Standing Arrangement on Policy Loan

LETTER TO BE SENT TO POLICYHOLDER OF NTUC INCOME

Dear Policyholder

POLICY XXXXXXX - LOAN BY TELEPHONE

You have taken a life insurance policy with us for more than 5 years. It has
accumulated a large cash value.

We wish to offer you an attractive arrangement:

- you can take a loan against this cash value by giving us a telephone call
- the loan will be credited to your bank account immediately
- interest will be charged at the prevailing rate, which is currently 5.5% per annum

To benefit from this arrangement, you have to open a "standing arrangement" with
us, as follows:

- you have to sign and return the attached agreement
- the fee of $50 is waived, if you sign up within 1 month of this letter.
- you do not pay any fee, apart from interest on any sum that is drawn down

For more information, call XXXXXXXXX

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WHY WE ENCOURAGE OUR POLICYHOLDER TO TAKE A LOAN?

We want to make it easy for our policyholders to take a loan from us.

Many are not aware, and they take a loan from credit card which carries 18% or 24% interest. Borrowing from loan sharks is higher. If they borrow from other insurers, they pay 6 to 8% interest.

If they take a loan from us, they save on the interest. It makes our insurance plans look much better.

Inexpensive to cover for Personal Accident

Recently, a cyclist crashed into a barrier in Tampines and may be paralysed for life. This unfortunate accident is a poignant reminder of the uncertainty of life. Besides the emotional trauma, the financial strain on his family can be quite considerable.

Accidents can happen anywhere, anytime. It is useful for people to have Personal Accident insurance. The payouts can help relieve the financial burden.

For as little as $6 a month, a person can receive up to $100,000 on permanent disability. This can tide over the immediate financial burden, as it will take time and cost to puruse a legal claim for compensation.

Our personal accident plan provide worldwide accident cover, 24 hours a day. It also covers natural perils and reservist training at no additional cost. You can aslo insure for payouts for temporary disablement and medical expenses.

Investment-linked product: choice of life cover

NTUC Income will offer 2 choice of cover for our Ideal plan (ie an investment linked product or ILP):

- level term
- decreasing term

Both covers will be paid by a level premium, which is lower than the premium under a traditional policy. The sum assured is payable in addition to the savings accumulated in the ILP plan.

For example, a policyholder who saves $2,000 a year may take a level term or decreasing term to cover $50,000 over 20 years.

Under level term, the sum of $50,000 is payable in addtion to the accumulated savings.

Under decreasing term, the sum is reduced by $2,500 each year, and is payable in addition to the accumulated savings.

The cost of the term insurance cover is quite modest. To find out more, visit our office in Bras Basah Road. You can also attend our educational seminar.

Call 6788 3366.

19 people gave their "wish for Singapore"

A colleague posted an article "I wish for Singapore..". 19 persons responded. Some posted more than 1 wish.

Consideration, less kiasu, more helpful - 6 wishes
More prosperous, more gracious, patience, happiness - 6 wishes
Terrorism-free - 4 wishes
Cooler weather, 4 seasons - 4 wishes
$250 per month for elderly people - 3 wishes
Self sufficiency in water and a hinterland - 1 wish
More green concious - 1 wish

Make a third party claim against NTUC Income

Here are the questins posed by a third party claimant, and reply given by me.

Question:
Friends from the industry have told me, that insurers make it difficult for people who are claiming against it for motor insurance policies. I just got my car banged by someone and Income (who insured the other party) have been refusing to coorporate with my workshop for the third-party claim, despite my workshop sending in pictures, to get it expedited.

I'm told that this delaying tactic is common practice for Income when a workshop or insurance company wants to claim against it, and now I've experienced it first hand.

Reply:
We have found, over the years, that the workshop likes to submit an inflated bill for motor repairs. If they can repair a car for $X for their customer, they will charge 2 times of $X for an insurance company, especially for a third party claim. The distributor's workshop (ie the distributor who sell the car) will charge even more.

Negotiation over the price of repair is the main cause of delay. We like to settle the claim early, but at a reasonable price.

