Telephone charges are high in Dubai.
It cost about S$6 per minute to make an international call. It cost S$1 per minute to make a local call to a mobilephone (minimum of S$3).
These charges are 10 to 20 times of similar charges in Singapore.
Thursday, November 30, 2006
Wednesday, November 29, 2006
Experience the Arabian nights
I visited a restaurant outside of Dubai, near the desert. The experience was stimulating, beyond my imagination.
There was good food, music, belly dancing, and local art and culture, riders on horse backs. I learned to smoke from a water pipe. The atmosphere was like a story out of the Arabian nights.
Wow.
There was good food, music, belly dancing, and local art and culture, riders on horse backs. I learned to smoke from a water pipe. The atmosphere was like a story out of the Arabian nights.
Wow.
Traffic Congestion in Dubai
Last night, I visited a restaurant outside of Dubai, near the desert. The journey was supposed to take 1 hour. It took nearly 2 hours, due to the congested traffic during the rush hour (5 pm to 9 pm).
My friend in Dubai said that the traffic situation will improve in 2010, when a new set of roads are ready. In the meantime, they have got used to the congestion.
My friend in Dubai said that the traffic situation will improve in 2010, when a new set of roads are ready. In the meantime, they have got used to the congestion.
Capital Protected Fund gives poor return
Dear Mr Tan,
I am a NTUC policy holder. I also have investments in some unit trusts.
I recently stumbled on your blog and have been reading your articles. I am very interested in the combined funds. May be it is a bit too late for investment at this age (I have retired).
I need your help on the closed funds. I have the intention to sell as the unit trust (closed fund) is now in the positive and with this money go into combined fund. Presently, the return is about 1% p.a. for the past 4 years and maturing sometime next year. It is a capital protected fund and there is a payout if it crosses certain price. Other than that, there is no mention whether subscriber of the fund will get anything else if the fund is doing well. It is moving very, very slowly. Should I sell now?
For the combined fund, should I start small with $1,000 and every month buys $100 of units or with a lump sum, say $10,000 noting that the funds are not cheap now.
LC
--------------------------
Dear LC
I am not familiar with the structure of your protected fund. I suggest that you should ask your fund manager to give you an estimate of the likely payout on the maturity date, assuming that the market stays at the current level, and assuming that the investments increase by 5% per annum.
For your investment into the combined fund, I suggest that you invest $1,000 a month over 10 months, to make a total investment of $10,000. This will help to spread out the investments and get an average price for your investments. In the meantime, you can invest the money in the money market fund and transfer it gradually over the next 10 months.
Alternatively, you can put the entire investment in the money markt fund and wait for a market correction to move into the combined fund. I am adopting this approach for my personal investments.
Tan Kin Lian
I am a NTUC policy holder. I also have investments in some unit trusts.
I recently stumbled on your blog and have been reading your articles. I am very interested in the combined funds. May be it is a bit too late for investment at this age (I have retired).
I need your help on the closed funds. I have the intention to sell as the unit trust (closed fund) is now in the positive and with this money go into combined fund. Presently, the return is about 1% p.a. for the past 4 years and maturing sometime next year. It is a capital protected fund and there is a payout if it crosses certain price. Other than that, there is no mention whether subscriber of the fund will get anything else if the fund is doing well. It is moving very, very slowly. Should I sell now?
For the combined fund, should I start small with $1,000 and every month buys $100 of units or with a lump sum, say $10,000 noting that the funds are not cheap now.
LC
--------------------------
Dear LC
I am not familiar with the structure of your protected fund. I suggest that you should ask your fund manager to give you an estimate of the likely payout on the maturity date, assuming that the market stays at the current level, and assuming that the investments increase by 5% per annum.
For your investment into the combined fund, I suggest that you invest $1,000 a month over 10 months, to make a total investment of $10,000. This will help to spread out the investments and get an average price for your investments. In the meantime, you can invest the money in the money market fund and transfer it gradually over the next 10 months.
Alternatively, you can put the entire investment in the money markt fund and wait for a market correction to move into the combined fund. I am adopting this approach for my personal investments.
Tan Kin Lian
Higher bonuses from 1 January 2007
NTUC Income will be increasing its bonus rates for policyholders from 1 January 2007.
The revised bonus rates will increase the cost of bonus for 2006 by 26%, or an additional $70 million. The key changes are:
- the bonus rates for Whole life plans will incease by $3 per $1000
- the bonus rates for Harvest plans (incepted before Sept 2005) will increase by $1 per 1000 sum assured
- the compounding rate of the accumulated bonus for these policies will increase by 0.3% and0.1% respectively
- the bonus rates for participating annuity plans will increase by 0.25%
The revised bonus rates for these plans will increase the return on these plans. A total of 405,000 policies, representing 54% of the total portfolio, will benefit from this increase.
The bonus rates for endowment plans will remain the same, as they are already enjoying a fairly high rate of return.
The special bonus on surrenders will also be increased to 15% (for durations of 10 to 19 years) and 25% (for durations of 20 years or longer). This will benefit all plans, including the endowment plans. It will give a higher return to policyholders who decide to terminate their policies earlier, usually for financial reasons. We wish to give a better return to these policyholders as well.
The revised bonus rates will increase the cost of bonus for 2006 by 26%, or an additional $70 million. The key changes are:
- the bonus rates for Whole life plans will incease by $3 per $1000
- the bonus rates for Harvest plans (incepted before Sept 2005) will increase by $1 per 1000 sum assured
- the compounding rate of the accumulated bonus for these policies will increase by 0.3% and0.1% respectively
- the bonus rates for participating annuity plans will increase by 0.25%
The revised bonus rates for these plans will increase the return on these plans. A total of 405,000 policies, representing 54% of the total portfolio, will benefit from this increase.
The bonus rates for endowment plans will remain the same, as they are already enjoying a fairly high rate of return.
The special bonus on surrenders will also be increased to 15% (for durations of 10 to 19 years) and 25% (for durations of 20 years or longer). This will benefit all plans, including the endowment plans. It will give a higher return to policyholders who decide to terminate their policies earlier, usually for financial reasons. We wish to give a better return to these policyholders as well.
Over 100 i-Gifts sold each week
The i-Gift sells very well. The results are much better than expected. Over 100 policies are sold each week.
i-Gift is a product that offers a guaranteed income for a fixed term. It is actually an annuity certain.
The average investment is about $50,000. 80% of the investors choose 5 year term, while the other 20% choose 10 and 15 year term.
i-Gift
It is popular as it offers a guaranteed return of more than 3%.
The current tranche will be withdrawn soon. The next tranche will offer a lower return, as interest rates have declined recently.
i-Gift is a product that offers a guaranteed income for a fixed term. It is actually an annuity certain.
The average investment is about $50,000. 80% of the investors choose 5 year term, while the other 20% choose 10 and 15 year term.
i-Gift
It is popular as it offers a guaranteed return of more than 3%.
The current tranche will be withdrawn soon. The next tranche will offer a lower return, as interest rates have declined recently.
Our policyholders get $3,000 more on maturity
A total of 31,000 endowment policies matured during 2005 and 2006. The total payout was $740 million, or an average of $23,800 per policy.
We give about 15% to 20% more to our policyholder, compared to a similar policy taken with another insurer. This works out to an average of $3,000 more.
We are able to give a better return to our policyholder due to our lower commision to agent and lower profit distributed to shareholders. We are a cooperative society.
Each month, more than 1,000 policyholders enjoy this benefit, without realising it. We will be more active in communicating this fact to our policyholders.
We give about 15% to 20% more to our policyholder, compared to a similar policy taken with another insurer. This works out to an average of $3,000 more.
We are able to give a better return to our policyholder due to our lower commision to agent and lower profit distributed to shareholders. We are a cooperative society.
Each month, more than 1,000 policyholders enjoy this benefit, without realising it. We will be more active in communicating this fact to our policyholders.
Tuesday, November 28, 2006
Re-invest into the Combined Fund
Dear Mr Tan
I bought this policy from Co X in year 2000 through an Insurance broker.
a) Enhanced living assurance, S$1924 per year
b) Premium payable for 52 years from age 33
c) Sum assured: $100,000 with annual reversionary bonus of $10/$1000 sum assured plus 1% of accumulated bonus.
d) From the sale quotation, at age 65 total premium paid-up S$61,568, surrender value : guaranteed 57400 non guaranteed S$33,190
e) Current policy status: total premium S$11,544, surrender value : guaranteed S$8,000 non guaranteed S$2,251
I have seriously considered surrendering this policy and go into term policy. What is your advice.
PL
---------------------
Dear PL
If you surrender the current policy and invest the cash value in our Ideal Combined Fund, you are likely to get the following:
a) Single premium: $10,251
b) Regular premium of $1,924 per year, $250 is used for decreasing term assurance, $1,674 is invested in the Combined Fund
Projected benefit at age 65 (not guaranteed)
- $125,900 based on return of 5% a year
- $181,600 based on return of 7% a year
The accumulated savings at age 65 is higher than that projected value ($90,000) under your current policy at age 65.
Tan Kin Lian
I bought this policy from Co X in year 2000 through an Insurance broker.
a) Enhanced living assurance, S$1924 per year
b) Premium payable for 52 years from age 33
c) Sum assured: $100,000 with annual reversionary bonus of $10/$1000 sum assured plus 1% of accumulated bonus.
d) From the sale quotation, at age 65 total premium paid-up S$61,568, surrender value : guaranteed 57400 non guaranteed S$33,190
e) Current policy status: total premium S$11,544, surrender value : guaranteed S$8,000 non guaranteed S$2,251
I have seriously considered surrendering this policy and go into term policy. What is your advice.
PL
---------------------
Dear PL
If you surrender the current policy and invest the cash value in our Ideal Combined Fund, you are likely to get the following:
a) Single premium: $10,251
b) Regular premium of $1,924 per year, $250 is used for decreasing term assurance, $1,674 is invested in the Combined Fund
Projected benefit at age 65 (not guaranteed)
- $125,900 based on return of 5% a year
- $181,600 based on return of 7% a year
The accumulated savings at age 65 is higher than that projected value ($90,000) under your current policy at age 65.
Tan Kin Lian
Set aside money for your grandchild
A friend wanted to set aside some money to be given to a grandchild when he reaches the age of 25 years.
Here is a suggestion. Take the Flexi-Link policy in the name of the grandparent, and nominate the child as the beneficiary.
The grandparent will have control over the policy during her lifetime.
On the death of the policyholder, we will transfer the policy in the name of the beneficiary and continue it for the remaining term. If the beneficiary is still a minor, the parent can act as the guardian.
Here is a suggestion. Take the Flexi-Link policy in the name of the grandparent, and nominate the child as the beneficiary.
The grandparent will have control over the policy during her lifetime.
On the death of the policyholder, we will transfer the policy in the name of the beneficiary and continue it for the remaining term. If the beneficiary is still a minor, the parent can act as the guardian.
Increase in bonus rates from 1 January 2007
NTUC Income is making an increase in its bonus rates for our living, protection and certain harvest plans from 1 January 2007. The revised bonus will represent an increase of 26% in the cost of bonus for 2006, or an additional $60 million (estimated) a year.
The revised bonus rates will also apply to all existing policies under these plans and new policies taken from this year.
Currently, NTUC Income offers the best return in the market for our popular plans. With the revised bonus rates, our plans will become more attractive.
The special bonus on policies surrendered after 10 years will also be increased.
More details will be announced soon.
The revised bonus rates will also apply to all existing policies under these plans and new policies taken from this year.
Currently, NTUC Income offers the best return in the market for our popular plans. With the revised bonus rates, our plans will become more attractive.
The special bonus on policies surrendered after 10 years will also be increased.
More details will be announced soon.
Advice on Home Financing
Dear Mr Tan,
I have read the numerous financial advice you gave on your blog, a very generous act of you to provide such valuable insight to the various investment and insurance schemes in the market.
I think NTUC Income, under your leadership, is one of the very few that really take good cares of the money invested by its customers.
I have a condo apartment which is fully paid up, and currently rented out to earn a modest rental. The condo has about 75 years lease remaining.
I am living in a landed property which I have bought 10 years ago. It has an outstanding mortgage loan, currently at 4% interest rate. The outstanding loan is about half of the market value of the property. The rental income from my condo is sufficient to cover the interest charge on this property.
I need to raise cash to finance my children's university education abroad. I am thinking of 2 options:
1. Refinance the condo and use part of the money to pay off the mortgage loan on my house. I can use the rental income to offset against the interest charge. If I sell the condo later, I have to return all the proceeds from sales to CPF (i.e. cannot be used to redeem the loan on my landed property).
2. Sell the condo, return the proceed to CPF (as it was used to pay for the condo), apply to withdraw my CPF to replay the loan on my landed property.
As the property market is slowly moving up, selling the condo now will not fetch me the best price. However, the value of the condo will also drop as it approaches 70 years. It is unlikely that the project has any enbloc potential.
I would appreciate it if you can enlighten me on your views on the options available for me, and whether NTUC has any suitable financing scheme that I can consider in refinancing my properties.
WF
-------------------
Dear WF
Apart from selling your condo now (which you are reluctant to do so, as the property market is now on the uptrend), you have the following options:
a) refinance the loan on your landed property and have an additional sum that is sufficient to provide financing for your children's education
b) take a new loan on your condo
You can take a normal loan (which requires monthly repayment) or a reverse mortgage loan (which does not require any payment). The reverse mortgage is available only to people beyond a certain age.
I will get my loan officer to contact and advise you.
Reverse Mortgage
Tan Kin Lian
I have read the numerous financial advice you gave on your blog, a very generous act of you to provide such valuable insight to the various investment and insurance schemes in the market.
I think NTUC Income, under your leadership, is one of the very few that really take good cares of the money invested by its customers.
I have a condo apartment which is fully paid up, and currently rented out to earn a modest rental. The condo has about 75 years lease remaining.
I am living in a landed property which I have bought 10 years ago. It has an outstanding mortgage loan, currently at 4% interest rate. The outstanding loan is about half of the market value of the property. The rental income from my condo is sufficient to cover the interest charge on this property.
I need to raise cash to finance my children's university education abroad. I am thinking of 2 options:
1. Refinance the condo and use part of the money to pay off the mortgage loan on my house. I can use the rental income to offset against the interest charge. If I sell the condo later, I have to return all the proceeds from sales to CPF (i.e. cannot be used to redeem the loan on my landed property).
2. Sell the condo, return the proceed to CPF (as it was used to pay for the condo), apply to withdraw my CPF to replay the loan on my landed property.
As the property market is slowly moving up, selling the condo now will not fetch me the best price. However, the value of the condo will also drop as it approaches 70 years. It is unlikely that the project has any enbloc potential.
I would appreciate it if you can enlighten me on your views on the options available for me, and whether NTUC has any suitable financing scheme that I can consider in refinancing my properties.
WF
-------------------
Dear WF
Apart from selling your condo now (which you are reluctant to do so, as the property market is now on the uptrend), you have the following options:
a) refinance the loan on your landed property and have an additional sum that is sufficient to provide financing for your children's education
b) take a new loan on your condo
You can take a normal loan (which requires monthly repayment) or a reverse mortgage loan (which does not require any payment). The reverse mortgage is available only to people beyond a certain age.
I will get my loan officer to contact and advise you.
Reverse Mortgage
Tan Kin Lian
Monday, November 27, 2006
Dubai does not require any entry card
I arrived in Dubai early this morning. I was surprised that there is no need to fill in any entry card.
In all the countries that I visited, I am always required to fill in a card for immigration and for customs. Even Singapore require tourists to fill in a card for "statistics" purpose.
