Someone asked for my views on how serious is the market correction today, and how much is the market likely to fall.
It is difficult to say.
If the shock is temporary, the market may fall by 10% (ie the ST index go down to 3,000) before it recovers.
I will prefer to wait for the market to correct by 20% (say 2,700) before I make further investment. In the meantime, I am happy to earn 3% on the money market.
In 2000, the ST Index was around 2,400. It fell by almost 50% during the next two years (ie 1,200 points), before it started its recover from mid 2003.
Tuesday, February 27, 2007
Monday, February 26, 2007
How to select a housing loan
Someone asked for my advice on how to select a housing loan.
My preference is:
* choose a loan with the interest rate linked to an external benchmark, such as the swap offer rate
* choose a flexible loan that you can break off at any time
This is the best way to ensure that you get a good deal. As the lender has to compete with other providers, they will offer you the best rate, and keep it competitive all the time.
The external benchmark may fluctuate, but this should not bother you. You are repaying the loan over 20 years or longer. So, the interest rate should average out to a level that is lower than a "locked in rate".
My preference is:
* choose a loan with the interest rate linked to an external benchmark, such as the swap offer rate
* choose a flexible loan that you can break off at any time
This is the best way to ensure that you get a good deal. As the lender has to compete with other providers, they will offer you the best rate, and keep it competitive all the time.
The external benchmark may fluctuate, but this should not bother you. You are repaying the loan over 20 years or longer. So, the interest rate should average out to a level that is lower than a "locked in rate".
Aviva advises to "Buy Direct"
There is a big advertisement from Aviva in Today paper, encouraging the public to "buy direct" from them. They offer an attractive product that pays 3.5% interest rate.
Insurance agents will be facing more competitive pressure from the direct channel. I strongly advise the agents to adopt technology, improve their productivity and reduce the cost to their customers. They should continue to add value.
This is the best way for agents to remain relevant in the competitive market.
Insurance agents will be facing more competitive pressure from the direct channel. I strongly advise the agents to adopt technology, improve their productivity and reduce the cost to their customers. They should continue to add value.
This is the best way for agents to remain relevant in the competitive market.
My views on other insurer's products
Hi Mr Tan,
I have recently started to learn quite a bit from your blog and is taking the time now to review whatever I have bought in the past.
I have bought the above from POSB on May '04. The annual management charge is 2.7% which is very high. I am comtemplating to stop this policy, even though it may mean a loss of some money. I would rather invest it with NTUC later when the market cools down.
Can you please help to advise me?
(Details of 4 products from Aviva are attached).
----------------------
My reply:
I am sorry. Generally, I am not able to comment on another insurer's products, because I am not familiar with them.
If you wish to find out if NTUC Income has a similar plan, I suggest that you visit the business center at Bras Basah Road, and talk to an insurance consultant.
Tan Kin Lian
I have recently started to learn quite a bit from your blog and is taking the time now to review whatever I have bought in the past.
I have bought the above from POSB on May '04. The annual management charge is 2.7% which is very high. I am comtemplating to stop this policy, even though it may mean a loss of some money. I would rather invest it with NTUC later when the market cools down.
Can you please help to advise me?
(Details of 4 products from Aviva are attached).
----------------------
My reply:
I am sorry. Generally, I am not able to comment on another insurer's products, because I am not familiar with them.
If you wish to find out if NTUC Income has a similar plan, I suggest that you visit the business center at Bras Basah Road, and talk to an insurance consultant.
Tan Kin Lian
NTUC Income funds
Dear Mr Tan
The various NTUC funds (growth, global equity, balanced) are very high now. What is your suggestion? Convert them into the money market fund or stay on?
----------------
My reply:
In my case, I decided to keep my existing investments in the Growth Fund, although it is quite high. My reason: I bought the units at a low price.
For new money, I invested in the money market fund and will wait for a market correction to convert into the Growth Fund or the Global Equity fund.
Tan Kin Lian
The various NTUC funds (growth, global equity, balanced) are very high now. What is your suggestion? Convert them into the money market fund or stay on?
----------------
My reply:
In my case, I decided to keep my existing investments in the Growth Fund, although it is quite high. My reason: I bought the units at a low price.
For new money, I invested in the money market fund and will wait for a market correction to convert into the Growth Fund or the Global Equity fund.
Tan Kin Lian
Sunday, February 25, 2007
Should I invest my CPF special account in the Growth Fund?
Mr Tan,
Would you advise a 30 year old professional to invest in NTUC Growth Fund with CPF SA even though money in the SA is guaranteed 4% interest per annum?
PL
------------
My reply:
At this time, when the stockmarket is high, I do not advise you to invest your special account (interest rate of 4% p.a.) in the Growth Fund (from NTUC Income). It is better to keep the money in the special account and wait for the market to correct to a more modest level.
It is all right to invest your ordinary account (interest rate at 2.5% p.a.) in the Growth Fund now, if you intend to keep for the long term.
Tan Kin Lian
Would you advise a 30 year old professional to invest in NTUC Growth Fund with CPF SA even though money in the SA is guaranteed 4% interest per annum?
PL
------------
My reply:
At this time, when the stockmarket is high, I do not advise you to invest your special account (interest rate of 4% p.a.) in the Growth Fund (from NTUC Income). It is better to keep the money in the special account and wait for the market to correct to a more modest level.
It is all right to invest your ordinary account (interest rate at 2.5% p.a.) in the Growth Fund now, if you intend to keep for the long term.
Tan Kin Lian
Should I buy an endowment policy to pay off a mortgage?
Dear Mr. Tan Kin Lian, Sir.
I have a query about endowment mortgage. The endowment is a European-originated Endowment 65 policy (maturing at 65 years old).
As I understand, with an endowment mortgage only the monthly loan interest is paid, and the loan itself will be paid off with the endowment's maturity payout.
What is your view of this product?
----------------
My reply:
Generally, an endowment policy gives a lower return compared to the interest rate that you have to pay on your mortgage. It is better to make a monthly repayment towards your mortgage, instead of investing in an endowment policy.
In some European countries, there is a tax advantage when you buy an endowment policy. With the tax savings, the net return on the endowment policy may be better than the interest on the mortgage. In such a case, it make sense to take an endowment policy to repay the principal sum on maturity.
This type of situation does not apply in Singapore.
There are many drawbacks of investing in an endowment policy, especially in a foreign country. You should avoid it, unless you are very clear about its implications.
I have a query about endowment mortgage. The endowment is a European-originated Endowment 65 policy (maturing at 65 years old).
As I understand, with an endowment mortgage only the monthly loan interest is paid, and the loan itself will be paid off with the endowment's maturity payout.
What is your view of this product?
----------------
My reply:
Generally, an endowment policy gives a lower return compared to the interest rate that you have to pay on your mortgage. It is better to make a monthly repayment towards your mortgage, instead of investing in an endowment policy.
In some European countries, there is a tax advantage when you buy an endowment policy. With the tax savings, the net return on the endowment policy may be better than the interest on the mortgage. In such a case, it make sense to take an endowment policy to repay the principal sum on maturity.
This type of situation does not apply in Singapore.
There are many drawbacks of investing in an endowment policy, especially in a foreign country. You should avoid it, unless you are very clear about its implications.
Mortgage aggregators in Australia
My friend told me that mortgage aggregators are doing a booming business in Australia.
These companies help the customer to source for the best mortgage loan available in the market. They sign up with several lending institutions and are able to find the best deal.
They are doing very well. The lending institutions find it costly to deal with the customer, so they are happy to let the mortage aggregators handle the customer.
I think that there is a similar need in Singapore. Customers find it quite difficult to get the best deal from several lending institutions. The terms are quite complex.
As the amount of mortgage is quite high, the customer can save a lot of money, if they can find the right deal.
These companies help the customer to source for the best mortgage loan available in the market. They sign up with several lending institutions and are able to find the best deal.
They are doing very well. The lending institutions find it costly to deal with the customer, so they are happy to let the mortage aggregators handle the customer.
I think that there is a similar need in Singapore. Customers find it quite difficult to get the best deal from several lending institutions. The terms are quite complex.
As the amount of mortgage is quite high, the customer can save a lot of money, if they can find the right deal.
Useful role for agents
Agents play a useful role to help their customers to sort out the complexity in our life.
For example, we need an agent to help us to plan our travel, to buy, sell or rent a property, or to handle a complex financial transaction.
The agent need to be adequately compensated for their time and effort, and also for the variable nature of their income (as they are paid on actual transactions).
To help reduce the cost to the customer, we need to find a way to make the agent more productive and to complete the transaction with less effort. The internet allows higher productivity to be achieved, but only if it is used effectively.
Agents should make the effort to embrace technology. By adopting the new way, they can increase their earnings (through higher volue), and reduce the cost to the customers. This is the win-win solution.
If the cost can come down, the customer will not find it necessary to handle directly.
There will continue to be a useful role for agents, but only if they can give value to the customer, and help to bring down the cost.
For example, we need an agent to help us to plan our travel, to buy, sell or rent a property, or to handle a complex financial transaction.
The agent need to be adequately compensated for their time and effort, and also for the variable nature of their income (as they are paid on actual transactions).
To help reduce the cost to the customer, we need to find a way to make the agent more productive and to complete the transaction with less effort. The internet allows higher productivity to be achieved, but only if it is used effectively.
Agents should make the effort to embrace technology. By adopting the new way, they can increase their earnings (through higher volue), and reduce the cost to the customers. This is the win-win solution.
If the cost can come down, the customer will not find it necessary to handle directly.
There will continue to be a useful role for agents, but only if they can give value to the customer, and help to bring down the cost.
Saturday, February 24, 2007
Take a flexible and transparent loan
My friend, who made an analysis of mortgage loans offered in Singapore told me the following:
* the lender promotes preferential interest rate for the first 3 years, sometimes longer
* in reality, the lender has the right to change the interest rate at any time, even during the first year
* the borrower is typically locked into the contract for 2 years
* the lender can raise the rate above their advertised rate, if the interest rate increases
* if the interest rate falls, the borrower does not enjoy the lower rate during the locked in period
* beyond the lock in period, the lender does not reduce the interest rate, unless the borrower takes the initiative to re-finance the loan
Conclusion: This arrangement works against the borrower. In my view, it is better to take a loan on flexible and transparent terms, even if it is more expensive.
* the lender promotes preferential interest rate for the first 3 years, sometimes longer
* in reality, the lender has the right to change the interest rate at any time, even during the first year
* the borrower is typically locked into the contract for 2 years
* the lender can raise the rate above their advertised rate, if the interest rate increases
* if the interest rate falls, the borrower does not enjoy the lower rate during the locked in period
* beyond the lock in period, the lender does not reduce the interest rate, unless the borrower takes the initiative to re-finance the loan
Conclusion: This arrangement works against the borrower. In my view, it is better to take a loan on flexible and transparent terms, even if it is more expensive.
Friday, February 23, 2007
Philips Securities promote i-Term
I received an e-mail from Philips Securities today. They are offering i-Term (low cost term insurance) from NTUC Income. It shows a discount of up to 20% (compared to the rates in the market).
It is easy to buy the i-Term. The transaction can be handled on-line.
My friend said that this new way of marketing is similar to what was described in my "Insurance Company for the 21st century (IC21)".
Actually, my concept goes beyond just the internet marketing. It is a whole new approach.
Read about IC21 in:
IC21
It is easy to buy the i-Term. The transaction can be handled on-line.
My friend said that this new way of marketing is similar to what was described in my "Insurance Company for the 21st century (IC21)".
Actually, my concept goes beyond just the internet marketing. It is a whole new approach.
Read about IC21 in:
IC21
A senior couple is interested in part time work
Dear Mr Tan,
I read your recent post in your blog regarding suitable jobs for seniors.
My spouse and myself are both 57 years old this year and are both currently unemployed. We are both secondary 4 educated. We are both hoping to look for some part time jobs to help supplement the family income, as currently, we still have one son studying medical school in NUS, which is quite a drain on the family resources.
Could you please help us and let us know which are these suitable jobs you are talking about? We are willing to learn new skills and take up new challenges for our new jobs.
I thank you for your enthusiasm in trying to help create employment for the seniors.
SH
----------------------------
Dear SH
Please continue to read my blog to find out about work opportunities for senior persons.
The Center for Seniors will be launching its website soon. By that time, you can call the contact center and register your interest. I hope that you and your spouse will be successful in your search for a job. It should be possible, especially if you are prepared to be flexible.
Wish you all the best.
Tan Kin Lian
I read your recent post in your blog regarding suitable jobs for seniors.
My spouse and myself are both 57 years old this year and are both currently unemployed. We are both secondary 4 educated. We are both hoping to look for some part time jobs to help supplement the family income, as currently, we still have one son studying medical school in NUS, which is quite a drain on the family resources.
Could you please help us and let us know which are these suitable jobs you are talking about? We are willing to learn new skills and take up new challenges for our new jobs.
I thank you for your enthusiasm in trying to help create employment for the seniors.
SH
----------------------------
Dear SH
Please continue to read my blog to find out about work opportunities for senior persons.
The Center for Seniors will be launching its website soon. By that time, you can call the contact center and register your interest. I hope that you and your spouse will be successful in your search for a job. It should be possible, especially if you are prepared to be flexible.
Wish you all the best.
Tan Kin Lian
Lunar New Year Party
I held a party for 120 colleagues of NTUC Income. This will be my last party with them.
Here are some pictures.
The person on the microphone is me. The Chinese character is my name. It means "bright". The little baby (who looks like me) is my grand-daughter, Vera. Her mother is my eldest daughter, Su Ling. Her father is Vitali from Russia.
Here are some pictures.
The person on the microphone is me. The Chinese character is my name. It means "bright". The little baby (who looks like me) is my grand-daughter, Vera. Her mother is my eldest daughter, Su Ling. Her father is Vitali from Russia.
