A doctor walk into our Tampines Business Center and bought two education policies for his children, with a total premium of $10,000 per annum. He said that the center is a good alternative channel and is convenient to him. He and his wife will be coming back for financial planning.
Our new consulant handled a customer at the center with the advice of a senior consultant. The customer is convinced and bought five policies with a total single Premium of $80,000 and annual premium of $13,000.
Our business center is reaching out to a new segment of customers who are willng to visit us.
Thursday, August 31, 2006
Superior return from NTUC Income's Fund
Standard & Poors covered 17 global equity funds managed by life insurance companies.
During the 3 years from 2003 to 2005, the annualised returns are:
NTUC Income's Global Equity Fund 19.2%
Average of 17 funds 15.1%
Difference 4.1%
NTUC Income's fund earned a superior return of 19.2%, which is 4.1% higher than the average of 17 funds.
Why?
1. Our expense ratio is 1.3% compared to the average of 1.7%; the difference is 0.4%
2. Some of the other funds may have other charges and fees that are not explicitly disclosed.
3. Perhaps, the fund managers of NTUC Income have performed better.
We have chosen global equities for this comparision because there are a large number
of such funds, and performance is not easily distorted by differences in asset allocation.
What about the future?
Past performance is not an indication of future performance. But, it is clear that the lower charges of our fund, will continue to be a key factor in producing superior returns for our investors.
Conclusion: Choose NTUC Income funds for our low charges and superior return!
During the 3 years from 2003 to 2005, the annualised returns are:
NTUC Income's Global Equity Fund 19.2%
Average of 17 funds 15.1%
Difference 4.1%
NTUC Income's fund earned a superior return of 19.2%, which is 4.1% higher than the average of 17 funds.
Why?
1. Our expense ratio is 1.3% compared to the average of 1.7%; the difference is 0.4%
2. Some of the other funds may have other charges and fees that are not explicitly disclosed.
3. Perhaps, the fund managers of NTUC Income have performed better.
We have chosen global equities for this comparision because there are a large number
of such funds, and performance is not easily distorted by differences in asset allocation.
What about the future?
Past performance is not an indication of future performance. But, it is clear that the lower charges of our fund, will continue to be a key factor in producing superior returns for our investors.
Conclusion: Choose NTUC Income funds for our low charges and superior return!
Support our Insurance Advisers
I wish to make this appeal to the general public. Support the insurance advisers from NTUC Income.
They earn a modest commission. It is about half of the commission paid to other company's agents. As they do not earn much, you should not make them spend too much time to close your business.
The lower commission allow us to reduce our expenses and give you a better return on your life insurance savings. In most cases, we give 10% to 20% more on the maturity of your policy. If the maturity amount is $100,000, you can get $10,000 to $20,000 more from NTUC Income.
Some companies (not NTUC Income) make unrealistic projections of their return. They pay high commission and incur high expenses. Many years later, they are not able to fulfil their projections. Their policyholders are disappointed, but it is too late.
You can trust NTUC Income. We keep our expenses low and give a better return to our policyholders. Please support my insurance advisers. Help us to help you.
Tan Kin Lian
Chief Executive Officer
NTUC Income
They earn a modest commission. It is about half of the commission paid to other company's agents. As they do not earn much, you should not make them spend too much time to close your business.
The lower commission allow us to reduce our expenses and give you a better return on your life insurance savings. In most cases, we give 10% to 20% more on the maturity of your policy. If the maturity amount is $100,000, you can get $10,000 to $20,000 more from NTUC Income.
Some companies (not NTUC Income) make unrealistic projections of their return. They pay high commission and incur high expenses. Many years later, they are not able to fulfil their projections. Their policyholders are disappointed, but it is too late.
You can trust NTUC Income. We keep our expenses low and give a better return to our policyholders. Please support my insurance advisers. Help us to help you.
Tan Kin Lian
Chief Executive Officer
NTUC Income
General public is surprised about the wastage
Dear Mr Tan,
Company 'P' and 'A' looks very familiar.
I have started distributing about 1 dozen FAQs to my visitors when I met them today –HP, MS, IDA and a reporter.
They (similar to the public) are really very ignorant on insurance and they are just shocked to learn the amount of wastage they can possibly incur if they choose the likes of ‘A’ and ‘P’.
J K
Company 'P' and 'A' looks very familiar.
I have started distributing about 1 dozen FAQs to my visitors when I met them today –HP, MS, IDA and a reporter.
They (similar to the public) are really very ignorant on insurance and they are just shocked to learn the amount of wastage they can possibly incur if they choose the likes of ‘A’ and ‘P’.
J K
NTUC Income offers the lowest premium for Term Insurance
Many Singaporeans are under-insured.
In the past, many people buy endowment and whole life policies. But the premium rate is too high. They are not able to get adequate insurance cover.
To get a higher cover for a low premium, you can buy a term insurance. It provides protection only and does not have any saving or cash value. It covers death and permanent total disablement.
NTUC Income has recently reduced the cost of term insurance. It now offers the most competitive rates for term insurance.
For example, a 35 year old man can insure for $500,000 for 20 years by paying only $760 a year to NTUC Income. The same policy cost $1220 at Great Eastern, $1045 at AIA, $955 at AXA Life, $832 at AVIVA. This comparison was recently reported in the Business Times.
If you wish to buy low cost term insurance to cover your family, call 62 INCOME ( 6246 2663).
In the past, many people buy endowment and whole life policies. But the premium rate is too high. They are not able to get adequate insurance cover.
To get a higher cover for a low premium, you can buy a term insurance. It provides protection only and does not have any saving or cash value. It covers death and permanent total disablement.
NTUC Income has recently reduced the cost of term insurance. It now offers the most competitive rates for term insurance.
For example, a 35 year old man can insure for $500,000 for 20 years by paying only $760 a year to NTUC Income. The same policy cost $1220 at Great Eastern, $1045 at AIA, $955 at AXA Life, $832 at AVIVA. This comparison was recently reported in the Business Times.
If you wish to buy low cost term insurance to cover your family, call 62 INCOME ( 6246 2663).
Wednesday, August 30, 2006
Earn 14% more, by investing with NTUC Income
When you invest your CPF or cash savings for your retirement, you can get a higher return from NTUC Income.
Why?
We take away a smaller portion of your gains to cover our expenses.
Here is a comparison of the charges:
Assume that you invest $100,000 for 20 years to earn an average gross return of 7% per annum.
After deducting the initial spread and annual fee, you will get the following amount at the end of 20 years:
From NTUC Income $309,000
From similar fund $274,000
Difference $ 35,000
NTUC Income gives you 13% more than the similar fund.
Wait! Here are some more facts!
1. Be careful of other funds that have even higher charges, as they give even less to you.
2. During 2003 to 2005, the Global Equity fund of NTUC Income earn an average of 19.2% per annum, compared to an average of 15.1% for 17 similar funds tracked by Standard & Poors.
3. If you have already invested in a high charge fund, you can switch to NTUC Income now, and earn more for your remaining years!
Why?
We take away a smaller portion of your gains to cover our expenses.
Here is a comparison of the charges:
NTUC Similar
Income Fund
Initial spread 3.5% 6%
Annual fee 1% 1.5%
Assume that you invest $100,000 for 20 years to earn an average gross return of 7% per annum.
After deducting the initial spread and annual fee, you will get the following amount at the end of 20 years:
From NTUC Income $309,000
From similar fund $274,000
Difference $ 35,000
NTUC Income gives you 13% more than the similar fund.
Wait! Here are some more facts!
1. Be careful of other funds that have even higher charges, as they give even less to you.
2. During 2003 to 2005, the Global Equity fund of NTUC Income earn an average of 19.2% per annum, compared to an average of 15.1% for 17 similar funds tracked by Standard & Poors.
3. If you have already invested in a high charge fund, you can switch to NTUC Income now, and earn more for your remaining years!
Tuesday, August 29, 2006
Incomeshield covers terrorism
Dear Mr Tan,
My whole family members are insured with incomeshield.
I was surprised to learn that incomeshield does not cover hospitalisation due to injuries as a result of terrorism act that may occur in Singapore. In today's increased terrorist threats no matter how small, it is certainly a concern for me and I am sure a lot of forward looking Singaporeans.
S C M
----------------------
Dear S C M
Our Incomeshield plans do NOT exclude terrorism. Hospitalisation arising from terrorism is claimable.
William Fong
My whole family members are insured with incomeshield.
I was surprised to learn that incomeshield does not cover hospitalisation due to injuries as a result of terrorism act that may occur in Singapore. In today's increased terrorist threats no matter how small, it is certainly a concern for me and I am sure a lot of forward looking Singaporeans.
S C M
----------------------
Dear S C M
Our Incomeshield plans do NOT exclude terrorism. Hospitalisation arising from terrorism is claimable.
William Fong
Insurance customer choose to buy from business center
A customer walks in to the business center and enquires about our Flexilink. The insurance consultant explained our Combined Funds. He is keen to invest and is happy to get the promotion gifts. He signed up for $210,000.
The following day, he called the business center and asked to top up another $90,000. He changed his mind about the promotion gifts and opted for 2% bonus units, worth $6,000.
We asked him why he decided to transact directly at the business center. He replied that he went to our website regularly and read CEO's Blog. He was quite well informed on our products. He just needed to clarify a few things.
He felt that the business center is able to meet his need.
The following day, he called the business center and asked to top up another $90,000. He changed his mind about the promotion gifts and opted for 2% bonus units, worth $6,000.
We asked him why he decided to transact directly at the business center. He replied that he went to our website regularly and read CEO's Blog. He was quite well informed on our products. He just needed to clarify a few things.
He felt that the business center is able to meet his need.
You can trust NTUC Income
A policyholder complained that she bought a 23 year endowment policy in 1997 with a projected yield of 6.5% from company P (not NTUC Income).
In 1997, our 23 year endowment had a projected yield of only 5.5%. With our lower commission, expenses and profit margin, we could only project 5.5%. This was realistic and fair.
Company P has to incur higher commission, expenses and profit margin. They made a bold projection of 6.5% p.a. Was it realistic? Was it fair? They managed to sell many policies to the public. Their agents earned a lot of commission.
The policyholder is now shocked that the projected yield of her policy has now dropped to 4.4% p.a. It is $150,000 LESS than originally projected.
One year ago, there was a similar complaint against company A. The policyholder took two identical poilcies from company A and from NTUC Income. On maturity, the policy from NTUC Income paid 15% more than company A.
I hope that the public in Singapore will learn from these two lessons. Trust NTUC Income. Place your long term savings with us. We will manage your funds carefully, and give you a fair return.
In 1997, our 23 year endowment had a projected yield of only 5.5%. With our lower commission, expenses and profit margin, we could only project 5.5%. This was realistic and fair.
Company P has to incur higher commission, expenses and profit margin. They made a bold projection of 6.5% p.a. Was it realistic? Was it fair? They managed to sell many policies to the public. Their agents earned a lot of commission.
The policyholder is now shocked that the projected yield of her policy has now dropped to 4.4% p.a. It is $150,000 LESS than originally projected.
One year ago, there was a similar complaint against company A. The policyholder took two identical poilcies from company A and from NTUC Income. On maturity, the policy from NTUC Income paid 15% more than company A.
I hope that the public in Singapore will learn from these two lessons. Trust NTUC Income. Place your long term savings with us. We will manage your funds carefully, and give you a fair return.
Our policies does not have a limit on critical illness claims
Dear Mr Tan
I read the Sunday Times article that there is a limit to the insurance payout on critical illnesses.
I have 5 policies with NTUC Income and covered for SGD 250,000. I also have term insurance with other companies total SGD 350,000, so total I am covered for SGD 600,000.
I would like to know if I ever need to claim on the insurance, is there a claimed limits from NTUC on the total claim I could get from all the issuers including NTUC?
G Y
--------------------
Dear G Y
Our policies do not have a limit for the payment of Critical Illness claims. For Permanent Total Disability there is a limit of $ 2 million.
Stanley Jeremiah
I read the Sunday Times article that there is a limit to the insurance payout on critical illnesses.
I have 5 policies with NTUC Income and covered for SGD 250,000. I also have term insurance with other companies total SGD 350,000, so total I am covered for SGD 600,000.
I would like to know if I ever need to claim on the insurance, is there a claimed limits from NTUC on the total claim I could get from all the issuers including NTUC?
G Y
--------------------
Dear G Y
Our policies do not have a limit for the payment of Critical Illness claims. For Permanent Total Disability there is a limit of $ 2 million.
Stanley Jeremiah
eNN - electronic Neighbourhood News
90,000 people have subscribed for this free newspaper. It is sent to the subcriber twice a week, and covers news in their selected neighbourhood. They get offers from merchants in their neighbourhood.
There are 20 neighbourhoods in Singapore.
To subscribe:
www.enn.com.sg
There are 20 neighbourhoods in Singapore.
To subscribe:
www.enn.com.sg
Invest your CPF savings in a Growth policy
1. What is Growth policy?
The Growth policy is a single premium endowment plan. You invest a single premium and receives a guaranteed sum assured payable on the maturity date or on earlier death before maturity date.
The sum assured is capital guaranteed and provides an attractive return on your single premium investment.
You will get a bonus each year, based on the financial results of the participating life insurance fund. The bonus is added to the sum assured, and increases the return on your investment.
The amount of the bonus is not guaranteed and may fluctuate each year. The amount is calculated by the appointed actuary, who has to observe several principles to ensure that the distribution is fair to the policyholders.
2. What is the LP Series?
The LP series is the latest series of participating policies offered by NTUC Income. It has been offered since 1993.
All Growth policies under the LP series enjoy the same rate of bonus, which is calculated at a certain percentage of the sum assured and a certain percentage of the accumulated bonus.
The rates of bonus declared for the Growth LP in recent years (2003 TO 2005) are 1.2%, 1.5% and 1.6% of the sum assured. The accumulated bonus is compounded at 1.5%.
A special bonus of 25% of the accumulated bonus is added and payable on death or on the maturity date. Although this special bonus is discretionary, it has been implemented for the past 20 years or longer.
We expect to continue this practice in the future.
3. What is the expected rate of return?
The following table shows the expected return, based on the rate of bonus declared in 2005, and assuming that this rate of bonus is declared for all future years:
Note:
1. This is prepared for illustration only.
2. The actual rate of bonus may change in future years.
3. There may be no bonus in some future years.
4. Past performance is not a guarantee for future performance.
4. What amount is payable on death?
If death occurs during the term, the sum assured, accumulated bonus and special bonus is payable immediately. The average yield is higher, due to the earlier payment of the benefit. This is an advantage of a life insurance product that allows the total benefit to be payable immediately on death.
5. What amount is payable on permanent and total disability?
In the event of permanent and total disability, and subject to the terms of the policy, the sum assured, accumulated bonus and special bonus is payable immediately.
To qualify for this payment, the life assured has to be either
* Total and irrecoverable loss of at least two eyes or two limbs;
* Totally unable to engage in any business or occupation or perform any work of any kind for remuneration or profit.
6. Can I withdraw my investment before the maturity date?
You can withdraw the investment and get the cash value. The cash value is calculated using the appropriate actuarial factors, to represent the discounted value of the sum assured and the accumulated bonus.
During the earlier years, the cash value may represent a small loss on your investment or give you a low rate of return. This is due to the cost of issuing the policy, including the commision payable to the agent.
Generally, we do not advise earlier withdrawal of your investment, as it does not provide a satisfactory return. You should consider this option as a measure of last resort.
11. Can I invest my CPF savings?
You can invest your CPF savings in the Growth Policy. The following table shows the difference between the projected return on the Growth plan, compared with the accumulation of your savings at 2.5% per annum.
Assuming you invest $10,000 at age 35:
Note: The "total" return on the Growth plan includes projected bonus (based on current rates), and is not guaranteed. The future bonus may change.
Based on the above table, if you invest $10,000 in the CPF to earn 2.5% per annum, you will get $16,400 at the end of 20 years. However, if you invest this sum in our Growth policy, it will grow to $22,500. You can get $6,100 or 37% more, by investing to earn a higher return.
If you use your CPF savings, you are not allowed to take a loan under the Growth plan. On maturity, the maturity benefit has to be returned to our CPF account.
The Growth policy is a single premium endowment plan. You invest a single premium and receives a guaranteed sum assured payable on the maturity date or on earlier death before maturity date.
The sum assured is capital guaranteed and provides an attractive return on your single premium investment.
You will get a bonus each year, based on the financial results of the participating life insurance fund. The bonus is added to the sum assured, and increases the return on your investment.
The amount of the bonus is not guaranteed and may fluctuate each year. The amount is calculated by the appointed actuary, who has to observe several principles to ensure that the distribution is fair to the policyholders.
2. What is the LP Series?
The LP series is the latest series of participating policies offered by NTUC Income. It has been offered since 1993.
All Growth policies under the LP series enjoy the same rate of bonus, which is calculated at a certain percentage of the sum assured and a certain percentage of the accumulated bonus.
The rates of bonus declared for the Growth LP in recent years (2003 TO 2005) are 1.2%, 1.5% and 1.6% of the sum assured. The accumulated bonus is compounded at 1.5%.
A special bonus of 25% of the accumulated bonus is added and payable on death or on the maturity date. Although this special bonus is discretionary, it has been implemented for the past 20 years or longer.
We expect to continue this practice in the future.
3. What is the expected rate of return?
The following table shows the expected return, based on the rate of bonus declared in 2005, and assuming that this rate of bonus is declared for all future years:
Age Term S/Premium SumAssd Bonus* Maturity* Yield*
30 20 $10,000 $15,400 $7,100 $22,500 4.14%
40 25 $10,000 $17,700 $10,100 $27,800 4.36%
50 10 $10,000 $12,500 $2,500 $14,500 3.82%
* non guaranteed
Note:
1. This is prepared for illustration only.
2. The actual rate of bonus may change in future years.
3. There may be no bonus in some future years.
4. Past performance is not a guarantee for future performance.
4. What amount is payable on death?
If death occurs during the term, the sum assured, accumulated bonus and special bonus is payable immediately. The average yield is higher, due to the earlier payment of the benefit. This is an advantage of a life insurance product that allows the total benefit to be payable immediately on death.