We have advised third party claimants to report their claim to our Idac center immediately after the accident. This allows us to assess the damages and estimate a fair repair cost. As we handle many repairs each day, we are able to get a repair cost that is fair and acceptable to the repair workshop.

If your workshop cannot accept our price, and many other workshop find the price to be reasonable, then your workshop is trying to profiteer on the repair.

If you choose to bypass our request, and you go to your own workshop, and they send us an "inflated bill", what do you expect us to do? Do not blame us for making things difficult. I think that you and your workshop have to be fair to us as well.

If you wish to form a fair opinion about our claim process, I invite you to visit our office. You can look at the number of repairs that are done by us, and the customer satisfaction rate, including the satisfaction for third party claims submitted through our Idac procedure.

Question:
Sure, I know of workshops that charge inflated rates. But why can't the victim of an accident go to his own workshop? How can it be that I have to go patronise Income's workshops?

Reply:
If your workshop is willing to charge a reasonable price, we agree to let the repair be done at your workshop. But, we have to agree on the price first.

There are many workshop that can repair the vehicle, using new parts (for a new car) and provide an acceptable standard of repair, for a reasonable price. This should be the "benchmark" price.

Question:
If you were involved in an accident, would you send in your Mercedes to just any workshop that the third party insurer assigns you to? Obviously not, because it's of no fault of yours that workshops are inflating prices and that your vehicle is banged into by someone else.

Reply:
My honest answer is "yes". I will let my insurer handle the repair, provided that they undertake to ensure that the repair is of an acceptable standard. They are many workshops that can do an acceptable level of work at a fair price. Over the past years, I have a two accidents (also caused by other parties) and have been happy to let my vehicle be repaired at the quality workshop under NTUC Income.

Question:
While insurance firms hagger over costs, they often forget that their customers are already stressed out with an accident, struggling to repair things and move on.

Reply:
Our policyholders are happy to let us arrange the repair. Based on our post repair survey, over 95% of our policyholders have expressed satisfaction at the quality of repair and customer service.

If the third party claimant is willing to follow this procedure, I am sure that they will find it to be stress free.

Question:
People buy insurance so that when the unexpected happens, we have something to fall back on. Claimants do not profiteer from the process. We expect insurance firms to help us, not prolong the uncertainty of a claim.

Reply:
The correct procedure is for you to claim against your own insurer and let them claim from NTUC Income. It is their duty to provide this customer service to you, as you are their customer. If you are not at fault, they should allow you to keep the No Claim Discount.

By making your claim direct against us, you are not being fair to us, because you do not follow our process and insist on your right to make the claim in your own way. We also have our right to protect our interest.

Question:
If others in the industry try to profiteer, it cannot be that the insured is asked to pay the price. My car only rolled out four months ago. It's only fair that I go back to the distributor for the original parts - I'm sure you know there are not many workshops that have the parts to fix my vehicle.

Reply:
I believe that our quality workshop is able to repair your car to a satisfactory standard. If they are not able to, we will certainly use your distributor.

Question:
Is it against "correct procedure" to claim against a third party? Sure, I can claim against my insuer first. But I will fight my case because I am confident of it.

Reply:
I understand your wish to insist on your right. Do be considerate of the right of the other party as well.

We handle 50 repairs of our policyholders on the "tender system". It works quite well - even from the customer perspective. If you do not trust this system, we accept your point of view.

Work Life Balance - more than Flexi Work

Editor
Forum Page
Straits Times

I refer to the letter 'Work-life balance? If only flexi-work is okay' by Ms Lynn Chong Fui Lian (ST, July 22).

I agree with Ms Lynn that more local companies should embrace flexi-work arrangements. Family friendly programmes at the workplace helps staff strike a balance between family obligations and work. Such practices contribute to a high satisfaction rate among staff and a motivated workforce.