Dubai is the only place that does not require this unnecessary hassle. Well done to Dubai!
In all the countries that I visited, I am always required to fill in a card for immigration and for customs. Even Singapore require tourists to fill in a card for "statistics" purpose.
Dubai is the only place that does not require this unnecessary hassle. Well done to Dubai!
Sunday, November 26, 2006
Is high property prices good or bad?
High property prices is good for property owners. But it is bad for the future generation, as they have to pay more for their property.
A property bubble may burst and cause losses to many people who bought their property at the peak.
The best situation is a situation where the supply and demand for property is properly managed, so that the property prices will appreciate gradually with the economic growth, and excessive speculation is avoided.
I hope that the current enthusiasm in our property market do not get out of control.
A property bubble may burst and cause losses to many people who bought their property at the peak.
The best situation is a situation where the supply and demand for property is properly managed, so that the property prices will appreciate gradually with the economic growth, and excessive speculation is avoided.
I hope that the current enthusiasm in our property market do not get out of control.
Avoid driving to work
For the past 30 years, I have a driver who drives me to work and back home. This allows me to think and plan business strategy. When I am in the office, my driver helps in handling the mail in the office services department.
I figure that it is less expensive to have a driver, than to have an expensive CEO to be driving around and to spend time in parking the car.
When I leave NTUC Income, I will continue to use a different type of driver, ie the bus or train driver. This allows me to continue to think and plan, instead of watching the road.
I figure that it is less expensive to have a driver, than to have an expensive CEO to be driving around and to spend time in parking the car.
When I leave NTUC Income, I will continue to use a different type of driver, ie the bus or train driver. This allows me to continue to think and plan, instead of watching the road.
How to overtime the Time Bomb
Two years ago, a journalist wrote about the "time bomb" in several investment-linked products. The key feature of these products is the higher cost of the life insurance cover as each year passes by. At some stage, the cost of the cover is more than the monthly premiums.
The products sold by NTUC Income do NOT have this feature. If you have invested in the products of some other insurance companies that have the "time bomb", this is what you can do.
- Ask your insurance company to confirm that you are allowed to cancel the life insurance cover at any time. In most cases, this is allowed.
- Check the premium rates for the life insurance cover for the future years, until you reach age 65.
- Compare the total premium with the low-cost term insurance cover offered by NTUC Income for the same sum assured and number of years. You will probably find our premium rates to be (perhaps) 30% lower.
If your insurance company insists that the life insurance cover cannot be terminated separately, you can consider to terminate the policy entirely and re-invest your money in our Flexi-Link plan.
Flexi-Link
You can buy the term insurance separately.
Low cost Term Assurance
The products sold by NTUC Income do NOT have this feature. If you have invested in the products of some other insurance companies that have the "time bomb", this is what you can do.
- Ask your insurance company to confirm that you are allowed to cancel the life insurance cover at any time. In most cases, this is allowed.
- Check the premium rates for the life insurance cover for the future years, until you reach age 65.
- Compare the total premium with the low-cost term insurance cover offered by NTUC Income for the same sum assured and number of years. You will probably find our premium rates to be (perhaps) 30% lower.
If your insurance company insists that the life insurance cover cannot be terminated separately, you can consider to terminate the policy entirely and re-invest your money in our Flexi-Link plan.
Flexi-Link
You can buy the term insurance separately.
Low cost Term Assurance
Friday, November 24, 2006
Middle East Fever
A few days ago, the newspapers reported the recent visit by Mr Lee Kuan Yew to the Middle East.
Over the next few weeks, there will be several delegations from Singapore led by our government leaders to the Middle East.
I am in close contact with two organisations in the Middle East to introduce the concept of the "Insurance Company for the 21st Century" to several countries in the Middle East and North Africa.
I expect to be quite busy in this region, after leaving NTUC Income.
Over the next few weeks, there will be several delegations from Singapore led by our government leaders to the Middle East.
I am in close contact with two organisations in the Middle East to introduce the concept of the "Insurance Company for the 21st Century" to several countries in the Middle East and North Africa.
I expect to be quite busy in this region, after leaving NTUC Income.
Thursday, November 23, 2006
Better to buy annuity certain (ie i-Gift)
Dear Mr. Tan,
I am interested in the annuity, with no capital protection. When it will be ready for roll-out? I am age 37.
Two years back I bought a life annuity policy from UOB, because UOB doesn't have age limit. I intend to buy another annuity policy in near future. I hope that Income will lower the age limit with this new product.
C
-----------------
Dear C
I suggest that you buy our 20 year annuity certain (i-Gift). It is extremely popular and is available now.
Details at: i-Gift
I will ask our product specialist to contact you.
Tan Kin Lian
I am interested in the annuity, with no capital protection. When it will be ready for roll-out? I am age 37.
Two years back I bought a life annuity policy from UOB, because UOB doesn't have age limit. I intend to buy another annuity policy in near future. I hope that Income will lower the age limit with this new product.
C
-----------------
Dear C
I suggest that you buy our 20 year annuity certain (i-Gift). It is extremely popular and is available now.
Details at: i-Gift
I will ask our product specialist to contact you.
Tan Kin Lian
Hi Mr Tan Kin Lian,
Sad to hear that you will be leaving NTUC Income. Your years of contribution have made NTUC Income not only a household name but a well established organisation. While you are still in NTUC Income, I would like to seek some valuable advice for my wife retirement.
She will be reaching 55 years of age next month. She has very little saving in her CPF, about 10K, as she had stopped working after getting married. I have a saver plan of 50K in a local insurance company (not NTUC Income) which will be maturing next month. The matured value is about 61K.
I am not sure whether to use it to top up her retirement account or to buy an
annuity. Is there any other better option? Incidentally I have already retired and have bought an annuity from NTUC Income.
Grateful if you could advise me on a practicable approach.
CJM
-----------------
Dear CJM
My colleague will arrange for our product specialist to advise you. He will give you two options (i.e. i-Gift and life annuity) and compare with the retirement account.
If you are allowed to top up the CPF retirement account and earn 4% per annum, I think that this is probably the best deal.
Tan Kin Lian
Sad to hear that you will be leaving NTUC Income. Your years of contribution have made NTUC Income not only a household name but a well established organisation. While you are still in NTUC Income, I would like to seek some valuable advice for my wife retirement.
She will be reaching 55 years of age next month. She has very little saving in her CPF, about 10K, as she had stopped working after getting married. I have a saver plan of 50K in a local insurance company (not NTUC Income) which will be maturing next month. The matured value is about 61K.
I am not sure whether to use it to top up her retirement account or to buy an
annuity. Is there any other better option? Incidentally I have already retired and have bought an annuity from NTUC Income.
Grateful if you could advise me on a practicable approach.
CJM
-----------------
Dear CJM
My colleague will arrange for our product specialist to advise you. He will give you two options (i.e. i-Gift and life annuity) and compare with the retirement account.
If you are allowed to top up the CPF retirement account and earn 4% per annum, I think that this is probably the best deal.
Tan Kin Lian
Is this a good plan?
Dear Mr Tan,
I wish to seek your opinion on my following whole life plan.
Quick summary:
I bought this policy in year 2000 through an Insurance broker.
- Plan: Enhanced living assurance
- Premium: S$1924 per year
- Start date: 23/5/2000 age 33
- Premium cessation date 22/3/2052 (ie age 85)
- Sum assured: S$100000
- Annual reversionary bonus: $10/$1000 sum assured plus 1% of accumulated bonus.
Projection at time of purchase:
- At age 65: total premium S$61,568
- Death benefit: guaranteed S$100,000 non guaranteed S$84,361
- Surrender value : guaranteed 57400 non guaranteed S$33,190
Current policy status as at year 2006:
- Total premium paid-up S$11,544
- Total bonus declared S$6,152 (meet expectation at in quotation)
- Death benefit :guaranteed S$100,000 non guaranteed S$6,152
- Surrender value : guaranteed S$8,000 non guaranteed S$2,251
I have seriously considered surrendering this policy and go into term policy.
Appreciate your kind advise if this is a wise choice for me.
LYF
-----------------
Dear LYF
Let me get my colleague to take a look at it. We will reply to you within a few days.
The living assurance covers 30 critical illness. What does the "enhanced" cover?
My initial response is that it is better for you to continue with the current policy as it provides covers "enhanced" critical illness for the whole of life. If you buy a decreasing term assurance, including cover for critical illness, it will expire at a certain age, e.g. 65 years.
Let me see if the accumulated savings at that time is more than sufficient to offset the loss of coverage
Tan Kin Lian
I wish to seek your opinion on my following whole life plan.
Quick summary:
I bought this policy in year 2000 through an Insurance broker.
- Plan: Enhanced living assurance
- Premium: S$1924 per year
- Start date: 23/5/2000 age 33
- Premium cessation date 22/3/2052 (ie age 85)
- Sum assured: S$100000
- Annual reversionary bonus: $10/$1000 sum assured plus 1% of accumulated bonus.
Projection at time of purchase:
- At age 65: total premium S$61,568
- Death benefit: guaranteed S$100,000 non guaranteed S$84,361
- Surrender value : guaranteed 57400 non guaranteed S$33,190
Current policy status as at year 2006:
- Total premium paid-up S$11,544
- Total bonus declared S$6,152 (meet expectation at in quotation)
- Death benefit :guaranteed S$100,000 non guaranteed S$6,152
- Surrender value : guaranteed S$8,000 non guaranteed S$2,251
I have seriously considered surrendering this policy and go into term policy.
Appreciate your kind advise if this is a wise choice for me.
LYF
-----------------
Dear LYF
Let me get my colleague to take a look at it. We will reply to you within a few days.
The living assurance covers 30 critical illness. What does the "enhanced" cover?
My initial response is that it is better for you to continue with the current policy as it provides covers "enhanced" critical illness for the whole of life. If you buy a decreasing term assurance, including cover for critical illness, it will expire at a certain age, e.g. 65 years.
Let me see if the accumulated savings at that time is more than sufficient to offset the loss of coverage
Tan Kin Lian
Wednesday, November 22, 2006
Consistency in service standard
Mr Peh,
Just a brief note to thank you once again for your assistance in resolving the matter.
I thought I would give you some feedback on my dealings with your colleagues during this matter.
Although I still have my concerns regarding the issues, and did not always agree with the position adopted or the responses, which sometimes came across as inflexible or did not directly address the issues raised, at all times your colleagues conducted themselves very professionally and politely.
I came away with a very positive impression of the consistency in service standards, and would like to compliment your team on what appears to be a very good customer service culture.
LBC
-------------------------
Dear LBC
Thank you for your positive feedback on service rendered by my colleagues. I am glad that our colleagues from Service Quality Unit and Life Insurance Department delivered consistent service standard in dealing with the matter.
As for your compliment of good customer service culture, the credit should go to our CEO Mr Tan. He leads by example in dealing with customers and we try to follow the standard set by him.
We appreciate your time and effort in giving us your feedback. Thank you.
Peh Chee Keong
Just a brief note to thank you once again for your assistance in resolving the matter.
I thought I would give you some feedback on my dealings with your colleagues during this matter.
Although I still have my concerns regarding the issues, and did not always agree with the position adopted or the responses, which sometimes came across as inflexible or did not directly address the issues raised, at all times your colleagues conducted themselves very professionally and politely.
I came away with a very positive impression of the consistency in service standards, and would like to compliment your team on what appears to be a very good customer service culture.
LBC
-------------------------
Dear LBC
Thank you for your positive feedback on service rendered by my colleagues. I am glad that our colleagues from Service Quality Unit and Life Insurance Department delivered consistent service standard in dealing with the matter.
As for your compliment of good customer service culture, the credit should go to our CEO Mr Tan. He leads by example in dealing with customers and we try to follow the standard set by him.
We appreciate your time and effort in giving us your feedback. Thank you.
Peh Chee Keong
Are you getting a good deal on your insurance policy?
I get a few enquiries each day from the public. They ask for my views about the insurance plan that that they have taken from another company.
I will do my best to give an impartial analysis. If you are interested in a second opinion, you can send the following facts to me:
- how much is the premium
- how long do you have to pay
- what is the sum assured
- what is the amount that you can get on maturity
I will try to see if you got a good deal.
If your policy has recently matured, you can send the details to me. I shall tell you about what is the return, if you had invested the same sum in a similar policy from NTUC Income.
Send to tankl@income.coop.
I will do my best to give an impartial analysis. If you are interested in a second opinion, you can send the following facts to me:
- how much is the premium
- how long do you have to pay
- what is the sum assured
- what is the amount that you can get on maturity
I will try to see if you got a good deal.
If your policy has recently matured, you can send the details to me. I shall tell you about what is the return, if you had invested the same sum in a similar policy from NTUC Income.
Send to tankl@income.coop.
I invested $500,000 in Flexi Cash
I have decided to withdraw my savings from the CPF, as I am now passed 55 years. I just invested $500,000 in Flexi Cash.
During the past 3 months, Flexi Cash earned 3.5% annualised. This is an attractive rate of return.
I will wait for the right time to transfer from Flexi Cash to other funds, such as the Global Equity or Combined fund.
During the past 3 months, Flexi Cash earned 3.5% annualised. This is an attractive rate of return.
I will wait for the right time to transfer from Flexi Cash to other funds, such as the Global Equity or Combined fund.
Poor return from competitor's policy
A consumer asked for my view about this "cash" policy taken with another insurance company:
- monthly premium $225
- term of policy: 21 years
- annual payout (from 2nd anniversary) $1,500
- sum assured $30,000
On subsequent enquiry, it seems that this is a participating plan, and the projected maturity benefit (not guaranteed), is $38,000.
Based on the projected benefit and annual payment, this plan offers a return of only 1.3% per annum for 21 years, which is rather low.
I advised the consumer to check with his insurance adviser on the guaranteed return, and on the likelihood of getting better than guaranteed.
The consumer is now considering to buy a term insurance from NTUC Income and to invest the remainder of the monthly premium in our Combined Fund. It should give a much better return.
- monthly premium $225
- term of policy: 21 years
- annual payout (from 2nd anniversary) $1,500
- sum assured $30,000
On subsequent enquiry, it seems that this is a participating plan, and the projected maturity benefit (not guaranteed), is $38,000.
Based on the projected benefit and annual payment, this plan offers a return of only 1.3% per annum for 21 years, which is rather low.
I advised the consumer to check with his insurance adviser on the guaranteed return, and on the likelihood of getting better than guaranteed.
The consumer is now considering to buy a term insurance from NTUC Income and to invest the remainder of the monthly premium in our Combined Fund. It should give a much better return.
Flexi Cash earned 3.5% annualised
Our Flexi Cash (invested in money market fund) earned 3.5% annualised during the latest 3 months.
The bid prices are:
2/5/06 -- $1.028
1/8/06 -- $1.035 (0.68% over 3 mths)
1/11/06 -- $1.044 (0.87% over 3 mths)
Interest rate is creeping up. The money market fund is now earning higher. Wow!
The bid prices are:
2/5/06 -- $1.028
1/8/06 -- $1.035 (0.68% over 3 mths)
1/11/06 -- $1.044 (0.87% over 3 mths)
Interest rate is creeping up. The money market fund is now earning higher. Wow!
Beware of insurance advisers "churning" your policies
Some insurance advisers have an unethical practice of "churning" the life insurance policies of their clients.
They advise their clients to stop their current policy and buy a "better" product. Being more knowledgeable, they are usually able to present a "convincing" case. Usually, the presentation is misleading.
The unsuspecting client take the advice of the adviser, who has the chance to earn a large commission on the sale of the new policy. The client is worse off, as they have to incur a large upfront cost, which may amount to two years of premium.