5. What amount is payable on permanent and total disability?
In the event of permanent and total disability, and subject to the terms of the policy, the sum assured, accumulated bonus and special bonus is payable immediately.
To qualify for this payment, the life assured has to be either
* Total and irrecoverable loss of at least two eyes or two limbs;
* Totally unable to engage in any business or occupation or perform any work of any kind for remuneration or profit.
6. Can I withdraw my investment before the maturity date?
You can withdraw the investment and get the cash value. The cash value is calculated using the appropriate actuarial factors, to represent the discounted value of the sum assured and the accumulated bonus.
During the earlier years, the cash value may represent a small loss on your investment or give you a low rate of return. This is due to the cost of issuing the policy, including the commision payable to the agent.
Generally, we do not advise earlier withdrawal of your investment, as it does not provide a satisfactory return. You should consider this option as a measure of last resort.
11. Can I invest my CPF savings?
You can invest your CPF savings in the Growth Policy. The following table shows the difference between the projected return on the Growth plan, compared with the accumulation of your savings at 2.5% per annum.
Assuming you invest $10,000 at age 35:
Term S-Premium Growth plan CPF at
Total(*) 2.5% p.a.
10 yrs $10,000 $14,800 $12,800 +15.6%
15 yrs $10,000 $18,400 $14,500 +26.9%
20 yrs $10,000 $22,500 $16,400 +37.2%
Note: The "total" return on the Growth plan includes projected bonus (based on current rates), and is not guaranteed. The future bonus may change.
Based on the above table, if you invest $10,000 in the CPF to earn 2.5% per annum, you will get $16,400 at the end of 20 years. However, if you invest this sum in our Growth policy, it will grow to $22,500. You can get $6,100 or 37% more, by investing to earn a higher return.
If you use your CPF savings, you are not allowed to take a loan under the Growth plan. On maturity, the maturity benefit has to be returned to our CPF account.
Stolen vehicles
Information provided by Freddy Neo, General Manager NTUC Income.
1. NTUC Income received 300 claims for stolen vehicles in 2004, 387 claims in 2005, and 200 claims for 6 months of 2006. The number is increasing each year.
2. In general, the theft rate for Toyota RAV4, Toyota Harrier, Lexus and motorcycles are higher than other models.
3. We have settled about 95% of the claim, after the police has completed its investigation that it is a genuine theft case. We will settle the claim within 7 working days from the police investigation report.
4. We compensate the owner based on the market value of the vehicle at the time of loss. We have a practice note to explain how this is computed. We arrive at a fair market value which is usually accepted by the owner.
5. If the vehicle is recovered prior to settlement, we will pay for the repair of the damages. If it is recovered after the vehicle has been de-registered, we will sell the wreck to a dealers. Usually, the value is quite low.
6. The number of cars stolen in Singapore is comparatively small, and is done by individuals. In Malaysia, most vehicles are stolen by organised criminal syndicates. Most stolen vehicles are smuggled overseas. Some are driven in Malaysian with a fake chassis number.
1. NTUC Income received 300 claims for stolen vehicles in 2004, 387 claims in 2005, and 200 claims for 6 months of 2006. The number is increasing each year.
2. In general, the theft rate for Toyota RAV4, Toyota Harrier, Lexus and motorcycles are higher than other models.
3. We have settled about 95% of the claim, after the police has completed its investigation that it is a genuine theft case. We will settle the claim within 7 working days from the police investigation report.
4. We compensate the owner based on the market value of the vehicle at the time of loss. We have a practice note to explain how this is computed. We arrive at a fair market value which is usually accepted by the owner.
5. If the vehicle is recovered prior to settlement, we will pay for the repair of the damages. If it is recovered after the vehicle has been de-registered, we will sell the wreck to a dealers. Usually, the value is quite low.
6. The number of cars stolen in Singapore is comparatively small, and is done by individuals. In Malaysia, most vehicles are stolen by organised criminal syndicates. Most stolen vehicles are smuggled overseas. Some are driven in Malaysian with a fake chassis number.
Website visitors like Logic9 (Sudoku)
We have a Logic9 (Sudoku) game at our website, www.income.coop/logic9. It is getting popular.
We receive about 80 visitors every day. The visitors in August has doubled, compared to July.
The visitor can play the game at level 1 to 4, and have a selection of games to choose. They can play with other symbols, besides numbers.
We receive about 80 visitors every day. The visitors in August has doubled, compared to July.
The visitor can play the game at level 1 to 4, and have a selection of games to choose. They can play with other symbols, besides numbers.
Survey on Parallel Imported Cars
We did a survey of 30 motorists on their interest in parallel imported cars. Here are the findings.
1. There is a strong interest in the motoring public to buy a parallel import car. About 50% of the respondents were interested. They look for a $5k - $10k price differential compared to other similar models sold by the regular dealers.
2. They find the following to be important:
* servicing support after purchase (76%)
* availability of spare parts (74%)
* warranty to be provided by NTUC Income (70%)
* good re-sale value of the car (65%)
3. The findings indicate that there is a potentially large market for parallel import cars. Motorists are price sensitive. NTUC Income will play a major role in assuring the motoring public on the reliability of the parallel importer in providing after-sales support. We can accredit the parallel importers and provide warranty cover and arrange block purchase.
4. A website will be created soon.
1. There is a strong interest in the motoring public to buy a parallel import car. About 50% of the respondents were interested. They look for a $5k - $10k price differential compared to other similar models sold by the regular dealers.
2. They find the following to be important:
* servicing support after purchase (76%)
* availability of spare parts (74%)
* warranty to be provided by NTUC Income (70%)
* good re-sale value of the car (65%)
3. The findings indicate that there is a potentially large market for parallel import cars. Motorists are price sensitive. NTUC Income will play a major role in assuring the motoring public on the reliability of the parallel importer in providing after-sales support. We can accredit the parallel importers and provide warranty cover and arrange block purchase.
4. A website will be created soon.
Monday, August 28, 2006
Law on contract - offer and acceptance
Dear Mr.Tan,
I read your blog and find that you have very professional advices for the general public. In view of your professionalism and expertise in the insurance industry, I like to seek your advice for the following :
Under the Singapore Law, if an insurance company accepted a policy holder payment and clear his cheque payment, is the policy consider as contract binding and the company have no right to reject the policy.
S T
-----------------------------------
Dear S T
This depends on the facts of the case. It is based on the law of contract. If the insurer has made a specific offer, and the customer has accepted it in good faith, then the contract is binding.
However, if there is a mistake, and the customer is aware about the mistake, then the contract can be voided (I think).
There was a case where the advertiser made a mistake in showing the price of the printer in the website. The customer sent in a payment to buy a large quantity of printers at that price. The court held that the advertiser was not bound by the mistake. I believe that the court acted fairly in this decision.
I will ask my colleague, who is a lawyer, to give his opinion.
Tan Kin Lian
----------------------------
Dear S T
For a contract to be binding there should be an offer and an acceptance and more importantly a meeting of minds, there must be an intention to engage into a contract.
Usually the proposal sent out by the insurer is only regarded as an invitation and the application by the insured is the ‘offer’ which the insurer is free to accept or reject.
By implication, in life insurance contracts especially, the contract is accepted only when the policy is issued.
The clearing of a cheque sent with the application is merely administrative. There is no acceptance until the acceptance is communicated by the insurer to the applicant by issuing the policy.
Even if there was an offer that was accepted, either party may be able to get out of it by demonstrating that there was a genuine mistake.
The example quoted by Mr Tan involved HP and there were similar incidents involving Dell where they wrongly quoted a very low price on their web site. Dell and HP were not obliged to accept the orders although the customer had ordered the items based on the advertised price and the credit card payment was processed.
Stanley Jeremiah
I read your blog and find that you have very professional advices for the general public. In view of your professionalism and expertise in the insurance industry, I like to seek your advice for the following :
Under the Singapore Law, if an insurance company accepted a policy holder payment and clear his cheque payment, is the policy consider as contract binding and the company have no right to reject the policy.
S T
-----------------------------------
Dear S T
This depends on the facts of the case. It is based on the law of contract. If the insurer has made a specific offer, and the customer has accepted it in good faith, then the contract is binding.
However, if there is a mistake, and the customer is aware about the mistake, then the contract can be voided (I think).
There was a case where the advertiser made a mistake in showing the price of the printer in the website. The customer sent in a payment to buy a large quantity of printers at that price. The court held that the advertiser was not bound by the mistake. I believe that the court acted fairly in this decision.
I will ask my colleague, who is a lawyer, to give his opinion.
Tan Kin Lian
----------------------------
Dear S T
For a contract to be binding there should be an offer and an acceptance and more importantly a meeting of minds, there must be an intention to engage into a contract.
Usually the proposal sent out by the insurer is only regarded as an invitation and the application by the insured is the ‘offer’ which the insurer is free to accept or reject.
By implication, in life insurance contracts especially, the contract is accepted only when the policy is issued.
The clearing of a cheque sent with the application is merely administrative. There is no acceptance until the acceptance is communicated by the insurer to the applicant by issuing the policy.
Even if there was an offer that was accepted, either party may be able to get out of it by demonstrating that there was a genuine mistake.
The example quoted by Mr Tan involved HP and there were similar incidents involving Dell where they wrongly quoted a very low price on their web site. Dell and HP were not obliged to accept the orders although the customer had ordered the items based on the advertised price and the credit card payment was processed.
Stanley Jeremiah
Commission to Agents
Most insurance companies pay about 160% of the annual premium as commission to their agents (including overriding commission to the agency managers) for a long term life insurance policy.
If you save $100 a month, the annual premium is $1,200. At 160%, your savings of almost $2,000 goes to pay the commission. That is a lot of money.
NTUC Income pays a modest commission to our insurance advisers. Our total cost is about half of the market. This allows us to give a better return to our policyholders.
Since our advisers earns a lower commission, you should try to reduce the work for them. Do not ask them to make many visits to your home to close a sale. Try to see them in our office.
Help our advisers to improve their productivity. This will allow us to reduce our expenses and pass the savings back to you.
If you save $100 a month, the annual premium is $1,200. At 160%, your savings of almost $2,000 goes to pay the commission. That is a lot of money.
NTUC Income pays a modest commission to our insurance advisers. Our total cost is about half of the market. This allows us to give a better return to our policyholders.
Since our advisers earns a lower commission, you should try to reduce the work for them. Do not ask them to make many visits to your home to close a sale. Try to see them in our office.
Help our advisers to improve their productivity. This will allow us to reduce our expenses and pass the savings back to you.
How to invest the CPF savings
Dear Mr Tan,
I am 59 and have about $150,000 in my CPF Ordinary Account which I can withdraw anytime and earning an interest of 2.5% per annum. At present Citibank offers 3.2% and HSBC about 3.4% per annum.
May I know base on the same basis, what NTUC income can offer.
---------------------------------
Dear
I suggest that you invest in our Flexi Cash or Flexi Link. You can read the FAQs on these products
http://www.income.coop/insurance/faq/
Our Flexi Cash now earns about 3.5% per annum. The interest rate changes with the money market. There is no lock-in period. You have to incur a very small spread of 0.1% on your investment.
Most of my savings (I am 58 years old) are invested in the Flexi Link (to be invested in the Combined Fund). If you expect to invest for 10 years or longer, this is a better choice.
I will ask my product expert to contact you.
Tan Kin Lian
CEO, NTUC Income
I am 59 and have about $150,000 in my CPF Ordinary Account which I can withdraw anytime and earning an interest of 2.5% per annum. At present Citibank offers 3.2% and HSBC about 3.4% per annum.
May I know base on the same basis, what NTUC income can offer.
---------------------------------
Dear
I suggest that you invest in our Flexi Cash or Flexi Link. You can read the FAQs on these products
http://www.income.coop/insurance/faq/
Our Flexi Cash now earns about 3.5% per annum. The interest rate changes with the money market. There is no lock-in period. You have to incur a very small spread of 0.1% on your investment.
Most of my savings (I am 58 years old) are invested in the Flexi Link (to be invested in the Combined Fund). If you expect to invest for 10 years or longer, this is a better choice.
I will ask my product expert to contact you.
Tan Kin Lian
CEO, NTUC Income
Better to invest in a diversified portolio of equity and bonds
A reader wrote to the Business Times.
In 1997, she bought a 23-year endowment policy from a major insurance company, to fund my eventual retirement. The illustration showed a projected maturity benefit of $590,000, ie an investment yield to maturity of almost 6.5 per cent.
In December 2002, she asked the insurance company for an updated illustration, and was surprised to discover that the projected maturity benefit and yield had shrunk to $532,000 and 5.7 per cent, respectively.
Three weeks ago, she asked for a new estimate. This time, she was truly concerned. The projected maturity benefit and yield had shrunk even further to $444,000 and 4.36 per cent.
She asked if an endowment policy is suitable for retirement planning? Is it better to invest in a diversified portfolio of equity and bond funds, as she does not need the life insurance protection (as she is single)?
---------------------------------------------------
Here are my views.
Prior to the Asian crisis in 1997, many life insurance companies made a high projection of their maturity benefit based on their prevailing bonus rates at that time.
Subsequently, the investment yield dropped. Interest rate on bonds dropped to a low level. The return on equity was also lower. The bonus rates were reduced accordingly.
Based on today's investment return, a net return of 4.36% per annum seemed to be reasonable. It is higher than the interest rate earned on bank deposits and bonds.
Note: This case does not belong to NTUC Income. In 1997, the projected yield on our 23 year endowment plan was 5.5% p.a. We act responsibily in projecting our return. Even so, we have to reduce the bonus rate and the projected yield.
For people who wish to get a better return over 10 years or longer, I recommend that they should invest in a large, well-diversified fund with low expense charge. This is likely to give a better return than an endowment policy.
There is investment risk, but the risk is reduced if one invest for a long term, and has the flexibility to withdraw the investments at a good time.
More details can be found in our FAQ:
http://www.income.coop/insurance/flexilink/faq2.asp
In 1997, she bought a 23-year endowment policy from a major insurance company, to fund my eventual retirement. The illustration showed a projected maturity benefit of $590,000, ie an investment yield to maturity of almost 6.5 per cent.
In December 2002, she asked the insurance company for an updated illustration, and was surprised to discover that the projected maturity benefit and yield had shrunk to $532,000 and 5.7 per cent, respectively.
Three weeks ago, she asked for a new estimate. This time, she was truly concerned. The projected maturity benefit and yield had shrunk even further to $444,000 and 4.36 per cent.
She asked if an endowment policy is suitable for retirement planning? Is it better to invest in a diversified portfolio of equity and bond funds, as she does not need the life insurance protection (as she is single)?
---------------------------------------------------
Here are my views.
Prior to the Asian crisis in 1997, many life insurance companies made a high projection of their maturity benefit based on their prevailing bonus rates at that time.
Subsequently, the investment yield dropped. Interest rate on bonds dropped to a low level. The return on equity was also lower. The bonus rates were reduced accordingly.
Based on today's investment return, a net return of 4.36% per annum seemed to be reasonable. It is higher than the interest rate earned on bank deposits and bonds.
Note: This case does not belong to NTUC Income. In 1997, the projected yield on our 23 year endowment plan was 5.5% p.a. We act responsibily in projecting our return. Even so, we have to reduce the bonus rate and the projected yield.
For people who wish to get a better return over 10 years or longer, I recommend that they should invest in a large, well-diversified fund with low expense charge. This is likely to give a better return than an endowment policy.
There is investment risk, but the risk is reduced if one invest for a long term, and has the flexibility to withdraw the investments at a good time.
More details can be found in our FAQ:
http://www.income.coop/insurance/flexilink/faq2.asp
Advice for a mother to save for a child's education
Dear Mr Tan,
I'm looking at buying two policies for our almost one year old girl.
I've decided to get a Living policy for protection purpose, but not sure what to do for her education, savings etc.
I've looked at Harvest, Education, Foundation policy, but not too sure which best suit our needs. I suppose the policy I'll choose should be least expensive and still able to meet our needs to provide a good sum of money for our girl's education.
Any advise from you, Mr Tan is greatly appreciated.
-----------------------
Dear
I suggest that you take an Ideal policy. Here is the FAQ for the Ideal plan:
http://www.income.coop/insurance/ideal/faq2.asp
We have a separate FAQ for the "Ideal plan for your Child". It is not in the website yet. My colleague will put it up and send to you separately.
The education plan is also suitable, but the return is not as good as the Ideal plan.
Although the Ideal plan has some investment risk, the risk is largely mitgated when you invest for more than 10 years and have the option to realise your investment at the right time.
I will ask a product expert to call you.
Tan Kin Lian
CEO, NTUC Income
I'm looking at buying two policies for our almost one year old girl.
I've decided to get a Living policy for protection purpose, but not sure what to do for her education, savings etc.
I've looked at Harvest, Education, Foundation policy, but not too sure which best suit our needs. I suppose the policy I'll choose should be least expensive and still able to meet our needs to provide a good sum of money for our girl's education.
Any advise from you, Mr Tan is greatly appreciated.
-----------------------
Dear
I suggest that you take an Ideal policy. Here is the FAQ for the Ideal plan:
http://www.income.coop/insurance/ideal/faq2.asp
We have a separate FAQ for the "Ideal plan for your Child". It is not in the website yet. My colleague will put it up and send to you separately.
The education plan is also suitable, but the return is not as good as the Ideal plan.
Although the Ideal plan has some investment risk, the risk is largely mitgated when you invest for more than 10 years and have the option to realise your investment at the right time.
I will ask a product expert to call you.
Tan Kin Lian
CEO, NTUC Income
Profile of investors in Growth plan
Here is the profile of policyholders who invested in our Growth plan (single premium endowment).
75% entered at age 30 to 50. Typical single premium is $15,000 to $20,000. The averge is close to $25,000. Most of the policies have a term of 10 or 15 years. The yield (not guaratneed) is 3.9% to 4.5% p.a.
