindly advise what alternate investment I should buy in order to increase wealth.
MY REPLY:
Please read the FAQS in
http://www.tankinlian.com/faq/
Tips on investing SGD 1 million
Questions:
If you have more than SGD 1 million to invest, is it good to have a renown private institution to help you? Can I get a safe 8% return? What do you recommend I do?
MY REPLY:
Read this FAQ before you talk to a private banker.
http://www.tankinlian.com/faq/august.html
If you have more than SGD 1 million to invest, is it good to have a renown private institution to help you? Can I get a safe 8% return? What do you recommend I do?
MY REPLY:
Read this FAQ before you talk to a private banker.
http://www.tankinlian.com/faq/august.html
Actuarial Education
Dear Mr Tan,
I am 23 years old. I wish to seek your advice on overseas actuarial education. Which countries in the world provides high quality actuarial education relevant to Singapore context?
As I plan to work in Singapore after my studies, which are the specialized areas of actuarial science I need to be familiarized with? Examples like General Insurance,
Life Insurance, Health Insurance, Pension or Investment and Finance.
MY REPLY:
I suggest that you contact the Singapore Actuarial Society. You can get their contact from their website:
http://www.actuaries.org.sg/resources.htm
They should be able to answer your questions better than me. They are more up-to-date on these matters.
Wish you all the best in your future career.
I am 23 years old. I wish to seek your advice on overseas actuarial education. Which countries in the world provides high quality actuarial education relevant to Singapore context?
As I plan to work in Singapore after my studies, which are the specialized areas of actuarial science I need to be familiarized with? Examples like General Insurance,
Life Insurance, Health Insurance, Pension or Investment and Finance.
MY REPLY:
I suggest that you contact the Singapore Actuarial Society. You can get their contact from their website:
http://www.actuaries.org.sg/resources.htm
They should be able to answer your questions better than me. They are more up-to-date on these matters.
Wish you all the best in your future career.
Sunday, September 30, 2007
Avoid "quick return" investments
Dear Mr Tan,
I am enjoying reading your Blog almost everyday. Great sharing and learn alot for you.
Someone actually approached me regarding to one of the MLM opporitunity. (Details deleted) Not sure whether have you hear of the company. But many people are investing their Broadband Wireless and Properties Projects.
The reward is excellant. For 1-GP investment (SGD 11800), the return is SGD 1200 per month.
Expecting to break-even within 8 month and get the extra Customer Rebate for the following months up to SGD 19200, Beside that within the 4 to 5 month, they will also give out USD 60000 bonus within 5 years.
Is this a good Investment opporitunity ?
MY REPLY:
I always avoid this type of "high return" investment. I also advise people to avoid investing in anything that looks too attractive, and where they do not really understand the business model. Some of these types of investments are scams.
I am enjoying reading your Blog almost everyday. Great sharing and learn alot for you.
Someone actually approached me regarding to one of the MLM opporitunity. (Details deleted) Not sure whether have you hear of the company. But many people are investing their Broadband Wireless and Properties Projects.
The reward is excellant. For 1-GP investment (SGD 11800), the return is SGD 1200 per month.
Expecting to break-even within 8 month and get the extra Customer Rebate for the following months up to SGD 19200, Beside that within the 4 to 5 month, they will also give out USD 60000 bonus within 5 years.
Is this a good Investment opporitunity ?
MY REPLY:
I always avoid this type of "high return" investment. I also advise people to avoid investing in anything that looks too attractive, and where they do not really understand the business model. Some of these types of investments are scams.
Courteous drivers in Brussels
The car drivers in Brussels are courteous. They give way to pedestrians on the road. They are patient. They drive slowly.
Why are drivers in Singapore impatent? Perhaps it is the heat or the stress of life!
Why are drivers in Singapore impatent? Perhaps it is the heat or the stress of life!
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