NTUC Income has measures to prevent the "churning" of life insurance policies. Our policies stay with us for many years.
Some other companies have policies that are churned every few years. The duration of their policies are usually much shorter.
Beware about churning. If your insurance adviser shows you how you can be better off by terminating an existing policy to buy a new policy, he is churning.
They advise their clients to stop their current policy and buy a "better" product. Being more knowledgeable, they are usually able to present a "convincing" case. Usually, the presentation is misleading.
The unsuspecting client take the advice of the adviser, who has the chance to earn a large commission on the sale of the new policy. The client is worse off, as they have to incur a large upfront cost, which may amount to two years of premium.
NTUC Income has measures to prevent the "churning" of life insurance policies. Our policies stay with us for many years.
Some other companies have policies that are churned every few years. The duration of their policies are usually much shorter.
Beware about churning. If your insurance adviser shows you how you can be better off by terminating an existing policy to buy a new policy, he is churning.
Saturday, November 18, 2006
This structured product is bad for consumers
Here is another example of a structured product that is bad for consumers.
- guarantees a full return of your principal at the end of 6 years
- gives a potential large gain (through a complicated investment strategy)
To give the full refund of principal, the manager invests 80% of the fund in safe bonds (which now earns about 3.5% p.a) . To give the potential large gain, they invest 10% to 15% of the fund in speculative investments, such as options or derivatives.
The chance of making a big gain from the speculative investments is small. It is like gambling.
This structured product imposes an additional cost of 5% to 10% to pay fees for the fund arranger and the distributors (usually banks). These fees have to be paid by the investors (i.e you).
With this type of structure, most investors find that their return on maturity is usually lower than the return on bonds (due to the high fees).
If the investor had invested directly in an equity fund, they would have received spectacular returns over the past three years. The investors in structured products have come out quite badly.
-------------------
There is now a new variation of structured products, which now give an attractive payout, say 5% per annum. Many investors do not realise that this return is actually taken out of your principal. They were misled into thinking that the structured product was able to earn this return.
Many investors are now stuck with these types of bad products. If they wish to withdraw from the investments, they have to suffer a loss now (due to the high fees).
- guarantees a full return of your principal at the end of 6 years
- gives a potential large gain (through a complicated investment strategy)
To give the full refund of principal, the manager invests 80% of the fund in safe bonds (which now earns about 3.5% p.a) . To give the potential large gain, they invest 10% to 15% of the fund in speculative investments, such as options or derivatives.
The chance of making a big gain from the speculative investments is small. It is like gambling.
This structured product imposes an additional cost of 5% to 10% to pay fees for the fund arranger and the distributors (usually banks). These fees have to be paid by the investors (i.e you).
With this type of structure, most investors find that their return on maturity is usually lower than the return on bonds (due to the high fees).
If the investor had invested directly in an equity fund, they would have received spectacular returns over the past three years. The investors in structured products have come out quite badly.
-------------------
There is now a new variation of structured products, which now give an attractive payout, say 5% per annum. Many investors do not realise that this return is actually taken out of your principal. They were misled into thinking that the structured product was able to earn this return.
Many investors are now stuck with these types of bad products. If they wish to withdraw from the investments, they have to suffer a loss now (due to the high fees).
My wife is very happy with her investments
For many years, my wife invested her savings in fixed deposits to earn interest rate at around 4%. When interest rate dropped, she was asked by the bank to invest in various types of special investment products and funds. Like countless other people, she had a bad experience with most of these investments.
During the past two years, she has been investing her savings into the combined fund from NTUC Income.
Recently, she found to her delight and surprise, that the investments had gained $40,000. She had never enjoyed this type of gain (must be more than 15%) on her other types of investments over the years.
Lesson:
1. Do not invest in structured or guaranteed products
2. Take the investment risk, but invest for many years (to average out the good and bad years)
3. Invest in a large, well diversified fund
4. Invest in a fund with low fees (and keep most of the gains for yourself)
5. Invest with NTUC Income
During the past two years, she has been investing her savings into the combined fund from NTUC Income.
Recently, she found to her delight and surprise, that the investments had gained $40,000. She had never enjoyed this type of gain (must be more than 15%) on her other types of investments over the years.
Lesson:
1. Do not invest in structured or guaranteed products
2. Take the investment risk, but invest for many years (to average out the good and bad years)
3. Invest in a large, well diversified fund
4. Invest in a fund with low fees (and keep most of the gains for yourself)
5. Invest with NTUC Income
FAQ: Is it safe to invest, when the stock market is high?
1. Is it safe to invest when the stock market is high?
At present (November 2007), the stockmarket is at an all time high. If you look forward, the projected price earning ratio (PER) is 15 times. This is an acceptable level. It is not low, but it is not high.
You have the following option to invest your savings:
- life annuity
- growth policy
- flexi-link policy
2. What is most suitable for people above 60 years?
It is a good time to buy a life annuity. You can get an attractive payback (5% or more) with a bonus that can
add another 2% to 3% to the return (not guaranteed). The bonus will be compounded. If you have invested in a fund previously and made a good gain, it is a good time to make the switch.
3. What is most suitable for people for investing a lump sum?
If you do not wish to take market risk now, you can invest in our growth plan. It is for a lump sum investment (using your CPF, SRS or FD). It has a guaranteed return of at least 2% per annum. With bonus, it is likely to earn about 4% to 5% p.a. It is quite safe.
If you wish to take some risk and invest for 10 years or longer, you can take up a flexi-link policy and invest your lump sum in the combined fund or global equity fund. It is likely to earn an attractive return (say, 6% or more, but ths is not guaranteed). If you invest for many years, you will average out the return from the good years and the bad years.
If you feel that the stock market is too high, you can invest your savings temporarily in a money market fund or keep it in the CPF for the time being. You can take a flexi-link policy with a small investment. You can top-up the investments in the flexi-link policy in installments over the next 6 to 12 months.
The money market fund earns a market interest rate, which is currently about 2.5% to 3% per annum. There is no lock-in period. You can transfer the money from this fund into the flexi-link policy at any time, without any penalty.
4. What is most suitable for investing monthly savings?
If you are investing your monthly savings for many years, you should take up the ideal plan and invest the savings in the combined fund or global equity fund.
As you are making small investments over many years, you do not need to worry about the level of the market now. You will be averaging out the cost of your investments over the years.
You will also get a good return, by averaging out the return form the good years and the bad years.
5. Can I get a better return from NTUC Income, compared to similar funds elsewhere?
You should choose a large, well diversified fund. Choose a global equity fund or a combined fund with a mix of equities and bonds.
All well managed and diversified funds should produce about similar returns over many years. Some funds may perform better in some years, and worse in other years. It is difficult to identify the funds that will perform consistently better than other funds over the long term, unless they are actively managed in a speculative manner.
It is better to choose a fund that have low fees. This allows most of the return to be given to the investor. For an actively managed fund, you should choose a fund with an annual fee of 1% or lower.
NTUC Income has several large, well diversified funds with an annual fee of 1% or lower. Most of the other funds in the same asset category have an annual fee of 1.5% to 2.5% or even higher.
A difference of 1% in the annual fee will amount to a lot of money after 10 to 20 years. If your investment grows to $200,000 with another fund with high charges, the same investment in a similar fund from NTUC Income can, for example, give you $30,000 more, due to our lower charges (based on a difference of 1% for 15 years).
End of FAQ
At present (November 2007), the stockmarket is at an all time high. If you look forward, the projected price earning ratio (PER) is 15 times. This is an acceptable level. It is not low, but it is not high.
You have the following option to invest your savings:
- life annuity
- growth policy
- flexi-link policy
2. What is most suitable for people above 60 years?
It is a good time to buy a life annuity. You can get an attractive payback (5% or more) with a bonus that can
add another 2% to 3% to the return (not guaranteed). The bonus will be compounded. If you have invested in a fund previously and made a good gain, it is a good time to make the switch.
3. What is most suitable for people for investing a lump sum?
If you do not wish to take market risk now, you can invest in our growth plan. It is for a lump sum investment (using your CPF, SRS or FD). It has a guaranteed return of at least 2% per annum. With bonus, it is likely to earn about 4% to 5% p.a. It is quite safe.
If you wish to take some risk and invest for 10 years or longer, you can take up a flexi-link policy and invest your lump sum in the combined fund or global equity fund. It is likely to earn an attractive return (say, 6% or more, but ths is not guaranteed). If you invest for many years, you will average out the return from the good years and the bad years.
If you feel that the stock market is too high, you can invest your savings temporarily in a money market fund or keep it in the CPF for the time being. You can take a flexi-link policy with a small investment. You can top-up the investments in the flexi-link policy in installments over the next 6 to 12 months.
The money market fund earns a market interest rate, which is currently about 2.5% to 3% per annum. There is no lock-in period. You can transfer the money from this fund into the flexi-link policy at any time, without any penalty.
4. What is most suitable for investing monthly savings?
If you are investing your monthly savings for many years, you should take up the ideal plan and invest the savings in the combined fund or global equity fund.
As you are making small investments over many years, you do not need to worry about the level of the market now. You will be averaging out the cost of your investments over the years.
You will also get a good return, by averaging out the return form the good years and the bad years.
5. Can I get a better return from NTUC Income, compared to similar funds elsewhere?
You should choose a large, well diversified fund. Choose a global equity fund or a combined fund with a mix of equities and bonds.
All well managed and diversified funds should produce about similar returns over many years. Some funds may perform better in some years, and worse in other years. It is difficult to identify the funds that will perform consistently better than other funds over the long term, unless they are actively managed in a speculative manner.
It is better to choose a fund that have low fees. This allows most of the return to be given to the investor. For an actively managed fund, you should choose a fund with an annual fee of 1% or lower.
NTUC Income has several large, well diversified funds with an annual fee of 1% or lower. Most of the other funds in the same asset category have an annual fee of 1.5% to 2.5% or even higher.
A difference of 1% in the annual fee will amount to a lot of money after 10 to 20 years. If your investment grows to $200,000 with another fund with high charges, the same investment in a similar fund from NTUC Income can, for example, give you $30,000 more, due to our lower charges (based on a difference of 1% for 15 years).
End of FAQ
Thursday, November 16, 2006
FAQ: Ideal Policy (revised)
FAQ: Ideal Policy
Earn up to $30,000 more, compared to similar plans in the market
1. What is Ideal Policy?
It is an investment linked plan for investing your regular savings, e.g. from your monthly earnings. You can earn an attractive return (not guaranteed) from an investment fund.
2. What are the key features of the Ideal Policy?
The attractive features are:
- The regular savings are invested in a large, well diversified fund
- 85% of the savings are invested during the first 3 years, 100% thereafter
- The charges are among the lowest in the market
- You are insured for 60 months of your savings, at no additional charge
3. What is the projected return?
The future return on your investment is not guaranteed. It will depend on the actual return from the investments of the fund over the period that you have invested.
Over the past ten years, the average return from investing in global equities is about 8% per annum.
The following tables shows the projected amount (not guaranteed) at the end of 30 years for a regular investment of $200 per month:
Assumed net return - after deducting fund management fee
Gain (estimated) - after deducting upfront and other fees
If you earn a net return of 7% per annum from your fund, you will get more than 3 times of your original investment and more than 2 times compared to a safe investment that earns 2.5% per annum.
4. Is it risky to invest in a fund?
By investing in an equity or balanced fund, you can earn a higher return.
You can minimise your risk by investing in a large, well diversified fund that is benchmarked against the market. The large fund is well diversified in many investments. If a few investments turn bad, they are likely to be offset by the good performance of other investments. .
If you invest for 10 years or longer, you will be able to average out the performance in good and bad years and earn an average long term return. This return should be much higher than safe investments, such as bank deposits or the Central Provident Fund.
5. Will NTUC Income give a better return, compared to similar funds in the market?
All large, well diversified funds should earn a similar return over the long term, provided that they are well managed and are invested in the same risk category.
The advantage of investing in a fund managed by NTUC Income is our low upfront and annual fee. We have among the lowest charges in the market.
Our upfront fee (i.e. spread) is only 3.5%, compared to 5% charged by most other funds. Our annual fee is about 1%, compared to 1.5% to 2% charged by other funds.
We invest a larger proportion of your savings, compared to similar plans in the market. The difference is nearly 1 year of your savings. This is due to the lower commission rate that is paid to our adviser.
The difference in fees can amount to 20% over an investment period of 30 years. If you invest $200 over 30 years to get a return of (say) $150,000 on maturity, the difference in fees can amount to $30,000. You can get $30,000 more from NTUC Income, due to our low charges.
The other funds will take an additional $1,000 a year from you to pay higher commission to their agent or to give higher profit to their shareholders. The total in 30 years could amount to $30,000.
6. What funds are available from NTUC Income?
NTUC Income offers several funds.
A popular fund is the Combined Growth Fund. It has a fund size of $3,800 million and is invested in 900 equity and bond instruments. They are managed by 9 top fund managers globally. The benchmark return during the past ten years was 6.5% per annum. The actual return during the first three years (2003 to 2005) was an average of 16% per annum.
Note:
-The future return is not guaranteed.
-Past performance is not indicative of future return.
7. Is there any life insurance cover?
In the event of death of before age 60, the policy pays a sum assured of 60 months of your regular savings, or the value of your investments, whichever is higher. This insurance cover is provided as part of the upfront fee. There is no additional charge.
If you wish to have additional insurance, you can purchase our low cost term assurance. Our premium rates are about 30% lower than the market. For example, a male aged 30 can insure for $150,000 on a 30 year decreasing term assurance, at an additional monthly premium of only $13.05.
8. What are the other important features?
This plan allows you to:
- make a monthly savings of $50 or more
- change your monthly savings at any time
- stop your savings temporarily (i.e. no penalty)
- make partial withdrawal at any time
9. Interested?
Call 62 INCOME (6246 2663)
Visit our Insurance Business Centre at Bras Basah Road or Tampines Point.
See your insurance adviser.
/end
Earn up to $30,000 more, compared to similar plans in the market
1. What is Ideal Policy?
It is an investment linked plan for investing your regular savings, e.g. from your monthly earnings. You can earn an attractive return (not guaranteed) from an investment fund.
2. What are the key features of the Ideal Policy?
The attractive features are:
- The regular savings are invested in a large, well diversified fund
- 85% of the savings are invested during the first 3 years, 100% thereafter
- The charges are among the lowest in the market
- You are insured for 60 months of your savings, at no additional charge
3. What is the projected return?
The future return on your investment is not guaranteed. It will depend on the actual return from the investments of the fund over the period that you have invested.
Over the past ten years, the average return from investing in global equities is about 8% per annum.
The following tables shows the projected amount (not guaranteed) at the end of 30 years for a regular investment of $200 per month:
Assumed net return 2.5% p.a. 5% p.a. 7% p.a. 9% p.a.
Total savings $72,000 $72,000 $72,000 $72,000
Gain (estimated) $27,700 $81,600 $149,200 $251,300
Projected amount $99,700 $153,600 $221,200 $323,300
Assumed net return - after deducting fund management fee
Gain (estimated) - after deducting upfront and other fees
If you earn a net return of 7% per annum from your fund, you will get more than 3 times of your original investment and more than 2 times compared to a safe investment that earns 2.5% per annum.
4. Is it risky to invest in a fund?
By investing in an equity or balanced fund, you can earn a higher return.
You can minimise your risk by investing in a large, well diversified fund that is benchmarked against the market. The large fund is well diversified in many investments. If a few investments turn bad, they are likely to be offset by the good performance of other investments. .