75% entered at age 30 to 50. Typical single premium is $15,000 to $20,000. The averge is close to $25,000. Most of the policies have a term of 10 or 15 years. The yield (not guaratneed) is 3.9% to 4.5% p.a.
Positive features of Growth plan
The Growth plan is a single premium endowment plan. It provides a modest return, which is supplemented by bonuses. The total return is quite attractive.
We carried out a survey with 584 policyholders who invested recently in our Growth plan. Here are the key reasons which attracted them:
* 43% like the attractive return
* 39% like the capital guarantee
* 76% act on the recommenation of the adviser
* 66% are willing to recommend this plan to their friends or relatives
We carried out a survey with 584 policyholders who invested recently in our Growth plan. Here are the key reasons which attracted them:
* 43% like the attractive return
* 39% like the capital guarantee
* 76% act on the recommenation of the adviser
* 66% are willing to recommend this plan to their friends or relatives
Sunday, August 27, 2006
Fair and honest views
I give my views on financial and insurance matters. My purpose is to educate people on these important matters. If they are able to make the right choice, they can save several tens thousand dollars.
I give fair and honest advice. Each day, about 250 people read my blog. Some people sent an e-mail to me personally, to seek my advice on how to manage their affairs. I will try my best to help them.
Some competitor agents and financial advisers read my blog. They feel that my views are "biased". They want to challenge my views and to post quite rude remarks. I suggest that they can express their views in their own blogs or in their personal interaction with their customers.
I will let the other readers judge for yourselves. If you find my views to be biased, you can ignore my blog. If you find my views to be useful, please ask your friends to visit my blog. I will continue to do my best to provide useful and honest views.
I give fair and honest advice. Each day, about 250 people read my blog. Some people sent an e-mail to me personally, to seek my advice on how to manage their affairs. I will try my best to help them.
Some competitor agents and financial advisers read my blog. They feel that my views are "biased". They want to challenge my views and to post quite rude remarks. I suggest that they can express their views in their own blogs or in their personal interaction with their customers.
I will let the other readers judge for yourselves. If you find my views to be biased, you can ignore my blog. If you find my views to be useful, please ask your friends to visit my blog. I will continue to do my best to provide useful and honest views.
Reason to invest in Flexi Cash
We survey 115 policyholders who bought Flexi-Cash. Key findings:
- 49% learned from advertisement; 23% buy through adviser.
- they like our reputation, no lock-in period, attractive returns, low risk ..
- 73% says they will recommend their friends to invest.
- 49% learned from advertisement; 23% buy through adviser.
- they like our reputation, no lock-in period, attractive returns, low risk ..
- 73% says they will recommend their friends to invest.
Insurance agents knocking on doors of residential homes
FROM A JOURNALIST
I have received feedback that insurance agents are now soliciting for customers by knocking on the doors of HDB flats. I have personally encountered agents on the street, particularly close to MRT stations in the past, but this is the first time ive heard of agents doing it at people's homes.
1. What are yr views on this? Will Income condone your agents prospecting by knocking on residential doors?
Reply. There is no need for our insurance agents to knock on the doors of residential homes. There are better ways to reach out to potential customers.
We have 1,800,000 existing customers. Many of them have only 1 insurance policy with us.
We are reaching out to these policyholders to increase their coverage of life, motor, home, accident and medical insurance and to increase their savings with us. The contacts are made by our customer relation officers.
We generate 25,000 sales leads each month to be followed up by our agents. These customers are willing to discuss their insurance and financial needs with our agents. Our agents do not have time to go knocking on doors, as they are busy following up on these leads.
2. Does such an avenue of getting sales "lower'' the image of the profession?
Reply: I agree. This approach lowers the image of the profession.
If you want to see a doctor, you visit the doctor's clinic. You do not have a trained doctor knocking on your door.
I wish to see insurance agents operating from offices, and they can contaclt the customer by telephone. IF the customer is intersted, the customer can visit the agent in the office. This is more productive. It will also allow the insurance company to reduce the cost of the insurance to the consumer, as the agent does not need to earn a high commission rate, if the sales effort can be reduced.
The insurance agents of NTUC Income are adjusting to this new concept. They sell through the telephone and earn a lower commission for the reduced effort. The consumer benefit from the lower cost of insurnce. The agents earn a higher income through a larger volume of sales.
3. What about soliciting for biz on the streets/outside MRT stations etc?
Reply: We discourage our agents from soliciting for business at MRT stations and public places. The consumers are busy and do not wish to be disturbed or interrupeted. It is not fair for them to be disturbed by a pushy sales person.
We like to use this point of contact to distribute an educational material. It takes the form of a FAQ leaflet. It contains 5 to 10 frequently asked questions about an important matter, such as financial planning for your future.
We ask our agent to give 3 key points to the consumer within 1 minute, when handing over the FAQ. This will create an interest of the consumer to learn more about the product. By being educated, they can make the right choice.
4. Any other comments
Reply. NTUC Income is actibve in educating consumers about making the right choice in their financial planning, investment and insurance products. By making the right choice, they can earn an additional sum, say more than $100,000, for themselves during their working life. They should make the effort to know about the product, rather than trust an agent who earns a commision on the sale.
We provide FAQs on our products at our website, www.income.coop/insurance/faq. They are easy to understand and fun to read. By making the right choice, the consumer pays a lower premium (maybe 10% saving) or earn a higher return on their investments (maybe$100,000 or more). These are explained in our FAQs.
I have received feedback that insurance agents are now soliciting for customers by knocking on the doors of HDB flats. I have personally encountered agents on the street, particularly close to MRT stations in the past, but this is the first time ive heard of agents doing it at people's homes.
1. What are yr views on this? Will Income condone your agents prospecting by knocking on residential doors?
Reply. There is no need for our insurance agents to knock on the doors of residential homes. There are better ways to reach out to potential customers.
We have 1,800,000 existing customers. Many of them have only 1 insurance policy with us.
We are reaching out to these policyholders to increase their coverage of life, motor, home, accident and medical insurance and to increase their savings with us. The contacts are made by our customer relation officers.
We generate 25,000 sales leads each month to be followed up by our agents. These customers are willing to discuss their insurance and financial needs with our agents. Our agents do not have time to go knocking on doors, as they are busy following up on these leads.
2. Does such an avenue of getting sales "lower'' the image of the profession?
Reply: I agree. This approach lowers the image of the profession.
If you want to see a doctor, you visit the doctor's clinic. You do not have a trained doctor knocking on your door.
I wish to see insurance agents operating from offices, and they can contaclt the customer by telephone. IF the customer is intersted, the customer can visit the agent in the office. This is more productive. It will also allow the insurance company to reduce the cost of the insurance to the consumer, as the agent does not need to earn a high commission rate, if the sales effort can be reduced.
The insurance agents of NTUC Income are adjusting to this new concept. They sell through the telephone and earn a lower commission for the reduced effort. The consumer benefit from the lower cost of insurnce. The agents earn a higher income through a larger volume of sales.
3. What about soliciting for biz on the streets/outside MRT stations etc?
Reply: We discourage our agents from soliciting for business at MRT stations and public places. The consumers are busy and do not wish to be disturbed or interrupeted. It is not fair for them to be disturbed by a pushy sales person.
We like to use this point of contact to distribute an educational material. It takes the form of a FAQ leaflet. It contains 5 to 10 frequently asked questions about an important matter, such as financial planning for your future.
We ask our agent to give 3 key points to the consumer within 1 minute, when handing over the FAQ. This will create an interest of the consumer to learn more about the product. By being educated, they can make the right choice.
4. Any other comments
Reply. NTUC Income is actibve in educating consumers about making the right choice in their financial planning, investment and insurance products. By making the right choice, they can earn an additional sum, say more than $100,000, for themselves during their working life. They should make the effort to know about the product, rather than trust an agent who earns a commision on the sale.
We provide FAQs on our products at our website, www.income.coop/insurance/faq. They are easy to understand and fun to read. By making the right choice, the consumer pays a lower premium (maybe 10% saving) or earn a higher return on their investments (maybe$100,000 or more). These are explained in our FAQs.
Friday, August 25, 2006
Liability on Motor Accident
FROM POLICYHOLDER
I recently been hit by a recklesss driver and both of us submit our claim to NTUC, (Both on NTUC motor insurance)
Before the result even come back, workshop and friends say it will be most likely 50-50 claim as NTUC dont want to reck their head to see who right or wrong.. after all both are still NTUC patrons.
And the result is really 50-50. is it true on this concept? if so, being with other motor insurance company does make a difference?
DW
MY REPLY
My colleauge will look at your case and reply to you. We follow the protocol on the apportionment of liability as agreed by the general insurance association. It depends on the circumstances of the accident. We try to assess it fairly.
Tan Kin Lian
I recently been hit by a recklesss driver and both of us submit our claim to NTUC, (Both on NTUC motor insurance)
Before the result even come back, workshop and friends say it will be most likely 50-50 claim as NTUC dont want to reck their head to see who right or wrong.. after all both are still NTUC patrons.
And the result is really 50-50. is it true on this concept? if so, being with other motor insurance company does make a difference?
DW
MY REPLY
My colleauge will look at your case and reply to you. We follow the protocol on the apportionment of liability as agreed by the general insurance association. It depends on the circumstances of the accident. We try to assess it fairly.
Tan Kin Lian
Good points of other insurance company's products
A person called "Truth Seeker" asked me to post good points of other company's products. This is to prove my "unbiasness".
I do not know of any of my competitor's products that give good value to the customers. Most of them pay high commission to the agent and make a good margin for their shareholders. They charge more to their customers to cover these additional expenses.
They give a return to their customers of 10% to 20% less than NTUC Income, due to the difference in expenses. This has been the experience over the past many years.
Most insurance agents and financial advisers like to sell the products of insurance companies that pay higher commission to them. I will let these agents convince their customers of the value of their advice. I am not able to do this work for them.
If you think that my views are biased, you can disregard them. If you wish to have some independent analysis, I suggest that you check this website: www.askdrmoney.com.
I do not know of any of my competitor's products that give good value to the customers. Most of them pay high commission to the agent and make a good margin for their shareholders. They charge more to their customers to cover these additional expenses.
They give a return to their customers of 10% to 20% less than NTUC Income, due to the difference in expenses. This has been the experience over the past many years.
Most insurance agents and financial advisers like to sell the products of insurance companies that pay higher commission to them. I will let these agents convince their customers of the value of their advice. I am not able to do this work for them.
If you think that my views are biased, you can disregard them. If you wish to have some independent analysis, I suggest that you check this website: www.askdrmoney.com.
Wednesday, August 23, 2006
Some problem in the backyard
A policyholder made a request to upgrade to enhanced Incomeshield. There was some problem with the request. He sent this message to me:
-----------------------------------------
Dear Mr Tan
This is what happen in your backyard, can you work something to get it right? Just got call that your teams lost all details and wanted us to re-fax again. What is this?
-----------------------------------------
Dear EL,
I am sorry about the trouble that you are facing.
As you have observed correctly, there is something wrong in our backyard. We are trying to clear it. Please bear with us.
Sometimes, this type of mistakes do occur. I hope that it is not too troublesome for you to fax again.
Tan Kin Lian
CEO, NTUC Income
-----------------------------------------
Dear Mr Tan
This is what happen in your backyard, can you work something to get it right? Just got call that your teams lost all details and wanted us to re-fax again. What is this?
-----------------------------------------
Dear EL,
I am sorry about the trouble that you are facing.
As you have observed correctly, there is something wrong in our backyard. We are trying to clear it. Please bear with us.
Sometimes, this type of mistakes do occur. I hope that it is not too troublesome for you to fax again.
Tan Kin Lian
CEO, NTUC Income
Income Focus: Message to policyholders
Dear Policyholder
We want you to know more about the insurance products that you have bought. We now written a FAQ (frequently-asked questions) on our popular products. You can read them at www.income.coop/insurance/faq/.
Can you tell your family members and friends about our FAQ. They may find it to be useful as well.
We are probably the first insurer in the world to introduce an innovative plan that covers personal accident and infectious diseases. Our PA+ID plan provides 24-hour, worldwide cover for less than $10 a month. Application is hassle-free. No medical examination is required.
Many people like to buy a low cost, term insurance plan to give financial security to their family. We wish to introduce our i-Term, which provides a large life insurance cover at an affordable premium. A male (non-smoker), aged 30, can insure for $100,000 on life insurance for about $9 a month.
We have the largest market share of motor insurance in Singapore. We cover about 250,000 cars, motor cycles and other vehicles, representing 35% of all vehicles. We offer premium rates that are 5% to 15% lower for most vehicle models. You can save as much as $100 or more when you insure with us. You can also pay your motor insurance and road tax in 12 monthly installments.
If you have bought a new car last year, we invite you to come to us on the next renewal. You can enjoy a lower premium rate.
You can visit our business centres to get free advice on insurance and financial planning from our salaried consultants. They do not earn any commission.
If you have any questions, call 6877 3366.
Tan Kin Lian
Chief Executive Officer
We want you to know more about the insurance products that you have bought. We now written a FAQ (frequently-asked questions) on our popular products. You can read them at www.income.coop/insurance/faq/.
Can you tell your family members and friends about our FAQ. They may find it to be useful as well.
We are probably the first insurer in the world to introduce an innovative plan that covers personal accident and infectious diseases. Our PA+ID plan provides 24-hour, worldwide cover for less than $10 a month. Application is hassle-free. No medical examination is required.
Many people like to buy a low cost, term insurance plan to give financial security to their family. We wish to introduce our i-Term, which provides a large life insurance cover at an affordable premium. A male (non-smoker), aged 30, can insure for $100,000 on life insurance for about $9 a month.
We have the largest market share of motor insurance in Singapore. We cover about 250,000 cars, motor cycles and other vehicles, representing 35% of all vehicles. We offer premium rates that are 5% to 15% lower for most vehicle models. You can save as much as $100 or more when you insure with us. You can also pay your motor insurance and road tax in 12 monthly installments.
If you have bought a new car last year, we invite you to come to us on the next renewal. You can enjoy a lower premium rate.
You can visit our business centres to get free advice on insurance and financial planning from our salaried consultants. They do not earn any commission.
If you have any questions, call 6877 3366.
Tan Kin Lian
Chief Executive Officer
Your blog widen my knowledge of financial product
Dear Mr Tan
I would just like to say that it is a wonderful gesture of you to spend time penning down your thoughts in your blog.
I may not agree with everything that you say but the purpose of the blog is to generate discussion and thoughts anyway.
It has widen my knowledge of financial products and planning.
Please keep up the good work.
JCCS
I would just like to say that it is a wonderful gesture of you to spend time penning down your thoughts in your blog.
I may not agree with everything that you say but the purpose of the blog is to generate discussion and thoughts anyway.
It has widen my knowledge of financial products and planning.
Please keep up the good work.
JCCS
Report by Standard & Poors on Investment Funds
Standard & Poors reports on the investment funds offered by NTUC Income.
Global Equity Fund - awarded 5 stars (Top 10% of the sector)
Conservative Fund; Growth Fund and Global Bond Fund - awarded 4 stars (Top 11 - 30% of the sector)
Balanced Fund; European Fund; Prime Fund and Technology Fund - awarded 3 stars (Top 31 - 50% of the sector)
3 yr absolute return: 11 of our 14 funds have above average return when compared to their respective peers.
3 yr volatility: 10 of our 14 funds have below average volatility when compared to their respective peers.
Expense ratio: All our funds have below average expense ratio
Global Equity Fund - awarded 5 stars (Top 10% of the sector)
Conservative Fund; Growth Fund and Global Bond Fund - awarded 4 stars (Top 11 - 30% of the sector)
Balanced Fund; European Fund; Prime Fund and Technology Fund - awarded 3 stars (Top 31 - 50% of the sector)
3 yr absolute return: 11 of our 14 funds have above average return when compared to their respective peers.
3 yr volatility: 10 of our 14 funds have below average volatility when compared to their respective peers.
Expense ratio: All our funds have below average expense ratio
Tuesday, August 22, 2006
Virtual contact center
We have recently set up a virtual contact center in Jurong with 28 seats. Each seat is equipped with a personal computer and soft phone. It supports our main contact center in Tampines.
The customer service officers receive their daily briefing through video conferencing from the main office. Their interactions are also monitored from the main office. We set up the virtual center to allow colleauges to work nearer to their homes and reduce the travelling time.
The virtual center also serves as an off-site center for disaster recovery. This is the first in the region.
Here is a view from our colleague: "I was struck by the clean, uncluttered look - flat screen monitors, compact key-boards and sleek work-stations. It has soft lighting, black ceiling, blown-up posters and a touch of designer decor. It is quiet, with only the humming of air-con and chatter from the TV screen. It provides a highly conducive working environment. By the way, it is bustling outside, surrounded by shops, banks, food-courts, coffee-shops and a mere 5-minute walk from the Jurong East MRT. "
If you are staying in the West and like to work in a really cosy and vibrant environment, do send in your resume via www.income.coop
The customer service officers receive their daily briefing through video conferencing from the main office. Their interactions are also monitored from the main office. We set up the virtual center to allow colleauges to work nearer to their homes and reduce the travelling time.
The virtual center also serves as an off-site center for disaster recovery. This is the first in the region.
Here is a view from our colleague: "I was struck by the clean, uncluttered look - flat screen monitors, compact key-boards and sleek work-stations. It has soft lighting, black ceiling, blown-up posters and a touch of designer decor. It is quiet, with only the humming of air-con and chatter from the TV screen. It provides a highly conducive working environment. By the way, it is bustling outside, surrounded by shops, banks, food-courts, coffee-shops and a mere 5-minute walk from the Jurong East MRT. "
If you are staying in the West and like to work in a really cosy and vibrant environment, do send in your resume via www.income.coop
You can get $228,000 more from NTUC Income
Be ready for a big surprise. Maybe a shock!
A young man aged 30 invested $100,000 in an investment product offered by a large insurer (not NTUC Income). He showed the benefit illustration to us.
We made a similar illustration based on the Flexi-link from NTUC Income. We used the same assumption, ie a gross yield of 5% and 9% per annum on our investment fund, and the same format as prescribed by the Life Insurance Association.