Some of NTUC Income's practices:

a) Staff with children below 12 years old can apply for part-time work. This encourages the working mothers to remain with us. They can choose to work half day or alternate full days. Those who are not able to make suitable arrangements for childcare can opt to work from home. They agree with their supervisor on the scope of work, level of productivity and quality standards.

b) Staff can apply for up to two years of no-pay leave to take care of their families.

c) Currently, staff receive one month of paid leave every three years. They enjoy this leave in addition to the normal annual leave. This special leave allows them to spend time with their families, learn a special skill or go on an extended overseas vacation.

d) Staff can select their starting time of work from 7 am to 10 am to suit their family commitments.

To minimise work disruption, NTUC Income has a pool of temporary employees who are trained and deployed when necessary to handle routine functions while an experienced employee handles the complicated ones.

The experience has been positive. Employees like the flexible work arrangements. The organisation enjoys high staff retention and achieves good business results.

NTUC Income has constantly received the 'Family Friendly Employer Award' in recognition of its positive actions in helping employees achieve work-life harmony.

Patricia Ng
Senior Manager, Human Resource
NTUC Income

Principle of insurance - share the loss

A policyholder wrote to ask my advise about a dread disease plan for his other who is 55 years old. He said that the premium is high. Term insurance is cheaper, but he will "lose money" on the insurance.

My advice to him is:

- the dread disease plan is not essential for your mother. If she falls ill, the hospital bill can be met by the hospital insurance (which she is already covered)

- if the premium is a burden on your cash flow, you can probably use it better elsewhere, e.g. to save for your own retirement needs.

You should not refer to "losing money" when you buy insurance. You are paying for the cost of insurance, and not "losing money".

Similarly, when we pay a premium to insure our vehicle or home, we are paying for the cost of insuring the risk. In fact, we are happy that we do not make any claim.

The premium that we pay is "not lost". It is used to pay the claim suffered by other people who meet with an accident or loss. We are helping other people.

If we suffer the loss, other people are helping us. This is the principle of insurance - to share the loss.

A hospital plan that pays without limits

A insurer has introduced a hospital plan that pays the bills "as charged". It does not impose any limit on the amount that can be claimed for each day of hospital stay or on the surgery fees.

This plan is likely to lead to an escalation in hospital bills. The private hospital and doctors will increase the charges to the patient who is covered under this plan, as the insurer has deep pockets.

This will lead to an increase in premium rates for the "as charged" plan. Experience in other countries have shown that this type of plan has the highest escalation in premiums.

If you are interested in the "as charged" plan, you should look at the premium rates. It is around $6,000 a year, at the older ages. This is the premium rate today. In 20 years time, it can be many times higher, due to escalation in medical expenses.

Can you afford this premium, when you grow old? Do you need to have money left for other living expenses?

You need to have an affordable plan that can cover you for a lifetime. Choose a plan that provides adequate coverage at an affordable premium.

Produce More Babies

Many countries face an declining and aging population. People are getting married later, and producing fewer children. Singapore face worse than many countries.

The root cause is the desire of women to compete with men in the working world. Many give priority to a university degree and a steady career. By the time that they are ready to get married and start a family, they are in their late 20s or early 30s. This is past their most productive years.

To change this trend requires a new approach by the government. The state should be willing to bear a larger part of the cost of raising children, and reduce the burden on the individual family.

I propose that each non-working mother should be given an adequate monthly allowance for each child, up to a maximum of three children in the family. The amount should be adequate to meet 80% of the cost of raising the child, and can be paid until the child is 18 years old. I think that a suitable sum is $500 per child.

This will encourage more women to choose to stop work and to raise a family. The women may marry at a younger age and produce a family with 2 or 3 children. The family will not need to depend on foreign maids.

This family payment will be an added cost to the state, and will have to be met with higher taxation. I think that the people who choose not to have children should share in the national cost of producing our next generation.

Many countries already have generous family allowances, of the type proposed by me. They have problems in implementing the benefits, which can be abused. I am sure that we can find a way to prevent the abuse, and focus on the positive aspect of this proposal.

Is ILP suitable for older people?

Editor
Forum Page
Straits Times

I refer to the letter from Ms Seah Geok Hong entitled "Time Life Insurance Association spoke up" (Straits Times, 19 July). Ms Seah asked the Life Insurance Association to substantiate its claim that regular premium investment plan are suitable for older people.