If you invest for 10 years or longer, you will be able to average out the performance in good and bad years and earn an average long term return. This return should be much higher than safe investments, such as bank deposits or the Central Provident Fund.
5. Will NTUC Income give a better return, compared to similar funds in the market?
All large, well diversified funds should earn a similar return over the long term, provided that they are well managed and are invested in the same risk category.
The advantage of investing in a fund managed by NTUC Income is our low upfront and annual fee. We have among the lowest charges in the market.
Our upfront fee (i.e. spread) is only 3.5%, compared to 5% charged by most other funds. Our annual fee is about 1%, compared to 1.5% to 2% charged by other funds.
We invest a larger proportion of your savings, compared to similar plans in the market. The difference is nearly 1 year of your savings. This is due to the lower commission rate that is paid to our adviser.
The difference in fees can amount to 20% over an investment period of 30 years. If you invest $200 over 30 years to get a return of (say) $150,000 on maturity, the difference in fees can amount to $30,000. You can get $30,000 more from NTUC Income, due to our low charges.
The other funds will take an additional $1,000 a year from you to pay higher commission to their agent or to give higher profit to their shareholders. The total in 30 years could amount to $30,000.
6. What funds are available from NTUC Income?
NTUC Income offers several funds.
A popular fund is the Combined Growth Fund. It has a fund size of $3,800 million and is invested in 900 equity and bond instruments. They are managed by 9 top fund managers globally. The benchmark return during the past ten years was 6.5% per annum. The actual return during the first three years (2003 to 2005) was an average of 16% per annum.
Note:
-The future return is not guaranteed.
-Past performance is not indicative of future return.
7. Is there any life insurance cover?
In the event of death of before age 60, the policy pays a sum assured of 60 months of your regular savings, or the value of your investments, whichever is higher. This insurance cover is provided as part of the upfront fee. There is no additional charge.
If you wish to have additional insurance, you can purchase our low cost term assurance. Our premium rates are about 30% lower than the market. For example, a male aged 30 can insure for $150,000 on a 30 year decreasing term assurance, at an additional monthly premium of only $13.05.
8. What are the other important features?
This plan allows you to:
- make a monthly savings of $50 or more
- change your monthly savings at any time
- stop your savings temporarily (i.e. no penalty)
- make partial withdrawal at any time
9. Interested?
Call 62 INCOME (6246 2663)
Visit our Insurance Business Centre at Bras Basah Road or Tampines Point.
See your insurance adviser.
/end
Is the market too high?
Someone asked me, "Is the market too high for investing my money now?"
Here is my advice:
1. For people who are 60 years or older
It is a good time to buy a life annuity. You can get an attractive payback (5% or more) with a bonus that can add another 2% to 3% to the return (not guaranteed). The bonus will be compounded.
If you have invested in a fund previously and made a good gain, make the switch now.
2. For those who are 45 to 60 years
I suggest that you invest in our growth plan. It is for a lump sum investment (using your CPF, SRS or FD). It has a guaranteed return of at least 2% per annum. With bonus, it is likely to earn about 4% to 4% p.a. It is quite safe.
3. If you are younger than 45 years
It is still a good time to invest in our combined fund or global equity fund. As you are investing for 20 years or longer, you will average out the good and bad years.
If you feel that the market is too high now, you can invest your savings in 3 installments over the next 6 to 12 months. You can invest one-third now.
You can keep the remaining savings in the CPF or in our money market fund (which earns 2.5% to 3% and has no lock-in period).
These investments are also available from other insurance companies. But, NTUC Income offers a better return compared to the market, as our charges are lower and most of the investment gain are given back to our customers.
Here is my advice:
1. For people who are 60 years or older
It is a good time to buy a life annuity. You can get an attractive payback (5% or more) with a bonus that can add another 2% to 3% to the return (not guaranteed). The bonus will be compounded.
If you have invested in a fund previously and made a good gain, make the switch now.
2. For those who are 45 to 60 years
I suggest that you invest in our growth plan. It is for a lump sum investment (using your CPF, SRS or FD). It has a guaranteed return of at least 2% per annum. With bonus, it is likely to earn about 4% to 4% p.a. It is quite safe.
3. If you are younger than 45 years
It is still a good time to invest in our combined fund or global equity fund. As you are investing for 20 years or longer, you will average out the good and bad years.
If you feel that the market is too high now, you can invest your savings in 3 installments over the next 6 to 12 months. You can invest one-third now.
You can keep the remaining savings in the CPF or in our money market fund (which earns 2.5% to 3% and has no lock-in period).
These investments are also available from other insurance companies. But, NTUC Income offers a better return compared to the market, as our charges are lower and most of the investment gain are given back to our customers.
FAQ: Flexi-Link Policy (revised)
FAQ: Flexi-Link
Earn up to $30,000 more, compared to similar plans in the market
1. What is Flexi-Link Policy?
It is an investment linked plan for investing a lump sum. You can invest your saving in the Central Provident Fund, Supplementary Retirement Scheme or fixed deposits, to earn a higher return (not guaranteed from an investment fund.
2. What are the key features of the Flexi-Link Policy?
The attractive features are:
-100% of the lump sum is invested in a large, well diversified fund
-The charges are among the lowest in the market
-You are insured for 125% of the savings or value of investments (if higher)
- You can invest as long as you wish (i.e. no lock-in period)
3. What is the projected return?
The future return on your investment is not guaranteed. It will depend on the actual return from the investments of the fund over the period that you have invested.
Over the past ten years, the average return from invesing in global equities is about 8% per annum.
The following tables shows the projected amount (not guaranteed) at the end of 20 years for a lump sum investment of $50,000:
Assumed net return - after deducting management fee
Gain (estimated) - after deducting spread and policy fee
If you earn a net return of 7% per annum from your fund, you will get more than 3 times of your original investment and more than 2 times compared to a safe investment that earns 2.5% per annum.
4. Is it risky to invest in a fund?
By investing in an equity or balanced fund, you can earn a higher return.
You can minimise your risk by investing in a large, well diversified fund that is benchmarked against the market. The large fund is well diversified in many investments. If a few investment turn bad, they are likely to be offset by the good performance of other investments. .
If you invest for 10 years or longer, you will be able to average out the performance in good and bad years and earn an average long term return. This return should be much higher than safe investments, such as bank deposits or the Central Provident Fund.
5. Will NTUC Income give a better return, compared to similar funds in the market?
All large, well diversified funds should earn a similar return over the long term, provided that they are well managed and are invested in the same risk category.
The advantage of investing in a fund managed by NTUC Income is our low upfront and annual fee. We have among the lowest charges in the market.
Our upfront fee (i.e. spread) is only 3.5%, compared to 5% charged by most other funds. Our annual fee is about 1%, compared to 1.5% to 2% charged by other funds.
The difference in fees can amount to 20% over an investment period of 20 years. If you invest $50,000 over 20 years to get a return of (say) $150,000 on maturity, the difference in fees can amount to $30,000. You can get $30,000 more from NTUC Income, due to our low charges.
The other funds will take an additional $1,500 a year from you to pay higher commisison to their agent or to give higher profit to their shareholders. The total in 20 years could amount to $30,000.
6. What funds are available from NTUC Income?
NTUC Income offers several funds.
A popular fund is the Combined Growth Fund. It has a fund size of $3,800 million and are invested in 900 equity and bond instruments. They are managed by 9 top fund managers globally. The benchmark return during the past ten years was 6.5% per annum. The actual return during the first three years (2003 to 2005) was an average of 16% per annum.
Note:
-The future return is not guaranteed.
-Past performance is not indicative of future return.
7. Is there any life insurance cover?
In the event of death of before age 60, the policy pays a sum assured of 125% of the invested sum (less withdrawals) or the value of the investments, whichever is higher. This insurance cover is provided as part of the upfront fee of 3.5%. There is no additional charge.
If you wish to have additional insurance, you can purchase our low cost term assurance. Our premium rates are about 30% lower than the market. For example, a male age 30 can insure for 20 years at a monthly premium of only $13.40.
8. What are the other important features?
This plan allows you to:
- make an initial investment of $5,000 or more.
- top up at any time, $1,000 or more.
- make partial withdrawal at any time, of $500 or more (without any charge).
- arrange for a fixed monthly withdrawal to be credited to your bank account
9. Interested?
Call 62 INCOME (6246 2663)
Visit our Insurance Business Centre at Bras Basah Road or Tampines Point.
See your insurance adviser.
/end
--
Tan Kin Lian (Gmail)
Earn up to $30,000 more, compared to similar plans in the market
1. What is Flexi-Link Policy?
It is an investment linked plan for investing a lump sum. You can invest your saving in the Central Provident Fund, Supplementary Retirement Scheme or fixed deposits, to earn a higher return (not guaranteed from an investment fund.
2. What are the key features of the Flexi-Link Policy?
The attractive features are:
-100% of the lump sum is invested in a large, well diversified fund
-The charges are among the lowest in the market
-You are insured for 125% of the savings or value of investments (if higher)
- You can invest as long as you wish (i.e. no lock-in period)
3. What is the projected return?
The future return on your investment is not guaranteed. It will depend on the actual return from the investments of the fund over the period that you have invested.
Over the past ten years, the average return from invesing in global equities is about 8% per annum.
The following tables shows the projected amount (not guaranteed) at the end of 20 years for a lump sum investment of $50,000:
Assumed net return 2.5% p.a 5% p.a. 7% p.a. 9% p.a.
Initial investment $50,000 $50,000 $50,000 $50,000
Gain (estimated) $31,900 $78,000 $136,000 $220,000
Projected amount $81,900 $128,000 $186,000 $270,000
Assumed net return - after deducting management fee
Gain (estimated) - after deducting spread and policy fee
If you earn a net return of 7% per annum from your fund, you will get more than 3 times of your original investment and more than 2 times compared to a safe investment that earns 2.5% per annum.
4. Is it risky to invest in a fund?
By investing in an equity or balanced fund, you can earn a higher return.
You can minimise your risk by investing in a large, well diversified fund that is benchmarked against the market. The large fund is well diversified in many investments. If a few investment turn bad, they are likely to be offset by the good performance of other investments. .
If you invest for 10 years or longer, you will be able to average out the performance in good and bad years and earn an average long term return. This return should be much higher than safe investments, such as bank deposits or the Central Provident Fund.
5. Will NTUC Income give a better return, compared to similar funds in the market?
All large, well diversified funds should earn a similar return over the long term, provided that they are well managed and are invested in the same risk category.
The advantage of investing in a fund managed by NTUC Income is our low upfront and annual fee. We have among the lowest charges in the market.
Our upfront fee (i.e. spread) is only 3.5%, compared to 5% charged by most other funds. Our annual fee is about 1%, compared to 1.5% to 2% charged by other funds.
The difference in fees can amount to 20% over an investment period of 20 years. If you invest $50,000 over 20 years to get a return of (say) $150,000 on maturity, the difference in fees can amount to $30,000. You can get $30,000 more from NTUC Income, due to our low charges.
The other funds will take an additional $1,500 a year from you to pay higher commisison to their agent or to give higher profit to their shareholders. The total in 20 years could amount to $30,000.
6. What funds are available from NTUC Income?
NTUC Income offers several funds.
A popular fund is the Combined Growth Fund. It has a fund size of $3,800 million and are invested in 900 equity and bond instruments. They are managed by 9 top fund managers globally. The benchmark return during the past ten years was 6.5% per annum. The actual return during the first three years (2003 to 2005) was an average of 16% per annum.
Note:
-The future return is not guaranteed.
-Past performance is not indicative of future return.
7. Is there any life insurance cover?
In the event of death of before age 60, the policy pays a sum assured of 125% of the invested sum (less withdrawals) or the value of the investments, whichever is higher. This insurance cover is provided as part of the upfront fee of 3.5%. There is no additional charge.
If you wish to have additional insurance, you can purchase our low cost term assurance. Our premium rates are about 30% lower than the market. For example, a male age 30 can insure for 20 years at a monthly premium of only $13.40.
8. What are the other important features?
This plan allows you to:
- make an initial investment of $5,000 or more.
- top up at any time, $1,000 or more.
- make partial withdrawal at any time, of $500 or more (without any charge).
- arrange for a fixed monthly withdrawal to be credited to your bank account
9. Interested?
Call 62 INCOME (6246 2663)
Visit our Insurance Business Centre at Bras Basah Road or Tampines Point.
See your insurance adviser.
/end
--
Tan Kin Lian (Gmail)
What is the financial stability of NTUC Income?
Dear Mr Tan,
I am a policy holder with NTUC. Although my policy is just a small amount, I like to find out about the stability of NTUC in view of further business with NTUC.
I understant that NTUC is a cooperative. What do you mean by that, compared to the other insurers and investments companies? Does it also mean the government is linked to NTUC and they will bill NTUC out in the event of financial crisis?
AN
------------------
Dear AN
Please read about our corporate profile at:
Corporate Profile
NTUC Income is rated AA by Standard & Poors. This is the strongest financial rating among all insurance companies in Asia. There must be a few thousand companies in this category.
We are NOT owned by the government. We do not need the government to bail us out in the event of a financial crisis.
With our strong financial rating, we will be able to face any financial crisis better than most other insurance companies, including those that are owned by multi-national companies.
Do you need me to introduce an adviser or consultant to talk to you?
Tan Kin Lian
I am a policy holder with NTUC. Although my policy is just a small amount, I like to find out about the stability of NTUC in view of further business with NTUC.
I understant that NTUC is a cooperative. What do you mean by that, compared to the other insurers and investments companies? Does it also mean the government is linked to NTUC and they will bill NTUC out in the event of financial crisis?
AN
------------------
Dear AN
Please read about our corporate profile at:
Corporate Profile
NTUC Income is rated AA by Standard & Poors. This is the strongest financial rating among all insurance companies in Asia. There must be a few thousand companies in this category.
We are NOT owned by the government. We do not need the government to bail us out in the event of a financial crisis.
With our strong financial rating, we will be able to face any financial crisis better than most other insurance companies, including those that are owned by multi-national companies.
Do you need me to introduce an adviser or consultant to talk to you?
Tan Kin Lian
Earn $30,000 more by investing through NTUC Income
I gave our FAQ on the Ideal plan to many young people. I explained the following:
- you can save $200 a month for the next 30 years
- you should invest the savings in a large, well diversified fund to get an attractive return, expected to be 6% per annum (not guaranteed)
- you can invest with NTUC Income or with any other insurance company.
- if you invest with NTUC Income, you can earn $30,000 more.
The reason? The other company take away about $1,000 more from your yield yearly to pay higher commission to their agents, and to make profit for the company. NTUC Income keeps this money for you. Over 30 years, you can get $30,000 more.
Many people were surprised that there is such a big difference. They decided to save and invest with NTUC Income.
Ideal plan
- you can save $200 a month for the next 30 years
- you should invest the savings in a large, well diversified fund to get an attractive return, expected to be 6% per annum (not guaranteed)
- you can invest with NTUC Income or with any other insurance company.
- if you invest with NTUC Income, you can earn $30,000 more.
The reason? The other company take away about $1,000 more from your yield yearly to pay higher commission to their agents, and to make profit for the company. NTUC Income keeps this money for you. Over 30 years, you can get $30,000 more.
Many people were surprised that there is such a big difference. They decided to save and invest with NTUC Income.
Ideal plan
Logic9 (Sudoku): 3 tips to solve difficult puzzles
I have 3 tips to solve the difficult puzzles.
- find the missing number
- 3 box rule
- eliminate the blanks
I have taught about 100 people. They all enjoyed it. About 2% of the population know how to solve this puzzle. Join this exclusive group of genius.