The difference in the projected return at age 65 (ie after 35 years) is staggering.
The difference is due to the higher charges imposed by the other insurer.
By investing in a lower charge plan from NTUC Income, the policyholder can enjoy $228,000 more (or 20% extra) at age 65.
Why give away so much money? Call 62INCOME (62 462663) for a quotation!
A young man aged 30 invested $100,000 in an investment product offered by a large insurer (not NTUC Income). He showed the benefit illustration to us.
We made a similar illustration based on the Flexi-link from NTUC Income. We used the same assumption, ie a gross yield of 5% and 9% per annum on our investment fund, and the same format as prescribed by the Life Insurance Association.
The difference in the projected return at age 65 (ie after 35 years) is staggering.
Projected return at age 65
5% p.a. 9% p.a.
NTUC Income $375,000 $1,390,900
Other insurer $313,400 $1,162,900
Difference $ 61,600 $ 228,000
The difference is due to the higher charges imposed by the other insurer.
By investing in a lower charge plan from NTUC Income, the policyholder can enjoy $228,000 more (or 20% extra) at age 65.
Why give away so much money? Call 62INCOME (62 462663) for a quotation!
Join NTUC Income to do insurance sales
We invite agents from other companies to move to NTUC Income. You will find it easier to sell our products. You will also get leads from the office to sell to our existing policyholders. Some of these sales can be done over the telephone.
No need to make cold calls. No need to visit them at their homes. No need to propect for new customers.
Just learn how to convert the leads.
Interested? Register at www.mailbox.coop/0001
No need to make cold calls. No need to visit them at their homes. No need to propect for new customers.
Just learn how to convert the leads.
Interested? Register at www.mailbox.coop/0001
I hope that more Singaporeans visit your blog
Hi
I think you have done a great job writing and sharing your views and ideas on financial planning and local issues. More CEOs from GLCs should do likewise.
I may not agree with all your views but I still feel it's great work done and hope more Singaporeans visit your blog
HL
I think you have done a great job writing and sharing your views and ideas on financial planning and local issues. More CEOs from GLCs should do likewise.
I may not agree with all your views but I still feel it's great work done and hope more Singaporeans visit your blog
HL
Monday, August 21, 2006
Practical system to control hot and cold water
I stayed at the Interncontinental hotel in Wellington, New Zealand.
They have a good system to control the water in the bath tub and shower. They use two separate knobs to control the the hot and cold water to the bath tap, and another two knobs to control the water to the shower. It is so easy to use.
In many other hotels, it is quite a hassle to figure out how the water system works. Often, I turn on the wrong knobs and obtained the wrong temperature or got the water flowing out of the wrong tap.
The other features in the hotel room are also well designed and friendly to the hotel guests.
I have stayed in many other hotels, including those managed by international chains, that are not friendly to the hotel guest.
Congratulations to the Intercontinental, Wellington. I shall check if this is due to the hotel chain or the New Zealand architect!
They have a good system to control the water in the bath tub and shower. They use two separate knobs to control the the hot and cold water to the bath tap, and another two knobs to control the water to the shower. It is so easy to use.
In many other hotels, it is quite a hassle to figure out how the water system works. Often, I turn on the wrong knobs and obtained the wrong temperature or got the water flowing out of the wrong tap.
The other features in the hotel room are also well designed and friendly to the hotel guests.
I have stayed in many other hotels, including those managed by international chains, that are not friendly to the hotel guest.
Congratulations to the Intercontinental, Wellington. I shall check if this is due to the hotel chain or the New Zealand architect!
I give my honest views
Some visitors to my blog are competitor agents or financial advisers. They accuse me of being biased in my views posted in this blog.
They are mistaken.
I give my honest views. I do make a judgement of what facts are fair and relevant. For example, I do not look at small investment funds, because the results are volatile. I consider them to be not suitale for long term financial planning.
Some of the large funds under NTUC Income perform slightly worse than the market. For example, our bond funds. I do not hesitate to show them, and explain why this is the case (if I know the reason).
Generally, the equity funds under NTUC Income perform well during the past three years. They earn 2% to 3% per annum better than most similar funds. I suspect that this is due to our lower charges.
Although the actual difference in charges is only 0.5% or 1%, I think that the other funds may have other charges that are not disclosed. In our case, we do NOT have any additional hidden charges.
I do not rule out that the difference could be due to the better performance of our managers. But, I think that it is mainly due to luck. In some years, certain managers may perform well, but this may reverse in other years. Over a longer period, the performance or good luck will balance out.
The low cost funds are likely to give a better return to the investors. This has been the result of many research done in America over the past decades.
They are mistaken.
I give my honest views. I do make a judgement of what facts are fair and relevant. For example, I do not look at small investment funds, because the results are volatile. I consider them to be not suitale for long term financial planning.
Some of the large funds under NTUC Income perform slightly worse than the market. For example, our bond funds. I do not hesitate to show them, and explain why this is the case (if I know the reason).
Generally, the equity funds under NTUC Income perform well during the past three years. They earn 2% to 3% per annum better than most similar funds. I suspect that this is due to our lower charges.
Although the actual difference in charges is only 0.5% or 1%, I think that the other funds may have other charges that are not disclosed. In our case, we do NOT have any additional hidden charges.
I do not rule out that the difference could be due to the better performance of our managers. But, I think that it is mainly due to luck. In some years, certain managers may perform well, but this may reverse in other years. Over a longer period, the performance or good luck will balance out.
The low cost funds are likely to give a better return to the investors. This has been the result of many research done in America over the past decades.
Saturday, August 19, 2006
Reduced annual charges
NTUC Income is reducing its annual charges for the following funds from 1 July 2006:
The reduced charge mean more return to our investors.
The largest reduction is for our Singapore Equity fund, which is also one
a top performing fund.
New Charges Old Charges
Singapore Equity 0.65% 1.00%
Growth Fund 1.0050% 1.0575%
Balanced Fund 0.9375% 0.9725%
Conservative Fund 0.8700% 0.8875%
The reduced charge mean more return to our investors.
The largest reduction is for our Singapore Equity fund, which is also one
a top performing fund.
Do all investment funds charge similar annual fee?
Do all investment funds charge similar annual fee?
Most funds in the market charge an annual fee of 1.5% to 2%. The Combined Growth Fund from NTUC Income charge a lower fee of about 1%.
Assume you invest $50,000 for 20 years and the fund earns 6% per annum. The difference of 1% in annual fee gives $26,000 more on maturity. You get more by investing in our fund, due to its lower annual fee.
NTUC Income has recently lowered its annual fee for several of its funds, including the Combined Funds and the Singapore Equity fund. So, the difference is higher than quoted above.
Our funds continue to perform better than similar funds in the market.
Most funds in the market charge an annual fee of 1.5% to 2%. The Combined Growth Fund from NTUC Income charge a lower fee of about 1%.
Assume you invest $50,000 for 20 years and the fund earns 6% per annum. The difference of 1% in annual fee gives $26,000 more on maturity. You get more by investing in our fund, due to its lower annual fee.
NTUC Income has recently lowered its annual fee for several of its funds, including the Combined Funds and the Singapore Equity fund. So, the difference is higher than quoted above.
Our funds continue to perform better than similar funds in the market.
Friday, August 18, 2006
Big cases closed at Business Center
The following big cases were closed at our Bras Basah Business Center recently:
$160,000 invested in Flexi-Cash
$96,000 invested in life annuity
$211,000 (5 cases) of Flexi
$70,000 Flexi
$300,000 in life annuity each (X 2 cases)
It seems that more people are willing to come to the business center to make large investments!
Several policyholders have decided to invest in the Flexi Cash to enjoy the lower spread of 0.1% during the promotion period. From 1 September, the spread will be raised to 0.25%.
Flexi Cash earned 0.28% during the past month (ie equivalent to 3.5% for 1 year). It is flexible and is not locked-in for 1 year. The only cost is the upfront spread.
$160,000 invested in Flexi-Cash
$96,000 invested in life annuity
$211,000 (5 cases) of Flexi
$70,000 Flexi
$300,000 in life annuity each (X 2 cases)
It seems that more people are willing to come to the business center to make large investments!
Several policyholders have decided to invest in the Flexi Cash to enjoy the lower spread of 0.1% during the promotion period. From 1 September, the spread will be raised to 0.25%.
Flexi Cash earned 0.28% during the past month (ie equivalent to 3.5% for 1 year). It is flexible and is not locked-in for 1 year. The only cost is the upfront spread.
How to select the right investment fund?
QUESTION
I read your article at your blog (My personal experience in managing my own money).
Please advise me on the basic criteria to selecting investment funds? How different is investing in such funds managed by NTUC as compared to the ones offered by banks or other finanical institutes? If I already have life insurance policies, does it make sense to buy investment-linked policies?
REPLY
Dear
You can find the answers in the following FAQ for single premium and regular premium investments:
http://www.income.coop/insurance/flexilink/faq2.asp
http://www.income.coop/insurance/ideal/faq2.asp
Many people have life insurance policies and is supplemented by investment linked policies. For example, they get their protection through whole life or term insurance policies and make their savings (including CPF savings) in the investment linked policies.
I will ask my colleague to get a product specialist to contact you. You can ask more questions from this specialist.
Tan Kin Lian
CEO, NTUC Income
I read your article at your blog (My personal experience in managing my own money).
Please advise me on the basic criteria to selecting investment funds? How different is investing in such funds managed by NTUC as compared to the ones offered by banks or other finanical institutes? If I already have life insurance policies, does it make sense to buy investment-linked policies?
REPLY
Dear
You can find the answers in the following FAQ for single premium and regular premium investments:
http://www.income.coop/insurance/flexilink/faq2.asp
http://www.income.coop/insurance/ideal/faq2.asp
Many people have life insurance policies and is supplemented by investment linked policies. For example, they get their protection through whole life or term insurance policies and make their savings (including CPF savings) in the investment linked policies.
I will ask my colleague to get a product specialist to contact you. You can ask more questions from this specialist.
Tan Kin Lian
CEO, NTUC Income
Do we employ ex-prisoners?
QUESTION
Hi CEO Mr Tan Kin Lian,
Does NTUC Income employ someone who has been detained in Prison for an offence of not paying their fine. It is not a criminal offence.
REPLY
Dear
We do not rule out any candidate due to past prison record (as they have already paid their penalty).
However, we will only consider them based on their suitability for the job (as there are other candidates available) and also if there is any vacancy.
Tan Kin Lian
CEO
NTUC Income
Hi CEO Mr Tan Kin Lian,
Does NTUC Income employ someone who has been detained in Prison for an offence of not paying their fine. It is not a criminal offence.
REPLY
Dear
We do not rule out any candidate due to past prison record (as they have already paid their penalty).
However, we will only consider them based on their suitability for the job (as there are other candidates available) and also if there is any vacancy.
Tan Kin Lian
CEO
NTUC Income
Reply to Dr Lim Boon Hee in Today Paper
Dr Lim Boon Hee asked, "did NTUC Income bite off more than it can chew"?
The frank answer is "yes". We are suffering from temporary indigestion. But, it is not serious. We hope to be able to recover from it fully by October.
When we tendered for the Medishield Plus scheme, we wanted to offer to the 300,000 members a better package that gives about higher coverage at a reduced premium. Our offer was the most attractive. We were given the entire portfolio of 300,000 members.
We made the best estimate of the likely work load based on our experience with 500,000 Incomeshield policyholders that are insured with us, and with the data provided by the Ministry of Health.
The actual volume of claims was higher than expected. This is due to the difference in the way of handling the claims through the integrated system. We have to change the computer system to deal with the higher situation and new way of processing. It takes time to design and implement the changes. There were other integation issues as well.
The matter was aggravated in June, when we introduced the Enhanced Incomeshield plan to meet with the many requests from our existing policyholders. We offered a two month period for upgrading of this plan. We received 60,000 requests. It was not possible for us to cope with this unexpected volume, as many policyholders rushed in to beat the deadline.
We have now decided to offer the upgrading to the remaining policyholders to take effect on the next renewal of their insurance plan. All existing policyholders will be given an additional opportunity for the upgrading within a 12 months period. The terms of the upgrading will also be clearly explained in the FAQ that will accompany the renewal notice.
We apologise to our many policyholders who were affected by our backlog. We plan to sort out this matter by October.
The frank answer is "yes". We are suffering from temporary indigestion. But, it is not serious. We hope to be able to recover from it fully by October.
When we tendered for the Medishield Plus scheme, we wanted to offer to the 300,000 members a better package that gives about higher coverage at a reduced premium. Our offer was the most attractive. We were given the entire portfolio of 300,000 members.
We made the best estimate of the likely work load based on our experience with 500,000 Incomeshield policyholders that are insured with us, and with the data provided by the Ministry of Health.
The actual volume of claims was higher than expected. This is due to the difference in the way of handling the claims through the integrated system. We have to change the computer system to deal with the higher situation and new way of processing. It takes time to design and implement the changes. There were other integation issues as well.
The matter was aggravated in June, when we introduced the Enhanced Incomeshield plan to meet with the many requests from our existing policyholders. We offered a two month period for upgrading of this plan. We received 60,000 requests. It was not possible for us to cope with this unexpected volume, as many policyholders rushed in to beat the deadline.
We have now decided to offer the upgrading to the remaining policyholders to take effect on the next renewal of their insurance plan. All existing policyholders will be given an additional opportunity for the upgrading within a 12 months period. The terms of the upgrading will also be clearly explained in the FAQ that will accompany the renewal notice.
We apologise to our many policyholders who were affected by our backlog. We plan to sort out this matter by October.
Thursday, August 17, 2006
Good performance during the past 4 weeks
A month ago, we sent a letter to our existing policyholders to top up their investment in our fund, and take advantage of the recent drop in the stockmarkets. This allowed them to make additinal investment at a lower price.
A large number of policyholders took this advice and topped up their investment. They have benefitted from the move.
During the past 4 weeks, the investment funds managed by NTUC Income have earned a return of between 2% to 5%. The highest increase is for the Singapore Equity fund.
These are the positive factors leading to the improved sentiment over the past month, globally and in Singapore.
It is still a good time to invest in the funds, as the prices have not recovered to their earlier highs.
Tan Kin Lian
Chief Executive Officer
NTUC Income
A large number of policyholders took this advice and topped up their investment. They have benefitted from the move.
During the past 4 weeks, the investment funds managed by NTUC Income have earned a return of between 2% to 5%. The highest increase is for the Singapore Equity fund.
These are the positive factors leading to the improved sentiment over the past month, globally and in Singapore.
It is still a good time to invest in the funds, as the prices have not recovered to their earlier highs.
Tan Kin Lian
Chief Executive Officer
NTUC Income
Slight fall in interest rate on money market fund
Generally, rates have come down some 0.1 to 0.2% for tenure up to 12 months. This would mean slightly lower return expected on our FlexiCash in the near future.
Despite the decline in rates, we should still be offering attractive returns to clients compared to savings rates offered by banks.
Globally, interest rates could be taking a pause in further hike, moving up higher only if the US Fed resumes rate hike on fear of inflation.
Despite the decline in rates, we should still be offering attractive returns to clients compared to savings rates offered by banks.
Globally, interest rates could be taking a pause in further hike, moving up higher only if the US Fed resumes rate hike on fear of inflation.
Wednesday, August 16, 2006
Call our hotline for home service
Editor
Straits Times
I refer to the article in "Buyer Beware" (ST, 11 Aug 2006). It featured a story about a customer who was overcharged by an electrician who advertised in the classified advertisements. The customer had to seek the assistance of the Consumer Association.
We advise customers to call our hotline, if the wish to engage a contractor for their home. Our contractors have to observe a code of ethics to provide quality service, fair price and and a 90-day warranty on the work.
More than 100 contractors covering 40 services are listed in our home service webiste. They cover many areas of home repairs and maintenance, including electrical, plumbing, air-conditioning and tuition. We check tht the contractors are licensed and have undergone the required training for their trade.
Our contractors are motivated to maintain a good standard, so that they can continue to be on our panel and enjoy a continuing flow of business from us. We handle an average of 150 customers every day.
After the contrator has completed the task, we call our customers to get their feedback. We received a satisfaction rating of 95%.
This is an example of the application of co-operative principles to benefit all parties, including the contractors and their customers.
Our referral service is available to policyholders and the general public. More information are available from our website: www.income.coop/homeservices. You can call our 24-hour hotline, 6788 8788.
Anthony Chia
General Manager
NTUC Income
Straits Times
I refer to the article in "Buyer Beware" (ST, 11 Aug 2006). It featured a story about a customer who was overcharged by an electrician who advertised in the classified advertisements. The customer had to seek the assistance of the Consumer Association.
We advise customers to call our hotline, if the wish to engage a contractor for their home. Our contractors have to observe a code of ethics to provide quality service, fair price and and a 90-day warranty on the work.
More than 100 contractors covering 40 services are listed in our home service webiste. They cover many areas of home repairs and maintenance, including electrical, plumbing, air-conditioning and tuition. We check tht the contractors are licensed and have undergone the required training for their trade.
Our contractors are motivated to maintain a good standard, so that they can continue to be on our panel and enjoy a continuing flow of business from us. We handle an average of 150 customers every day.
After the contrator has completed the task, we call our customers to get their feedback. We received a satisfaction rating of 95%.
This is an example of the application of co-operative principles to benefit all parties, including the contractors and their customers.
Our referral service is available to policyholders and the general public. More information are available from our website: www.income.coop/homeservices. You can call our 24-hour hotline, 6788 8788.
Anthony Chia
General Manager
NTUC Income
Take Ownership, be Responsible
My colleague sent this letter to the newspaper. She asked me to publish the letter in my blog.
TAKING OWNERSHIP, BE RESPONSIBILE
My daughter is in Nursery Class at a local kindergarten. Her kindergarten is organising a trip to the zoo the end of this month. My daughter brought back the parent’s consent form for this trip. I was appalled to see the following clause in the consent form: "I shall not hold the Centre responsible for any mishap during the trip".