Kind words from a cooperator friend
Dear Kin Lian
For some reason or other, it is sad that you are departing from NTUC Income.
You have made yourself an icon in the insurance industry – and also in the credit co-operative movement.
Truly, you leave behind a legacy of business transparency, honesty and integrity
- which I hope Singapore and Singaporeans would always be grateful for.
Singaporeans cannot and will not forget your tremendous contributions and exemplary
character.
Although, I have not known you well enough, I have always admired your guts as
well as your forthrightness and firmness - when there was a need for leadership and fairness.
I am sure you will soar further and reach new heights in your new endeavours - because - as Socrates says:-
"No evil can happen,
To a good man,
Either in life,
Or after death."
With my warm wishes always - and all the very best.
T
For some reason or other, it is sad that you are departing from NTUC Income.
You have made yourself an icon in the insurance industry – and also in the credit co-operative movement.
Truly, you leave behind a legacy of business transparency, honesty and integrity
- which I hope Singapore and Singaporeans would always be grateful for.
Singaporeans cannot and will not forget your tremendous contributions and exemplary
character.
Although, I have not known you well enough, I have always admired your guts as
well as your forthrightness and firmness - when there was a need for leadership and fairness.
I am sure you will soar further and reach new heights in your new endeavours - because - as Socrates says:-
"No evil can happen,
To a good man,
Either in life,
Or after death."
With my warm wishes always - and all the very best.
T
Today paper, 'Mr Income' puts his feet up
'Mr Income' puts his feet up
After 30 years with insurance cooperative, the chief calls it a day
Clement Mesenas
Editor-At-Large
clement@mediacorp.com.sg
FOR once, Chinese New Year was all play and no work for Mr Tan Kin Lian.
Reason: Two days earlier, on Friday, he served his last working day as chief executive officer with the giant insurance cooperative which he helped build over the past 30 years.
Mr Tan, who is perhaps better known as Mr NTUC Income, devoted the holiday to his family and friends. He also threw a party for 120 of his former colleagues. He was very touched when his colleagues presented him with a piece of Chinese calligraphy.
It had one large character, liang, which means "bright, light, enlightened, open and clear". The small characters said, among other things: "You are honest, upright and fair-minded. You are a person of integrity, someone who is fair."
When Mr Tan resigned last September, it was under rather dramatic circumstances and the news sent shockwaves through the insurance industry.
Mr Tan had to call a "very rare midnight meeting" to tell his key managers of his intention to step down before they learnt about it from the media.
In an exclusive interview with Today recently, Mr Tan - when asked why he was moving on - said: "Any decision is never one-sided but has to be in the interests of both sides. Sometimes, preferences diverge - when the shareholders and the board of directors prefer something and I prefer something else. But we don't take arbitrary decisions."
So how did the parting of ways come about?
"We must recognise that in any organisation, there will come a time when somebody will have to decide what is better for the future. It doesn't matter who is right or wrong."
A glistening of the eyes, a catch in the voice, betrayed his sadness at the parting.
But he added: "I am confident that any organisation which acts ethically, and on principles, will find the right way ... It does not have to be my way."
On Mr Tan's last working day, incoming chief executive Tan Suee Chieh paid a glowing tribute to Mr Tan, who helped NTUC Income grow from a fledgling into the largest composite insurance company in Singapore with $17 billion in assets today.
"The many strengths of Income are his legacies to us," said Mr Tan Suee Chieh in an email to Income staff.
Mr Tan's persuasive, consultative ways went down well with many of his staff. "His policies were transparent ... and he was a people person," said a senior employee. Yet there were others who found Mr Tan a tough boss.
In his tribute to Mr Tan, the new CEO said: "He is a man who is well known for his strong and independent views."
Admirable attributes but could they have rubbed some people the wrong way? Nobody's talking.
What of the future? "I will continue to write my blog about insurance, finance and current affairs in Singapore, but in my personal capacity," said Mr Tan.
His topmost plan would be to make insurance affordable to all with his new insurance outfit, IC21. It is built round a software platform which allows customers to deal directly with the company. "No need for agents ... The savings in commissions would be tremendous," said Mr Tan.
At NTUC Income, Mr Tan had set up a Business Centre to allow customers to deal directly with the company. "If he (an agent) were to go out to make the approach to potential clients, he could see two in a week. But if they came to the Centre, he would be able to service two to three customers a day," said Mr Tan. This would increase the volume of business, make insurance more affordable and assure agents of a regular income.
Is the nature of business at NTUC Income set for further changes?
The answer could lie in what a close former associate of Mr Tan told Today: "I remember Mr Tan's advice when I first joined NTUC Income. He told me: A company boss will always say: How much money can I make for it? A coop boss will say: How many jobs can I create and how affordable will the product be to the consumer?"
After 30 years with insurance cooperative, the chief calls it a day
Clement Mesenas
Editor-At-Large
clement@mediacorp.com.sg
FOR once, Chinese New Year was all play and no work for Mr Tan Kin Lian.
Reason: Two days earlier, on Friday, he served his last working day as chief executive officer with the giant insurance cooperative which he helped build over the past 30 years.
Mr Tan, who is perhaps better known as Mr NTUC Income, devoted the holiday to his family and friends. He also threw a party for 120 of his former colleagues. He was very touched when his colleagues presented him with a piece of Chinese calligraphy.
It had one large character, liang, which means "bright, light, enlightened, open and clear". The small characters said, among other things: "You are honest, upright and fair-minded. You are a person of integrity, someone who is fair."
When Mr Tan resigned last September, it was under rather dramatic circumstances and the news sent shockwaves through the insurance industry.
Mr Tan had to call a "very rare midnight meeting" to tell his key managers of his intention to step down before they learnt about it from the media.
In an exclusive interview with Today recently, Mr Tan - when asked why he was moving on - said: "Any decision is never one-sided but has to be in the interests of both sides. Sometimes, preferences diverge - when the shareholders and the board of directors prefer something and I prefer something else. But we don't take arbitrary decisions."
So how did the parting of ways come about?
"We must recognise that in any organisation, there will come a time when somebody will have to decide what is better for the future. It doesn't matter who is right or wrong."
A glistening of the eyes, a catch in the voice, betrayed his sadness at the parting.
But he added: "I am confident that any organisation which acts ethically, and on principles, will find the right way ... It does not have to be my way."
On Mr Tan's last working day, incoming chief executive Tan Suee Chieh paid a glowing tribute to Mr Tan, who helped NTUC Income grow from a fledgling into the largest composite insurance company in Singapore with $17 billion in assets today.
"The many strengths of Income are his legacies to us," said Mr Tan Suee Chieh in an email to Income staff.
Mr Tan's persuasive, consultative ways went down well with many of his staff. "His policies were transparent ... and he was a people person," said a senior employee. Yet there were others who found Mr Tan a tough boss.
In his tribute to Mr Tan, the new CEO said: "He is a man who is well known for his strong and independent views."
Admirable attributes but could they have rubbed some people the wrong way? Nobody's talking.
What of the future? "I will continue to write my blog about insurance, finance and current affairs in Singapore, but in my personal capacity," said Mr Tan.
His topmost plan would be to make insurance affordable to all with his new insurance outfit, IC21. It is built round a software platform which allows customers to deal directly with the company. "No need for agents ... The savings in commissions would be tremendous," said Mr Tan.
At NTUC Income, Mr Tan had set up a Business Centre to allow customers to deal directly with the company. "If he (an agent) were to go out to make the approach to potential clients, he could see two in a week. But if they came to the Centre, he would be able to service two to three customers a day," said Mr Tan. This would increase the volume of business, make insurance more affordable and assure agents of a regular income.
Is the nature of business at NTUC Income set for further changes?
The answer could lie in what a close former associate of Mr Tan told Today: "I remember Mr Tan's advice when I first joined NTUC Income. He told me: A company boss will always say: How much money can I make for it? A coop boss will say: How many jobs can I create and how affordable will the product be to the consumer?"
Thursday, February 22, 2007
Center for Seniors
I am the chairman of the Center for Seniors. Someone asked me to post in my blog about the work of this organisation.
Briefly, it is a non-profit organisation. It aims to serve the seniors in Singapore. Some of its key activities are:
* to operate a website and call center, to provide useful information for seniors
* to link seniors to other organisations that provide service and activities for seniors
* to provide guidance on continuing employment
* to help seniors to find suitable jobs
* to provide counselling service on how to cope with aging
The Center for Seniors will set up an office in Junction 8 in Bishan. This is expectd to be ready by April. It receives its funds from the National Council of Social Service and from donations from well-wishers.
I will provide more information in due course.
Briefly, it is a non-profit organisation. It aims to serve the seniors in Singapore. Some of its key activities are:
* to operate a website and call center, to provide useful information for seniors
* to link seniors to other organisations that provide service and activities for seniors
* to provide guidance on continuing employment
* to help seniors to find suitable jobs
* to provide counselling service on how to cope with aging
The Center for Seniors will set up an office in Junction 8 in Bishan. This is expectd to be ready by April. It receives its funds from the National Council of Social Service and from donations from well-wishers.
I will provide more information in due course.
Goodbye to Uncle Larry
My uncle, Larry Koh, passed away yesterday morning. He was 79 years old. He had not been well for the past few years.
In spite of poor health, uncle Larry has always been a positive, jovial person. I enjoyed my several visits to his home. He was always delighted to see me, and to share with me, his views about current events. He has clear views and he talks convincingly. He is a great communicator.
Two years ago, I took one day of leave to accompany uncle Larry on his MRT journey round Singapore. This was a great way for him to take his exercise and pass his time.
I introduced him to Logic9 (Sudoku). He must have spent hundreds of hours on this game on his PC.
In many respects, I share the same characteristics as my uncle Larry, namely a positive approach and to be convincing. Uncle Larry was my mother's youngest brother.
He told me that, during his younger days, he was able to convince people through the clarity of his views, which he put across with emphasis. He likes to "blow his big trumpet".
This is how the community portal set up by NTUC Income, ie the Big Trumpet, got its name.
I shall miss uncle Larry.
In spite of poor health, uncle Larry has always been a positive, jovial person. I enjoyed my several visits to his home. He was always delighted to see me, and to share with me, his views about current events. He has clear views and he talks convincingly. He is a great communicator.
Two years ago, I took one day of leave to accompany uncle Larry on his MRT journey round Singapore. This was a great way for him to take his exercise and pass his time.
I introduced him to Logic9 (Sudoku). He must have spent hundreds of hours on this game on his PC.
In many respects, I share the same characteristics as my uncle Larry, namely a positive approach and to be convincing. Uncle Larry was my mother's youngest brother.
He told me that, during his younger days, he was able to convince people through the clarity of his views, which he put across with emphasis. He likes to "blow his big trumpet".
This is how the community portal set up by NTUC Income, ie the Big Trumpet, got its name.
I shall miss uncle Larry.
A whole life policy pegged to a child's age
Dear Mr Tan
I hope this email finds you well. I have always been impressed with your personal commitment and dedication towards your career. Cheers to a job well done !!
I am a female Singaporean who has a couple of policies under the NTUC arm.
I have been trying to find out over the last 4 years, but without any success, from your agents as to whether there are any whole life policy for my child, on condition that they are pegged to my child's age at the time of entering into the insurance contract.
I bought a policy for my first child when she was born, but pegged to my age. At that point in time, we didn't have much knowledge about insurance. My 2nd child arrived recently.
With time and wisdom, we now realise that it seriously doesn't make any sense to purchase a policy for a young child pegged to a parent's age.
LH
----------------
Dear LH
You can buy a whole life policy pegged to the age of your child. The policy can be in your name as the policyholder, with your child as the life assured. You can transfer the ownership of the policy to your child at any time, but you will only want to do so after your child has started to work.
Tan Kin Lian
I hope this email finds you well. I have always been impressed with your personal commitment and dedication towards your career. Cheers to a job well done !!
I am a female Singaporean who has a couple of policies under the NTUC arm.
I have been trying to find out over the last 4 years, but without any success, from your agents as to whether there are any whole life policy for my child, on condition that they are pegged to my child's age at the time of entering into the insurance contract.
I bought a policy for my first child when she was born, but pegged to my age. At that point in time, we didn't have much knowledge about insurance. My 2nd child arrived recently.
With time and wisdom, we now realise that it seriously doesn't make any sense to purchase a policy for a young child pegged to a parent's age.
LH
----------------
Dear LH
You can buy a whole life policy pegged to the age of your child. The policy can be in your name as the policyholder, with your child as the life assured. You can transfer the ownership of the policy to your child at any time, but you will only want to do so after your child has started to work.
Tan Kin Lian
Japan has a low birth rate
There is an article in the newspaper today about the low birth rate in Japan.
According to the article, the birth rate improved marginally to 1.26 last year, due to the improving economy. But this was expected to be temporary. The reasons for the low birth rate are similar to Singapore, namely, the uncertainty of jobs, the high cost of raising a child and potential loss of career prospects for working mothers
If I recall correctly, our birth rate in Singapore is around this level.
We have to understand the underlying concerns, and be able to find a bold new way to break out of the problem.
According to the article, the birth rate improved marginally to 1.26 last year, due to the improving economy. But this was expected to be temporary. The reasons for the low birth rate are similar to Singapore, namely, the uncertainty of jobs, the high cost of raising a child and potential loss of career prospects for working mothers
If I recall correctly, our birth rate in Singapore is around this level.
We have to understand the underlying concerns, and be able to find a bold new way to break out of the problem.
Wednesday, February 21, 2007
A larger population of Singaporeans
Singapore has a low birth rate. We are among the fastest aging population in the world. Many families prefer to have fewer children.
Why?
They find it too costly to raise children. As jobs are uncertain and the cost of living is high, many people prefer to avoid this financial burden.
How can this be reversed?