I shall be giving a public talk in December on how to solve these puzzles. Watch out for details. Attend the talk, and get a free copy of the Logic0 pocketbook (worth $5).
- find the missing number
- 3 box rule
- eliminate the blanks
I have taught about 100 people. They all enjoyed it. About 2% of the population know how to solve this puzzle. Join this exclusive group of genius.
I shall be giving a public talk in December on how to solve these puzzles. Watch out for details. Attend the talk, and get a free copy of the Logic0 pocketbook (worth $5).
Many motorists switch after first year
Each month, about 1,200 motorists switched their insurance to NTUC Income after the first year. 60% switched to us directly; the remaining 40% switched through our agents.
They enjoy a saving of up to 30% on their premium, by switching to us. The premium charged by their previous insurer, who had a tied arrengement with the motor distributor for the first year, is about 30% higher.
We encourage motorists to switch to NTUC Income after the first year, to enjoy this big saving.
Do not wait until your insurance expires. You can call us now and register with us, to enjoy the saving. We will contact you to remind you about the renewal of the insurance, and to remind you about the saving in premium.
Call 6788 1111
Motor Insurance
They enjoy a saving of up to 30% on their premium, by switching to us. The premium charged by their previous insurer, who had a tied arrengement with the motor distributor for the first year, is about 30% higher.
We encourage motorists to switch to NTUC Income after the first year, to enjoy this big saving.
Do not wait until your insurance expires. You can call us now and register with us, to enjoy the saving. We will contact you to remind you about the renewal of the insurance, and to remind you about the saving in premium.
Call 6788 1111
Motor Insurance
Wednesday, November 15, 2006
Happy with review of claim
Our policyholder met with an accident. A claim was paid by us to the third party. He lost his No Claim Discount.
Upon a review of the claim, we decided to waive the penalty and retain the No Claim Discount. The policyholder sent this e-mail to me.
Dear Mr. Tan
I received the revised renewal letter. Since then I have also renewed my insurance, very conveniently over the phone. Thanks once again for promptly resolving my concern. Much appreciated!
So far among all insurance companies, my dealings with NTUC Income have generally been the most efficient. I am sure having accessible and electronic communication email, blog..) savvy management is helping.
NJ
Upon a review of the claim, we decided to waive the penalty and retain the No Claim Discount. The policyholder sent this e-mail to me.
Dear Mr. Tan
I received the revised renewal letter. Since then I have also renewed my insurance, very conveniently over the phone. Thanks once again for promptly resolving my concern. Much appreciated!
So far among all insurance companies, my dealings with NTUC Income have generally been the most efficient. I am sure having accessible and electronic communication email, blog..) savvy management is helping.
NJ
Performance of Investment Funds
Standard & Poors assess the performance of funds (during the past 36 months) relative to other funds in its category. It awards 5 stars for the best funds, down to 1 star for the worst funds.
Here are the results as at end September 2006.
NTUC Income has the highest proportion of its funds in the top two ranks (i.e. 6 out of 9 funds). This is followed by Prudential with 4 out of 7 funds.
Most of the other insurers have more funds in the bottom two ranks than the top two ranks. They have more funds that perform below average.
The better performance of NTUC Income's funds is probably due mainly to our low charges.
Here is another observation. Each insurer has some funds that perform better than average and others that perform worse than average. It is difficult to choose the right fund by looking at the "manager".
If you track the performance of each fund, you are likely to see that the same fund may perform better in some years and worse in other years.
Lesson: Choose a large, well diversifed, low charge fund and invest for the long term. You will get a better than average return.
Here are the results as at end September 2006.
Stars Inc Pru AIA GE JH Manu Axa Av
5 1 0 0 1 1 1 0 0
4 5 4 2 2 1 1 0 1
3 1 2 2 3 6 4 1 1
2 2 1 3 7 5 1 3 3
1 0 0 2 3 1 0 2 1
Total 9 7 9 16 14 7 6 6
NTUC Income has the highest proportion of its funds in the top two ranks (i.e. 6 out of 9 funds). This is followed by Prudential with 4 out of 7 funds.
Most of the other insurers have more funds in the bottom two ranks than the top two ranks. They have more funds that perform below average.
The better performance of NTUC Income's funds is probably due mainly to our low charges.
Here is another observation. Each insurer has some funds that perform better than average and others that perform worse than average. It is difficult to choose the right fund by looking at the "manager".
If you track the performance of each fund, you are likely to see that the same fund may perform better in some years and worse in other years.
Lesson: Choose a large, well diversifed, low charge fund and invest for the long term. You will get a better than average return.
Get a better deal from NTUC Income on your HDB loan
Dear Mr Tan
I took a loan of $225,000 on my HDB flat and pay a fixed rate of interest of $9,500 a year for the first three years. I have to deposit $100,000 in a current linked account with the bank to earn a total interest of $10,500 for the first three years.
Can you recommend a better package for me from NTUC Income?
EG
---------------
Dear EG
It seems that you are paying interest at 4.2% on your HDB loan and you get interest at 3.5% on your current linked account.
Your net borrowing is $125,000 (i.e $225,000 less $100,000) and you pay an interest of $6,000 (ie $9,500 less $3,500) on it. Your effective interest rate appears to be 4.8%, fixed for 3 years.
NTUC Income charges a fixed interest rate of 4.15% for 5 years. See:
HDB Loan
Tan Kin Lian
I took a loan of $225,000 on my HDB flat and pay a fixed rate of interest of $9,500 a year for the first three years. I have to deposit $100,000 in a current linked account with the bank to earn a total interest of $10,500 for the first three years.
Can you recommend a better package for me from NTUC Income?
EG
---------------
Dear EG
It seems that you are paying interest at 4.2% on your HDB loan and you get interest at 3.5% on your current linked account.
Your net borrowing is $125,000 (i.e $225,000 less $100,000) and you pay an interest of $6,000 (ie $9,500 less $3,500) on it. Your effective interest rate appears to be 4.8%, fixed for 3 years.
NTUC Income charges a fixed interest rate of 4.15% for 5 years. See:
HDB Loan
Tan Kin Lian
Tuesday, November 14, 2006
Structured product withdrawn in the UK
Dear Mr Tan,
My father nearly bought a structured product a few years ago in the UK. It offered a "guaranteed 10%", which sounded good as risk-free interest rates were about 6%.
In the small print, it was stated that the amount paid on maturity after 10 years was far from "guaranteed". It emphasised in big print that you might get more, but my father missed the small print which said that you might get less.
The money (less charges) was to be invested in some sort of balanced fund - including both bonds & equities - with a 10% draw-down facility each year.
In the (unlikely) event of the company achieving a 12% return, the policyholder would get money back after 10 years - or even more if returns were higher - but if returns were less, a lower amount would be returned at the end - with a minimum of zero.
All that was guaranteed was a return of the Principal without interest over 10 years, or on death within the 10 year period.
This product was marketed by some "reputable" UK insurance companies. They dropped the product after the press and consumer groups criticised the misleading sales literature. It was a very simple product - made to look like something it was not.
The lesson is that nothing comes free. If a product looks "too good to be true" - you have been misled by the marketing literature or by the salesperson.
NR
My father nearly bought a structured product a few years ago in the UK. It offered a "guaranteed 10%", which sounded good as risk-free interest rates were about 6%.
In the small print, it was stated that the amount paid on maturity after 10 years was far from "guaranteed". It emphasised in big print that you might get more, but my father missed the small print which said that you might get less.
The money (less charges) was to be invested in some sort of balanced fund - including both bonds & equities - with a 10% draw-down facility each year.
In the (unlikely) event of the company achieving a 12% return, the policyholder would get money back after 10 years - or even more if returns were higher - but if returns were less, a lower amount would be returned at the end - with a minimum of zero.
All that was guaranteed was a return of the Principal without interest over 10 years, or on death within the 10 year period.
This product was marketed by some "reputable" UK insurance companies. They dropped the product after the press and consumer groups criticised the misleading sales literature. It was a very simple product - made to look like something it was not.
The lesson is that nothing comes free. If a product looks "too good to be true" - you have been misled by the marketing literature or by the salesperson.
NR
Monday, November 13, 2006
Logic9 (Sudoku) trains the mind
Sudoku is a number game that is popular around the world. You enter each row, column or box (3X3) with the numbers 1 to 9 (each number appear only once). It appears in Today paper and in MyPaper.
NTUC Income has created puzzles under the name of Logic9. You can view the game at
Logic9.
The game is good for young and old. It trains children to be familiar with numbers and strengthens their mathematics. It trains the elderly to keep their mind alert, and prevents dementia (so it is claimed).
If you play the CD version of Logic9, you have the following option:
- use numbers, train the left brain
- use symbols (eg flowers, animals), train the right brain
- try level 5 to 8, train your mind to be flexible and adapt to the uncertain.
You can buy the CD and pocketbooks at NTUC Income branches, and bookstores for only $5.
The pocketbook is suitable for use in the bus, train or plan. It contains 128 puzzles at 4 levels. 2,000 copies are sold each month.
NTUC Income has created puzzles under the name of Logic9. You can view the game at
Logic9.
The game is good for young and old. It trains children to be familiar with numbers and strengthens their mathematics. It trains the elderly to keep their mind alert, and prevents dementia (so it is claimed).
If you play the CD version of Logic9, you have the following option:
- use numbers, train the left brain
- use symbols (eg flowers, animals), train the right brain
- try level 5 to 8, train your mind to be flexible and adapt to the uncertain.
You can buy the CD and pocketbooks at NTUC Income branches, and bookstores for only $5.
The pocketbook is suitable for use in the bus, train or plan. It contains 128 puzzles at 4 levels. 2,000 copies are sold each month.
My financial advice is free, but worth a lot of money
My financial advice is free. But is worth a lot of money to you.
Buy term insurance for your life insurance needs and invest the rest of your savings in a large, well diversified fund, with low charges.
This advice is worth many ten of thousand of dollars to any ordinary consumer. You do not need to pay any money to me for this advice.
Some advisers tell you to buy a product that give a high commission to them, and a large profit to the financial institution. These charges come out from your investments.
Do not fall for complex products that give uncertain guarantees. Watch out for the warnings, such as "you may lose part or all of your principal".
Do not ask a financial adviser to help you to select the best funds. Past performance is not a guarantee of future performance. You will pay a large "trailer fee" for an advice that is probably worthless.
The term insurance product from NTUC Income saves you 20% or more, compared to similar products in the market.
Low cost Term Insruance
The combined fund is a large, well diversified fund with low charges. You can invest a lump sum or monthly savings.
Invest a lump sum
Invest your monthly savings
And, here are my financial planning tips:
Financial Planning Tips
Buy term insurance for your life insurance needs and invest the rest of your savings in a large, well diversified fund, with low charges.
This advice is worth many ten of thousand of dollars to any ordinary consumer. You do not need to pay any money to me for this advice.
Some advisers tell you to buy a product that give a high commission to them, and a large profit to the financial institution. These charges come out from your investments.
Do not fall for complex products that give uncertain guarantees. Watch out for the warnings, such as "you may lose part or all of your principal".
Do not ask a financial adviser to help you to select the best funds. Past performance is not a guarantee of future performance. You will pay a large "trailer fee" for an advice that is probably worthless.
The term insurance product from NTUC Income saves you 20% or more, compared to similar products in the market.
Low cost Term Insruance
The combined fund is a large, well diversified fund with low charges. You can invest a lump sum or monthly savings.
Invest a lump sum
Invest your monthly savings
And, here are my financial planning tips:
Financial Planning Tips
Unhappy about inflated claim from a third party
Hi Mr Tan Kin Lian,
Can you help me to investigate this traffic accident claim from NTUC.
My wife met with an traffic accident with a motorbike. The motorbike has since lodged a 3rd party claim against me.
I am a shocked by the value that is being claimed and am wondering if this is a
case of inflated claims from a dishonest workshop.
I have taken photos of the damaged bike and understood from friends that a used bike of similar features cost an approximately $3000. The value that is being claimed is $2000. Repairs cost from bike workshops have quoted a nominal amount of below $300 based on the photos.
(Details of the case deleted)
Is there any way for me to understand why the 3rd party claim will be so expensive? How do I know if these claims are valid ? I am finding it difficult to resolve this matter.
It seems that the dishonest workshop will profit from this exercise. NTUC will suffer a bad reputation by allowing such workshops to make tihs claim. I feel that your policyholder has been dishonest from the start as he demanded payment from my wife.
GL
--------------------
Dear GL
Can you show me the letter that you have received. Is it from NTUC Income or from a workshop directly?
If it is from a workshop engaged by my policyholder, this matter will be outside of our control.
I suggest that you should let your insurance company handle this third party claim.
Tan Kin Lian
Can you help me to investigate this traffic accident claim from NTUC.
My wife met with an traffic accident with a motorbike. The motorbike has since lodged a 3rd party claim against me.
I am a shocked by the value that is being claimed and am wondering if this is a
case of inflated claims from a dishonest workshop.
I have taken photos of the damaged bike and understood from friends that a used bike of similar features cost an approximately $3000. The value that is being claimed is $2000. Repairs cost from bike workshops have quoted a nominal amount of below $300 based on the photos.
(Details of the case deleted)
Is there any way for me to understand why the 3rd party claim will be so expensive? How do I know if these claims are valid ? I am finding it difficult to resolve this matter.
It seems that the dishonest workshop will profit from this exercise. NTUC will suffer a bad reputation by allowing such workshops to make tihs claim. I feel that your policyholder has been dishonest from the start as he demanded payment from my wife.
GL
--------------------
Dear GL
Can you show me the letter that you have received. Is it from NTUC Income or from a workshop directly?
If it is from a workshop engaged by my policyholder, this matter will be outside of our control.
I suggest that you should let your insurance company handle this third party claim.
Tan Kin Lian
Sunday, November 12, 2006
Happy with injury settlement
Dear Mr Tan Kin Lian
I would like to express my gratitude regarding the compensation related to my injury as a result of traveling in the TIBS bus.
The matter has come to a conclusion recently. I would like to have a special mention of Mr DP, the representative of your Company.
Mr DP was amazingly very efficient and professional. He called me for an appointment immediately after TIBS officer told me that TIBS submitted my claims to Income.
Mr DP did all the necessary work before he presented the documents to me. During the meeting he explained patiently and clearly to me about the clauses and details. He was precise and yet carry very good manner and present himself very professionally.
I received the payment promptly without any delay.
Congratulatutions for having a good representative like Mr DP.
DT
I would like to express my gratitude regarding the compensation related to my injury as a result of traveling in the TIBS bus.
The matter has come to a conclusion recently. I would like to have a special mention of Mr DP, the representative of your Company.
Mr DP was amazingly very efficient and professional. He called me for an appointment immediately after TIBS officer told me that TIBS submitted my claims to Income.
Mr DP did all the necessary work before he presented the documents to me. During the meeting he explained patiently and clearly to me about the clauses and details. He was precise and yet carry very good manner and present himself very professionally.
I received the payment promptly without any delay.
Congratulatutions for having a good representative like Mr DP.
DT
Saturday, November 11, 2006
I wish to invest more in NTUC Income shares
Dear Mr Tan
My husband and I have invested 5000 Income shares ($50,000) each in 2004. We are both happy with the return.
This is the core part of our retirement planning. Both of us are in our mid forty. We would like to invest more into Income shares. When will you be re-opening for new subcription.
CH
--------------
Dear CH
Congratulations> You and your husband have made an excellent investment.
We do not plan to invite new subscription for the share capital for the immediate future.