I am indeed surprised to know that a kindergarten, that is suppose to take responsibility of the children when they are at school and at school activities would disregard their basic responsibility in such an outright manner.
Such a clause is indeed a blank cheque for the school to be taken a child safety very lightly. It now makes me wonder if the school would also completely write off their responsibility of my child’s safety if something was to happen during school hours.
If the school does not want to take responsibility, then should they organize such an activity? Is the school worried about their financial responsibility in case an accident occurs? Or are they just being very kiasu? Or is the school reflecting the kind of social fabric that we Singaporean are made up of: that it is not my problem, it someone else’s problem.
I believe that my daughter’s kindergarten is not unique in having such a disclaimer clause in the consent form. I believe the school is merely following guidelines set by the Ministry of Education. If so, then is it indeed the right of every parent to know why schools should organize activities that they don’t want to take responsibility of.
Would I trust my daughter to be sent out with anyone who irks their responsibility of taking care of her safety and well-being? I definitely would not.
Babita Rai
TAKING OWNERSHIP, BE RESPONSIBILE
My daughter is in Nursery Class at a local kindergarten. Her kindergarten is organising a trip to the zoo the end of this month. My daughter brought back the parent’s consent form for this trip. I was appalled to see the following clause in the consent form: "I shall not hold the Centre responsible for any mishap during the trip".
I am indeed surprised to know that a kindergarten, that is suppose to take responsibility of the children when they are at school and at school activities would disregard their basic responsibility in such an outright manner.
Such a clause is indeed a blank cheque for the school to be taken a child safety very lightly. It now makes me wonder if the school would also completely write off their responsibility of my child’s safety if something was to happen during school hours.
If the school does not want to take responsibility, then should they organize such an activity? Is the school worried about their financial responsibility in case an accident occurs? Or are they just being very kiasu? Or is the school reflecting the kind of social fabric that we Singaporean are made up of: that it is not my problem, it someone else’s problem.
I believe that my daughter’s kindergarten is not unique in having such a disclaimer clause in the consent form. I believe the school is merely following guidelines set by the Ministry of Education. If so, then is it indeed the right of every parent to know why schools should organize activities that they don’t want to take responsibility of.
Would I trust my daughter to be sent out with anyone who irks their responsibility of taking care of her safety and well-being? I definitely would not.
Babita Rai
My friend's experience with insurance agents
My friend told this story. 25 years ago, when he started working, he bought a few insurance policies from company X. The agent keeps coming back to him every few years, to advice him to change to a new plan. He took the advice.
Later, he realised that the agent was taking him for a ride. The agent was not looking after his interest. Each time, when he changed the policies, the agent earned a big commission again. He cancelled all the policies, and dropped the agent.
Later, he moved to company Y. The agent gave him good advice, and served him well until today.
Both company X and company Y are not NTUC Income. My friend said that he now buy his home and car insurance from NTUC Income.
Advice: Do not allow your agent to advice you to switch your policies to a new plan. You will lose most of your savings. The agent earned a high commission during the first two years.
Later, he realised that the agent was taking him for a ride. The agent was not looking after his interest. Each time, when he changed the policies, the agent earned a big commission again. He cancelled all the policies, and dropped the agent.
Later, he moved to company Y. The agent gave him good advice, and served him well until today.
Both company X and company Y are not NTUC Income. My friend said that he now buy his home and car insurance from NTUC Income.
Advice: Do not allow your agent to advice you to switch your policies to a new plan. You will lose most of your savings. The agent earned a high commission during the first two years.
My personal experience in managing my own money
Zaobao's CEO forum
Although I earn a high salary as a chief executive officer, I spend my money carefully.
I give a monthly allowance to my wife to take care of the food and other household expenses. I spend carefully on my entertainment, clothing and other personal expenses. If I am not using the company car, I prefer to take a bus or MRT, rather than call a taxi.
I think carefully, before I buy appliances, furniture or other household needs. I keep things for several years and will not replace them unless they break down. When I travel on holiday, I will fly economy class and stay in modestly priced hotels. I do not want to be extravagrant.
My wife share my same values and avoid spending extravagrantly. But, she likes to wear nice clothes and to look pretty. Once a while, she will pamper herself.
I make a large monthly contribution to the Community Chest of Singapore to help the needy.
I have a lot of savings each month. I invest most of my savings in a large, well diversified investment fund managed by NTUC Income. I invest for the long term, i.e 10 years or longer. During the past few years, the fund achieved a very attractive rate of return of more than 15% per annum.
Previously, when I invested on my own in shares, I did not make much gain. Some of my shares made money, but others lose money. On the whole, I do make a small gain, but it was not spectacular. I learned that it is better to let the professional fund manager make the decison for me. They have more time to monitor the investments in the fund.
I live in my own house and own two other properties on rental. I bought my properties at a high price, so they do not make any profit for me. They earn a modest return on the rental.
People who buy property at a low price can make a big capital gain. But, in my case, I am not so lucky with my property investments.
If I were to earn a much lower salary, I will certainly have a monthly budget and make sure that at least 15 percent of my salary is saved for the future. I will be even more careful with my monthly spending. I wish to advise all young people to have a similar approach towards their spending and savings. Do not be extravagrant. Be frugal.
I have three children. Two are working. My youngest is still in university. I encourage them to follow my financial habit and be frugal.
I have taken an investment-linked policy and invested a lump sum for each of my three children. I prefer to give them some of my assets now, so that they can have some money that now belong to them. This will give them a sense of financial well being and independence. So far, they have been careful, and allowed the savings to accumulate and earn a good return. They have not taken out the money to spend.
Although I earn a high salary as a chief executive officer, I spend my money carefully.
I give a monthly allowance to my wife to take care of the food and other household expenses. I spend carefully on my entertainment, clothing and other personal expenses. If I am not using the company car, I prefer to take a bus or MRT, rather than call a taxi.
I think carefully, before I buy appliances, furniture or other household needs. I keep things for several years and will not replace them unless they break down. When I travel on holiday, I will fly economy class and stay in modestly priced hotels. I do not want to be extravagrant.
My wife share my same values and avoid spending extravagrantly. But, she likes to wear nice clothes and to look pretty. Once a while, she will pamper herself.
I make a large monthly contribution to the Community Chest of Singapore to help the needy.
I have a lot of savings each month. I invest most of my savings in a large, well diversified investment fund managed by NTUC Income. I invest for the long term, i.e 10 years or longer. During the past few years, the fund achieved a very attractive rate of return of more than 15% per annum.
Previously, when I invested on my own in shares, I did not make much gain. Some of my shares made money, but others lose money. On the whole, I do make a small gain, but it was not spectacular. I learned that it is better to let the professional fund manager make the decison for me. They have more time to monitor the investments in the fund.
I live in my own house and own two other properties on rental. I bought my properties at a high price, so they do not make any profit for me. They earn a modest return on the rental.
People who buy property at a low price can make a big capital gain. But, in my case, I am not so lucky with my property investments.
If I were to earn a much lower salary, I will certainly have a monthly budget and make sure that at least 15 percent of my salary is saved for the future. I will be even more careful with my monthly spending. I wish to advise all young people to have a similar approach towards their spending and savings. Do not be extravagrant. Be frugal.
I have three children. Two are working. My youngest is still in university. I encourage them to follow my financial habit and be frugal.
I have taken an investment-linked policy and invested a lump sum for each of my three children. I prefer to give them some of my assets now, so that they can have some money that now belong to them. This will give them a sense of financial well being and independence. So far, they have been careful, and allowed the savings to accumulate and earn a good return. They have not taken out the money to spend.
Sunday, August 13, 2006
Invest now to enjoy a lower charge on Flexi Cash
Here is your last chance to invest in our money market fund (Flexi Cash) during our promotion (ie enjoy lower spread of 0.1%)
Our money market fund earned an average return of 3.5% during the past 1 month. It is better than the interest rate on fixed deposit, and there is no lock-in period.
Our promotion will end on 31 August. After the promotion, the spread for investing in the money market fund will be increased to 0.25%.
By investing now, you enjoy a saving of 0.15% in the spread. If you invest $100,000, the saving is $150. Act now. Enjoy the lower spread, an attactive return, and flexibility.
Call 6877 3366.
Our money market fund earned an average return of 3.5% during the past 1 month. It is better than the interest rate on fixed deposit, and there is no lock-in period.
Our promotion will end on 31 August. After the promotion, the spread for investing in the money market fund will be increased to 0.25%.
By investing now, you enjoy a saving of 0.15% in the spread. If you invest $100,000, the saving is $150. Act now. Enjoy the lower spread, an attactive return, and flexibility.
Call 6877 3366.
Need a loan? Go for Smart Credit!
NTUC Income has launched an unsecured loan called Smart Credit.
The attractions of Smart Credit are:
* available to policyholders above 21, with annual income of at least $30,000
* can be used for wedding, travel, medical, emergency and other lifestyle needs
* up to 2 months of salary
* no need for guarantors
* loan can be repaid within 5 years
* interest rate is only 12.88% per annum
* enjoy a rebate of 20% of interest charged, for prompt payment during the year
* instant online approval through the website
Details are available at www.income.coop/loans
Banks and financial institutions charge 15% to 18% on their unsecured credit. Most of them do not offer any rebate on interest for prompt payment.
Be Smart. Use Smart Credit from NTUC Income.
The attractions of Smart Credit are:
* available to policyholders above 21, with annual income of at least $30,000
* can be used for wedding, travel, medical, emergency and other lifestyle needs
* up to 2 months of salary
* no need for guarantors
* loan can be repaid within 5 years
* interest rate is only 12.88% per annum
* enjoy a rebate of 20% of interest charged, for prompt payment during the year
* instant online approval through the website
Details are available at www.income.coop/loans
Banks and financial institutions charge 15% to 18% on their unsecured credit. Most of them do not offer any rebate on interest for prompt payment.
Be Smart. Use Smart Credit from NTUC Income.
Saturday, August 12, 2006
Barbeque at Labrador Park
My daughter and her husband organised a barbeque at Labrador Park. I attended it. It was an enjoyable experience. I especially like the sea breeze, blowing all the way from Sentosa. It was quite refreshing.
I miss the sea breeze after moving out of Marine Parade 20 years ago.
I recommend friends to organise a barbeque at the sea side. We have many of these wonderful facilities in Singapore. And they are available for a small booking fee.
A few other families also held their barbeque at Labrador Park. The family in the next pit held a birthday celebration.
Enjoy.
I miss the sea breeze after moving out of Marine Parade 20 years ago.
I recommend friends to organise a barbeque at the sea side. We have many of these wonderful facilities in Singapore. And they are available for a small booking fee.
A few other families also held their barbeque at Labrador Park. The family in the next pit held a birthday celebration.
Enjoy.
FAQ: Get a better return for your CPF savings
draft (subject to change)
1. How can I get a better return on my CPF savings?
Your savings in the CPF earns for you an interest rate of 2.5% per annum (ordinary account) or 4% per annum (special account).
If you invest your savings in our Combined Fund (which is allowed by CPF), you are likely to get a higher return. This will give more money for your retirement.
2. How much more can I earn?
The following table shows the amount at the end of 10 and 20 years, if you invest $100,000 of your savings:
If you keep $100,000 in the CPF to earn 2.5% per annum., you will get $128,000 at the end of 10 years. If you invest this sum to earn 6% per annum, it will grow to $179,000. You can get $51,000 more, by investing to earn a higher return.
If you keep $100,000 in the CPF to earn 2.5% per annum., you will get $164,000 at the end of 20 years. If you invest this sum to earn 6% per annum, it will grow to $320,000. You can get $156,000 more, by investing to earn a higher return.
If you can earn 9% per annum, the difference is $109,000 for 10 years and $396,000 for 20 years. It is staggering.
I have shown the figure above for the special account (which earns 4% per annum). You will find it attractive to invest your special account to earn a higher rate of return.
The return of 6% and 9% are used for illustration only. We want to encourage you to find out more about other ways to invest your CPF savings to earn a higher rate of return. It is worth exploring.
3. Do I have to invest in risky investments?
There is some risk in investing in equities (i.e. shares of companies) and in bonds (i.e. issued by companies or governments).
You can reduce the risk in the following ways:
* invest in a large, well diversified fund - reduce the impact of some investments performing badly
* invest for the long term - to average out the good and bad years
* invest only in quality shares and bonds - the return is still attractive, and the risk is low
If you choose this investment strategy, you are likely to get the market rate of return. Here are the returns for the past years:
Over the past 10 years, global equities earned an average yearly return of 6.4% and Singapore equity earned 5.4%. The return over 20 years and 30 years are better.
4. Do I have to incur high charges?
The investment funds offered by NTUC Income have lower charges, compared to similar funds in the market.
Our initial charge is 3.5%, compared to an average of 5% charged by other funds. Our annual charge is about 1% per annum, compared to an average of 2% charged by other funds. Other funds may have hidden charges that are not disclosed in the reported charges.
Over 10 years, our lower charges can earn for you about 10% to 20% more than similar funds.
If your investment in our funds earn $200,000 for you, another fund may pay you $20,000 to $40,000 LESS, due to their higher charges! This is a lot of money.
It is better for you to invest your CPF savings with NTUC Income. We will take care of your interest and give you a better return.
5. What fund should I invest in?
We recommend that you invest in our Combined Fund. Here are its key features:
* the Combined Fund is invested in $3,800 million of underlying assets
* the fund is invested in over 900 quality assets (ie equities and bonds)
* the assets are managed by 9 top fund managers based around the world
* the annual charge is among the lowest in the market, i.e. about 1% per annum
* the fund (growth) earned an average of xx.x% per annum during its first three years (2003 to 2005)
Note: Past performance is not indicative of future performance. This investments are subject to risk. The returns are not guaranteed.
6. Can I withdraw my investments at a later date?
You can withdraw your investment at any time.
We advise you to invest for at least 10 year, so that you can benefit from the higher return, and average out the good years and bad years. It also allow you to spread the initial front-end charge over a longer period.
If you decide to withdraw, wait for a good time, when the investment have appreciated in value and produce a good profit to you. Do not withdraw at a bad time, and make a loss.
If you invest using your CPF savings, the withdrawal have to be credited back to the CPF account.
Some people wish to withdraw their investment to pay for a property. They should consider taking a bigger loan for the property. If the interest on the loan may be lower than the return from their investments in our Combined Fund, it is better to keep your investment in the Combined Fund.
7. How can I find out more, before I invest?
You have these options:
* visit our website, www.income.coop/xxxxxxx
* visit our business center and talk to a consultant (call 6877 3366 to make an appointment)
* contact your insurance adviser to visit you at home
* attend our weekly eduational talk (call 6877 3366 to register)
8. Can I invest my cash savings?
You can invest your cash savings as well. It is better for you to take your savings out of fixed deposit and invest in our Combined Fund.
If you have invested in other funds that levy a high charge, or give you a lower than average return, you can withdraw from that find and re-invest in our Combined Fund.
9. Is this a good time to invest?
The stockmarket has corrected during the past two months. Many of the funds are now cheaper by 5% to 10%.
This is a good time to invest, for the long term. The investments are likely to recover in value over the next 6 to 12 months. (This is just an opinion, and is not a guarantee). You should act now, to take advantage of the lower price.
10. Is there a promotion offer?
We have a promotion offer for a limited period. If you come to our business center or our branch (to see your adviser), you can get a bonus unit of 1% or 2% depending on the amount that you invest.
For example, if you invest $100,000, the bonus unit of 2% will give you an additional $2,000 of investment.
11. How do I invest?
You can call your insurance adviser or visit our business center (call 6877 3366 to make an appointment). You can call the CPF to get a statement of the amount that you can invest.
Act now. Do not miss this attractive offer.
1. How can I get a better return on my CPF savings?
Your savings in the CPF earns for you an interest rate of 2.5% per annum (ordinary account) or 4% per annum (special account).
If you invest your savings in our Combined Fund (which is allowed by CPF), you are likely to get a higher return. This will give more money for your retirement.
2. How much more can I earn?
The following table shows the amount at the end of 10 and 20 years, if you invest $100,000 of your savings:
Annual return over the term ..........
Term 2.5% 4% 6% 9%
10 years $128,000 $148,000 $179,000 $237,000
20 years $164,000 $219.000 $320,000 $560,000
If you keep $100,000 in the CPF to earn 2.5% per annum., you will get $128,000 at the end of 10 years. If you invest this sum to earn 6% per annum, it will grow to $179,000. You can get $51,000 more, by investing to earn a higher return.
If you keep $100,000 in the CPF to earn 2.5% per annum., you will get $164,000 at the end of 20 years. If you invest this sum to earn 6% per annum, it will grow to $320,000. You can get $156,000 more, by investing to earn a higher return.
If you can earn 9% per annum, the difference is $109,000 for 10 years and $396,000 for 20 years. It is staggering.
I have shown the figure above for the special account (which earns 4% per annum). You will find it attractive to invest your special account to earn a higher rate of return.
The return of 6% and 9% are used for illustration only. We want to encourage you to find out more about other ways to invest your CPF savings to earn a higher rate of return. It is worth exploring.
3. Do I have to invest in risky investments?
There is some risk in investing in equities (i.e. shares of companies) and in bonds (i.e. issued by companies or governments).
You can reduce the risk in the following ways:
* invest in a large, well diversified fund - reduce the impact of some investments performing badly
* invest for the long term - to average out the good and bad years
* invest only in quality shares and bonds - the return is still attractive, and the risk is low
If you choose this investment strategy, you are likely to get the market rate of return. Here are the returns for the past years:
Benchmark Return(Annualized)
10yr 20yr 30yr
Global Equity MSCI World (USD) 6.4% 8.7% 9.1%
Singapore Equity STI (SGD) 5.4% 10.1% N.A.
Global Bond LBAG(hedged to SGD)3.1% N.A. N.A.
Source: Bloomberg
Over the past 10 years, global equities earned an average yearly return of 6.4% and Singapore equity earned 5.4%. The return over 20 years and 30 years are better.
4. Do I have to incur high charges?
The investment funds offered by NTUC Income have lower charges, compared to similar funds in the market.