We need a new approach. We have to shift the cost of raising a family from the individual to the community. Each person should be allowed to have up to two or three children with the cost being largely financed by the community.
This is the approach adopted in the Scandinavian countries. They have generous benefits for families that have children.
The measures that were adopted in Singapore during the past two decades have failed to produce the desired results. We need to try a new way.
Why?
They find it too costly to raise children. As jobs are uncertain and the cost of living is high, many people prefer to avoid this financial burden.
How can this be reversed?
We need a new approach. We have to shift the cost of raising a family from the individual to the community. Each person should be allowed to have up to two or three children with the cost being largely financed by the community.
This is the approach adopted in the Scandinavian countries. They have generous benefits for families that have children.
The measures that were adopted in Singapore during the past two decades have failed to produce the desired results. We need to try a new way.
Short term interest rate increased in recent years
Short term interest rate have been very low for the five years. During the past year, it has increased significantly.
Here are the rates:
3m SOR - 3 month swap offer rate, ie the rate offered by a bank to another bank
12m SOR - 12 month swap offer rate
5y SGS - 5 year Singapore Government Security
The rate charged by a bank to an individual is usually 1% to 4% higher than the swap rate, depending on the credit risk.
The 3 month rate used to be less than 1.5% p.a. until Dec 2004. It has since increased to 3.6%.
It is now possible to get a fairly good rate of return by investing in the money market (ie you will get swap rate less an expense margin).
Here are the rates:
3m SOR 12m SOR 5y SGS
Dec 01 1.3% 1.8% 4.0%
Dec 02 0.9% 1.0% 2.5%
Dec 03 0.8% 1.2% 3.4%
Dec 04 1.5% 1.6% 2.3%
Dec 05 3.3% 3.2% 3.1%
Dec 06 3.6% 3.5% 3.0%
3m SOR - 3 month swap offer rate, ie the rate offered by a bank to another bank
12m SOR - 12 month swap offer rate
5y SGS - 5 year Singapore Government Security
The rate charged by a bank to an individual is usually 1% to 4% higher than the swap rate, depending on the credit risk.
The 3 month rate used to be less than 1.5% p.a. until Dec 2004. It has since increased to 3.6%.
It is now possible to get a fairly good rate of return by investing in the money market (ie you will get swap rate less an expense margin).
Why structured products are not popular in America?
A financial expert told me that structured products are not popular in America. They are hardly sold there.
Here is the reason: In America, you can buy options from the exchange. You only pay a very low fee for the option. The options are fairly priced by the market, and is quite liquid.
The structured products that are sold in Singapore are priced by the issuer, and contain a large profit and expense margin. The final return to the investor, after deducting these margins, are quite poor.
Here is the reason: In America, you can buy options from the exchange. You only pay a very low fee for the option. The options are fairly priced by the market, and is quite liquid.
The structured products that are sold in Singapore are priced by the issuer, and contain a large profit and expense margin. The final return to the investor, after deducting these margins, are quite poor.
Decreasing term is really affordable
Figures applicable for male, age 30.
If you buy a whole life policy for $200,000 to cover death, disability and 30 dread disease, you pay a monthly premium of $418.50.
If you buy a 30 year decreasing term to cover the same risks, you pay a monthly premium of $29.10. This is only 7% of the whole life premium.
You can invest the remaining 93% (ie $389.40) in a large, well diversified, low charge fund and earn an attractive return.
In 30 years, time, the total saving (with investment gain), and after deducting 5% for expenses, will be more than the sum assured of $200,000.
Assume 4% per annum: $253,000
Assume 6% per annum: $361,000
If you buy a whole life policy for $200,000 to cover death, disability and 30 dread disease, you pay a monthly premium of $418.50.
If you buy a 30 year decreasing term to cover the same risks, you pay a monthly premium of $29.10. This is only 7% of the whole life premium.
You can invest the remaining 93% (ie $389.40) in a large, well diversified, low charge fund and earn an attractive return.
In 30 years, time, the total saving (with investment gain), and after deducting 5% for expenses, will be more than the sum assured of $200,000.
Assume 4% per annum: $253,000
Assume 6% per annum: $361,000
Stop paying premiums on your whole life policy
If you retire from work and find it difficult to continue to pay the premiums, you can convert the policy into a "paid-up" policy.
After the conversion, you will not be required to pay any more premium. The sum assured under your policy will be reduced (based on an actuarial formula). Any accumulated bonus will continue to be in-force. In most cases, the paid up value is quite attractive.
If you wish to learn about this "paid up" option, you can approach your insurance company.
Based on the quoted paid-up value, you can decide which option is best for you:
* continue to pay the premium
* stop the policy and take out the cash value
* convert into a paid up policy.
After the conversion, you will not be required to pay any more premium. The sum assured under your policy will be reduced (based on an actuarial formula). Any accumulated bonus will continue to be in-force. In most cases, the paid up value is quite attractive.
If you wish to learn about this "paid up" option, you can approach your insurance company.
Based on the quoted paid-up value, you can decide which option is best for you:
* continue to pay the premium
* stop the policy and take out the cash value
* convert into a paid up policy.
Tuesday, February 20, 2007
My Chinese name, Liang
My colleagues presented a Chinese caligraphy to me as a farewell gift. It contains 1 large character, Liang. It contains a line of 8 characters using my Chinese name.
Here is the explanation:
Liang means bright, light, enlightened, open and clear.
The 8 characters is translated to:
You are admired for your contribution towards the cooperative movement, policyholders and the country at large. You are honest, upright and fair minded. You are a person of integrity, someone who is fair.
I am very touched by these words from my colleagues.
Here is the explanation:
Liang means bright, light, enlightened, open and clear.
The 8 characters is translated to:
You are admired for your contribution towards the cooperative movement, policyholders and the country at large. You are honest, upright and fair minded. You are a person of integrity, someone who is fair.
I am very touched by these words from my colleagues.
Does car insurance policy cover car pooling?
Dear Mr Tan.
I wish to compliment you for the many interesting topics and tips.
Regarding your comments on car-pooling and payment of $2 per trip, would this not constitute using one's private car for business?. Will the insurance cover any accidents occuring during such trips?
LL
----------------
Dear LL
The payment of $2 per trip is considered as sharing the expenses of the car. In fact, the actual expenses is much higher, so a higher payment is justified. It does not constitute using the private car for business.
I believe that NTUC Income's insurance policy will cover this situation. I will ask the head of motor insurance to confirm it.
Tan Kin Lian
---------------------
The private car insurance policy issue by NTUC Income covers use of the Insured car for social domestic and pleasure purpose and in connection with the Policyholder's business or profession.
The car-pooling with a small payment of $2.00 will be covered under our private car policy.
Eddie Loke
Head, Motor Department
NTUC Income
I wish to compliment you for the many interesting topics and tips.
Regarding your comments on car-pooling and payment of $2 per trip, would this not constitute using one's private car for business?. Will the insurance cover any accidents occuring during such trips?
LL
----------------
Dear LL
The payment of $2 per trip is considered as sharing the expenses of the car. In fact, the actual expenses is much higher, so a higher payment is justified. It does not constitute using the private car for business.
I believe that NTUC Income's insurance policy will cover this situation. I will ask the head of motor insurance to confirm it.
Tan Kin Lian
---------------------
The private car insurance policy issue by NTUC Income covers use of the Insured car for social domestic and pleasure purpose and in connection with the Policyholder's business or profession.
The car-pooling with a small payment of $2.00 will be covered under our private car policy.
Eddie Loke
Head, Motor Department
NTUC Income
Learn how to use public transport
A young man came to my house to collect some part time work from me.
He took the MRT to Yio Chu Kang station and a taxi to my home. He was not familiar with the bus service 70.
I advised him, in future, to ask people for direction. Someone will be able to tell him which bus to take, and where to take it.
Let us learn about public transport.
He took the MRT to Yio Chu Kang station and a taxi to my home. He was not familiar with the bus service 70.
I advised him, in future, to ask people for direction. Someone will be able to tell him which bus to take, and where to take it.
Let us learn about public transport.
Valuing their labour
A few days ago, I posted my views about the low fertility rate in Singapore.
In today's Today paper, there is an article by Thomas Koshy on "Valuing Their Labour". He suggested that it is better for the government to pay the maternity benefit in full, instead of asking the employer to pay for the first two months. Alternatively, the total cost can be spread across all employers by a levy, (instead of being borne by the current employer).
I agree with this point of view. It is better for the cost of maternity benefit to be borne by the government (through taxes) or by all employers through a levy. This will remove the pressure against female employees having children.
My proposal to raise the fertility rate in Singapore will go one step further. I shall cover it in a separate posting.
In today's Today paper, there is an article by Thomas Koshy on "Valuing Their Labour". He suggested that it is better for the government to pay the maternity benefit in full, instead of asking the employer to pay for the first two months. Alternatively, the total cost can be spread across all employers by a levy, (instead of being borne by the current employer).
I agree with this point of view. It is better for the cost of maternity benefit to be borne by the government (through taxes) or by all employers through a levy. This will remove the pressure against female employees having children.
My proposal to raise the fertility rate in Singapore will go one step further. I shall cover it in a separate posting.
Monday, February 19, 2007
Workfare Bonus
The workfare bonus is an excellent idea. It supplements the earnings of the older workers and encourages more people to work.
I wish to suggest two improvements to the current scheme:
* remove the requirement on annual value of the home
* pay the supplement monthly into the CPF account.
Here are my reasons.
If an older person works for a low income, he is likely to be in financial need. There is no need to check the type of house that he lives in, and whether he owns or rents the home. Let us also help those who are "asset rich and cash poor" to earn a supplementary income.
In many countries, older people receive a pension, and are not required to meet any means test. In our case, the older person has to work to receive a modest supplement (less than $100 a month). Let us not make it too difficult for them.
If the supplement is paid monthly, the employer can include it as part of the pay package and communicate it to the older worker. It will also encourage more employers to create jobs for older workers.
I wish to suggest two improvements to the current scheme:
* remove the requirement on annual value of the home
* pay the supplement monthly into the CPF account.
Here are my reasons.
If an older person works for a low income, he is likely to be in financial need. There is no need to check the type of house that he lives in, and whether he owns or rents the home. Let us also help those who are "asset rich and cash poor" to earn a supplementary income.
In many countries, older people receive a pension, and are not required to meet any means test. In our case, the older person has to work to receive a modest supplement (less than $100 a month). Let us not make it too difficult for them.
If the supplement is paid monthly, the employer can include it as part of the pay package and communicate it to the older worker. It will also encourage more employers to create jobs for older workers.
Risk is to your advantage
Hi Mr Tan,
Someone told me that you coin the term "Risk is to your advantage". Can you explain this concept?
-------------------------
My reply:
The global stockmarket goes in cycles. You have some good years and some bad years. Over a long period, the return is averages about 6% to 10% per annum.
If you hit a bad year, the prices may go down by up to 30% below the trend line. This is a bad time to sell. You should wait for the market to recover. It will usually take one or two years, but may be longer.
In a bullish year, the prices may go up 30% above the trend line. This is a good time to realise your gains. In this case, you can get a much better return than average. It is also all right to keep fully invested in a bull year, as it may go higher.
If you are investing your money for the long term, you can wait for the right time to realise your investment. This is how you can turn risk (or volatility in the price) to your advantage.
Someone told me that you coin the term "Risk is to your advantage". Can you explain this concept?
-------------------------
My reply:
The global stockmarket goes in cycles. You have some good years and some bad years. Over a long period, the return is averages about 6% to 10% per annum.
If you hit a bad year, the prices may go down by up to 30% below the trend line. This is a bad time to sell. You should wait for the market to recover. It will usually take one or two years, but may be longer.
In a bullish year, the prices may go up 30% above the trend line. This is a good time to realise your gains. In this case, you can get a much better return than average. It is also all right to keep fully invested in a bull year, as it may go higher.
If you are investing your money for the long term, you can wait for the right time to realise your investment. This is how you can turn risk (or volatility in the price) to your advantage.
I treat all the lanes fairly
Each week, I run 8 rounds the track in Yio Chu Kang stadium. I run each round on a different lane, starting from lane 1 to lane 8. I treat all the lanes fairly. I do not expect lane 1 (which is the shortest) to take the entire load and be runned 8 times.
Note: This is intended to be a joke, so please laugh!
Note: This is intended to be a joke, so please laugh!
Difference in terms used in American and Singapore
In Singapore, we park our car in a "parking lot" in a car park. In America, the "lot" refers to the entire area to park many cars. The car is parked in a "space".
In Singapore, we have 8 running "tracks" in a stadium. In America, there have one track with 8 "lanes".
My American friend was confused when I refer to track 1 to track 8 in the stadium. He said there is only 1 track with 8 lanes.
In Singapore, we have 8 running "tracks" in a stadium. In America, there have one track with 8 "lanes".
My American friend was confused when I refer to track 1 to track 8 in the stadium. He said there is only 1 track with 8 lanes.
Better to buy term and invest the difference
Dear Mr Tan,
In December 2002 (@ age 35), I brought a life insurance policy from an insurance company which paid a monthly premium of S$96.50. The benefits are:
- Death or TPD coverage, S$25,000.
- if surrender at age of 65, based on the Benefit Illustration (Nov 2002), will receive a lump sum of approximately S$50,000 (Non Guaranteed).
What are your comments about this policy?
WC
--------------------
Dear WC
If you get a return of $50000 at age 65 (after 30 years), you are getting a yield of 2.88%. This is not too bad, but I think that the return from a similar product from NTUC Income should be better. I do not have the figure, but you can ask the business center in NTUC Income to give you a quotation.
You can call them at 6510 2860. See http://www.income.coop/businesscentre/
I prefer to buy a decreasing term assurance and invest the difference in a large, well diversified, low cost fund. You can read about the i-term and ideal plan in www.income.coop/faq.