I will let the coop secretary know about your interest, and to keep you in the waiting list (in case some shareholders wish to sell their shares).
Tan Kin Lian
My husband and I have invested 5000 Income shares ($50,000) each in 2004. We are both happy with the return.
This is the core part of our retirement planning. Both of us are in our mid forty. We would like to invest more into Income shares. When will you be re-opening for new subcription.
CH
--------------
Dear CH
Congratulations> You and your husband have made an excellent investment.
We do not plan to invite new subscription for the share capital for the immediate future.
I will let the coop secretary know about your interest, and to keep you in the waiting list (in case some shareholders wish to sell their shares).
Tan Kin Lian
What is the right time to invest in the Global Equity Fund?
Dear Mr Tan,
I hope the funds managed by NTUC especially the Growth Fund will continue to perform well after 1 April 2007!
You mentioned that you were going to purchase the Global Fund. What level do you intend to make this investment?
I have taken profit on 20% of my Growth Fund and am contemplating purchase the Global Fund. Please advise.
OL
--------------
Dear OL
I have withdrawn my ST Trakker Fund and re-invested it in the money market fund (ie Flexi Cash).
Tentatively, I will wait for the global equity market to correct by about 10% from its peak, before I re-invest in the global equity fund.
If this does not occur, I may re-invest in 3 installments during 2007.
This is a personal opinion. I am not really good at market timing.
Tan Kin Lian
I hope the funds managed by NTUC especially the Growth Fund will continue to perform well after 1 April 2007!
You mentioned that you were going to purchase the Global Fund. What level do you intend to make this investment?
I have taken profit on 20% of my Growth Fund and am contemplating purchase the Global Fund. Please advise.
OL
--------------
Dear OL
I have withdrawn my ST Trakker Fund and re-invested it in the money market fund (ie Flexi Cash).
Tentatively, I will wait for the global equity market to correct by about 10% from its peak, before I re-invest in the global equity fund.
If this does not occur, I may re-invest in 3 installments during 2007.
This is a personal opinion. I am not really good at market timing.
Tan Kin Lian
Do you think that she is pretending to be ill?
Somebody passed this joke to me. Any resemblence to a recent event is entirely co-incidental.
A worker asked the supervisor for the afternoon off, as he has to see his grandmother who is ill.
The supervisor said, "It appears that, whenever there is a soccer match, your grandmother becomes ill?"
The worker replied, "Do you think, maybe, that my grandmother is pretending to be ill?"
A worker asked the supervisor for the afternoon off, as he has to see his grandmother who is ill.
The supervisor said, "It appears that, whenever there is a soccer match, your grandmother becomes ill?"
The worker replied, "Do you think, maybe, that my grandmother is pretending to be ill?"
Buy Term Insurance
Sunday Times have an article about Term Insurance. It provides a large insurance cover at a very low cost.
NTUC Income offers the lowest premium for term insurance. We are about 30% lower than the market. It is based on a survey publised in the Business Times a few weeks ago.
Buy Term Insuarance. Buy from NTUC Income and pay less.
NTUC Income offers the lowest premium for term insurance. We are about 30% lower than the market. It is based on a survey publised in the Business Times a few weeks ago.
Buy Term Insuarance. Buy from NTUC Income and pay less.
NTUC Income pays claims promptly
Hi Mr Tan,
I read your blog. I wish to give this feedback to you.
I heard from many Financial Advisers that NTUC is always very slow in their administrative processes, especially with regards to claims. Some claims can go up to half a year and they are still unsettled.
As a leading cooperation, is this acceptable? I wonder if you are aware of this happening on the ground.
JHN
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Dear JHN
95% of our life insurance claims are settled within 7 days. We pay more quickly than other insurance companies. This is published in our magazine and our website.
The financial adviser wants to scare you to avoid buying your insurance from NTUC Income. The reason is clear. If you buy from them, and they sell your a plan from another insurance company, they will earn a large commission. It could be up to 1 years of your savings.
I will leave you to make the best judgement.
Tan Kin Lian
I read your blog. I wish to give this feedback to you.
I heard from many Financial Advisers that NTUC is always very slow in their administrative processes, especially with regards to claims. Some claims can go up to half a year and they are still unsettled.
As a leading cooperation, is this acceptable? I wonder if you are aware of this happening on the ground.
JHN
----------------
Dear JHN
95% of our life insurance claims are settled within 7 days. We pay more quickly than other insurance companies. This is published in our magazine and our website.
The financial adviser wants to scare you to avoid buying your insurance from NTUC Income. The reason is clear. If you buy from them, and they sell your a plan from another insurance company, they will earn a large commission. It could be up to 1 years of your savings.
I will leave you to make the best judgement.
Tan Kin Lian
High commission for life insurance products
Hi Mr Tan,
I enjoyed reading your blog.
You mentioned that some insurance products have high charges that take away 2% to 3% from the annual yield. Is this bad for cosnumers? Can a consumer buy directly and avoid this high charge, especially the high rate of commission paid to the agent?
TSB
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Dear TSB
When life insurance was first introduced more than 100 years ago, the government (in most countries) offered a tax incentive for people to buy life insurance. The premium paid towards life insurance is deducted from taxable income. The consumer is able to enjoy tax savings.
The tax savings help to offset the high charges and still give a fairly attractive return to the consumer. The high charge was required to train and pay the agent to advice the consumer about the value of this product.
About twenty years ago, most governments withdrew the tax incentive. The high charge become a burden to the consumers. Many insurance companies continued their old practice to pay high commission.
They trained their agents to convince customers about the "value" of life insurance, but they did not try to reduce the cost to the consumer.
NTUC Income is different. We reduced the cost to the consumer significantly. Hence, our deduction from the yield is lower than the market. Our customers are able to get a much better return from us, due to our lower charge.
If you are investing for the long term, the lower charge can give you a lot more on the maturity of your policy.
I enjoyed reading your blog.
You mentioned that some insurance products have high charges that take away 2% to 3% from the annual yield. Is this bad for cosnumers? Can a consumer buy directly and avoid this high charge, especially the high rate of commission paid to the agent?
TSB
---------------------
Dear TSB
When life insurance was first introduced more than 100 years ago, the government (in most countries) offered a tax incentive for people to buy life insurance. The premium paid towards life insurance is deducted from taxable income. The consumer is able to enjoy tax savings.
The tax savings help to offset the high charges and still give a fairly attractive return to the consumer. The high charge was required to train and pay the agent to advice the consumer about the value of this product.
About twenty years ago, most governments withdrew the tax incentive. The high charge become a burden to the consumers. Many insurance companies continued their old practice to pay high commission.
They trained their agents to convince customers about the "value" of life insurance, but they did not try to reduce the cost to the consumer.
NTUC Income is different. We reduced the cost to the consumer significantly. Hence, our deduction from the yield is lower than the market. Our customers are able to get a much better return from us, due to our lower charge.
If you are investing for the long term, the lower charge can give you a lot more on the maturity of your policy.
Friday, November 10, 2006
Diversified funds with low fees
Someone asked me, "What are the large, diversified funds with low fees available for investments?
To my knowledge, these are the available funds:
- combined funds from NTUC Income (with annual fee of less than 1%)
- ST Tracker fund available in the Stock Exchange (annual fee of 0.3%)
- indexed funds available in America (annual fee of about 0.2%)
I have invested most of my savings in the combined funds (from NTUC Income) and the ST Tracker fund (which I have now withdrawn).
Recently, I investigated about investing in the indexed funds in America. It seems that they are not allowed to market in Singapore, due to some regulatory constraints.
So, most of my investments are now in the combined fund.
I withdrew my investment from the ST Tracker Fund becuase it is invested solely in Singapore and the market is quite high. I have re-invested it temporarily in the money market fund (ie flexi-cash) and will wait for the right time, within the next 12 months, to re-invest it in the global equity fund.
To my knowledge, these are the available funds:
- combined funds from NTUC Income (with annual fee of less than 1%)
- ST Tracker fund available in the Stock Exchange (annual fee of 0.3%)
- indexed funds available in America (annual fee of about 0.2%)
I have invested most of my savings in the combined funds (from NTUC Income) and the ST Tracker fund (which I have now withdrawn).
Recently, I investigated about investing in the indexed funds in America. It seems that they are not allowed to market in Singapore, due to some regulatory constraints.
So, most of my investments are now in the combined fund.
I withdrew my investment from the ST Tracker Fund becuase it is invested solely in Singapore and the market is quite high. I have re-invested it temporarily in the money market fund (ie flexi-cash) and will wait for the right time, within the next 12 months, to re-invest it in the global equity fund.
NTUC Income funds will continue to perform well
A policyholder, whom I know personally, had a large amount of savings in NTUC Income's funds.
He met me last night and told me, "Kin Lian, I have a lot of money invested in NTUC Income because of you. I know that you will take care of the interest of the policyholders. Now that you are leaving NTUC, shall I keep my savings with NTUC?"
I told him, "It should be all right. The current general managers will continue to run NTUC Income. The structure has been in place, to take care of the interest of our policyholders. After leaving NTUC Income, I will keep my investments with NTUC.
If NTUC Income changes its focus in the future, and acts against the interest of its policyholders, I shall withdraw my investments. At that time, I shall alert you and other policyholders. But, I don't think that this will happen."
He met me last night and told me, "Kin Lian, I have a lot of money invested in NTUC Income because of you. I know that you will take care of the interest of the policyholders. Now that you are leaving NTUC, shall I keep my savings with NTUC?"
I told him, "It should be all right. The current general managers will continue to run NTUC Income. The structure has been in place, to take care of the interest of our policyholders. After leaving NTUC Income, I will keep my investments with NTUC.
If NTUC Income changes its focus in the future, and acts against the interest of its policyholders, I shall withdraw my investments. At that time, I shall alert you and other policyholders. But, I don't think that this will happen."
FAQ: Financial Planning Tips
1. How much should I save for my retirement
You should save 10% to 15% of your regular earnings for your retirement. This is separate from your savings to pay for the purchase of your home or your children's needs.
You can count your savings in the Central Provident Fund (excluding the portion used to pay your home loan or set aside for medical expenses) as part of this savings.
If your net saving in the Central Provident Fund is inadequate, you should make additional savings for your retirement. Most people try to save at least 10% of their regular savings, in addition to their Central Provident Fund savings.
2. How much life insurance do I need
If you have dependents, you should have life insurance for 5 to 10 years of your earnings. If you earn $30,000 a year, you should have life insurance for $150,000 or more.
It is better to buy a decreasing term assurance. At age 30, you can buy a 30 year decreasing term assurance for $150,000 for only $165 a year (male) or $115 a year (female). This insurance covers you for $150,000 during the first year and reduces by $5,000 in each subsequent year.
After 30 years, you will probably have accumulated sufficient savings to take care of your family or your own future needs. By that time, life insurance is not necessary.
If you buy a level term assurance to cover $150,000 for 30 years (i.e. the insurance does not reduce), the premium is $280 a year (male) or $195 a year (female).
3. How should I invest my savings
You should invest in your savings in a large, well diversified, equity fund. An equity fund can give you a higher return compared to other types of investments, such as bonds or cash.
By investing in a diversifed fund, you reduces the risk of loss from a few bad investments. As the other investments may perform better, the average return for the fund should follow the market.
You should also invest for the long term, i.e. for 10 years or more. The investments will perform very well in some years (e.g. give a return more than 15%) and may perform badly in other years (e.g a negative return). By investing for many years, you will average out the good and bad years.
Over the past 20 years, the global equity market earned an average return of 10 percent per annum. In the future, the return may be more lower, say 6% to 8% per annum, but it is still very attractive.
You should also choose a fund that have a low upfront fee and a low annual fee. This allows you to keep most of the market gains. You should not allow the fund manager or the financial adviser to charge high fees, as they have to be paid from your investment gains.
If you invest in a fund that have low fees, compared to a fund with high fees, the difference in the your return can be as much as 20 percent over a period of 30 years.
NTUC Income offers several large, well diversified funds with probably the lowest fee in the market. You can choose an equity fund or a combined fund (i.e. equity and bond).
4. Should I buy a whole life or endowment policy
An endowment or whole life policy provides the protection and savings in a bundled product. It gives a modest net return of about 3% to 4% per annum. It is inflexible, and requires you to pay the premium regularly over the duration of the policy.
Many people prefer a more flexible plan and earn a higher return.
You now have the option to buy a low cost term insurance to cover your protection needs and to invest your savings in an investment fund. You have flexibilty to change your savings and to make withdrawals, without penalty. You can also change the investment fund.
5. What age should I retire
You should work for about 40 years, so that you can accumulate sufficient savings to meet your financial needs during the next 15 to 20 years of your life. Most people start work around age 25. They should aim to retire at around age 65.
If you save 10% of your earnings and invest wisely, you should have sufficient savings for a basic lifestyle. You should save 15% of your earnings, if you aim to have a more comfortable lifestyle during retirement.
At the time of retirement, you should have accumulated savings representing 6 to 10 years of your earnings, plus a fully paid home. If your annual earning is $50,000, you should have accumulated savings of at least $300,000.
If your accumualted savings is inadequate, you should work a few years longer. If you have to retire earlier, you should accept a more modest lifestyle.
It is better to save a larger portion of your earnings, if you can. Do not spend too much on your home, car or other expensive items.
6. Where can I get financial advice?
You can visit our business center and talk to our salaried consultants. You can also talk to our insurance adviser, who can visit your at your home. The financial advice is FREE.
Tan Kin Lian
Chief Executive Officer
NTUC Income
You should save 10% to 15% of your regular earnings for your retirement. This is separate from your savings to pay for the purchase of your home or your children's needs.
You can count your savings in the Central Provident Fund (excluding the portion used to pay your home loan or set aside for medical expenses) as part of this savings.
If your net saving in the Central Provident Fund is inadequate, you should make additional savings for your retirement. Most people try to save at least 10% of their regular savings, in addition to their Central Provident Fund savings.
2. How much life insurance do I need
If you have dependents, you should have life insurance for 5 to 10 years of your earnings. If you earn $30,000 a year, you should have life insurance for $150,000 or more.
It is better to buy a decreasing term assurance. At age 30, you can buy a 30 year decreasing term assurance for $150,000 for only $165 a year (male) or $115 a year (female). This insurance covers you for $150,000 during the first year and reduces by $5,000 in each subsequent year.
After 30 years, you will probably have accumulated sufficient savings to take care of your family or your own future needs. By that time, life insurance is not necessary.
If you buy a level term assurance to cover $150,000 for 30 years (i.e. the insurance does not reduce), the premium is $280 a year (male) or $195 a year (female).
3. How should I invest my savings
You should invest in your savings in a large, well diversified, equity fund. An equity fund can give you a higher return compared to other types of investments, such as bonds or cash.
By investing in a diversifed fund, you reduces the risk of loss from a few bad investments. As the other investments may perform better, the average return for the fund should follow the market.
You should also invest for the long term, i.e. for 10 years or more. The investments will perform very well in some years (e.g. give a return more than 15%) and may perform badly in other years (e.g a negative return). By investing for many years, you will average out the good and bad years.
Over the past 20 years, the global equity market earned an average return of 10 percent per annum. In the future, the return may be more lower, say 6% to 8% per annum, but it is still very attractive.
You should also choose a fund that have a low upfront fee and a low annual fee. This allows you to keep most of the market gains. You should not allow the fund manager or the financial adviser to charge high fees, as they have to be paid from your investment gains.
If you invest in a fund that have low fees, compared to a fund with high fees, the difference in the your return can be as much as 20 percent over a period of 30 years.
NTUC Income offers several large, well diversified funds with probably the lowest fee in the market. You can choose an equity fund or a combined fund (i.e. equity and bond).