Our initial charge is 3.5%, compared to an average of 5% charged by other funds. Our annual charge is about 1% per annum, compared to an average of 2% charged by other funds. Other funds may have hidden charges that are not disclosed in the reported charges.
Over 10 years, our lower charges can earn for you about 10% to 20% more than similar funds.
If your investment in our funds earn $200,000 for you, another fund may pay you $20,000 to $40,000 LESS, due to their higher charges! This is a lot of money.
It is better for you to invest your CPF savings with NTUC Income. We will take care of your interest and give you a better return.
5. What fund should I invest in?
We recommend that you invest in our Combined Fund. Here are its key features:
* the Combined Fund is invested in $3,800 million of underlying assets
* the fund is invested in over 900 quality assets (ie equities and bonds)
* the assets are managed by 9 top fund managers based around the world
* the annual charge is among the lowest in the market, i.e. about 1% per annum
* the fund (growth) earned an average of xx.x% per annum during its first three years (2003 to 2005)
Note: Past performance is not indicative of future performance. This investments are subject to risk. The returns are not guaranteed.
6. Can I withdraw my investments at a later date?
You can withdraw your investment at any time.
We advise you to invest for at least 10 year, so that you can benefit from the higher return, and average out the good years and bad years. It also allow you to spread the initial front-end charge over a longer period.
If you decide to withdraw, wait for a good time, when the investment have appreciated in value and produce a good profit to you. Do not withdraw at a bad time, and make a loss.
If you invest using your CPF savings, the withdrawal have to be credited back to the CPF account.
Some people wish to withdraw their investment to pay for a property. They should consider taking a bigger loan for the property. If the interest on the loan may be lower than the return from their investments in our Combined Fund, it is better to keep your investment in the Combined Fund.
7. How can I find out more, before I invest?
You have these options:
* visit our website, www.income.coop/xxxxxxx
* visit our business center and talk to a consultant (call 6877 3366 to make an appointment)
* contact your insurance adviser to visit you at home
* attend our weekly eduational talk (call 6877 3366 to register)
8. Can I invest my cash savings?
You can invest your cash savings as well. It is better for you to take your savings out of fixed deposit and invest in our Combined Fund.
If you have invested in other funds that levy a high charge, or give you a lower than average return, you can withdraw from that find and re-invest in our Combined Fund.
9. Is this a good time to invest?
The stockmarket has corrected during the past two months. Many of the funds are now cheaper by 5% to 10%.
This is a good time to invest, for the long term. The investments are likely to recover in value over the next 6 to 12 months. (This is just an opinion, and is not a guarantee). You should act now, to take advantage of the lower price.
10. Is there a promotion offer?
We have a promotion offer for a limited period. If you come to our business center or our branch (to see your adviser), you can get a bonus unit of 1% or 2% depending on the amount that you invest.
For example, if you invest $100,000, the bonus unit of 2% will give you an additional $2,000 of investment.
11. How do I invest?
You can call your insurance adviser or visit our business center (call 6877 3366 to make an appointment). You can call the CPF to get a statement of the amount that you can invest.
Act now. Do not miss this attractive offer.
Get prior approval first for your loan
A borrower wanted to take a loan from several banks. He was rejected, as he had a previous bad credit record.
This is his history.
He operated a business before. The business failed after a few years. He had to sell his house to settle his debts. He has now found a job. We wanted to buy an apartment now. He even signed the purchase option. Then, he approached the bank for the loan.
The banks had access to his previous credit record, as it is now shared through a credit bureau. Several of the banks rejected his loan.
He approached NTUC Income for help. He needs a loan immediately as the option will expire within the next few days. We find it difficult to help him, but we will try.
-------------------------------
Here is my general advice to other people who wants to buy a property:
* you can approach NTUC Income to get prior approval for a loan
* we will process your application for free
* you can then look for your property
* you can sign the purchase option without worring about the loan (as it is prior approved)
* we are likely to give you a lower interest rate or fairer terms
Be wise. Get proir approval.
This is his history.
He operated a business before. The business failed after a few years. He had to sell his house to settle his debts. He has now found a job. We wanted to buy an apartment now. He even signed the purchase option. Then, he approached the bank for the loan.
The banks had access to his previous credit record, as it is now shared through a credit bureau. Several of the banks rejected his loan.
He approached NTUC Income for help. He needs a loan immediately as the option will expire within the next few days. We find it difficult to help him, but we will try.
-------------------------------
Here is my general advice to other people who wants to buy a property:
* you can approach NTUC Income to get prior approval for a loan
* we will process your application for free
* you can then look for your property
* you can sign the purchase option without worring about the loan (as it is prior approved)
* we are likely to give you a lower interest rate or fairer terms
Be wise. Get proir approval.
Performance of Equity Funds
Performance of Equity Funds
between major insurers for 2003 to 2005 (3 year)
between major insurers for 2003 to 2005 (3 year)
Investment-linked Fund Annualized
Return
Global Equity
NTUC Income Global Equity 19.2%
Prulink Global Equity 16.0%
AIA Portfolio 100 14.3%
Greatlink Global Equity 12.5%
*
Singapore Equity
NTUC Income S'pore Equity 21.8%
Greatlink S'pore Equities 17.7%
*
Europe Equity
Prulink Pan European 19.8%
NTUC Income Europe Equity 19.5%
Greatlink Europe Equity 17.5%
*
Technology
Prulink Global Technology 20.7%
NTUC Income Technology 18.2%
AIA Global Technology 13.8%
*
Source: S&P Report
Think of your Future!
We live in an uncertain world. Jobs are uncertain, due to global competition. Life is uncertain, due to terrorism, war, disease and natural disasters. It is even risky to invest our savings.
Many people need insurance to take care of the uncertainty and risks.
The financial institutions, such as banks, insurers and fund managers, design financial products to address these needs. They are able to design complicated products that look attractive, but do not give a fair return to the consumers. Their aim is to make a big profit margin for their shareholders, but this is usually done at the expense of the consumers.
These products are usually not easily understood by consumers. But, they are able to use marketing to get consumers to buy their products.
NTUC Income offer fair products that are good for consumers. They give an attractive return for their savings.
We wish to educate consumers, so that you know how to choose the right financial product and get a fair, attractive return for their savings. You can earn $20,000 or $50,000 more, on your long term saving plan, without taking excessive risk.
Here are the convenient ways for you to learn:
* read our product FAQ at www.income.coop/insurance/faq
* learn about insurance at www.knowyourinsurance.com.sg
* attend our educational talk (call 6877 3366)
* read a ranking of products: www.askdrmoney.com
Please help to pass this message to your friends and family members. Do them a favour. Help them to make the right choice. It is for their own good.
Tan Kin Lian
Chief Executive Officer
NTUC Income
Many people need insurance to take care of the uncertainty and risks.
The financial institutions, such as banks, insurers and fund managers, design financial products to address these needs. They are able to design complicated products that look attractive, but do not give a fair return to the consumers. Their aim is to make a big profit margin for their shareholders, but this is usually done at the expense of the consumers.
These products are usually not easily understood by consumers. But, they are able to use marketing to get consumers to buy their products.
NTUC Income offer fair products that are good for consumers. They give an attractive return for their savings.
We wish to educate consumers, so that you know how to choose the right financial product and get a fair, attractive return for their savings. You can earn $20,000 or $50,000 more, on your long term saving plan, without taking excessive risk.
Here are the convenient ways for you to learn:
* read our product FAQ at www.income.coop/insurance/faq
* learn about insurance at www.knowyourinsurance.com.sg
* attend our educational talk (call 6877 3366)
* read a ranking of products: www.askdrmoney.com
Please help to pass this message to your friends and family members. Do them a favour. Help them to make the right choice. It is for their own good.
Tan Kin Lian
Chief Executive Officer
NTUC Income
Flexi Cash earned 3.5% after initial charge of 0.1%
Dear Mr Tan
I refer to your posting on 8 August 2006 where you indicated that the flexi-cash earned a return of 3.5% per annum in the past 1 month, presumably during the month of July 2006.
I have invested $200,000/= on 7 July 2006 and looking at the unit price on 7 August 2006, my return is less than 1.8% p a. I earned interest of only $300 on $200,000 for 1 month).
Please care to enlighten me how the earning of 3.5% per annum came about.
--------------------------
Dear,
The return for 1 month is about 0.28% (equivalent to 3.5% per year). Less the front end load of 0.1%, you get 0.18% for the past one month.
Next month, if the return in the money market fund is still the same, you will get 0.28%. If the money market fund increases, you will get highier.
The unit price is a way to calculate the average return of all the investments in the money market fund, and especially as investors join and leave on different days.
You will certainly enjoy the higher interest rate after overcoming the initial front end load of 0.1%. It is a good investment. Your money is not locked in to any specific period.
I refer to your posting on 8 August 2006 where you indicated that the flexi-cash earned a return of 3.5% per annum in the past 1 month, presumably during the month of July 2006.
I have invested $200,000/= on 7 July 2006 and looking at the unit price on 7 August 2006, my return is less than 1.8% p a. I earned interest of only $300 on $200,000 for 1 month).
Please care to enlighten me how the earning of 3.5% per annum came about.
--------------------------
Dear,
The return for 1 month is about 0.28% (equivalent to 3.5% per year). Less the front end load of 0.1%, you get 0.18% for the past one month.
Next month, if the return in the money market fund is still the same, you will get 0.28%. If the money market fund increases, you will get highier.
The unit price is a way to calculate the average return of all the investments in the money market fund, and especially as investors join and leave on different days.
You will certainly enjoy the higher interest rate after overcoming the initial front end load of 0.1%. It is a good investment. Your money is not locked in to any specific period.
Guide to Incomeshield
NTUC Income has the following Incomeshield plans
Incomeshield - covers up to certain limits, less co-payment
Enhanced Incomeshield - covers "as charged", less co-payment
Medishield Plus (taken over from CPF)
PLUS rider: covers co-payment, ie deductible and co-insurance
Incomeshield - covers up to certain limits, less co-payment
Enhanced Incomeshield - covers "as charged", less co-payment
Medishield Plus (taken over from CPF)
PLUS rider: covers co-payment, ie deductible and co-insurance
Cover Income Enhanced Medishield
Ward shield Incomeshield Plus
Private Plan P Plan EP (Preferred) n/a
A Plan A Plan EA (Advantage) Plan MA
B1 Plan B Plan EB (Basic) Plan MB
B2, C Plan C n/a n/a
PLUS Rider Yes Yes No
Agents keen to join NTUC Income
At our recent recruitment briefing, 19 agents out of 20 indicate interest to join NTUC Income.
My manager called six of them after the meeting. All are positive about joining Income. Here are their feedback:
* Income is different from other insurers.
* Income has a good reputation
* Impressed with our Leads System
* The CEO is convincing
* There is potential for Career Advancement
* Easier to market Income products.
* Likes the concept of the Insuarnce consultant.
Another manager called five of them. All of them want to join Income. Here are their feedback:
Another manager called five agents who are interested to migrate to NTUC Income. Here are their reasons:
* like our Cooperative values
* Had good experience with our Claims dept
* like our 1-tier structure
* Income has strong customer base
* Income offers office-based sales job
* Career advancement
My manager called six of them after the meeting. All are positive about joining Income. Here are their feedback:
* Income is different from other insurers.
* Income has a good reputation
* Impressed with our Leads System
* The CEO is convincing
* There is potential for Career Advancement
* Easier to market Income products.
* Likes the concept of the Insuarnce consultant.
Another manager called five of them. All of them want to join Income. Here are their feedback:
Another manager called five agents who are interested to migrate to NTUC Income. Here are their reasons:
* like our Cooperative values
* Had good experience with our Claims dept
* like our 1-tier structure
* Income has strong customer base
* Income offers office-based sales job
* Career advancement
Friday, August 11, 2006
Collect the Logic9 gift from our business center
Mrs Tan participated in our Flexi-link contest at our website. She won a Logic9 pocketbook as a gift. Here is her request and my reply.
-----------------------------------
Dear Mr Tan,
Firstly I would like to congrats your company’s innovative way of getting surveys done online. I believe that this is more effective and saves client's time.
When it comes to collection of gift token for participating, eg Logic 9 booklet, you make it very inconvenient and require us to collect it personally.
I suggest that you mail it to us. You can find our address from your database.
--------------------------------
Dear Mrs Tan
I hope that you don't mind coming to our business center to collect the gift. When we offered the gift, we wanted to avoid the additional cost of posting the gift.
We also wanted our consultant in the business center to have a chance to talk to our policyholder.
Tan Kin Lian
CEO, NTUC Income
-----------------------------------
Dear Mr Tan,
Firstly I would like to congrats your company’s innovative way of getting surveys done online. I believe that this is more effective and saves client's time.
When it comes to collection of gift token for participating, eg Logic 9 booklet, you make it very inconvenient and require us to collect it personally.
I suggest that you mail it to us. You can find our address from your database.
--------------------------------
Dear Mrs Tan
I hope that you don't mind coming to our business center to collect the gift. When we offered the gift, we wanted to avoid the additional cost of posting the gift.
We also wanted our consultant in the business center to have a chance to talk to our policyholder.
Tan Kin Lian
CEO, NTUC Income
Investor wants indexed fund with even lower charges
Hi Mr Tan,
Thank you for the interesting seminar on 2 Aug. Glad that your investment funds have the lowest expense ratio in the market.
When you initiate a global equity or bond index funds which will lower expense ratio by at least 50% ?
Note: Many studies have recommended index funds for long term investors.
---------------------------
Dear
This may take another one or two years to be available. We have to sort out other more pressing issues first. I suggest that you invest in our actively managed fund for the time being.
Tan Kin Lian
CEO, NTUC Income
Thank you for the interesting seminar on 2 Aug. Glad that your investment funds have the lowest expense ratio in the market.
When you initiate a global equity or bond index funds which will lower expense ratio by at least 50% ?
Note: Many studies have recommended index funds for long term investors.
---------------------------
Dear
This may take another one or two years to be available. We have to sort out other more pressing issues first. I suggest that you invest in our actively managed fund for the time being.
Tan Kin Lian
CEO, NTUC Income
Pay by GIRO to reduce the handling cost
A policyholder is angry about having to pay a fee of 1.2% to pay through credit card. Here is his letter (edited) and my reply.
----------------------------------------------
Dear Mr Tan,
I refer to the above NTUC policy which my mother bought for me 16 years ago.
I received a letter from your office recently, reminding me of the payment via GIRO deduction.
I called your office to request to pay by credit card. I got this reply:
1. From 1 May 2006, we will allow payment for premium up to $300 by credit card. This is applicable to all products which are on yearly mode.
2. For payment in excess of $300, we will charge 1.2% to the policyholder.
3. If the policyholder does not wish to bear this charge, we will ask the policyholder to pay by GIRO, NETS, internet banking or cheque.
My questions to you are:
1. Why are you imposing a 1.2% handling fee when this is not standard industry practice?
2. Do you actually have premium policies, which are equal or less than S$300 per year? (Which is precluded from paying this handling fee?)
-------------------------------
Dear
Our aim is to encourage policyholders to pay by GIRO as the cost of collection is lower.
I estimate that we have to collect $500 million in life insurance premium in each year. If all the policyholders insist on paying by credit card, we have to incur 1.5% on the credit card charge. This will amount to $7.5 million.
I hope that you will realise why we are reluctant to incur this potential cost.
We have many travel, accident and home insurance policies payable by annual premium less than $300.
In your case, we have to pay a fee of $15 to the bank to receive your premium of $1,000 by credit card. We want to avoid this wasteful expense. If you send us a cheque, it will cost us $2 to process it.
----------------------------------------------
Dear Mr Tan,
I refer to the above NTUC policy which my mother bought for me 16 years ago.
I received a letter from your office recently, reminding me of the payment via GIRO deduction.
I called your office to request to pay by credit card. I got this reply:
1. From 1 May 2006, we will allow payment for premium up to $300 by credit card. This is applicable to all products which are on yearly mode.
2. For payment in excess of $300, we will charge 1.2% to the policyholder.
3. If the policyholder does not wish to bear this charge, we will ask the policyholder to pay by GIRO, NETS, internet banking or cheque.
My questions to you are:
1. Why are you imposing a 1.2% handling fee when this is not standard industry practice?
2. Do you actually have premium policies, which are equal or less than S$300 per year? (Which is precluded from paying this handling fee?)
-------------------------------
Dear
Our aim is to encourage policyholders to pay by GIRO as the cost of collection is lower.
I estimate that we have to collect $500 million in life insurance premium in each year. If all the policyholders insist on paying by credit card, we have to incur 1.5% on the credit card charge. This will amount to $7.5 million.
I hope that you will realise why we are reluctant to incur this potential cost.
We have many travel, accident and home insurance policies payable by annual premium less than $300.
In your case, we have to pay a fee of $15 to the bank to receive your premium of $1,000 by credit card. We want to avoid this wasteful expense. If you send us a cheque, it will cost us $2 to process it.
We will honour claims for enhanced Incomeshield during the processing period
Mr Tan applied to convert his family existing Incomeshield plan to Enhanced Incomeshield in May.
Due to the high volume of applications and migration to a new computer system, our processing time took longer than the service standard. Hence Mr Tan was not told about the status of his conversion. He wrote to give his feedback in August.
We explained to Mr Tan of the current situation and assured him that if any claim arises within the processing time, we will honour the claim under the Enhanced Incomeshield terms. At the same time, we have requested our underwriter to expedite the processing.
Mr Tan's enhanced cover will commence on 1 September. He is happy with our assurance to honour any claim arises during the processing time, which is a fair practice.
----------------------------------
We will give this assurance to the 60,000 applicants that are still on our waiting list, who are in the same situation as Mr Tan, subject to the conditions below:
For policyholders requesting equivalent upgrading to the Enhanced plans, e.g. Plan B to Enhanced Basic, the higher benefits will apply.
For policyholders requesting upgrade to a higher plan, e.g. Plan B to Enhanced Advantage, the benefits under the higher plan will apply if no policy exclusion is subsequently applied. Exclusions or limited terms will only apply if the insured member has already developed a medical condition.