The cost of the decreasing term should be less than 10% of your premium. If you invest the remaining 90% (ie $1,042 a year), you may be able to get the following amount at the end of 30 years:
Assume an average return of 4% per annum: amount at end of 30 years: $60,700
Assume an average return of 6% per annum: amount at end of 30 years: $87,300
Note: these projections are not guaranteed.
Wish you the best for the Lunar New Year
Tan Kin Lian
In December 2002 (@ age 35), I brought a life insurance policy from an insurance company which paid a monthly premium of S$96.50. The benefits are:
- Death or TPD coverage, S$25,000.
- if surrender at age of 65, based on the Benefit Illustration (Nov 2002), will receive a lump sum of approximately S$50,000 (Non Guaranteed).
What are your comments about this policy?
WC
--------------------
Dear WC
If you get a return of $50000 at age 65 (after 30 years), you are getting a yield of 2.88%. This is not too bad, but I think that the return from a similar product from NTUC Income should be better. I do not have the figure, but you can ask the business center in NTUC Income to give you a quotation.
You can call them at 6510 2860. See http://www.income.coop/businesscentre/
I prefer to buy a decreasing term assurance and invest the difference in a large, well diversified, low cost fund. You can read about the i-term and ideal plan in www.income.coop/faq.
The cost of the decreasing term should be less than 10% of your premium. If you invest the remaining 90% (ie $1,042 a year), you may be able to get the following amount at the end of 30 years:
Assume an average return of 4% per annum: amount at end of 30 years: $60,700
Assume an average return of 6% per annum: amount at end of 30 years: $87,300
Note: these projections are not guaranteed.
Wish you the best for the Lunar New Year
Tan Kin Lian
An honest investment banker
I met an honest investment banker during the Chinese New Year holiday. His colleagues in the firm design structured products to be sold to retail customers.
He strongly felt that it is not a suitable product for retail investors. The product was designed to make profit for the issuing bank. The customer is likely to get a poor return on the maturity of the product, quite likely to be less than bank deposit.
The customers are attracted to the capital guarantee, but they do not realise that they are giving up a lot of the potential gain.
He said that the issuing banks made million of dollars on these products, but they are at the expense of the retail customers.
He advised many of his personal friends not to invest in these products. It is better to invest in the stocks directly and take the investment risk. If not, they should just invest in bonds and get a fixed rate of interest.
He strongly felt that it is not a suitable product for retail investors. The product was designed to make profit for the issuing bank. The customer is likely to get a poor return on the maturity of the product, quite likely to be less than bank deposit.
The customers are attracted to the capital guarantee, but they do not realise that they are giving up a lot of the potential gain.
He said that the issuing banks made million of dollars on these products, but they are at the expense of the retail customers.
He advised many of his personal friends not to invest in these products. It is better to invest in the stocks directly and take the investment risk. If not, they should just invest in bonds and get a fixed rate of interest.
My wife's cousin migrated to Australia
During the Lunar New Year holiday, I met my wife's cousin who migrated to Australia 3 years ago. He and his family is now operating a farm to rear crabs and fish. They have good demand and good prices from Australia and overseas.
They get land and technical assistance from the Australian government. This is hard work which the local Australians are not interested.
Another cousin and a group of friends are joining him to expand the business. They will bring capital into Australia, but are also prepared to do the hard work to make a living. They do not intend to employ any workers, as labour is expensive.
They get land and technical assistance from the Australian government. This is hard work which the local Australians are not interested.
Another cousin and a group of friends are joining him to expand the business. They will bring capital into Australia, but are also prepared to do the hard work to make a living. They do not intend to employ any workers, as labour is expensive.
Is private banking anything special
In today's New Paper, Dr Money tells about his experience in visiting a private banker with his friend.
They were introduced to an investment product that earned a return of 39 percent in 2006. This product is to issue structured products to be sold to retail customers in the bank. The issuer is able to earn such a high return, because the retail purchasers of the structured products get a poor return.
To find out more, you should read the New Paper, Monday 19 February.
Many people have learned from their personal experience that the structured products offered a poor return. Now we know the reason. The product issuer made an average return of 39 percent, taken from the reduced return of the retail customers.
Advice: Do not invest in structured products.
They were introduced to an investment product that earned a return of 39 percent in 2006. This product is to issue structured products to be sold to retail customers in the bank. The issuer is able to earn such a high return, because the retail purchasers of the structured products get a poor return.
To find out more, you should read the New Paper, Monday 19 February.
Many people have learned from their personal experience that the structured products offered a poor return. Now we know the reason. The product issuer made an average return of 39 percent, taken from the reduced return of the retail customers.
Advice: Do not invest in structured products.
Sunday, February 18, 2007
Use a short word
Here are some commonly used long words. You can click on my comments to find the short words that mean the same:
1. as a consequence of
2. as of the date of
3. at the present time
4. costs the sum of
5. despite the fact that
6. due to the fact that
7. during which time
8. for the duration of
9. for the purpose of
10. give consideration to
11. in the majority of instances
12. in the neighbourhood of
13. in view of the fact that
14. is in accordance with
15. on numerous occasions
16. the question as to whether
17. with the minimum of delay
18. you are required to
The long words are from "old English". They are still used often in legal documents and business correspondence.
1. as a consequence of
2. as of the date of
3. at the present time
4. costs the sum of
5. despite the fact that
6. due to the fact that
7. during which time
8. for the duration of
9. for the purpose of
10. give consideration to
11. in the majority of instances
12. in the neighbourhood of
13. in view of the fact that
14. is in accordance with
15. on numerous occasions
16. the question as to whether
17. with the minimum of delay
18. you are required to
The long words are from "old English". They are still used often in legal documents and business correspondence.
Why do my agents say that my insurance is not enough?
Hi Mr Tan
I came across your blog from the eNN Neighbourhood News & would like to get a neutral party's opinion from you.
I'm 50 years old & semi retired with an income of between $1,600 to $2,000, but I'm paying $880 for my monthly insurance cum investment. I find this difficult to maintain and it has become a burden to me. My 2 agents from 2 different insurance companies told me that I do not have enough coverage.
Here are my coverage. (details removed)
With 9 different insurance & investments, I wonder why my coverage & savings are not enough???
C
----------------
Dear C
Your two advisers tell you that your insurance is not enough, so they can sell more insurance to you. They earn commission on the additional insurance. They are not really looking after your interest.
You should consider your insurance needs in the following aspects:
* how much do you and your dependent need, if your income stops now due to death or permanent disability?
* how much do you need to save for your future needs, ie when you retire
To provide the protection benefit (ie payable on death or disability), it is best to buy a low cost term insurance. To save for the future, it is best to have in a flexible savings plan invested in a large, well diversified, low cost fund. You can read about the i-term and ideal plan in www.income.coop/faq
If you wish to see a salaried consultant who can give advice to you without being motivated by the commission, you can visit the business center of NTUC Income at Bras Basah Road.
For your existing policies, you can stop the saving on the plans without incurring any penalty. The consultant should be able to help you make this decision.
Tan Kin Lian
I came across your blog from the eNN Neighbourhood News & would like to get a neutral party's opinion from you.
I'm 50 years old & semi retired with an income of between $1,600 to $2,000, but I'm paying $880 for my monthly insurance cum investment. I find this difficult to maintain and it has become a burden to me. My 2 agents from 2 different insurance companies told me that I do not have enough coverage.
Here are my coverage. (details removed)
With 9 different insurance & investments, I wonder why my coverage & savings are not enough???
C
----------------
Dear C
Your two advisers tell you that your insurance is not enough, so they can sell more insurance to you. They earn commission on the additional insurance. They are not really looking after your interest.
You should consider your insurance needs in the following aspects:
* how much do you and your dependent need, if your income stops now due to death or permanent disability?
* how much do you need to save for your future needs, ie when you retire
To provide the protection benefit (ie payable on death or disability), it is best to buy a low cost term insurance. To save for the future, it is best to have in a flexible savings plan invested in a large, well diversified, low cost fund. You can read about the i-term and ideal plan in www.income.coop/faq
If you wish to see a salaried consultant who can give advice to you without being motivated by the commission, you can visit the business center of NTUC Income at Bras Basah Road.
For your existing policies, you can stop the saving on the plans without incurring any penalty. The consultant should be able to help you make this decision.
Tan Kin Lian
Saturday, February 17, 2007
Buy term and invest the difference
Dear Mr Tan,
I obtained the following quotation from an Income agent.
* Living policy to cover $200,000: monthly premium $404.00
* Decreasing term (extended to cover dread disease) for $200,000 for 35 years: monthly premium $76.40.
* Difference is $327.60
You advised me to invest the difference in a large, well diversified, low cost fund. But the return of 6% per annum is not guaranteed? There will be no protection after 65 years old? Do we need not to consider that?
KS
----------------------
Dear KS
If you invest the difference of $327.60 for 35 years, you will get the following:
Assuming average return of 6% per annum: total after 35 years is $451,000
Assuming average return of 4% per annum: total after 35 years is $295,000
If your savings accumulate to $451,000 at the end of 35 years, you will not need to have any insurance cover. Anyway, I suspect that the sum assured and bonus under living policy will be lower than $451,000 at that time. The cash value will be even less.
I have shown the calculation assuming a lower rate of return of 4 percent per annum. The accumulated sum is still quite attractive. In my personal view, the return is likely to be better than 6%.
Although the Living policy does not look so attractive compared to "invest the difference", I must say that it offers better value than similar policies offered in the market by other insurance companies.
Wish you all the best for the Lunar New Year.
Tan Kin Lian
I obtained the following quotation from an Income agent.
* Living policy to cover $200,000: monthly premium $404.00
* Decreasing term (extended to cover dread disease) for $200,000 for 35 years: monthly premium $76.40.
* Difference is $327.60
You advised me to invest the difference in a large, well diversified, low cost fund. But the return of 6% per annum is not guaranteed? There will be no protection after 65 years old? Do we need not to consider that?
KS
----------------------
Dear KS
If you invest the difference of $327.60 for 35 years, you will get the following:
Assuming average return of 6% per annum: total after 35 years is $451,000
Assuming average return of 4% per annum: total after 35 years is $295,000
If your savings accumulate to $451,000 at the end of 35 years, you will not need to have any insurance cover. Anyway, I suspect that the sum assured and bonus under living policy will be lower than $451,000 at that time. The cash value will be even less.
I have shown the calculation assuming a lower rate of return of 4 percent per annum. The accumulated sum is still quite attractive. In my personal view, the return is likely to be better than 6%.
Although the Living policy does not look so attractive compared to "invest the difference", I must say that it offers better value than similar policies offered in the market by other insurance companies.
Wish you all the best for the Lunar New Year.
Tan Kin Lian
My honest opinion
When I first started my blog a year ago, some insurance agents (working for other companies) criticised me for recommending products from NTUC Income. They felt that I was biased in my views.
Actually, I give my honest opinion. If there are other insurance or financial products (offered by other institutions) that give good value, I am happy to invest in them personally and to talk about their merits.
In my opinion, the exchange traded fund (STI-ETF) offered in SGX is an excellent product. However, I recently sold my ETF because the market is too high. I will wait for a market correction to reinvest in this product.
I now get many positive messages from members of the public. They tell me that they like the views given in my blog. They trust that I am giving my honest opinion.
I have now left NTUC Income. But, my view about the merits of the products remain the same.
Actually, I give my honest opinion. If there are other insurance or financial products (offered by other institutions) that give good value, I am happy to invest in them personally and to talk about their merits.
In my opinion, the exchange traded fund (STI-ETF) offered in SGX is an excellent product. However, I recently sold my ETF because the market is too high. I will wait for a market correction to reinvest in this product.
I now get many positive messages from members of the public. They tell me that they like the views given in my blog. They trust that I am giving my honest opinion.
I have now left NTUC Income. But, my view about the merits of the products remain the same.
Trailer Fee
Question: In your blog, you recommend to invest in decreasing SA term and invest the balance in a low cost diversified fund. Are you referring to a unit trust right?
Reply by Tan Kin Lian: The large, well diversified, low-cost fund can apply to both unit trust or an invvestment linked fund (offered by an insurance company). The Combined Fund from NTUC Income fits into this category. You can read about it in www.income.coop/faq. You can ask read www.askdrmoney.com to see if other unit trusts meet this criteria.
Question: I recently read some articles that lump sum unit trust investment have shown historical better returns compared to regular saving plan invested in unit trust through dollar cost averaging? Which might be a better option giving higher returns?
Reply by Tan Kin Lian: It depends on when you invest your lump sum. If you invest it when the market is low, you will get a better return compared to regular investment. If you invest the lump sum when the market is high, you will get a comparatively lower return. I believe that the market is too high now. I will not make a lump sum investment now, if I intend to invest for the long term.
Question: Is the trailer fee mentioned by you included in unit trust vs investment linked plan (ILP)? What is this trailer fee? Does it apply only to unit trust and not ILP? Does it applies to all unit trust offered by banks and other insurance companies?
Reply by Tan Kin Lian: The trailer fee can apply to both unit trust and to the investment-linked fund. It is usually added by the financial advisor (in lieu of the upfront fee). You should add the trailer fee (if applicable) to the fund management fee to get the total fee that you have to pay.
I recommend you to visit the business center in NTUC Income and talk to an adviser. You can get their contact information at www.income.coop.
Reply by Tan Kin Lian: The large, well diversified, low-cost fund can apply to both unit trust or an invvestment linked fund (offered by an insurance company). The Combined Fund from NTUC Income fits into this category. You can read about it in www.income.coop/faq. You can ask read www.askdrmoney.com to see if other unit trusts meet this criteria.
Question: I recently read some articles that lump sum unit trust investment have shown historical better returns compared to regular saving plan invested in unit trust through dollar cost averaging? Which might be a better option giving higher returns?