4. Should I buy a whole life or endowment policy
An endowment or whole life policy provides the protection and savings in a bundled product. It gives a modest net return of about 3% to 4% per annum. It is inflexible, and requires you to pay the premium regularly over the duration of the policy.
Many people prefer a more flexible plan and earn a higher return.
You now have the option to buy a low cost term insurance to cover your protection needs and to invest your savings in an investment fund. You have flexibilty to change your savings and to make withdrawals, without penalty. You can also change the investment fund.
5. What age should I retire
You should work for about 40 years, so that you can accumulate sufficient savings to meet your financial needs during the next 15 to 20 years of your life. Most people start work around age 25. They should aim to retire at around age 65.
If you save 10% of your earnings and invest wisely, you should have sufficient savings for a basic lifestyle. You should save 15% of your earnings, if you aim to have a more comfortable lifestyle during retirement.
At the time of retirement, you should have accumulated savings representing 6 to 10 years of your earnings, plus a fully paid home. If your annual earning is $50,000, you should have accumulated savings of at least $300,000.
If your accumualted savings is inadequate, you should work a few years longer. If you have to retire earlier, you should accept a more modest lifestyle.
It is better to save a larger portion of your earnings, if you can. Do not spend too much on your home, car or other expensive items.
6. Where can I get financial advice?
You can visit our business center and talk to our salaried consultants. You can also talk to our insurance adviser, who can visit your at your home. The financial advice is FREE.
Tan Kin Lian
Chief Executive Officer
NTUC Income
Financial Plan for Teenage Children
Dear Mr Tan,
1) My son is 21 yrs old. In year 2009, he will go to university. I plan to put aside of $30,000 for him to earn as much interest as possible. What should I do? Buy investment fund, endowment or bank FD?
2) My daughter is 17 yrs old. She will go to university in 2009. I also wish to set aside $30000 for her. What should I do?
3) I want to start saving habit for them now. I can either pay monthly for them for few years and next time they continue on their own. Or I can put now additional $10.000 for investment or saving. After a few yrs they can continue to pay.
Can you advise me what to do?
TBC
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Dear TBC
For short term savings, you can choose the following:
- fixed deposit from a bank (earns about 3% per annum, but locked in for the term)
- flexi-cash from Income (earns about 2.5% to 3% per annum, changes with money market, can be withdrawn without penalty).
My wife recently had $50,000 of fixed deposit matured. She placed it in the flexi-cash from NTUC Income. As this is flexible, she may re-invest in an investment fund at a later date, when the market corrects downwards.
For long term savings for your child, I recommend our Ideal plan.
Look at the FAQs:
FlexiCash
Ideal Plan
I will arrnge for our product specialist to call and advise you.
Tan Kin Lian
1) My son is 21 yrs old. In year 2009, he will go to university. I plan to put aside of $30,000 for him to earn as much interest as possible. What should I do? Buy investment fund, endowment or bank FD?
2) My daughter is 17 yrs old. She will go to university in 2009. I also wish to set aside $30000 for her. What should I do?
3) I want to start saving habit for them now. I can either pay monthly for them for few years and next time they continue on their own. Or I can put now additional $10.000 for investment or saving. After a few yrs they can continue to pay.
Can you advise me what to do?
TBC
----------------
Dear TBC
For short term savings, you can choose the following:
- fixed deposit from a bank (earns about 3% per annum, but locked in for the term)
- flexi-cash from Income (earns about 2.5% to 3% per annum, changes with money market, can be withdrawn without penalty).
My wife recently had $50,000 of fixed deposit matured. She placed it in the flexi-cash from NTUC Income. As this is flexible, she may re-invest in an investment fund at a later date, when the market corrects downwards.
For long term savings for your child, I recommend our Ideal plan.
Look at the FAQs:
FlexiCash
Ideal Plan
I will arrnge for our product specialist to call and advise you.
Tan Kin Lian
Thursday, November 9, 2006
High cost of structured product
Someone asked me, "Mr Tan, what is the underlying value and risk of a structured product? Why has it generally performed badly for the investors?"
Here is my answer:
1. The product arranger (also called the underwriter or issuer) designs the product to earn an attractive fee. Generally, they do not take any risk. Most of the risk is eventually shouldered by the investor.
2. The distributor (usually a few banks) earns an attractive commission to sell the product. They give a sales quota for their marketing officer to sell the product to their customers.
3. My guess is that the charges paid to the arranger and distributor could amount to 10% of your investment.
4. Usually, the investor shoulders most of the underlying risk of the investments. In some structure, a portion of the risk is transferred to another party, but it comes with a cost, which as to be paid to the counter-party that accepts the risk. The counter-party is usually a sophisticated financial institution that can price the risk to earn a big profit margin.
5. This complicated structure adds to the cost of the product. If a safe investment can earn 3% per year, the investor can earn slightly more than 15% for 5 years. After deudcting the cost (say 10%) on the structured product, the eventual return to the investor will be only 5% for 5 years (ie 1% a year). After investing for so many years, many people find that they get a poor return, from a low risk product.
6. Some investors did make a better return (say 10% to 15% for a few years) on structured product which carries a high risk. However, if they had invested in the shares directly, their return would have been much higher. For example, I earned a return of 60% on the ST Tracker Fund during the past three years.
Lesson: Do not pay the high cost of a structured product. It does NOT benefit the investor.
Here is my answer:
1. The product arranger (also called the underwriter or issuer) designs the product to earn an attractive fee. Generally, they do not take any risk. Most of the risk is eventually shouldered by the investor.
2. The distributor (usually a few banks) earns an attractive commission to sell the product. They give a sales quota for their marketing officer to sell the product to their customers.
3. My guess is that the charges paid to the arranger and distributor could amount to 10% of your investment.
4. Usually, the investor shoulders most of the underlying risk of the investments. In some structure, a portion of the risk is transferred to another party, but it comes with a cost, which as to be paid to the counter-party that accepts the risk. The counter-party is usually a sophisticated financial institution that can price the risk to earn a big profit margin.
5. This complicated structure adds to the cost of the product. If a safe investment can earn 3% per year, the investor can earn slightly more than 15% for 5 years. After deudcting the cost (say 10%) on the structured product, the eventual return to the investor will be only 5% for 5 years (ie 1% a year). After investing for so many years, many people find that they get a poor return, from a low risk product.
6. Some investors did make a better return (say 10% to 15% for a few years) on structured product which carries a high risk. However, if they had invested in the shares directly, their return would have been much higher. For example, I earned a return of 60% on the ST Tracker Fund during the past three years.
Lesson: Do not pay the high cost of a structured product. It does NOT benefit the investor.
Wednesday, November 8, 2006
Save in Ideal plan now and buy a life annuity later
Dear Mr Tan
I'm an Income policy holder. I've always believed in insurance, and understandably, annuity too.
Can I buy an annuity now even though I'm still working? I expect to continue working for another decade or two.
I want to make sure I will have more set aside when I retire to ensure a higher standard of living. My current CPF savings is not enough to ensure a high quality of lifestyle.
MJ
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Dear MJ
My advice is to save and invest in our Combined Fund for the next 20 years.
You can use the accumulated savings to buy a life annuity after you have stopped working. More details are available from:
http://www.income.coop/insurance/ideal/faq2.asp
http://www.income.coop/insurance/glannuity/faq-lifeannuity.asp
Tan Kin Lian
CEO, NTUC Income
I'm an Income policy holder. I've always believed in insurance, and understandably, annuity too.
Can I buy an annuity now even though I'm still working? I expect to continue working for another decade or two.
I want to make sure I will have more set aside when I retire to ensure a higher standard of living. My current CPF savings is not enough to ensure a high quality of lifestyle.
MJ
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Dear MJ
My advice is to save and invest in our Combined Fund for the next 20 years.
You can use the accumulated savings to buy a life annuity after you have stopped working. More details are available from:
http://www.income.coop/insurance/ideal/faq2.asp
http://www.income.coop/insurance/glannuity/faq-lifeannuity.asp
Tan Kin Lian
CEO, NTUC Income
Term insurance sells very well
What is the best way to get a large life insurance cover, and pay a very low cost?
Buy term insuance. NTUC Income offers term insurance (called i-Term) at the lowest rates in the market. It is well received.
It covers death from accidents and illness. It also covers permanent total disability.
The i-Term is well received by the public. About 1,900 applications were received over the past 6 months. This is THREE times of the average for last year.
Here are the reasons for its success:
- Simple application process. Can be submitted through the internet.
- Best value. The premium is about 30% cheaper than similar products in the market
i-Term
By paying a lower premium for your term insurance, you can invest the rest of your savings in a large, well diversified, low charge fund to earn an attractive return (much higher than a traditional life insurance policy).
Invest your savings
Buy term insuance. NTUC Income offers term insurance (called i-Term) at the lowest rates in the market. It is well received.
It covers death from accidents and illness. It also covers permanent total disability.
The i-Term is well received by the public. About 1,900 applications were received over the past 6 months. This is THREE times of the average for last year.
Here are the reasons for its success:
- Simple application process. Can be submitted through the internet.
- Best value. The premium is about 30% cheaper than similar products in the market
i-Term
By paying a lower premium for your term insurance, you can invest the rest of your savings in a large, well diversified, low charge fund to earn an attractive return (much higher than a traditional life insurance policy).
Invest your savings
Do you want to retire at age 54?
A newspaper survey said that Singaporeans want to retire at age 54 (on the average).
Sorry, this is not possible for the ordinary working person. You can retire at an erly age only if you come from a rich family or have a very high income.
A person who starts work at 25 should work and save for 40 years, until age 65, to have sufficient money to live for another 15 years (to age 80). You should save at least 10% of your earnings. The savings for your home or children should be separate items.
A saving of 10% is just sufficient for a basic lifestyle in retirement. If you want a more comfortable lifestyle, you should save at least 15%.
If you are not able to save sufficiently, you should be prepared to work longer, say up to age 70 years, or to live modestly.
You must invest your savings wisely, to get a good return for the future. You should invest in a product that gives you a fairly attractive return, such as a large, well diversified, low charge fund.
Do not invest in products that pays high commission to distributors (e.g agents) and make large profit margin for the financial institution. Take care of your own financial future. Do not allow other people to earn a lot of money at your expense.
Ideal Plan
Sorry, this is not possible for the ordinary working person. You can retire at an erly age only if you come from a rich family or have a very high income.
A person who starts work at 25 should work and save for 40 years, until age 65, to have sufficient money to live for another 15 years (to age 80). You should save at least 10% of your earnings. The savings for your home or children should be separate items.
A saving of 10% is just sufficient for a basic lifestyle in retirement. If you want a more comfortable lifestyle, you should save at least 15%.
If you are not able to save sufficiently, you should be prepared to work longer, say up to age 70 years, or to live modestly.
You must invest your savings wisely, to get a good return for the future. You should invest in a product that gives you a fairly attractive return, such as a large, well diversified, low charge fund.
Do not invest in products that pays high commission to distributors (e.g agents) and make large profit margin for the financial institution. Take care of your own financial future. Do not allow other people to earn a lot of money at your expense.
Ideal Plan
Why structured products are risky
I wish to give a hypothetical example of a structured product, to show why the product can be risky to consumers. Some structured products in the market work in this way.
An investor who wish to have a safe guaranteed return for 5 years can expect about 3% per annum, by investing in a government bond.
A structured product can be designed to give a return of, say 5% per annum. To give the enhanced return of 2% per annum, the product has to give a potential loss of slightly more than 10% per annum (ie 2% p.a. compounded for 5 years) on maturity.
To hide this potential loss on maturity, the product will pay back 100% on athe principal on maturity under certain events, but will define some events (with a 10% or higher chance of happening) where the investor lose the entire principal.
The investors may not realise that they are taking a real risky bet.
The actual risk of losing the entire principal could be as high as 20% in this example. The arranger has to package this higher risk, as they wish to have an additional margin to pay the distributor (ie the bank that sells the structured product) and to keep a profit for the arranger (who designs the structured product). The total charges can be as high as 10% of your principal.
If you wish to have a safe return, are you really prepared to take a 20% chance of losing your entire principal?
The advertisement warns investors of the risk of losing the entire capital on the occurrence of certain events. You should take this warning seriously. Do not trust the words of the marketeer that the risk is "very small". It can happen and may be quite high, ie 20% or higher.
An investor who wish to have a safe guaranteed return for 5 years can expect about 3% per annum, by investing in a government bond.
A structured product can be designed to give a return of, say 5% per annum. To give the enhanced return of 2% per annum, the product has to give a potential loss of slightly more than 10% per annum (ie 2% p.a. compounded for 5 years) on maturity.
To hide this potential loss on maturity, the product will pay back 100% on athe principal on maturity under certain events, but will define some events (with a 10% or higher chance of happening) where the investor lose the entire principal.
The investors may not realise that they are taking a real risky bet.
The actual risk of losing the entire principal could be as high as 20% in this example. The arranger has to package this higher risk, as they wish to have an additional margin to pay the distributor (ie the bank that sells the structured product) and to keep a profit for the arranger (who designs the structured product). The total charges can be as high as 10% of your principal.
If you wish to have a safe return, are you really prepared to take a 20% chance of losing your entire principal?
The advertisement warns investors of the risk of losing the entire capital on the occurrence of certain events. You should take this warning seriously. Do not trust the words of the marketeer that the risk is "very small". It can happen and may be quite high, ie 20% or higher.
Tuesday, November 7, 2006
What return can you expect from NTUC Income's funds?
Dear Mr Tan,
I read your article in eNN.
On lesson 1, I was also told not to invest in srructured deposits too from my financial advisers . However what have you got to say about guanrantee returns of structured deposits from the banks. The minimum is at least 2% per annum and better than normal savings of less than 1% interest (maybe 0.5%).
For Lesson 2 and your best choice, what I can see is the difference perhaps could be the difference in charges. Other than that, the large, well-diversified fund you mentioned has its own risks attached. By the way, what returns are we talking about for those fund coming from ntuc income.
TKS
--------------
Dear TKS
If you wish to invest in safe investments that give more than 2% per annum, and have full flexibility, I suggest the Money Market Fund.
FlexiCash
I have recently invested $100,000 in this fund to earn an interest rate of around 2.5% to 3%. The interest rate will fluctuate with the money market. I will re-invest this money in the combined fund (equity and bonds) some time next year, if the market has corrected from the current level.
If you wish to invest to earn a higher return, I suggest that you consider our Combined Fund.
Flexi-Link
Tan Kin Lian
I read your article in eNN.
On lesson 1, I was also told not to invest in srructured deposits too from my financial advisers . However what have you got to say about guanrantee returns of structured deposits from the banks. The minimum is at least 2% per annum and better than normal savings of less than 1% interest (maybe 0.5%).
For Lesson 2 and your best choice, what I can see is the difference perhaps could be the difference in charges. Other than that, the large, well-diversified fund you mentioned has its own risks attached. By the way, what returns are we talking about for those fund coming from ntuc income.
TKS
--------------
Dear TKS
If you wish to invest in safe investments that give more than 2% per annum, and have full flexibility, I suggest the Money Market Fund.
FlexiCash
I have recently invested $100,000 in this fund to earn an interest rate of around 2.5% to 3%. The interest rate will fluctuate with the money market. I will re-invest this money in the combined fund (equity and bonds) some time next year, if the market has corrected from the current level.
If you wish to invest to earn a higher return, I suggest that you consider our Combined Fund.
Flexi-Link
Tan Kin Lian
Do not invest in structured products
Dear Mr tan
Thank you for your advice on eNN. It is a good e-newsletter. I like it. Brief and informative.