I like to speak for NTUC Income and address the underlying question.

Compared to a traditional life insurance plan, an investment-linked plan (ILP) has the following advantages:

- flexibility in making regular and adhoc savings, including temporary suspension,
- choice of investment funds,
- flexibility in types and amounts of insurance coverage,
- transparency in the mortality, expense and other charges.

In choosing between different ILP plans available in the market, the consumer should look at the charges and also the investment risks in the various funds.

Older people pay a higher mortality charge for their insurance protection. However, the amount of insurance needed at the older age should reduce, as the children are older and the policyholder has probably already accumulated sufficient savings.

One way to reduce the charge is to deduct the accumulated savings from the initial amount of insurance. The premium will reduce with the lower insured amount. The policyholder also has the flexibility to terminate the insurance coverage on their retirement.

A flexible ILP plan is more suitable for today's uncertain job environment.

The policyholder will need to be properly advised on how to tailor this plan to meet their needs. NTUC Income offers free financial counselling to our policyholders using salaried insurance consultants. We will extend this free service on a limited scale to the general public.

Tan Kin Lian
Chief Executive Officer
NTUC Income

Buy Term and Invest the Difference

"Buy Term" refers to term insurance, which is an insurance contract payable on death. The cost of term insurance is very low, as the chance of making a claim is usually less than 1%. To insure a sum of $100,000, you need to pay $500 or less, depending on your age.

Some people pay more than $5,000 on a life insurance plan to insure $100,000. This is a traditional plan that provides insurance cover and savings. When the policy is terminated at a future date, there is a cash value that is refunded. It represents a portion of the premium, accumulated with interest.

Under the "Invest the Difference" concept, the balance of the savings is invested separately. Usually, it will give a much higher return.

Insurance agents like to sell the traditional plan because they can earn a high rate of commission (up to 100%) of the annual premium, including the saving portion.

If you "buy term" separately, you only pay commission to the agent on the term insurance premium. You save commision on the saving portion.

How much to save for the future?

Someone asked for my advice: how much of my earnings should I save for the future?

My advice - you should save 10 to 15 percent of your earnings. They are for the following:

- in case you lose your job
- for unexpected medical and other expenses
- to supplement your savings for retirement

Many people think that they do not earn enough to meet their living expenses. This is not correct. If they look at how people who earn less cope with their budget, they will find that it is possible to set aside the savings.

They can cut down expenses on buying a car, or they can buy a smaller flat, or spend less on holiday or children's tuition.

It is a matter of priority.

Make some savings. Take care of your future first. Then, you can take care of others.

Third Party submit an inflated claim

Editor
The New Paper

I refer to the letter 'Premium rose after minor accident' (TNP, 13 July) by Ms Janet Chua Yah Choo.

Ms Chua said that she was involved in a minor accident recently. The damage on the third party's vehicle was small but the claim was quite substantial. As a result, she had to pay a premium loading and had her no-claim discount reduced by her insurer during the policy renewal.

Ms Chua is not insured by NTUC Income. As this is a common situation, we wish to share our current practice in dealing with this type of claim, so as to protect the interest of our policyholder.

When we receive a third party claim, we write to our policyholder with the details of the claim. We ask our policyholder to give us his feedback on the claim. If the claim is inflated, we will get a statement from our policyholder to reject or contest the third party claim. If the unjustified claim is not withdrawn, we will take legal action against the motorist who has authorised the workshop to file the claim.

If we are able to reject the claim, we will allow our policyholder to retain the No Claim Discount.

If a third party wish to make a claim against our policyholder, they are advised to go to an Idac center within 24 hours of the accident. We will assess the damages and make an offer to settle the claim expeditiously. We will also offer a cash settlement and allow the third party to find their own repair workshop.

Freddy Neo,
Senior Claims Manager,
NTUC Income

Boot licker?

Someone posted a positive comment about me, but preferred to remain anonymous. He was afraid of being accused of boot licking.

I have a way to overcome this fear.

I like to find positive things to say about other people. I am just being decent and encouraging. I am not boot licking.