Reply by Tan Kin Lian: It depends on when you invest your lump sum. If you invest it when the market is low, you will get a better return compared to regular investment. If you invest the lump sum when the market is high, you will get a comparatively lower return. I believe that the market is too high now. I will not make a lump sum investment now, if I intend to invest for the long term.
Question: Is the trailer fee mentioned by you included in unit trust vs investment linked plan (ILP)? What is this trailer fee? Does it apply only to unit trust and not ILP? Does it applies to all unit trust offered by banks and other insurance companies?
Reply by Tan Kin Lian: The trailer fee can apply to both unit trust and to the investment-linked fund. It is usually added by the financial advisor (in lieu of the upfront fee). You should add the trailer fee (if applicable) to the fund management fee to get the total fee that you have to pay.
I recommend you to visit the business center in NTUC Income and talk to an adviser. You can get their contact information at www.income.coop.
Term with critical illness cover
Question: In your blog, you said Some people prefer to cover the critical illness under a medical insurance plan' instead of buying a special type of term assurance to cover payment of the sum assured on the diagnosis of the illness.
Is it better to buy term to cover death and permanent disability and get critical illness separately? Or to buy term (including critical illness), since term is cheaper than buying a whole life plan?
Reply by Tan Kin Lian: It depends on the premium that you have to pay.
You should ask the insurance adviser to give you the following options:
* premium for decreasing term insurance (including critial illness) for 30 years
* premium for a whole life plan (that covers critical illness)
You can find out the difference in premium. You can calculate the amount that you can get, if you invest the difference in a large, well diversified low cost fund (assuming that it can earn 6% per annum). You will find that the total accumulated savings could be higher than the cash value under the whole life policy.
I suggest that you visit the business center of NTUC Income and get them to show the figures to you. You can then ask another insurance company to quote for the same plan. Then you can see which gives you a better value.
Is it better to buy term to cover death and permanent disability and get critical illness separately? Or to buy term (including critical illness), since term is cheaper than buying a whole life plan?
Reply by Tan Kin Lian: It depends on the premium that you have to pay.
You should ask the insurance adviser to give you the following options:
* premium for decreasing term insurance (including critial illness) for 30 years
* premium for a whole life plan (that covers critical illness)
You can find out the difference in premium. You can calculate the amount that you can get, if you invest the difference in a large, well diversified low cost fund (assuming that it can earn 6% per annum). You will find that the total accumulated savings could be higher than the cash value under the whole life policy.
I suggest that you visit the business center of NTUC Income and get them to show the figures to you. You can then ask another insurance company to quote for the same plan. Then you can see which gives you a better value.
Life Insurance Policy with Cash Payout
One insurance company is able to sell a lot of life insurance policy with a cash payout every 2 or 3 years. Their agents were able to convince the customers about the attraction of this policy.
Actually, this policy provides a poor return to the policyholder.
This is how it works.
Assume that you can buy a whole life policy for $100,000 by paying a premium of $200 a month. This special policy ask you to pay a higher premium, say $300, in order to enjoy a cash payout of $2,000 every 2 years.
You may not realise that you are actually paying $2,400 in 2 years (ie $100 more each month) to get back a cash payout of (say) $2,500. The return on this additional payment is small, or may be negative. This is because a portion of the premium is used to pay commission to the agent.
The agent is very keen to sell this special policy because they can earn a higher commision.
The customer is better off by keeping to the basic plan and saving the difference in a bank account to earn interest.
Actually, this policy provides a poor return to the policyholder.
This is how it works.
Assume that you can buy a whole life policy for $100,000 by paying a premium of $200 a month. This special policy ask you to pay a higher premium, say $300, in order to enjoy a cash payout of $2,000 every 2 years.
You may not realise that you are actually paying $2,400 in 2 years (ie $100 more each month) to get back a cash payout of (say) $2,500. The return on this additional payment is small, or may be negative. This is because a portion of the premium is used to pay commission to the agent.
The agent is very keen to sell this special policy because they can earn a higher commision.
The customer is better off by keeping to the basic plan and saving the difference in a bank account to earn interest.
Friday, February 16, 2007
I like your blog, because it is plain
Dear Mr. Tan Kin Lian,
I am 56 years old and I thought I already knew a lot about insurance and investments until I started reading your very very useful postings on the same subject. Many thanks for educating & humbling me all over again. The contents and tips are very useful.
I also hope that you will continue to keep your Blog very plain and simple like the existing ones we are reading here...just like Google's. I express this hope because I wish to continue visiting your web site.
I notice that many other web sites become too fanciful and distracting with lots of irrelevant stuff or attempts to impress the visitors as the individual or company grows bigger and more successful - so much so that it becomes a pain to go straight to the relevant contents. I usually give up visiting when web sites become overcrowded.
I hope yours will continue to be plain, simple but very very readable and useful, so that we can continue to enjoy your growth and success, which is without doubt given your wonderful background and experience.
Wishing you good health and everything beautiful!
YK
I am 56 years old and I thought I already knew a lot about insurance and investments until I started reading your very very useful postings on the same subject. Many thanks for educating & humbling me all over again. The contents and tips are very useful.
I also hope that you will continue to keep your Blog very plain and simple like the existing ones we are reading here...just like Google's. I express this hope because I wish to continue visiting your web site.
I notice that many other web sites become too fanciful and distracting with lots of irrelevant stuff or attempts to impress the visitors as the individual or company grows bigger and more successful - so much so that it becomes a pain to go straight to the relevant contents. I usually give up visiting when web sites become overcrowded.
I hope yours will continue to be plain, simple but very very readable and useful, so that we can continue to enjoy your growth and success, which is without doubt given your wonderful background and experience.
Wishing you good health and everything beautiful!
YK
I have completed my last day in NTUC Income
Yesterday was my last working day in NTUC Income. I have said good-bye to my colleagues.
After the Lunar New Year, I will be embarking on a new lifestyle. I shall work from my home initially.
I may set up a company at a later date.
And I shall continue to update my blog ......
After the Lunar New Year, I will be embarking on a new lifestyle. I shall work from my home initially.
I may set up a company at a later date.
And I shall continue to update my blog ......
I need to be protected for dread disease
Dear Mr Tan,
Recently, I have been thinking of buying a life policy, my reasons as below:
I have a wife and 2 very young children and thus I need coverage for them. Sum assured should be $200,000. I would like to have returns for money invested.
Reading your BLOG, you would say to buy a decreasing i-term insurance for myself so as to protect them.
But if I'm hit by 30 major illness, the i-term would not help as I would need lots of money to see doctor whch is very expensive. I would have to buy a living rider and that cost a lot of money. Using the above policy, there is no return and my money will go down the drain.
KS
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Dear KS
I suggest that you ask the insurance adviser to give you the quote for the following:
Living policy to cover $200,000
Decreasing term (extended to cover dread disease) for $200,000 for 30 years
If you take the difference in premium and invest it to earn 6% per annum (not guaranteed) in a large, well diversified low cost fund), you will find that the total invested sum with gains will exceed $200,000 at the end of 30 years.
If you can get the figures for me, I can calculate the projected maturity value for you.
Wish you all the best for the Lunar New Year.
Tan Kin Lian
Recently, I have been thinking of buying a life policy, my reasons as below:
I have a wife and 2 very young children and thus I need coverage for them. Sum assured should be $200,000. I would like to have returns for money invested.
Reading your BLOG, you would say to buy a decreasing i-term insurance for myself so as to protect them.
But if I'm hit by 30 major illness, the i-term would not help as I would need lots of money to see doctor whch is very expensive. I would have to buy a living rider and that cost a lot of money. Using the above policy, there is no return and my money will go down the drain.
KS
--------------
Dear KS
I suggest that you ask the insurance adviser to give you the quote for the following:
Living policy to cover $200,000
Decreasing term (extended to cover dread disease) for $200,000 for 30 years
If you take the difference in premium and invest it to earn 6% per annum (not guaranteed) in a large, well diversified low cost fund), you will find that the total invested sum with gains will exceed $200,000 at the end of 30 years.
If you can get the figures for me, I can calculate the projected maturity value for you.
Wish you all the best for the Lunar New Year.
Tan Kin Lian
How to save for the future
Mr Tan
I have just started work and earn a salary of $2,000. I find it difficult to save, as there are so many expenses to take care of. How much should I save, and how?
My reply:
You should aim to save 10% to 20% of your salary. You can save by cutting down on your luxury expenses, such as mobilephone bills, fashion and entertainment.
You have to meet your mandatory expenses, such as:
* pay off your education loan
* travelling, food and other expenses needed in your daily work
* monthly contribution to the household expenses
This allows you a balance to set aside for your savings.
You can use the remainder for your luxury expenses.
For your savings, you should invest in a large, well diversified fund with low charges. NTUC Income offers this option. You can also look at some mutual funds or unit trust that offer this facility.
I have just started work and earn a salary of $2,000. I find it difficult to save, as there are so many expenses to take care of. How much should I save, and how?
My reply:
You should aim to save 10% to 20% of your salary. You can save by cutting down on your luxury expenses, such as mobilephone bills, fashion and entertainment.
You have to meet your mandatory expenses, such as:
* pay off your education loan
* travelling, food and other expenses needed in your daily work
* monthly contribution to the household expenses
This allows you a balance to set aside for your savings.
You can use the remainder for your luxury expenses.
For your savings, you should invest in a large, well diversified fund with low charges. NTUC Income offers this option. You can also look at some mutual funds or unit trust that offer this facility.
Low Fertility Rate of 1.2
Singapore has a low fertility rate of 1.2, one of the lowest in the world. At this rate, we will not be able to maintain our current population. There are insufficient Singaporean babies to replace those that will pass away.
How can we encourage a higher birth rate? We have tried various measures, including incentives and penalties, over the past twenty years. They failed.
We need to think of a new way. If we look at some of the countries that are successful, such as the Sandinavian countries, we may find some clues. We have to be prepared to try a new approach, instead of keeping to our old mindset.
I shall give my views in a few days time.
How can we encourage a higher birth rate? We have tried various measures, including incentives and penalties, over the past twenty years. They failed.
We need to think of a new way. If we look at some of the countries that are successful, such as the Sandinavian countries, we may find some clues. We have to be prepared to try a new approach, instead of keeping to our old mindset.
I shall give my views in a few days time.
Thursday, February 15, 2007
Growth Policy and Growth Fund
A customer told me that he is confused between the Growth policy and the Growth fund.
I agree. It is unfortunate that we use the same name for two different products.
Here is the difference:
* the Growth policy is a single premium endowment policy
* the Growth Fund is an investment fund which has 70% in equity and 30% in bonds.
Sorry about this confusion. Do take note of the difference.
I agree. It is unfortunate that we use the same name for two different products.
Here is the difference:
* the Growth policy is a single premium endowment policy
* the Growth Fund is an investment fund which has 70% in equity and 30% in bonds.
Sorry about this confusion. Do take note of the difference.
Wednesday, February 14, 2007
Early withdrawal of Single Premium Endowment (Growth policy)
A policyholder asked if it is possible to make an early withdrawal under the single premium endowment (Growth policy) and get back the invested sum, with interest.
The Growth policy allows early withdrawal (ie surrender) but it will be based on the cash value.
During the early years, the cash value may be less than the invested sum, as the commision, charges and other expeses are deducted.
After 3 to 5 years, the cash value may be more than the invested sum, giving a modest return.
It is best to keep the Growth policy to its maturity date, to earn a fairly attractive return.
Usually, the charges for a single premium policy is much lower than a regular premium policy. This allows the Growth policy to reach a break even point at an earlier date, ie 3 to 5 years.
The Growth policy also provide some life insurance cover. In the event of death during the term, the total sum assured and accumulated bonus is paid immediately (without any discount). This will be much higher than the invested sum.
The Growth policy allows early withdrawal (ie surrender) but it will be based on the cash value.
During the early years, the cash value may be less than the invested sum, as the commision, charges and other expeses are deducted.
After 3 to 5 years, the cash value may be more than the invested sum, giving a modest return.
It is best to keep the Growth policy to its maturity date, to earn a fairly attractive return.
Usually, the charges for a single premium policy is much lower than a regular premium policy. This allows the Growth policy to reach a break even point at an earlier date, ie 3 to 5 years.
The Growth policy also provide some life insurance cover. In the event of death during the term, the total sum assured and accumulated bonus is paid immediately (without any discount). This will be much higher than the invested sum.
Policyholder make monthly withdrawal from the Growth fund
Dear Mr TKL
I'm happy with the arrangements I made recently to buy into more Growth Funds, and sell off some units each month for some steady income, in addition to my two annuities. I'm surprised more people don't do this.
The Growth Fund has been appreciating very steadily so far, and does not have the volatility of the stock market.
Thank you! My agent tells me you provided for this arrangement. Incidentally, how long has the fund been in existence?
Happy New Year!
VS
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Dear VS
The Combined Fund (Growth) was launched at the beginning of 2003. Some of our other funds were in existence for over 10 years.
We allow our investor to make monthly withdrawal from the fund. This works almost like a life annuity.
Wish you all the best in the future.
Tan Kin Lian
I'm happy with the arrangements I made recently to buy into more Growth Funds, and sell off some units each month for some steady income, in addition to my two annuities. I'm surprised more people don't do this.
The Growth Fund has been appreciating very steadily so far, and does not have the volatility of the stock market.
Thank you! My agent tells me you provided for this arrangement. Incidentally, how long has the fund been in existence?
Happy New Year!
VS
-----------------------------
Dear VS
The Combined Fund (Growth) was launched at the beginning of 2003. Some of our other funds were in existence for over 10 years.
We allow our investor to make monthly withdrawal from the fund. This works almost like a life annuity.
Wish you all the best in the future.
Tan Kin Lian
Single premium endowment
Someone asked for my views on investing a lump sum in a single premium endowment policy. Is this a good plan?