Yes, until now, I don't understand structured deposits; and the golden rule
of investing - invest not in what you don't understand....
Unfortunately, too many are trapped by marketing talk. It goes beyond any doubt that a well prepared marketing speech would have most objections taken care of, and
consumers stand little chance to "resist the good deal".
Luckily at my company, after having train about "closing a sale"; I have learnt also
"NOT TO DECIDE" immediately without thinking through. Takes discipline and
courage to walk away...
YSL
eNN
Thank you for your advice on eNN. It is a good e-newsletter. I like it. Brief and informative.
Yes, until now, I don't understand structured deposits; and the golden rule
of investing - invest not in what you don't understand....
Unfortunately, too many are trapped by marketing talk. It goes beyond any doubt that a well prepared marketing speech would have most objections taken care of, and
consumers stand little chance to "resist the good deal".
Luckily at my company, after having train about "closing a sale"; I have learnt also
"NOT TO DECIDE" immediately without thinking through. Takes discipline and
courage to walk away...
YSL
eNN
Best Fund to Invest
Dear Mr Tan
What are some of the best funds to invest now?
NN
---------------
Dear NN
I recommend a large, well diversified, low cost fund. The Combined Fund (Growth) from NTUC Income is such a fund.
Combined Fund
It is invested in the four core funds with a total of $3,900 million of assets.
For an investor who is worried that the stockmarket is too high now, I suggest that the money be invested in the Money Market Fund now and be invested into the Combined Fund in a few installments.
FlexiCash
Tan Kin Lian
What are some of the best funds to invest now?
NN
---------------
Dear NN
I recommend a large, well diversified, low cost fund. The Combined Fund (Growth) from NTUC Income is such a fund.
Combined Fund
It is invested in the four core funds with a total of $3,900 million of assets.
For an investor who is worried that the stockmarket is too high now, I suggest that the money be invested in the Money Market Fund now and be invested into the Combined Fund in a few installments.
FlexiCash
Tan Kin Lian
What are structured products?
Dear Mr Tan
I am a NTUC policy holder. I just read what you have written on eNN. Can you kindly explain to me what is structured deposit?
LSK
---------------
Dear LSK
You can read about structured deposits in
askdrmoney
knowyourinsurance
Tan Kin Lian
eNN
I am a NTUC policy holder. I just read what you have written on eNN. Can you kindly explain to me what is structured deposit?
LSK
---------------
Dear LSK
You can read about structured deposits in
askdrmoney
knowyourinsurance
Tan Kin Lian
eNN
Policyholders enjoyed up to 15% higher return on their policies
NTUC Income is the first insurance company to publish its ACTUAL RETURN on its endowment policies that matured in 2006.
The return was 4.4% p.a. for a 10 year policy, 5.2% p.a. for 15 year policy and 6.2% p.a. for 20 year policy. This is quite an attractive return.
The other life insurance companies are embarrassed to publish their actual returns.
Compared to similar plans offered by other insurers, the return from NTUC Income is up to 15% higher. This is possible due to lower commision to agents, lower expenses and lower distribution to sharehholders.
If the policy that you have taken from another insurer paid you $50,000 on maturity, a similar policy from NTUC Income paid you up to $7,500 nore.
It may be too late for you now. But tell your children. Put their savings with NTUC Income and earn up to 15% more.
The return was 4.4% p.a. for a 10 year policy, 5.2% p.a. for 15 year policy and 6.2% p.a. for 20 year policy. This is quite an attractive return.
The other life insurance companies are embarrassed to publish their actual returns.
Compared to similar plans offered by other insurers, the return from NTUC Income is up to 15% higher. This is possible due to lower commision to agents, lower expenses and lower distribution to sharehholders.
If the policy that you have taken from another insurer paid you $50,000 on maturity, a similar policy from NTUC Income paid you up to $7,500 nore.
It may be too late for you now. But tell your children. Put their savings with NTUC Income and earn up to 15% more.
AIA Choice Life policyholders has to pay premium for longer period
Someone sent this message to me.
AIA's agents have sold several ten thousands of life policies on the "promise" that the premiums will stop after a certain number of years.
Now, the policyhlders are told that they have to pay the premiums for many more years.
The agents earned high commission rates to sell these policies. Should they refund their high commission back to the customers? Should they earn high incomes at the expense of their customers?
A few years ago, it was the Financial Guardian policies sold by AIA. Now it is the Choice Life. What else can be expected in the future?
AIA's agents have sold several ten thousands of life policies on the "promise" that the premiums will stop after a certain number of years.
Now, the policyhlders are told that they have to pay the premiums for many more years.
The agents earned high commission rates to sell these policies. Should they refund their high commission back to the customers? Should they earn high incomes at the expense of their customers?
A few years ago, it was the Financial Guardian policies sold by AIA. Now it is the Choice Life. What else can be expected in the future?
Sunday, November 5, 2006
Two pitfalls to avoid in your investments
So many people have fallen for these bad financial products. And they learned a painful lesson. It has been very costly for them.
Lesson 1.
Do not invest in structured deposit. They are structured to look attractive, but are usually quite deceptive. The product creator and distributor made high profit for themselves. Their large charges are hidden in the complicated structure. You will only find out after a few years. By that time, you will realise that most of the gains have been eaten away by the charges. If the market perform badly, you have to carry the loss.
Lesson 2.
Avoid investing through financial advisers. They will be able to find unit trusts that perform well in the past (from more than 300 unit trusts available in the market). The probem is that these unit trusts are NOT likely to perform well in the future. These unit trusts are likely to have high charges (2% to 3% per year). The financial adviser recommend them to you, because they get a trailer fee of 0.5% to 1% every year. This comes from your earnings.
WHAT IS THE BEST CHOICE FOR THE CONSUMER?
Invest in a large, well diversified fund with low charge. Less than 1% per annum. This is available from NTUC Income. Many people have benefited for it. Join them.
Lesson 1.
Do not invest in structured deposit. They are structured to look attractive, but are usually quite deceptive. The product creator and distributor made high profit for themselves. Their large charges are hidden in the complicated structure. You will only find out after a few years. By that time, you will realise that most of the gains have been eaten away by the charges. If the market perform badly, you have to carry the loss.
Lesson 2.
Avoid investing through financial advisers. They will be able to find unit trusts that perform well in the past (from more than 300 unit trusts available in the market). The probem is that these unit trusts are NOT likely to perform well in the future. These unit trusts are likely to have high charges (2% to 3% per year). The financial adviser recommend them to you, because they get a trailer fee of 0.5% to 1% every year. This comes from your earnings.
WHAT IS THE BEST CHOICE FOR THE CONSUMER?
Invest in a large, well diversified fund with low charge. Less than 1% per annum. This is available from NTUC Income. Many people have benefited for it. Join them.
An expensive lesson
A friend told me this story. She invested $25,000 in a "vitamin account" offered by a bank. The account paid 4% interest. After one year, the value of the account plus the interest paid is still LESS than the principal invested. There was no gain for the past one year.
She also invested in the Combined Fund managed by NTUC Income. It produced a return of about 10% during the same period.
She asked the bank why the return was still negative. The bank officer advised her to wait longer.
My friend now realised that the bank had high charges in the "vitamin account". Her money is locked up for 6 years. She does not know when she is going to get a decent return.
It is an expensive lesson for her.
Most structured deposits being marketed by the banks are similar to this product, namely:
- high charges (not disclosed)
- a complicated formula on calcuting the value of the investments
- a locked-in period
I wish to advise all consumers. Do not invest in the structured products. They are to your disadvantahe.
Invest your money in a large, well diversified fund, with low charges (less than 1% per annum). You will benefit in the long term.
She also invested in the Combined Fund managed by NTUC Income. It produced a return of about 10% during the same period.
She asked the bank why the return was still negative. The bank officer advised her to wait longer.
My friend now realised that the bank had high charges in the "vitamin account". Her money is locked up for 6 years. She does not know when she is going to get a decent return.
It is an expensive lesson for her.
Most structured deposits being marketed by the banks are similar to this product, namely:
- high charges (not disclosed)
- a complicated formula on calcuting the value of the investments
- a locked-in period
I wish to advise all consumers. Do not invest in the structured products. They are to your disadvantahe.
Invest your money in a large, well diversified fund, with low charges (less than 1% per annum). You will benefit in the long term.
Financial Adviser earns trailer fee of 1% annually
I met an agency manager from another company (not NTUC Income). His top adviser wants to leave him to join an independent financial adviser firm. The IFA firms pays him a trailer fee of 1% per annum on the total sum invested.
This means that the customer probably has to bear a charge of 2.5% to 3% on the amount invested. This is required to pay the trailer fee to the adviser and to pay the fund for managing the assets.
The total fee of 3% is FAR TOO HIGH.
Over the past 10 years, the average return on equity is about 7% per annum. After deducting 3%, the investor gets only 4% left. This is insufficient for the risk.
For a fund managed by NTUC Income, the total deduction is less than 1% per annum. If our fund earns 7%, the investor gets 6%.
A difference of 2% over 10 years amounts to more than 20%. You can get a much bigger payout from NTUC Income, because our deduction is modest. Most of the return goes back to you.
Over a long period, most funds will earn about the same return for the same type of risk. There is very little difference between the performance of good fund managers. It is better to invest in a large, well diversified, low charge fund (ie the fund offered by NTUC Income.
This means that the customer probably has to bear a charge of 2.5% to 3% on the amount invested. This is required to pay the trailer fee to the adviser and to pay the fund for managing the assets.
The total fee of 3% is FAR TOO HIGH.
Over the past 10 years, the average return on equity is about 7% per annum. After deducting 3%, the investor gets only 4% left. This is insufficient for the risk.
For a fund managed by NTUC Income, the total deduction is less than 1% per annum. If our fund earns 7%, the investor gets 6%.
A difference of 2% over 10 years amounts to more than 20%. You can get a much bigger payout from NTUC Income, because our deduction is modest. Most of the return goes back to you.
Over a long period, most funds will earn about the same return for the same type of risk. There is very little difference between the performance of good fund managers. It is better to invest in a large, well diversified, low charge fund (ie the fund offered by NTUC Income.
Friday, November 3, 2006
How to provide for my family
Dear Mr Tan
I am thinking of retiring at 60 in 2007. I like your advice concerning adequate provision for my family. What do I need to do?
I have a 4 year old son, my wife takes (mid 40s) earns about $x monthly. She may also decide to retire.
I have 2 fixed deposits of $50,000. One insurance policy will mature to realise $350,000. We have other policies and investments of about $1 million).
We do not have any outstanding debt.
Best Rgds
GY
-------------------
Dear GY
I advise you to consider the following plans:
For investing CPF or bank deposits:
Flexi-Link
For your wife to invest regular savings:
Ideal
Low cost term insurance (to provide security to your family)
Term
Life annuity
Life annuity
My business center manager will ask my product specialist to contact you.
The specialist is paid a salary and does not earn a commission. Feel free to
talk to the specialist.
Tan Kin Lian
I am thinking of retiring at 60 in 2007. I like your advice concerning adequate provision for my family. What do I need to do?
I have a 4 year old son, my wife takes (mid 40s) earns about $x monthly. She may also decide to retire.
I have 2 fixed deposits of $50,000. One insurance policy will mature to realise $350,000. We have other policies and investments of about $1 million).
We do not have any outstanding debt.
Best Rgds
GY
-------------------
Dear GY
I advise you to consider the following plans:
For investing CPF or bank deposits:
Flexi-Link
For your wife to invest regular savings:
Ideal
Low cost term insurance (to provide security to your family)
Term
Life annuity
Life annuity
My business center manager will ask my product specialist to contact you.
The specialist is paid a salary and does not earn a commission. Feel free to
talk to the specialist.
Tan Kin Lian
Ideal Plan for your child
What is the best plan for a parent to save for a child?
It is the ideal plan. It is flexible and can give you a better return for the future. It is better than a traditional Education policy.
Find out more:
Ideal plan for your child
Act now. Read the FAQ. Call our hotline 62 INCOME (6246 2663)
It is the ideal plan. It is flexible and can give you a better return for the future. It is better than a traditional Education policy.
Find out more:
Ideal plan for your child
Act now. Read the FAQ. Call our hotline 62 INCOME (6246 2663)
Flexi-Link: Earn up to $26,000 more
The Flexi-Link is for you to invest your CPF or fixed deposit to earn a better return.
By choosing the right fund (ie a large, well diversified, low charge fund), you can earn up to $26,000 more, for an investment of $50,000.
Find our more:
FAQ on Flexi-Link
Act now. Read our FAQ and call our hotline now. And benefit from this wonderful investment.
By choosing the right fund (ie a large, well diversified, low charge fund), you can earn up to $26,000 more, for an investment of $50,000.
Find our more:
FAQ on Flexi-Link
Act now. Read our FAQ and call our hotline now. And benefit from this wonderful investment.
Ideal Plan: Earn up to $32,000 more
The Ideal plan is designed for young people to save regularly and invest for their future needs.
By choosing the right fund (ie large, well diversified, low charge fund) for a monthly saving of $200, they can earn up to $32,000 more, compared to similar plans in the market.
More details can be found at:
Ideal plan
Act now. Read the FAQ and call our hotline. Make the right choice, and get a better return on your savings.
By choosing the right fund (ie large, well diversified, low charge fund) for a monthly saving of $200, they can earn up to $32,000 more, compared to similar plans in the market.
More details can be found at:
Ideal plan
Act now. Read the FAQ and call our hotline. Make the right choice, and get a better return on your savings.
Thursday, November 2, 2006
Shop for the best financial products
Where can you get the best insurance, bank or loan products.
Visit this independent website Best Products
Visit this independent website Best Products
Wednesday, November 1, 2006
Compare fixed deposit with money market fund
Hi Mr Tan,
I am just curious about NTUC's Flexi-cash investment versus MayBank's iSavvy time deposit.
iSavvy returns between 3% to 3.15% (returns variou with different lock-in period), with minimum of $25,000.
Say if I don't forsee an immediate use of my cash, would iSavvy suit me better?
When you have decided to invest your $100k into Flexi-Cash, have you too considered the merits of iSavvy? (being higher returns)
MT
-----------------
Dear MT
The advantage of Flexi-cash is its flexibility. I can withdraw my money at any time, without any penalty. This allows me to invest in an equity fund at the right time, eg if the market has corrected.
Another advantage is that the return is flexible. If the interest rate in the money market goes up, the return in flexi-cash will also go up. As interest rate is expected to increse, it will be to the advantage of the saver to be on "floating rate".
For the small difference in return, compared to the "locked up deposit" from Maybank, I prefer to be in flexi-cash.
Tan Kin Lian
I am just curious about NTUC's Flexi-cash investment versus MayBank's iSavvy time deposit.
iSavvy returns between 3% to 3.15% (returns variou with different lock-in period), with minimum of $25,000.
Say if I don't forsee an immediate use of my cash, would iSavvy suit me better?
When you have decided to invest your $100k into Flexi-Cash, have you too considered the merits of iSavvy? (being higher returns)
MT
-----------------
Dear MT
The advantage of Flexi-cash is its flexibility. I can withdraw my money at any time, without any penalty. This allows me to invest in an equity fund at the right time, eg if the market has corrected.
Another advantage is that the return is flexible. If the interest rate in the money market goes up, the return in flexi-cash will also go up. As interest rate is expected to increse, it will be to the advantage of the saver to be on "floating rate".
For the small difference in return, compared to the "locked up deposit" from Maybank, I prefer to be in flexi-cash.
Tan Kin Lian
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