We need to promote a climate of positiveness. We have to find positive things to say about other people. We have to create an optimistic climate.

I encourate other people to think positive, and be positive.

Ideal plan - best plan for an uncertain world

I wish to recommend the Ideal plan from NTUC Income as the best plan for an uncertain world.

It allows you to make regular savings when you are employed. You can top up with adhoc savings, out of your annual bonus or occasional income.

If you have a cash flow problem, you can stop your savings for a short period. There is no penalty.

Your savings can be invested in the Combined Fund from NTUC Income. It is a large, well diversified fund, have $3,500 million of assets, and is managed by 9 top fund managers.

I expect the fund to earn an average of 6% per annum over 10 years or longer, but this is not guaranteed. As it is a large and well diversified fund, the risk is reduced. A few bad investments will not affect the long term return of the fund.

Here are two additional advantage:

- you can buy insurance protection in a separate policy and pay a separate premium
- 100% of your savings is invested from the first month
- our charges are probably the lowest

To know more about this plan, you should attend our educational seminar that is held every two weeks. Call 6788 6636. Website: www.income.coop

How much does the CEO of NTUC Income earns?

Someone posted in my blog - how much does the CEO of NTUC Income earns. He wants to know about this information, following the media report on the court case by the CEO of the National Kidney Foundation.

I will give a reply on my salary at a suitable forum in the future. Maybe, this can be a question to be raised at the annual general meeting of NTUC Income. The chairman of my board of directors can address it.

I will give a hint. I earn less than 50% of CEOs of large listed companies that are reported regularly in the newspapers.

I wish to state the following:

- I fly by economy class, including long distance travel
- I drive a 8 year old Mercedes E200 and will keep it for a few more years.

I am quite frugal in spending money for NTUC Income, including paying for computer systems and management consultants. This helps us to keep our expense ratio low, and reduce the premium rates payable by our policyholders.

Yob Culture in the UK

I read that some teanagers in the UK behaved badly. It is called yob culture. "yob" is the opposite of "boy" and refers to a hooligan.

The source of this problem appears to be single parents and lack of parental supervision. The correct values are not taught to the children.

Tony Blair, prime minister of the UK, is worried about the culture of "lack of respect" and "freedom without responsibility". He is trying to promote the value of respect.

The problem is so bad, that they have to pass a law on "anti-social behaviour". I am worried that some of these behaviour are happening in Singapore.

What does a CEO do?

A CEO is:

Chief Executive Officer - everybody knows that.

However, I have to play the following additional roles:

Chief Explanation Officer - when I write in my blog or send my reply to letters in the newspaper.

Chief Excuse Officer - when I have to explain mistakes made by my colleagues, and pacify my customers

Chief Education Officer - when I conduct public seminars on insurance matters.

and finally

Chief Entertainment Officer - when I have to boost the morale of my colleagues, in facing competition and demanding customers.

It is FUN.

Advantages of Late Marriage

A frequent reader of my blog suggest that I should post views from other people of the advantages of late marriage.

If you have this view, you can send them to me. Keep it short. I will post it to create the diversity of views.

I expect that most people already hold this view, which is why marriages are getting later, or may not happen at all. This is why I have to give special attention to those who prefer early marriages.

A lady's view on Early Marriage

FROM A LADY COLLEAGUE

I wish to give my views on the pros and cons of getting married early.

I have read your blog and agree that getting married early does have its advantages. I married at the age of 23, gave birth at 25, completed my Masters in Business (Accounting) at 27, gave birth to my second one last year at 31.

Pros:
Able to start family earlier therefore able to plan for retirement better as the age whereby children reach university level does not coincide with retirement age.
After we settle down, time to concentrate on career.

Cons:
Friends and colleagues about the same age are able to enjoy themselves without the commitment as being married, we are tied down. Getting married earlier, financially not strong. Buying house is deferred.

On the whole, I still encourage people to get married early. I have been the envy of many people as my elder son is already in Primary 1. While other people about my age just gave birth to their first child or still have not given birth, I already have my second child.

Getting married and starting family early is like tasting bitter first and then tasting the sweetness at the end of the life journey.