Due to the high volume of applications and migration to a new computer system, our processing time took longer than the service standard. Hence Mr Tan was not told about the status of his conversion. He wrote to give his feedback in August.
We explained to Mr Tan of the current situation and assured him that if any claim arises within the processing time, we will honour the claim under the Enhanced Incomeshield terms. At the same time, we have requested our underwriter to expedite the processing.
Mr Tan's enhanced cover will commence on 1 September. He is happy with our assurance to honour any claim arises during the processing time, which is a fair practice.
----------------------------------
We will give this assurance to the 60,000 applicants that are still on our waiting list, who are in the same situation as Mr Tan, subject to the conditions below:
For policyholders requesting equivalent upgrading to the Enhanced plans, e.g. Plan B to Enhanced Basic, the higher benefits will apply.
For policyholders requesting upgrade to a higher plan, e.g. Plan B to Enhanced Advantage, the benefits under the higher plan will apply if no policy exclusion is subsequently applied. Exclusions or limited terms will only apply if the insured member has already developed a medical condition.
Past performance is not an indication of future performance
Some financial advisers recommend to their clients to invest in funds with high expense ratios that performed well in the past years.
Dr Money (a financial journalist writing for The New Paper) said that Research done in America over the past decades have shown that the top performers in past years will not be the top performers in the future years. They tend to move to the lower quartiles.
This is why MAS require a statement to be made that "Past performance is not indicative of future performance".
This is also my view, based on the experience of the funds managed by NTUC Income and our external fund managers. The performance in some years will be better than the market, and will be worse in other years.
What is the reason? Each fund manager focuses on a specific strategy, e.g. growth or value strategy. In some years, a certain strategy will perform better than the other strategy. The situation is likely to change in other years, as the investment results go in cycles.
No one knows in advance which strategy will perform better. Hence, it is better to stick to a certain strategy and measure the results over a longer period, say 10 years or longer.
If you put your money now in a high cost fund that performs better in past years, you are likely to be disillustioned. You will find that the fund will perform worse in the future years, and you will be paying high expenses for nothing.
The financial adviser will be happy to sell you the story that he is able to select a good fund for you. And he can earn a higher commision to sell the investment to you!
Here is my advice. When you choose a fund, look for a large, well diversified, low cost fund.
Do not invest in a small fund, as you have to depend on the quality of the manager. It is difficult to judge, unless you know the manager personally and can trust the manager. And when the manager moves to another fund, you do not know who will be the next person who will manage it.
Most (but not all of) the funds managed by NTUC Income earn 2% to 3% higher than similar large funds managed by other insurance companies.
I do not claim that my internal or external fund managers are performing better. It can be a matter of luck. But, I do know that our expense ratio is 1% lower than the other funds.
I also know that we manage the funds ethically and look after the interest of the existing investors. We do not churn the investments. We do not allow new investors to come in and get a better price, at the expense of existing investors. Perhaps, our ethical practices account for another 1% to 2% in the difference in yield.
A 2% difference in expense ratio will amount to 34% over 10 years. If your investment value is $100,000, you can get $34,000 more by investing in a low cost fund that gives a differnce of 2% in yield.
Here is a final tip. The combined funds managed by NTUC Income has a total of $3,800 million in assets. The actual size reported to LIA/IMAS is smaller, as it is the portion held by the ILP investors. But, they are investing in a much larger fund that is co-mingled with our life insurance fund. You can attend our educational talk by calling 68773366.
Dr Money (a financial journalist writing for The New Paper) said that Research done in America over the past decades have shown that the top performers in past years will not be the top performers in the future years. They tend to move to the lower quartiles.
This is why MAS require a statement to be made that "Past performance is not indicative of future performance".
This is also my view, based on the experience of the funds managed by NTUC Income and our external fund managers. The performance in some years will be better than the market, and will be worse in other years.
What is the reason? Each fund manager focuses on a specific strategy, e.g. growth or value strategy. In some years, a certain strategy will perform better than the other strategy. The situation is likely to change in other years, as the investment results go in cycles.
No one knows in advance which strategy will perform better. Hence, it is better to stick to a certain strategy and measure the results over a longer period, say 10 years or longer.
If you put your money now in a high cost fund that performs better in past years, you are likely to be disillustioned. You will find that the fund will perform worse in the future years, and you will be paying high expenses for nothing.
The financial adviser will be happy to sell you the story that he is able to select a good fund for you. And he can earn a higher commision to sell the investment to you!
Here is my advice. When you choose a fund, look for a large, well diversified, low cost fund.
Do not invest in a small fund, as you have to depend on the quality of the manager. It is difficult to judge, unless you know the manager personally and can trust the manager. And when the manager moves to another fund, you do not know who will be the next person who will manage it.
Most (but not all of) the funds managed by NTUC Income earn 2% to 3% higher than similar large funds managed by other insurance companies.
I do not claim that my internal or external fund managers are performing better. It can be a matter of luck. But, I do know that our expense ratio is 1% lower than the other funds.
I also know that we manage the funds ethically and look after the interest of the existing investors. We do not churn the investments. We do not allow new investors to come in and get a better price, at the expense of existing investors. Perhaps, our ethical practices account for another 1% to 2% in the difference in yield.
A 2% difference in expense ratio will amount to 34% over 10 years. If your investment value is $100,000, you can get $34,000 more by investing in a low cost fund that gives a differnce of 2% in yield.
Here is a final tip. The combined funds managed by NTUC Income has a total of $3,800 million in assets. The actual size reported to LIA/IMAS is smaller, as it is the portion held by the ILP investors. But, they are investing in a much larger fund that is co-mingled with our life insurance fund. You can attend our educational talk by calling 68773366.
Views about expense ratio and return on funds
In his comment to my posting, a James Ong said that some funds with higher expense ratio have consistently produced better returns that NTUC Income's funds.
I asked Dr Money for his views. Here is his reply:
* As for the idea that funds with higher expense ratios have higher returns, there is no evidence of this in the literature (ie past research).
* To the contrary, index funds have lower expense ratios and on average they out-perform managed funds. The difference in performance turns out to be approximately equal to the difference in their expense ratios.
* In the long-run, costs matter in determining a fund's performance -(and the lower the costs, the better the performance
James Ong also says, "I would encourage the public to visit the LIA/IMAS website to avoid any confusion."
Dr Money said:
Quote
There is no confusion. That web site is also the source of the data I used in my study.
I went through each of the 600+ funds at the LIA/IMAS web site and pulled out all the equity funds.
For ILPs, I took the average expense ratio for each insurer's equity funds. For unit trusts, I took one average for all equity unit trust funds.
Results:
1) For NTUC Income, the average expense ratio for its equity funds is 1.0 per cent.
2) For the other 10 life insurance companies, the average expense ratio for their equity funds is 1.7 per cent. (It ranges from 1.4 to 2.2 per cent.)
3) For unit trusts, the average expense ratio for all equity funds averages 2.1 per cent.
The results are shown in: http://www.askdrmoney.com/Ins_ILP_SP.htm
unquote
I asked Dr Money for his views. Here is his reply:
* As for the idea that funds with higher expense ratios have higher returns, there is no evidence of this in the literature (ie past research).
* To the contrary, index funds have lower expense ratios and on average they out-perform managed funds. The difference in performance turns out to be approximately equal to the difference in their expense ratios.
* In the long-run, costs matter in determining a fund's performance -(and the lower the costs, the better the performance
James Ong also says, "I would encourage the public to visit the LIA/IMAS website to avoid any confusion."
Dr Money said:
Quote
There is no confusion. That web site is also the source of the data I used in my study.
I went through each of the 600+ funds at the LIA/IMAS web site and pulled out all the equity funds.
For ILPs, I took the average expense ratio for each insurer's equity funds. For unit trusts, I took one average for all equity unit trust funds.
Results:
1) For NTUC Income, the average expense ratio for its equity funds is 1.0 per cent.
2) For the other 10 life insurance companies, the average expense ratio for their equity funds is 1.7 per cent. (It ranges from 1.4 to 2.2 per cent.)
3) For unit trusts, the average expense ratio for all equity funds averages 2.1 per cent.
The results are shown in: http://www.askdrmoney.com/Ins_ILP_SP.htm
unquote
AA-rating: what is the difference?
I posted my views on a structured product that offers 4.9% return over 7 years. I received this comment:
Quote
This post seems to be selectively misleading. To my limited awareness, the assets backing the product concerned is rated by S&P. Have also done a quick surf of Income's website. It is revealed that Income is rated AA by S&P which is the same rating as the plan.
Since you have highlighted that it is a "scary" product due to the risk, will I be correct to say that it actually shares similar level of risk as Income?
Unquote
-------------------------
Here is my reply:
It is very rare for an insurance company to fail. If it gets into financial difficulty, another insurance company will take over the liability. The policyholder will be protected to a large extend.
Anyway, NTUC Income is rated AA by Standard & Poors. This is the highly rating among all insurance companies in Asia. It is very safe to invest your money with NTUC Income.
In the case of the structured product (not offered by NTUC Income), the investor will lose 100% of the invested capital if there are 21 failures among the 121 investments.
Although the likelihood of 21 failures is small, it is still "scary", especially if the investor has not be made aware about this risk.
I advise the investors to clarify with the insurance company. You can decide after getting the explanation.
Quote
This post seems to be selectively misleading. To my limited awareness, the assets backing the product concerned is rated by S&P. Have also done a quick surf of Income's website. It is revealed that Income is rated AA by S&P which is the same rating as the plan.
Since you have highlighted that it is a "scary" product due to the risk, will I be correct to say that it actually shares similar level of risk as Income?
Unquote
-------------------------
Here is my reply:
It is very rare for an insurance company to fail. If it gets into financial difficulty, another insurance company will take over the liability. The policyholder will be protected to a large extend.
Anyway, NTUC Income is rated AA by Standard & Poors. This is the highly rating among all insurance companies in Asia. It is very safe to invest your money with NTUC Income.
In the case of the structured product (not offered by NTUC Income), the investor will lose 100% of the invested capital if there are 21 failures among the 121 investments.
Although the likelihood of 21 failures is small, it is still "scary", especially if the investor has not be made aware about this risk.
I advise the investors to clarify with the insurance company. You can decide after getting the explanation.
JetStar Asia
I went with a few colleagues to Phuket on JetStar. I wanted to experience a low cost airline.
My experience is satisfactory. It is almost like a normal airline. The only key difference is that they do not serve any food. I do not mind. Airline food is not that great anyway.
The saving is fare is almost 50%, compared to the normal airline. So, it make sense to travel on a low cost airline for short trips.
My experience is satisfactory. It is almost like a normal airline. The only key difference is that they do not serve any food. I do not mind. Airline food is not that great anyway.
The saving is fare is almost 50%, compared to the normal airline. So, it make sense to travel on a low cost airline for short trips.
NTUC Income ILP Funds perform better than other funds
In the S&P website, the ILP funds of NTUC Income give a higher return than similar funds managed by other insurers. The difference is about 2 percent per annum.
Is it because NTUC Income fund managers were more skilled or perhaps more lucky? I do not think so.
The most likely reason is that our funds have lower costs. Dr Money has made an analysis of the cost. It is posted in his website, www.askdrmoney.com.
If you invest $100,000 for 10 years, what is the difference of 2% per annum in yield?
It is $34,000. This is the difference between earning 5% and 7% per annum. Yes, it is a lot of money. Yes, you can earn $34,000 more by investing with NTUC Income (and earn a 2% higher return), due to our lower charges.
Is it because NTUC Income fund managers were more skilled or perhaps more lucky? I do not think so.
The most likely reason is that our funds have lower costs. Dr Money has made an analysis of the cost. It is posted in his website, www.askdrmoney.com.
If you invest $100,000 for 10 years, what is the difference of 2% per annum in yield?
It is $34,000. This is the difference between earning 5% and 7% per annum. Yes, it is a lot of money. Yes, you can earn $34,000 more by investing with NTUC Income (and earn a 2% higher return), due to our lower charges.
Wednesday, August 9, 2006
Customer wants to buy an additional annuity
Dear Mr. Tan,
You gave a talk on Anniuty last year, I was in the audience. I was impressed by your frankness.
I wish to ask about your new feature, if I were to buy a new Annuity Policy, if I happen to die within a year or two, the unspent mobney will be return to the deceased family ?
I will probably have some money coming in Mid or end of Sept, and I am considering of buying another $30,000 worth of annuity.
Can you kindly e mail me a quotation, telling me how much in returns per month, I expect to receive in six month's time? I already have two existing annuity policies with your company and I am quite happy with them.
You gave a talk on Anniuty last year, I was in the audience. I was impressed by your frankness.
I wish to ask about your new feature, if I were to buy a new Annuity Policy, if I happen to die within a year or two, the unspent mobney will be return to the deceased family ?
I will probably have some money coming in Mid or end of Sept, and I am considering of buying another $30,000 worth of annuity.
Can you kindly e mail me a quotation, telling me how much in returns per month, I expect to receive in six month's time? I already have two existing annuity policies with your company and I am quite happy with them.
Logic9 pocketbooks sell very well
We now sell 2,000 pieces of the Logic9 pocketbook and CD software EVERY WEEK at bookstores, Fairprice supermakets and Income branches.
Logic9 is now getting to be very popular!
You can play the puzzle in the pocketbook when you travel by bus, train or plane. It sells for only $5 and contain 128 puzzles at 4 levels. Each puzzle has a unique answer, so it is fun!
You can buy a package of 4 volumes with a CD (to play on the computer) for a special price of only $16 from our branches. This is so popular, that it sold out. New stocks will arrive soon.
The Logic9 package is a wonderful gift for a friend.
Logic9 is now getting to be very popular!
You can play the puzzle in the pocketbook when you travel by bus, train or plane. It sells for only $5 and contain 128 puzzles at 4 levels. Each puzzle has a unique answer, so it is fun!
You can buy a package of 4 volumes with a CD (to play on the computer) for a special price of only $16 from our branches. This is so popular, that it sold out. New stocks will arrive soon.
The Logic9 package is a wonderful gift for a friend.
Greetings for the 41st National Day
I wish to send greetings to our 1,800,000 policyholders.
Happy 41st National Day.
Tan Kin Lian
Chief Executive Officer
NTUC Income
Happy 41st National Day.
Tan Kin Lian
Chief Executive Officer
NTUC Income
You can lose your entire capital in this structured product!
An insurance company (not NTUC Income) sold a single premium product that pays an annual return of 4.9%. According to their advertisement, they will return 100% of the capital at the end of 7 years. There is a footnote that "terms and condition applies".
A financial expert who analysed this product told me that there is a risk that the investor may lose 100% of the capital invested, if 21 of the 120 investments failed.
Many of the investors may not be aware about this risk. If this event occur, they can lose their entire capital. If they invest $100,000, they may have to lose all of $100,000. Although the probably it low, it can be quite frightening.
Apparently, the agents who sold this product did not highlight this risk to the clients.
I advise investors who have bought this product to seek clarification from the insurance company.
A financial expert who analysed this product told me that there is a risk that the investor may lose 100% of the capital invested, if 21 of the 120 investments failed.
Many of the investors may not be aware about this risk. If this event occur, they can lose their entire capital. If they invest $100,000, they may have to lose all of $100,000. Although the probably it low, it can be quite frightening.
Apparently, the agents who sold this product did not highlight this risk to the clients.
I advise investors who have bought this product to seek clarification from the insurance company.
Tuesday, August 8, 2006
FAQ: Life Annuity
1. What is a life annuity?
A life annuity allows you to invest a capital sum to earn an income payable for the rest of your lifetime.
If you put the capital sum in a bank, you can earn interest at 2% to 3% per annum. For example, a capital sum of $100,000 can earn for you $3,000 a year, or $250 a month.
If this capital sum is invested in a life annuity, you can earn a higher return, e.g. 5% to 6% per annum. For example, a capital sum of $100,000, you can earn for you, say $6,000 a year, or $500 a month. The actual amount depends on your age, gender and the type of annuity.
A life annuity can pay a better return to you, because your capital sum is distributed back to you based on your average life expectancy.
2. Who should invest in a life annuity?
It is advisable for all retired persons to invest in a life annuity. You should invest a capital sum that is sufficient to provide a guaranteed income that can meet your expenses during your retirement.
Most couples with a modest lifestyle will find $1,500 a month to be adequate for their needs, if they already owned a home that is fully paid. A single person will probably need $1,000 a month.
If they are used to a comfortable or luxurious lifestyle, they will need a higher monthly income. Some people target to have $5,000 or $10,000 a month for their needs.
3. How is the annuity better than other types of investments?
The life annuity has the following advantages compared to other types of investments, such as fixed deposits or investing in shares:
* it provides a better return than fixed deposit
* the payment is guaranteed for a lifetime
You can choose an annuity with the following features:
* pays back the balance of the capital on early death
* increases the monthly payment with a bonus each year
If you put your capital sum in fixed deposit and spend more than the interest earned each year, you capital sum will run out at a future date. You will have nothing to live on.
With a life annuity, this will never happen. The monthly income will continue to be paid to you for as long as your live. It will continue to grow with a bonus.
4. How much do I get from my capital sum?
The amount of monthly income depends on the following:
* your current age and gender
* the commencement date of the annuity payment
* the type of annuity
Here is an example of the monthly annuity for a capital sum of $100,000. The first payment is due one month after the date of entry. A bonus may be added to the monthly payment each year, depending on the average investment yield of the fund.
No-CP: no capital protection, ie no refund on early death
With-CP: with capital protection, ie refund of balance of capita sum on early death
A female receives a lower monthly payment compared to a male, because they are expected to live longer.
An older person receives a higher monthly payment, because they have a shorter life expectancy.
An annuity without capital protection pays 35% to 40% more than an annuity with capital protection. The difference is quite high!
5. How does the bonus work?
Each year, the actuary works on the return on the investments of the fund. If thi s return exceed the interest rate that is used to calculate the annuity payment, the actuary decides on the amount of the excess investment return to be used to declare a bonus to be added to the annuity payment.