This is how the policy works.
* The insurance company collect a single premium from you, say $10,000
* The money is invested in the life insurance fund
* A small portion of your premium is taken to buy the life insurance cover and meet the expenses (but these are relatively small)
* You will get a guaranteed return on your total savings at the end of the term, say 10, 15 or 20 years
* If the insurance fund earns more than the rate of interest used to calculate the guaranteed return, you can get an annual bonus
* the annual bonus may increase the payout on the maturity rate
The policy is usually able to give you a return of around 3% to 4% on your total investment, if you keep it to the maturity date. This comprise of the guaranteed portion and the non-guaranteed bonus. If you exclude the bonus entirely, the guaranteed return is around 2% per annum. (These figures apply to NTUC Income, and may be lower for other insurance companies).
The name of this product offered by NTUC Income is the Growth plan. It is popular. Over 100,000 people have invested in this policy in past years. You can read more about it in www.income.coop/faq
Other insurance companies offer similar products (under different names) but they usually provide a lower return to the policyholder.
This is how the policy works.
* The insurance company collect a single premium from you, say $10,000
* The money is invested in the life insurance fund
* A small portion of your premium is taken to buy the life insurance cover and meet the expenses (but these are relatively small)
* You will get a guaranteed return on your total savings at the end of the term, say 10, 15 or 20 years
* If the insurance fund earns more than the rate of interest used to calculate the guaranteed return, you can get an annual bonus
* the annual bonus may increase the payout on the maturity rate
The policy is usually able to give you a return of around 3% to 4% on your total investment, if you keep it to the maturity date. This comprise of the guaranteed portion and the non-guaranteed bonus. If you exclude the bonus entirely, the guaranteed return is around 2% per annum. (These figures apply to NTUC Income, and may be lower for other insurance companies).
The name of this product offered by NTUC Income is the Growth plan. It is popular. Over 100,000 people have invested in this policy in past years. You can read more about it in www.income.coop/faq
Other insurance companies offer similar products (under different names) but they usually provide a lower return to the policyholder.
Suitable jobs for seniors
I met the CEO of two large organisations in my capacity as chairman of the Center for Seniors, to discuss the feasibility of creating jobs for seniors along the following lines:
* they are paid an hourly rate of $6 or higher, depending on skill
* the job involved providing information and assistance to customers
* the seniors will be trained on soft skills and product knowledge prior to their appointment
* the seniors will work during the busy periods, e.g 4 hours a day
* they will handle first level customer servicing, and refer the difficult tasks to specialists
* the earnings of the seniors will be supplemented by workfare bonus paid by the government
* priority will be given to seniors living near the place of work, to reduce the time and cost of travelling
Both organisations are positive. They are willing to try this concept. It has the potential to create over 100 jobs. If this concept proves to be successfully, there will be many other businesses in the community that can provide similar opportunities.
* they are paid an hourly rate of $6 or higher, depending on skill
* the job involved providing information and assistance to customers
* the seniors will be trained on soft skills and product knowledge prior to their appointment
* the seniors will work during the busy periods, e.g 4 hours a day
* they will handle first level customer servicing, and refer the difficult tasks to specialists
* the earnings of the seniors will be supplemented by workfare bonus paid by the government
* priority will be given to seniors living near the place of work, to reduce the time and cost of travelling
Both organisations are positive. They are willing to try this concept. It has the potential to create over 100 jobs. If this concept proves to be successfully, there will be many other businesses in the community that can provide similar opportunities.
Tuesday, February 13, 2007
Moral responsibility of a insurance company
Dear Mr Tan,
I read with interest the recent press stories regarding AVIVA's refusal to pay a woman's medical insurance claim on grounds of a "pre-existing condition" despite her being unaware of it.
Sure, one must always carefully read the terms of contract and contract language that is unambigious would leave little room for doubt.
But I cannot agree with AVIVA's clause because THE key motivation for people taking up insurance is to provide financially for the unexpected! AVIVA's clause though precise, leaves little doubt as to its intention.
At least one doctor has written publicly to suggest what constitutes a "pre-existing condition" is a matter of professional opinion, and there may be serious conditions that are latent.
There is a moral responsibility on the part of insurance companies to its policyholders. Insurance companies should not hide behind the veil of a carefully worded contract to avoid paying a claim.
There have been many cases of fraudulent claims but I am certain health insurance is one area few would like to invoke if one had a choice.
Though I have chosen to write to you in your personal capacity, I always regarded NTUC Income (thanks to your stewardship) as being more "responsible" and it is my hope that your successor will continue your good work.
Kind regard.
I read with interest the recent press stories regarding AVIVA's refusal to pay a woman's medical insurance claim on grounds of a "pre-existing condition" despite her being unaware of it.
Sure, one must always carefully read the terms of contract and contract language that is unambigious would leave little room for doubt.
But I cannot agree with AVIVA's clause because THE key motivation for people taking up insurance is to provide financially for the unexpected! AVIVA's clause though precise, leaves little doubt as to its intention.
At least one doctor has written publicly to suggest what constitutes a "pre-existing condition" is a matter of professional opinion, and there may be serious conditions that are latent.
There is a moral responsibility on the part of insurance companies to its policyholders. Insurance companies should not hide behind the veil of a carefully worded contract to avoid paying a claim.
There have been many cases of fraudulent claims but I am certain health insurance is one area few would like to invoke if one had a choice.
Though I have chosen to write to you in your personal capacity, I always regarded NTUC Income (thanks to your stewardship) as being more "responsible" and it is my hope that your successor will continue your good work.
Kind regard.
Provide adequate financial security for your family
You can provide adequate financial security for your family at a very affordable cost.
If you buy a 20 year decreasing term assurance, you can cover $100,000 by paying an ANNUAL premium of only $51 (entry age 25, male) or $103 (entry age 35, male).
If you wish to insure $300,000, you pay only $154 or $309 per year.
At age 25, you pay $0.50 for every %1,000 of coverage. At age 35, you pay $1 for every $1,000 of coverage.
For a female, the premium is about 30% to 50% lower than for a male.
Your premium rate remain the same for 20 years, based on your entry age. If you buy at a younger age, you pay a lower premium for 20 years.
The decreasing term assurance is also available for other terms, for example, 30 years.
If you buy a 20 year decreasing term assurance, you can cover $100,000 by paying an ANNUAL premium of only $51 (entry age 25, male) or $103 (entry age 35, male).
If you wish to insure $300,000, you pay only $154 or $309 per year.
At age 25, you pay $0.50 for every %1,000 of coverage. At age 35, you pay $1 for every $1,000 of coverage.
For a female, the premium is about 30% to 50% lower than for a male.
Your premium rate remain the same for 20 years, based on your entry age. If you buy at a younger age, you pay a lower premium for 20 years.
The decreasing term assurance is also available for other terms, for example, 30 years.
Best wishes for the Lunar New Year
I wish all visitors to my blog, good fortune, good health and happiness in the Lunar New Year.
I shall be leaving NTUC Income on New Year's Day. But, I will continue to maintain this blog and educate the public about insurance and financial matters.
I shall be leaving NTUC Income on New Year's Day. But, I will continue to maintain this blog and educate the public about insurance and financial matters.
Join a Car Pool
My collegue joins a car pool to work every day. The driver lives near her home and drop her at her office on his way to his office. She pays $2 for each trip.
This arrangement has worked for the past five years. They got together through a car pool website managed by NTUC Income at that time.
The Big Trumpet website is now reviving the car pool scheme. You can go to the website to look for a car pool. You can be a driver or a passenger.
www.bigtrumpet.com.sg
This arrangement has worked for the past five years. They got together through a car pool website managed by NTUC Income at that time.
The Big Trumpet website is now reviving the car pool scheme. You can go to the website to look for a car pool. You can be a driver or a passenger.
www.bigtrumpet.com.sg
Get a contractor to repair the leak
My tenant in my townhouse complained about the leak in the house during the rainy period. My wife arranged for a contractor to view the problem. He sent a quotation for $900.
Initially, I was not sure about the reliabilty of the contractor. Then, I saw in his letterhead, the tagline, "member of NTUC Income Home Service". This gave me the reassurance, as he is required to observe the code of conduct and service standard agreed with NTUC Income.
He got the job.
Initially, I was not sure about the reliabilty of the contractor. Then, I saw in his letterhead, the tagline, "member of NTUC Income Home Service". This gave me the reassurance, as he is required to observe the code of conduct and service standard agreed with NTUC Income.
He got the job.
Monday, February 12, 2007
Do not understand life insurance?
I met a heart specialist last night. When he graduated 20 years ago, he bought a life insurance policy from an agent and paid a large monthly premium. He only knew that the policy was to take care of the security of the family. He did not understand how the insurance policy works and what the benefits were.
This is the typical reaction of many people.
You should approach life insurance in the same manner as you buy other products. Find out:
* what are the benefits
* what is the cost (ie premium)
* what are the offers from similar products in the market
* what other options do you have (ie other products that may suit you better)
You can also learn about insurance from this website,
www.knowyourinsurance.com.sg
This is the typical reaction of many people.
You should approach life insurance in the same manner as you buy other products. Find out:
* what are the benefits
* what is the cost (ie premium)
* what are the offers from similar products in the market
* what other options do you have (ie other products that may suit you better)
You can also learn about insurance from this website,
www.knowyourinsurance.com.sg
What to do when your term insurance expires?
I met a retired insurance manager. He told me that he did not like term insurance because, at the end of the term, the policy lapses and he does not receive any more coverage.
I told him the following points:
* you can take a term insurance for 20 years
* at the end of 20 years, your total savings (from other sources) can be more than the insured sum
* there is no need for life insurance when you have accumulated sufficient savings.
He was surprised. He did not know that you can buy a term insurance for 20 years. He thought that it was only available for 3 or 5 years.
The cost of term insurance is very low, about one-tenth of the cost of a whole life policy. If you buy a decreasing term insurance, you get a further 30% to 50% discount.
Find out more about this low cost plan from www.income.coop/faq (look for i-term).
I told him the following points:
* you can take a term insurance for 20 years
* at the end of 20 years, your total savings (from other sources) can be more than the insured sum
* there is no need for life insurance when you have accumulated sufficient savings.
He was surprised. He did not know that you can buy a term insurance for 20 years. He thought that it was only available for 3 or 5 years.
The cost of term insurance is very low, about one-tenth of the cost of a whole life policy. If you buy a decreasing term insurance, you get a further 30% to 50% discount.
Find out more about this low cost plan from www.income.coop/faq (look for i-term).
Encourage more people to save for their retirement
Someone told me that the supplementary retirement scheme (SRS) is attractive only to tax payers.
We need a scheme to encourage the low income earners to make additional savings for their retirement.
The only way is to give them a top-up. For every dollar that they put aside in a retirement saving plan, the government tops up with a dollar, up to a certain limit.
I hope that some attractive scheme can be devised to make it attractive for the low income earners and self-employed to save for their retirement. A dollar for dollar matching scheme can go a long way to make it attractive.
We need a scheme to encourage the low income earners to make additional savings for their retirement.
The only way is to give them a top-up. For every dollar that they put aside in a retirement saving plan, the government tops up with a dollar, up to a certain limit.
I hope that some attractive scheme can be devised to make it attractive for the low income earners and self-employed to save for their retirement. A dollar for dollar matching scheme can go a long way to make it attractive.
Before you go for expensive medical treatment ...
Before you see a specialist for an expensive medical treatment or get treated in a hospital, you should:
* get an estimate from your specialist on the cost of treatment
* call your insurance company's hotline
* check on the amount of your coverage
* get a second opinion (through your insurer) on other suitable specialists
This can save you a lot of money, and avoid paying for expenses that are not covered by your insurance plan.
* get an estimate from your specialist on the cost of treatment
* call your insurance company's hotline
* check on the amount of your coverage
* get a second opinion (through your insurer) on other suitable specialists
This can save you a lot of money, and avoid paying for expenses that are not covered by your insurance plan.
Tips on Medical Insurance
I wish to give the following tips on how you can save on your medical insurance:
* if your employer now provides medical insurance for you, you do not need any shield plan.
* however, if you wish to have continuation of cover after leaving your employer, you can take a low cost plan now, such as Medishield or a B2 private shield plan.
* you should not waste money on an expensive plan, as you are not likely to claim on it while you are working.
* you need a shield plan only when you are not covered by your employer; you can choose a plan the meets your budget.
* the premium increases when you get older; at that time, you should downgrade to a cheaper plan, eg to cover B2 or B1 ward
Do not over-spend on a shield plan that you do not really need.
* if your employer now provides medical insurance for you, you do not need any shield plan.
* however, if you wish to have continuation of cover after leaving your employer, you can take a low cost plan now, such as Medishield or a B2 private shield plan.
* you should not waste money on an expensive plan, as you are not likely to claim on it while you are working.
* you need a shield plan only when you are not covered by your employer; you can choose a plan the meets your budget.
* the premium increases when you get older; at that time, you should downgrade to a cheaper plan, eg to cover B2 or B1 ward
Do not over-spend on a shield plan that you do not really need.
You can comment in my blog
Previously, I allowed only registered bloggers to give comments in my blog. I have now opened it to allow any of my visitors to make their comments. I hope to see more views being submitted in my blog.
Sunday, February 11, 2007
My experience on public transport
I visited a friend in town and took a MRT ride bome to Yio Chu Kang station. From there, I took a bus to my home.
This is the first time that I took the bus for this stretch. (Previously, when I travel by MRT, I asked a family member to pick me from the station).
As I am not familiar with the bus route, I asked for directions. A Malay couple, with two young children, were friendly and helpful. They took the same bus, checked on my destination and made sure that I get down at the right stop.
I am quite impressed with the quality of the bus and its facilities. I intend to use public transport regularly, after I leave NTUC Income.
This is the first time that I took the bus for this stretch. (Previously, when I travel by MRT, I asked a family member to pick me from the station).
As I am not familiar with the bus route, I asked for directions. A Malay couple, with two young children, were friendly and helpful. They took the same bus, checked on my destination and made sure that I get down at the right stop.
I am quite impressed with the quality of the bus and its facilities. I intend to use public transport regularly, after I leave NTUC Income.
Do not be locked into a poor return
I gave a talk on financial planning on Saturday.
During the question time, a customer asked for my advice. She has been paying premium for many years to an insurance company (not NTUC Income) that provide a poor return. What can she do now?
My reply is that there is nothing much that can be done now. The poor return is due to:
* high commission paid to the agent
* profit to the shareholders
It is quite sad that she has been locked into a long term insurance contract with a poor return.
My advice for the future:
* buy a decreasing term insurance to provide the coverage
* invest in a large, well diversified, low-cost fund
During the question time, a customer asked for my advice. She has been paying premium for many years to an insurance company (not NTUC Income) that provide a poor return. What can she do now?
My reply is that there is nothing much that can be done now. The poor return is due to:
* high commission paid to the agent
* profit to the shareholders
It is quite sad that she has been locked into a long term insurance contract with a poor return.
My advice for the future:
* buy a decreasing term insurance to provide the coverage
* invest in a large, well diversified, low-cost fund
Compare Ideal plan with unit trust
Dear Mr Tan,
What is the meaning of effect of deduction? Does it apply for both unit trust and ILP?
Based on $2,400/yr, if I invest in unit trust, assume 9% annualised gain for 25 yr period, I’ll get back $203,282.
If I invest in Ideal plan, assume 9% annualised gain for 25yr period, I’ll get back only $168,100.
The income bid-offer spread is lower at 3.5% and yet the effect of deduction is about $44,990 compared to unit trust effect of deduction of $11,200.
I’m just a layman doing the calculations. I may be wrong in my comparison.
J
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Dear J,
For the Ideal plan, the effect of deduction include the following:
* advisory fee of 15% for 3 years
* spread of 3.5% on each payment
* annual management fee of about 1%
In the case of the unit trust, you have to calculate the annual charge, trailer fee and other charges (which is more than 1% per annum) to get the comparable figure.
For example, if the unit trust has a spread of 5% and deduct 2% p.a (in annual and trailer fee), you will only get $149,250 by investing $2,400 a year for 25 years (assuming the gross yield is 9% p.a.). This is much lower than $203,282.
Tan Kin Lian
What is the meaning of effect of deduction? Does it apply for both unit trust and ILP?
Based on $2,400/yr, if I invest in unit trust, assume 9% annualised gain for 25 yr period, I’ll get back $203,282.
If I invest in Ideal plan, assume 9% annualised gain for 25yr period, I’ll get back only $168,100.
The income bid-offer spread is lower at 3.5% and yet the effect of deduction is about $44,990 compared to unit trust effect of deduction of $11,200.
I’m just a layman doing the calculations. I may be wrong in my comparison.
J
---------------------------------------------------------------------------------------------------------------------------------------------------------------
Dear J,
For the Ideal plan, the effect of deduction include the following:
* advisory fee of 15% for 3 years
* spread of 3.5% on each payment
* annual management fee of about 1%
In the case of the unit trust, you have to calculate the annual charge, trailer fee and other charges (which is more than 1% per annum) to get the comparable figure.
For example, if the unit trust has a spread of 5% and deduct 2% p.a (in annual and trailer fee), you will only get $149,250 by investing $2,400 a year for 25 years (assuming the gross yield is 9% p.a.). This is much lower than $203,282.
Tan Kin Lian
Saturday, February 10, 2007
Big Trumpet Folder
Earlier today, I have to search for the name of the mail server used by Starhub. I checked my Big Trumpet folder. It was recorded there under the title, Starhub.
I am now keeping information in the Big Trumpet folder. It comes in handy. It is more convenient, always accessible.
You can create an account and store your personal information in the folders in:
www.bigtrumpet.com.sg
I am now keeping information in the Big Trumpet folder. It comes in handy. It is more convenient, always accessible.
You can create an account and store your personal information in the folders in:
www.bigtrumpet.com.sg
High cost of life insurance products
It can cost you almost 18 months your savings, if you buy a life insurance or investment-linked policy.
If you save $300 a month, the cost (to pay commission to the insurance adviser and the insurance company) can take away $5,400 from your savings. This is far too high.
Many graduates buy an insurance policy to help their friend (who is an insurance agent), without realising the high cost.
NTUC Income has reduced this cost to about 8 months, under our Ideal plan. This means that you can get an additional $3,000 of savings that can earn a return for you for the next 20 or 30 years - amounting to $10,000 or more.
Look into the front end cost. Choose a plan that gives you a higher upfront investment.
If you save $300 a month, the cost (to pay commission to the insurance adviser and the insurance company) can take away $5,400 from your savings. This is far too high.
Many graduates buy an insurance policy to help their friend (who is an insurance agent), without realising the high cost.
NTUC Income has reduced this cost to about 8 months, under our Ideal plan. This means that you can get an additional $3,000 of savings that can earn a return for you for the next 20 or 30 years - amounting to $10,000 or more.
Look into the front end cost. Choose a plan that gives you a higher upfront investment.
Why are financial planners more successful in other countries?
A financial planner asked me, "Why are financial planners more successful in other countries, and more difficult to make a living in Singapore?"
I wish to give a frank answer.
In many countries, the financial adviser can add value by giving advice on how to save tax and benefit from some tax-sheltered schemes. This applies to USA and Australia.
The tax regime in Singapore is straight forward. There are no much tax saving or tax-sheltered schemes. The only scheme is the SRS (supplementary retirement scheme), but it is quite modest.
The best way for a person to save for the future is through a large, well diversified, low-cost fund. Most people will probably benefit by taking this approach, but there is little margin to pay the financial adviser.
The best model for the financial adviser is to give the "no frill" advice and take a small fee. The adviser can earn a larger earning, by serving many customers efficiently.
We should not follow the high cost model in other countries, as they are supported by tax savings (which does not apply in Singapore).
I wish to give a frank answer.
In many countries, the financial adviser can add value by giving advice on how to save tax and benefit from some tax-sheltered schemes. This applies to USA and Australia.
The tax regime in Singapore is straight forward. There are no much tax saving or tax-sheltered schemes. The only scheme is the SRS (supplementary retirement scheme), but it is quite modest.
The best way for a person to save for the future is through a large, well diversified, low-cost fund. Most people will probably benefit by taking this approach, but there is little margin to pay the financial adviser.
The best model for the financial adviser is to give the "no frill" advice and take a small fee. The adviser can earn a larger earning, by serving many customers efficiently.
We should not follow the high cost model in other countries, as they are supported by tax savings (which does not apply in Singapore).
A flexible financial plan
I wish to recommend a flexible financial plan that can be adopted by most people, regardless of their age group.
* regardless of age, a working person needs a flexible saving plan combined with adequate insurance coverage.
* the insurance coverage is needed to replace the income, in the event of death or permanent disability; this can be best bought through a decreasing term assurance; the coverage can be increased, when needed, to keep in line with higher earnings or family commitments.
* each person should save 10% to 20% of the regular earnings in a flexible saving plan, and invested for the long term in a large, well diversified low-cost fund (comprising mainly of equity).
This plan is suitable for a working person, from age 20 to 65. As the investment is to get a long term return, there is no need to worry about "risk profile" - just take a long term view.
The only change is when the person retires. At that time, I suggest that they convert a significant portion of their total savings (say 50%) into a life annuity. The remainder can continue to be invested in the fund.
A good financial adviser will probably give the same advice to you.
* regardless of age, a working person needs a flexible saving plan combined with adequate insurance coverage.
* the insurance coverage is needed to replace the income, in the event of death or permanent disability; this can be best bought through a decreasing term assurance; the coverage can be increased, when needed, to keep in line with higher earnings or family commitments.
* each person should save 10% to 20% of the regular earnings in a flexible saving plan, and invested for the long term in a large, well diversified low-cost fund (comprising mainly of equity).
This plan is suitable for a working person, from age 20 to 65. As the investment is to get a long term return, there is no need to worry about "risk profile" - just take a long term view.
The only change is when the person retires. At that time, I suggest that they convert a significant portion of their total savings (say 50%) into a life annuity. The remainder can continue to be invested in the fund.
A good financial adviser will probably give the same advice to you.
Philp Yeo - Lee Wei Ling Debate
My friend asked for my view on the debate between Philip Yeo and Lee Wei Ling. Whose side am I on?
I said, Philip Yeo is right. Lee Wei Ling is also right.
He was surprised. How can I said that both people are right? I told him, "you are also right!".
Philip Yeo advocated a broad based approach - to focus on many areas and find out which present the opportunity. Lee Wei Ling preferred a targeted approach, to focus on niches where we have a competitive advantage.
In tacking my own business issues, I adopt both approaches. I call it, "working at two levels". At the first level, I adopt a broad approach to have a better understanding of the issues, and the areas to work on. At the second level, I focused on the targeted areas.
I am usually able to find the right approach - one that produces the best result.
I said, Philip Yeo is right. Lee Wei Ling is also right.
He was surprised. How can I said that both people are right? I told him, "you are also right!".
Philip Yeo advocated a broad based approach - to focus on many areas and find out which present the opportunity. Lee Wei Ling preferred a targeted approach, to focus on niches where we have a competitive advantage.
In tacking my own business issues, I adopt both approaches. I call it, "working at two levels". At the first level, I adopt a broad approach to have a better understanding of the issues, and the areas to work on. At the second level, I focused on the targeted areas.
I am usually able to find the right approach - one that produces the best result.
Thank you for your gift of leadership to Singapore..
Mr Tan
Read your NTUC story. 30 years is an incredible life time of service and achievement!
Thank you for the way you've blessed Singapore through your stewardship of NTUC and giving all of us an example of integrity and what the gift of leadership can do.
It's really not about asset transformation, though this is important notwithstanding, but how you've raised the quality of life for your workers and colleagues, and in the process, bless a whole new generation along with them. NTUC will miss a great man...
All the best as you climb new peaks. The Lord continue to prosper you and establish the work of your hand.
Lydia
Read your NTUC story. 30 years is an incredible life time of service and achievement!
Thank you for the way you've blessed Singapore through your stewardship of NTUC and giving all of us an example of integrity and what the gift of leadership can do.
It's really not about asset transformation, though this is important notwithstanding, but how you've raised the quality of life for your workers and colleagues, and in the process, bless a whole new generation along with them. NTUC will miss a great man...
All the best as you climb new peaks. The Lord continue to prosper you and establish the work of your hand.
Lydia
How do I find a trustworthy agent?
1. Do I need an insurance adviser?
2. Which option is best for me?
3. How much commission does the adviser earn?
4. Can I buy directly from the insurance company?
5. Can I learn more about the insurance product on my own?
Read this FAQ
2. Which option is best for me?
3. How much commission does the adviser earn?
4. Can I buy directly from the insurance company?
5. Can I learn more about the insurance product on my own?
Read this FAQ
Motorist have trouble in claiming against a Malaysian insurance company
Dear Mr Tan
I was involved in a road traffic accident. My car was hit by a Malaysia car in year 2002.
Currently, I have reached the stage that the Singapore High Court has awarded me the compensation since July 2006.
All documents has submitted to Singapore Public Trustee. But Malaysian insurance company has not settled the sum with the Public Trustee.
1. My lawyer told me that the payment will take 3 to 5 years, is this true?
2. When I checked with the Malaysian insurance company, they told me that to speak to my lawyer. But my lawyer told me that they did not respond, in spite of reminders.
3. Is it true that it is difficult to claim from a Malaysian insurance company?
--------------------
MY REPLY
Normally, you should let your insurance company handle your claim for you, instead of making a claim against the third party's insurance company.
Even we, as an insurance company, face difficulty in claiming against a Malaysian insurance company. I can imagine that it is even more difficult for you.
At this stage, you should ask your lawyer to take the next step. It is your lawyer's duty to handle it for you.
I was involved in a road traffic accident. My car was hit by a Malaysia car in year 2002.
Currently, I have reached the stage that the Singapore High Court has awarded me the compensation since July 2006.
All documents has submitted to Singapore Public Trustee. But Malaysian insurance company has not settled the sum with the Public Trustee.
1. My lawyer told me that the payment will take 3 to 5 years, is this true?
2. When I checked with the Malaysian insurance company, they told me that to speak to my lawyer. But my lawyer told me that they did not respond, in spite of reminders.
3. Is it true that it is difficult to claim from a Malaysian insurance company?
--------------------
MY REPLY
Normally, you should let your insurance company handle your claim for you, instead of making a claim against the third party's insurance company.
Even we, as an insurance company, face difficulty in claiming against a Malaysian insurance company. I can imagine that it is even more difficult for you.
At this stage, you should ask your lawyer to take the next step. It is your lawyer's duty to handle it for you.
Friday, February 9, 2007
My wish list for Budget 2007
Here is my personal wish list for budget 2007
1. I wish to see more incentive to encourage people to make additional savings for their retirement. This can be made through the supplementary retirement scheme (SRS). I suggest that, in the case of citizens, the contribution to SRS be allowed up to 10% of the taxable income.
2. I hope to see a full restoration of the 3% cut in the employer's contribution to the Central Provident Fund, to be made over the next one or two years.
3. I hope to see more public funds be channelled towards reducing the cost of public transport. This can be done by reducing the operating costs and fees for buses and taxis. This will allow the operators to reduce their charges. It will encouarge more people to use public transport, instead of owning their private cars. It will help to reduce the traffic congestion on our road.