In deciding on the amount of the bonus, the actuary has to take many relevant factors into account. The actuary has to act impartially and fairly in recommending the rate of bonus. The rate or bonus may differ between different types and series of annuity contacts.
If the rate of bonus is 3% and the monthly payment is $1,000, the bonus will add $30 to the monthly payment. The bonus declared in each year is guaranteed and will be payable for all future years. The monthly payment can only increase with bonus. It can never be reduced.
In some years, if the investment return is low, the actuary may recommend that no bonus will be added for the year.
The recommendation of the actuary is subject to approval of the board of directors. The payment of the bonus is non-contractual and is not guaranteed. The decision of the board of directors is final.
NTUC Income is a cooperative society. The actuary and board of directors will act in the best interest of all annuitants in deciding on the amount of bonus to be declared. They will declare a good rate of bonus while ensuring that the annuity fund remains financially solvent for all future years.
6. Why is my capital consumed during my lifetime?
If you wish to keep your capital sum intact, you should keep your money in a bank and spend only the interest earned. However, the amount of interest may be quite low, and inadequate for your needs.
You invest in a life annuity to earn a higher return. This is achieved by consuming your capital sum over the average life expectancy.
Some annuitants die younger. They will leave behind the balance of their capital sum in the fund. This will be used to pay the monthly income to the annuitants who live longer. The annuity works on the principle of pooling of risk of life expectancy. This is a fair arrangement.
Under the capital protected annuity, the balance of the capital sum (after deducting the monthly payments) is refunded to the estate on the early death of the annuitant. Only the interest earned is left behind in the fund.
If the annuitant does not need to have the refund on early death, they will receive a larger monthly payment.
7. What happens if I die at a younger age?
It depends on whether you have any capital protection, and the type of protection that is available in your annuity policy.
In some of our earlier policies, the annuity payment will continue to be paid to the beneficiary for a certain number of years. The remaining payments can be discounted to a lump sum, using the prevailing rate of interest.
For the policies issued in recent years, the balance of the capital sum is refunded, after deducting the annuity payments that have been received! .
8. What happens if I live for a long time?
The monthly payments will continue to be paid to you for as long as you live. If you live longer, you will receive more than the invested capital sum and the interest that is earned. The extended payment is contributed by the annuitants who die younger and leave behind a part of their capital sum in the fund.
9. Can I invest with my CPF savings?
If you have withdrawn your CPF savings, you are free to invest the savings in any suitable way that you decide. It is better to seek the advice of an expert adviser.
The CPF requires all members to keep a certain amount of savings in the retirement account. This amount is currently $99,400. This savings can be invested in a life annuity, but is subject to certain rules imposed by the CPF. Under this rule, the monthly payment can only start from age 62.
NTUC Income has a special plan, called the Classic Annuity, that is approved by the CPF. This plan is very popular. Over 25,000 CPF members have opted to invest their retirement account in this plan.
10. Can I invest with my own cash?
You can invest your own cash, including the savings withdrawn from the CPF account at age 55, in our life annuity.
Most people choose an annuity policy that pays the monthly payment immediately! , and has a capital protection. A few annuitants prefer the non-protec ted policy, as it pays a higher monthly sum.
Some people choose to invest their savings in our Combined Fund to earn a higher rate of return (not guaranteed), and to convert a part of the savings into a life annuity when they are older, say after age 65.
11. What is the difference between a participating and a non-participating annuity?
A non-participating annuity pays a fixed monthly sum. It is not eligible for any bonus.
A participating annuity pays a lower monthly sum (compared to a non-participating annuity), but is eligible for an annual bonus, based on the rate dec! lared by the board of directors.
All life annuities offered by NTUC Income are participating contracts. We offer some short term annuities as non-participating contacts.
12. Can I cancel my life annuity to get a refund?
You are allowed to cancel the annuity contract within three months of purchase and get a refund of the capital sum with interest earned, subject to deduction of some charges and any payments made to you.
Under the Classic plan, you can allowed to cancel the annuity contract at any time before age 62 and get a refund based on the terms of the contract, i.e. a refund of the capital sum with interest earned, subject to deduction of some charges.
After the annuity payments has commenced, you are generally not allowed to cancel your annuity and get a refund. The annuity is intended to be a lifetime contract.
If you insist on cancelling the contract, we can pay the refund that is applicable in the event of early death. This refund is usually not attractive to the annuitant.
Under certain circumstances, we may pay a higher refund, but this is entirely at our discretion. We have to make sure that the request for cancellation is not an attempt to take unfair advantage of the fund.
13. Should I keep my capital sum to pass to my children?
You have other assets, including your property, that can be passed to your children. This is more than sufficient.
You should invest a certain capital sum in a life annuity for your own benefit. You have to take care of yourself. This capital sum does not need to be kept for your children.
A life annuity allows you to invest a capital sum to earn an income payable for the rest of your lifetime.
If you put the capital sum in a bank, you can earn interest at 2% to 3% per annum. For example, a capital sum of $100,000 can earn for you $3,000 a year, or $250 a month.
If this capital sum is invested in a life annuity, you can earn a higher return, e.g. 5% to 6% per annum. For example, a capital sum of $100,000, you can earn for you, say $6,000 a year, or $500 a month. The actual amount depends on your age, gender and the type of annuity.
A life annuity can pay a better return to you, because your capital sum is distributed back to you based on your average life expectancy.
2. Who should invest in a life annuity?
It is advisable for all retired persons to invest in a life annuity. You should invest a capital sum that is sufficient to provide a guaranteed income that can meet your expenses during your retirement.
Most couples with a modest lifestyle will find $1,500 a month to be adequate for their needs, if they already owned a home that is fully paid. A single person will probably need $1,000 a month.
If they are used to a comfortable or luxurious lifestyle, they will need a higher monthly income. Some people target to have $5,000 or $10,000 a month for their needs.
3. How is the annuity better than other types of investments?
The life annuity has the following advantages compared to other types of investments, such as fixed deposits or investing in shares:
* it provides a better return than fixed deposit
* the payment is guaranteed for a lifetime
You can choose an annuity with the following features:
* pays back the balance of the capital on early death
* increases the monthly payment with a bonus each year
If you put your capital sum in fixed deposit and spend more than the interest earned each year, you capital sum will run out at a future date. You will have nothing to live on.
With a life annuity, this will never happen. The monthly income will continue to be paid to you for as long as your live. It will continue to grow with a bonus.
4. How much do I get from my capital sum?
The amount of monthly income depends on the following:
* your current age and gender
* the commencement date of the annuity payment
* the type of annuity
Here is an example of the monthly annuity for a capital sum of $100,000. The first payment is due one month after the date of entry. A bonus may be added to the monthly payment each year, depending on the average investment yield of the fund.
Entry Gender Monthly annuity
Age No-CP With-CP
55 Male $549 $391
Female $521 $366
60 Male $587 $428
Female $556 $400
65 Male $629 $473
Female $599 $443
No-CP: no capital protection, ie no refund on early death
With-CP: with capital protection, ie refund of balance of capita sum on early death
A female receives a lower monthly payment compared to a male, because they are expected to live longer.
An older person receives a higher monthly payment, because they have a shorter life expectancy.
An annuity without capital protection pays 35% to 40% more than an annuity with capital protection. The difference is quite high!
5. How does the bonus work?
Each year, the actuary works on the return on the investments of the fund. If thi s return exceed the interest rate that is used to calculate the annuity payment, the actuary decides on the amount of the excess investment return to be used to declare a bonus to be added to the annuity payment.
In deciding on the amount of the bonus, the actuary has to take many relevant factors into account. The actuary has to act impartially and fairly in recommending the rate of bonus. The rate or bonus may differ between different types and series of annuity contacts.
If the rate of bonus is 3% and the monthly payment is $1,000, the bonus will add $30 to the monthly payment. The bonus declared in each year is guaranteed and will be payable for all future years. The monthly payment can only increase with bonus. It can never be reduced.
In some years, if the investment return is low, the actuary may recommend that no bonus will be added for the year.
The recommendation of the actuary is subject to approval of the board of directors. The payment of the bonus is non-contractual and is not guaranteed. The decision of the board of directors is final.
NTUC Income is a cooperative society. The actuary and board of directors will act in the best interest of all annuitants in deciding on the amount of bonus to be declared. They will declare a good rate of bonus while ensuring that the annuity fund remains financially solvent for all future years.
6. Why is my capital consumed during my lifetime?
If you wish to keep your capital sum intact, you should keep your money in a bank and spend only the interest earned. However, the amount of interest may be quite low, and inadequate for your needs.
You invest in a life annuity to earn a higher return. This is achieved by consuming your capital sum over the average life expectancy.
Some annuitants die younger. They will leave behind the balance of their capital sum in the fund. This will be used to pay the monthly income to the annuitants who live longer. The annuity works on the principle of pooling of risk of life expectancy. This is a fair arrangement.
Under the capital protected annuity, the balance of the capital sum (after deducting the monthly payments) is refunded to the estate on the early death of the annuitant. Only the interest earned is left behind in the fund.
If the annuitant does not need to have the refund on early death, they will receive a larger monthly payment.
7. What happens if I die at a younger age?
It depends on whether you have any capital protection, and the type of protection that is available in your annuity policy.
In some of our earlier policies, the annuity payment will continue to be paid to the beneficiary for a certain number of years. The remaining payments can be discounted to a lump sum, using the prevailing rate of interest.
For the policies issued in recent years, the balance of the capital sum is refunded, after deducting the annuity payments that have been received! .
8. What happens if I live for a long time?
The monthly payments will continue to be paid to you for as long as you live. If you live longer, you will receive more than the invested capital sum and the interest that is earned. The extended payment is contributed by the annuitants who die younger and leave behind a part of their capital sum in the fund.
9. Can I invest with my CPF savings?
If you have withdrawn your CPF savings, you are free to invest the savings in any suitable way that you decide. It is better to seek the advice of an expert adviser.
The CPF requires all members to keep a certain amount of savings in the retirement account. This amount is currently $99,400. This savings can be invested in a life annuity, but is subject to certain rules imposed by the CPF. Under this rule, the monthly payment can only start from age 62.
NTUC Income has a special plan, called the Classic Annuity, that is approved by the CPF. This plan is very popular. Over 25,000 CPF members have opted to invest their retirement account in this plan.
10. Can I invest with my own cash?
You can invest your own cash, including the savings withdrawn from the CPF account at age 55, in our life annuity.
Most people choose an annuity policy that pays the monthly payment immediately! , and has a capital protection. A few annuitants prefer the non-protec ted policy, as it pays a higher monthly sum.
Some people choose to invest their savings in our Combined Fund to earn a higher rate of return (not guaranteed), and to convert a part of the savings into a life annuity when they are older, say after age 65.
11. What is the difference between a participating and a non-participating annuity?
A non-participating annuity pays a fixed monthly sum. It is not eligible for any bonus.
A participating annuity pays a lower monthly sum (compared to a non-participating annuity), but is eligible for an annual bonus, based on the rate dec! lared by the board of directors.
All life annuities offered by NTUC Income are participating contracts. We offer some short term annuities as non-participating contacts.
12. Can I cancel my life annuity to get a refund?
You are allowed to cancel the annuity contract within three months of purchase and get a refund of the capital sum with interest earned, subject to deduction of some charges and any payments made to you.
Under the Classic plan, you can allowed to cancel the annuity contract at any time before age 62 and get a refund based on the terms of the contract, i.e. a refund of the capital sum with interest earned, subject to deduction of some charges.
After the annuity payments has commenced, you are generally not allowed to cancel your annuity and get a refund. The annuity is intended to be a lifetime contract.
If you insist on cancelling the contract, we can pay the refund that is applicable in the event of early death. This refund is usually not attractive to the annuitant.
Under certain circumstances, we may pay a higher refund, but this is entirely at our discretion. We have to make sure that the request for cancellation is not an attempt to take unfair advantage of the fund.
13. Should I keep my capital sum to pass to my children?
You have other assets, including your property, that can be passed to your children. This is more than sufficient.
You should invest a certain capital sum in a life annuity for your own benefit. You have to take care of yourself. This capital sum does not need to be kept for your children.
Policyholder decided to keep the Growth policies
A policyholder invested in our Growth policies (ie single premium endowment policies).
She was approached to invest in a fixed deposit at a preferential rate of 3.45% for one year. She wanted to surrender the Growth policies to re-invest in this deposit. Based on the current surrender values, the yield for the past 4 years was about 2.5% per annum.
I sent to her the following facts. If she continued the Growth policies to the maturity date, the average return for the entire period increases to 3.5% per annum, based on our current bonus rates.
However, if we measure the cash value now now and the projected value at the maturity date, the return increased to an average of 5.2% per annum. It was clear that the policyhholder will get a better return by keeing the Growth policy to maturity.
She replied,
Dear Mr Tan
Thanks for dispensing good advice and information. I really do appreciate the efforts taken by you, and Jessie Wong.
She was approached to invest in a fixed deposit at a preferential rate of 3.45% for one year. She wanted to surrender the Growth policies to re-invest in this deposit. Based on the current surrender values, the yield for the past 4 years was about 2.5% per annum.
I sent to her the following facts. If she continued the Growth policies to the maturity date, the average return for the entire period increases to 3.5% per annum, based on our current bonus rates.
However, if we measure the cash value now now and the projected value at the maturity date, the return increased to an average of 5.2% per annum. It was clear that the policyhholder will get a better return by keeing the Growth policy to maturity.
She replied,
Dear Mr Tan
Thanks for dispensing good advice and information. I really do appreciate the efforts taken by you, and Jessie Wong.
Reply to Lim Yan Beng: It is better to invest in a life annuity!
Editor
Forum Page
Straits Times
I refer to the letter from Mr Lim Yan Beng entitled "It may not pay to invest in an annuity" (St Times, 8 August).
Mr Lim transferrred $37,000 from his CPF Retirement Account to pay a life annuity that pays him a guaranteed monthly sum of $183.30 in 2009, when he reach age 62. This monthly sum is payable for a lifetime and will earn an annual bonus that depends on the return from our investments.
The bonus that is added to his monthly sum is $4.60 in 2004 and $5.20 in 2005. They will increase his monthly sum to a total of $193.10 payable from age 62. This represents a notional return of 6.26% on his invested sum of $37,000. As a bonus is added each year, the notional return will increase further.
As each year's bonus is declared, it will be added to the monthly sum and is guaranteed.
In some years, if our investment return is low, we may not declare any bonus. But the bonus that were declared in past years are guaranteed. The monthly sum can only increase. It cannot be reduced.
The monthly sum will be payable for a lifetime. Many people are not aware that, with increased life expectancy, more and more people will be living beyond age 80, 85 or even 90 years. It is important that they invest a substantial portion of their savings in a life annuity that guarantees a payment to them that will continue for a lifetime.
For other types of investments, if the retiree draws out a large sum that the interest that is earned, there is the risk that the savings will be completely drawn down during their lifetime. This will leave them with nothing to live on.
The notional return quoted above is partly contributed by the consumption of the capital during the lifetime. The effective return to the annuitant is slightly more than 5% per annum, taking all relevant factors into account. This is more attractive than leaving the money to earn 4% per annum in the retirement account.
I apologise that my colleague had not given the information about our bonus in the right context to Mr Lim. This has led Mr Lim to make the wrong decision to cancel his life annuity. I urge Mr Lim to visit my office and talk to our specialist. I hope that he will reconsider his decision.
This incident highlights the importance of educating the public about the financial product that they have bought.
During the past two years, NTUC Income as intensified our effects to educate the public. We now have FAQ (frequently asked questions) about our various popular products. They are easily accessible from our website, http://www.income.coop/insurance/faq/
We also organise educational talks on various products. We invite our policyholders and potential customers to attend these educational talks. I urge them to attend the talk and have a better understanding of their product. They should also visit our business center and talk to our product specialist.
Tan Kin Lian
Chief Executive Officer
NTUC Income
Forum Page
Straits Times
I refer to the letter from Mr Lim Yan Beng entitled "It may not pay to invest in an annuity" (St Times, 8 August).
Mr Lim transferrred $37,000 from his CPF Retirement Account to pay a life annuity that pays him a guaranteed monthly sum of $183.30 in 2009, when he reach age 62. This monthly sum is payable for a lifetime and will earn an annual bonus that depends on the return from our investments.
The bonus that is added to his monthly sum is $4.60 in 2004 and $5.20 in 2005. They will increase his monthly sum to a total of $193.10 payable from age 62. This represents a notional return of 6.26% on his invested sum of $37,000. As a bonus is added each year, the notional return will increase further.
As each year's bonus is declared, it will be added to the monthly sum and is guaranteed.
In some years, if our investment return is low, we may not declare any bonus. But the bonus that were declared in past years are guaranteed. The monthly sum can only increase. It cannot be reduced.
The monthly sum will be payable for a lifetime. Many people are not aware that, with increased life expectancy, more and more people will be living beyond age 80, 85 or even 90 years. It is important that they invest a substantial portion of their savings in a life annuity that guarantees a payment to them that will continue for a lifetime.
For other types of investments, if the retiree draws out a large sum that the interest that is earned, there is the risk that the savings will be completely drawn down during their lifetime. This will leave them with nothing to live on.
The notional return quoted above is partly contributed by the consumption of the capital during the lifetime. The effective return to the annuitant is slightly more than 5% per annum, taking all relevant factors into account. This is more attractive than leaving the money to earn 4% per annum in the retirement account.
I apologise that my colleague had not given the information about our bonus in the right context to Mr Lim. This has led Mr Lim to make the wrong decision to cancel his life annuity. I urge Mr Lim to visit my office and talk to our specialist. I hope that he will reconsider his decision.
This incident highlights the importance of educating the public about the financial product that they have bought.
During the past two years, NTUC Income as intensified our effects to educate the public. We now have FAQ (frequently asked questions) about our various popular products. They are easily accessible from our website, http://www.income.coop/insurance/faq/
We also organise educational talks on various products. We invite our policyholders and potential customers to attend these educational talks. I urge them to attend the talk and have a better understanding of their product. They should also visit our business center and talk to our product specialist.
Tan Kin Lian
Chief Executive Officer
NTUC Income
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