4. I wish to see a higher quantum of workfare bonus to encourage older people to continue to work, and to supplement the income of the lower wage earners. This will help to reduce the gap between the high and low income workers. I also wish to see the workfare bonus paid monthly, rather than at the end of the year. The payment can be made by the employer and reimbursed by the government.
Tan Kin Lian
(in my personal capacity)
1. I wish to see more incentive to encourage people to make additional savings for their retirement. This can be made through the supplementary retirement scheme (SRS). I suggest that, in the case of citizens, the contribution to SRS be allowed up to 10% of the taxable income.
2. I hope to see a full restoration of the 3% cut in the employer's contribution to the Central Provident Fund, to be made over the next one or two years.
3. I hope to see more public funds be channelled towards reducing the cost of public transport. This can be done by reducing the operating costs and fees for buses and taxis. This will allow the operators to reduce their charges. It will encouarge more people to use public transport, instead of owning their private cars. It will help to reduce the traffic congestion on our road.
4. I wish to see a higher quantum of workfare bonus to encourage older people to continue to work, and to supplement the income of the lower wage earners. This will help to reduce the gap between the high and low income workers. I also wish to see the workfare bonus paid monthly, rather than at the end of the year. The payment can be made by the employer and reimbursed by the government.
Tan Kin Lian
(in my personal capacity)
Thursday, February 8, 2007
Difficult to access my blog?
Someone told me that she had trouble access my blog in recent days. After a few postings are displayed, it hung. If you also face the same problem, send an e-mail to me.
Do I need an Insurance Adviser?
Should you get an Insurance Adviser to help you to find the right insurance plan?
Here are my views:
FAQ
Insurance Adviser
Here are my views:
FAQ
Insurance Adviser
Bullet Train to Kuala Lumpur
I look forward to the day when there is a bullet train between Singapore and Kuala Lumpur. This will cut down the travel time from 7 hours to 90 minutes. It will even be faster than travelling by plane (if you take the time needed to travel from the airport to town.
And later, an extension of the journey from Kuala Lumpur to Ipoh and Penang. Wow.
I love trains, starting from the MRT in Singapore. It is a more sensible way to travel.
And later, an extension of the journey from Kuala Lumpur to Ipoh and Penang. Wow.
I love trains, starting from the MRT in Singapore. It is a more sensible way to travel.
Transparent home loan rates
I congratulate 3 banks for introducing new home loans that have interest rates that are pegged to an external benchmark, i.e the CPF rate or the Swap Offer Rate (i.e. the cost of funds plus processing cost).
These banks are:
* DBS
* MayBank
* UOB
I hope that they will offer a low cost way for their existing customers to convert to the new terms.
These banks are:
* DBS
* MayBank
* UOB
I hope that they will offer a low cost way for their existing customers to convert to the new terms.
Strong interest in jobs for mature workers
I have received several e-mails from mature workers, expressing interest to find jobs.
I do not have any openings at this time (from potential employers). But I will be trying my best to encourage employers to employ mature workers, by designing the jobs to use their strengths, and minimise their weaknesses.
For example, NTUC Income has been successful to create many jobs for mature workers to work in the contact center.
If any opening becomes available from my efforts, I shall post them in my blog. I shall also create a webpage in my website in early March, for mature workers to register their interest.
My website is: www.tankinlian.com
Let me wish everyone, good fortune, good health and happiness in the Lunar New Year.
I do not have any openings at this time (from potential employers). But I will be trying my best to encourage employers to employ mature workers, by designing the jobs to use their strengths, and minimise their weaknesses.
For example, NTUC Income has been successful to create many jobs for mature workers to work in the contact center.
If any opening becomes available from my efforts, I shall post them in my blog. I shall also create a webpage in my website in early March, for mature workers to register their interest.
My website is: www.tankinlian.com
Let me wish everyone, good fortune, good health and happiness in the Lunar New Year.
Secure Folder
I store my personal information in a secure folder at Big Trumpet. They include:
* id, password, and URL links for various services on the internet
* credit card numbers
* hotlines
* telcos, mobilephone, broadband, TV
* e-mail address, server names
Many website asked me to register, but I keep forgetting the id and password. Now, I can easily retrieve them from Big Trumpet.
For example, I have registered for:
* Airline
* Hotel
* Credit cards
Where to go? www.bigtrumpet.com.sg.
Register your account.
Go to "Folder".
* id, password, and URL links for various services on the internet
* credit card numbers
* hotlines
* telcos, mobilephone, broadband, TV
* e-mail address, server names
Many website asked me to register, but I keep forgetting the id and password. Now, I can easily retrieve them from Big Trumpet.
For example, I have registered for:
* Airline
* Hotel
* Credit cards
Where to go? www.bigtrumpet.com.sg.
Register your account.
Go to "Folder".
Wednesday, February 7, 2007
A heart warming message
Dear Mr Tan Kin Lian
Thank you very much for your exceptionally kind service for so many years in NTUC Income.
We have truly benefitted from your goodness. From the sum of money I deposited with NTUC Income, I am eligible to $1,400 per month for the rest of my life. That gives me some security.
Thank you for the many offers and arrangements you have made to help others too.
I wish you all the best in your future years. May God bless you and your family more and more.
Yours sincerely
Thank you very much for your exceptionally kind service for so many years in NTUC Income.
We have truly benefitted from your goodness. From the sum of money I deposited with NTUC Income, I am eligible to $1,400 per month for the rest of my life. That gives me some security.
Thank you for the many offers and arrangements you have made to help others too.
I wish you all the best in your future years. May God bless you and your family more and more.
Yours sincerely
A new look for my blog
I just learned, only two days ago, how to put a photograph in my blog and to create links to other blogs and websites. Many bloggers already knew before. It took me a long time to find out.
I also changed the "look" of my blog, as one visitor told me that my old "look" was tiring. I hope that the new look is better.
I have created links to other other blogs of insurance advisers of NTUC Income. They follow my example to provide educational materials to the public. I hope that you will visit their blog.
I put in a new counter in my blog. During the first two days, I received 1,200 unique visitors. Wow! This is much higher than a daily average of 350 visitors previously.
Please tell your friends to visit my blog. Thanks.
I also changed the "look" of my blog, as one visitor told me that my old "look" was tiring. I hope that the new look is better.
I have created links to other other blogs of insurance advisers of NTUC Income. They follow my example to provide educational materials to the public. I hope that you will visit their blog.
I put in a new counter in my blog. During the first two days, I received 1,200 unique visitors. Wow! This is much higher than a daily average of 350 visitors previously.
Please tell your friends to visit my blog. Thanks.
A fairer, better alternative to the queue?
Many organisations adopt the queue to decide on priority for a high demand product, such as:
* walk in selection of HDB flat
* a place in a choice primary school
* selection of a choice unit in a property launch
In some cases, a queue may be formed one or two days before the opening time. Security personnel are required to ensure the proper behaviour of the people int he queue. This is wasteful.
In a recent case, there is suspicion that news of the selection process may have leaked out, giving some applicants an unfair advantage over the other applications.
There is a better way to handle allocation of priority. Here are the steps:
* collect the application from the people who are interested
* allocate an application number to each application received before the closing date.
* draw the application numbers, either manually or through a computerised balloting system
* the drawing process can be audited to ensure that it is done transparently and fairly.
I hope that the relevant organisation can implement a better alternative to the queue.
Tan Kin Lian
* walk in selection of HDB flat
* a place in a choice primary school
* selection of a choice unit in a property launch
In some cases, a queue may be formed one or two days before the opening time. Security personnel are required to ensure the proper behaviour of the people int he queue. This is wasteful.
In a recent case, there is suspicion that news of the selection process may have leaked out, giving some applicants an unfair advantage over the other applications.
There is a better way to handle allocation of priority. Here are the steps:
* collect the application from the people who are interested
* allocate an application number to each application received before the closing date.
* draw the application numbers, either manually or through a computerised balloting system
* the drawing process can be audited to ensure that it is done transparently and fairly.
I hope that the relevant organisation can implement a better alternative to the queue.
Tan Kin Lian
Sell SingTel shares
Someone asked if she should sell her SingTel shares at the Post Office now, as she heard that this service will be discontinued in March.
I asked my stockbroker for advice. He said that a shareholder who does not have a trading account with a stockbroker will find it better to sell the shares at the Post Office. It will be quite inconvenient to open an account and link to the CDP account, just to sell the SingTel shares.
However, if the shareholder has a trading account, then it is quite convenient to sell through the stockbroker.
He is not aware that the Post Office intends to withdraw this service.
I asked my stockbroker for advice. He said that a shareholder who does not have a trading account with a stockbroker will find it better to sell the shares at the Post Office. It will be quite inconvenient to open an account and link to the CDP account, just to sell the SingTel shares.
However, if the shareholder has a trading account, then it is quite convenient to sell through the stockbroker.
He is not aware that the Post Office intends to withdraw this service.
Poor return from Umbrella policy
Dear Mr Tan
I purchased the Umbrella policy in 1992, with a death/ permenant disability benefit of $50,000. My quarterly premium was $185.65. At that time, it was a popular product with good value for money.
However, 15 years on, I am a little disappointed with the value, as the policy bas not reached the break-even point. I have paid $11,000 in total premium, but the cash value to date is $10,009. This figure is lower than that projected in the quotation given to me at that time.
I would like to hear your comments on this policy.
PS. Last but not least, let me commend you for building Income into one of the most successful Insurance big boys it is today. Such is my confidence in Income that I had bought 3 other life policies and 4 Incomeshield Shield policies for myself and 3 dependents. Your impending departure would indeed be a loss to Income.
M
----------------------
Dear M
The Umbrella policy has a long break even point as it provides a relatively high coverage, compared to the premium.
Actually, the break even point should have occurred earlier, but this was extended due to the reduction in bonus rates during 2003 and 2004. The bonus rates have since been increased on two occasions. There will be a further increase in bonus rate this year.
I hope that, going forward, you will see the cash value increase at a faster rate.
With best wishes to you.
Tan Kin Lian
I purchased the Umbrella policy in 1992, with a death/ permenant disability benefit of $50,000. My quarterly premium was $185.65. At that time, it was a popular product with good value for money.
However, 15 years on, I am a little disappointed with the value, as the policy bas not reached the break-even point. I have paid $11,000 in total premium, but the cash value to date is $10,009. This figure is lower than that projected in the quotation given to me at that time.
I would like to hear your comments on this policy.
PS. Last but not least, let me commend you for building Income into one of the most successful Insurance big boys it is today. Such is my confidence in Income that I had bought 3 other life policies and 4 Incomeshield Shield policies for myself and 3 dependents. Your impending departure would indeed be a loss to Income.
M
----------------------
Dear M
The Umbrella policy has a long break even point as it provides a relatively high coverage, compared to the premium.
Actually, the break even point should have occurred earlier, but this was extended due to the reduction in bonus rates during 2003 and 2004. The bonus rates have since been increased on two occasions. There will be a further increase in bonus rate this year.
I hope that, going forward, you will see the cash value increase at a faster rate.
With best wishes to you.
Tan Kin Lian
Tuesday, February 6, 2007
eServices at South West CDC
South West Community Development Council (South West CDC) serves about one fifth of Singapore.
It's website has a directory of the social services provided in the district. It can be accessed easily through
SWCDC
e-Services
The services include:
Kindergarten
Child Care
Student Care
Disability
Medical
Eldercare
Education
Family
For example, it lists details of 100 kindergartens operating in the district.
It's website has a directory of the social services provided in the district. It can be accessed easily through
SWCDC
e-Services
The services include:
Kindergarten
Child Care
Student Care
Disability
Medical
Eldercare
Education
Family
For example, it lists details of 100 kindergartens operating in the district.
Monday, February 5, 2007
A hybrid plan
Hi Mr Tan,
Most of the insurance advice I see available seems to be around the two extremes:
- whole life policy
- term policy + invest the difference
My thoughts:-
Whole-life: Pro:whole life coverage with bonuses, Con: expensive
Term: Pro: cheap, Con: no coverage beyond end of term (high chance of outliving the policy)
Why is it that nobody mentions a hybrid solution? e.g. for a desired 100k sum assured, buy 50k whole life, 50k decreasing term. Over the course of the two policies, the bonuses added to the whole life plan will balance out with the decreasing term coverage. Costs are kept reasonable and coverage will last the entire lifetime.
BK
--------------
Dear BK
Your hybrid solution is quite good. Well done.
Under the buy term and invest the difference, it is likely that the savings with capital gains will be more than the sum assured at the end of the term of 20 years. So, there is no need to have any more insurance cover.
For example, if you are insured for $100,000 and you save $4,000 a year, the total savings with capital gains should be more than $100,000 at the end of 20 years
Tan Kin Lian
Most of the insurance advice I see available seems to be around the two extremes:
- whole life policy
- term policy + invest the difference
My thoughts:-
Whole-life: Pro:whole life coverage with bonuses, Con: expensive
Term: Pro: cheap, Con: no coverage beyond end of term (high chance of outliving the policy)
Why is it that nobody mentions a hybrid solution? e.g. for a desired 100k sum assured, buy 50k whole life, 50k decreasing term. Over the course of the two policies, the bonuses added to the whole life plan will balance out with the decreasing term coverage. Costs are kept reasonable and coverage will last the entire lifetime.
BK
--------------
Dear BK
Your hybrid solution is quite good. Well done.
Under the buy term and invest the difference, it is likely that the savings with capital gains will be more than the sum assured at the end of the term of 20 years. So, there is no need to have any more insurance cover.
For example, if you are insured for $100,000 and you save $4,000 a year, the total savings with capital gains should be more than $100,000 at the end of 20 years
Tan Kin Lian
Volatile Singapore Stockmarket
Here are the years when the stock market moved up and down by a big margin
1993 (1 yr) up 1000 points
1997-98 (2 yrs) down 1000 points
1999 (1 yr) up 1500 points
2000-02 (3 yrs) down 1200 points
2003-06 (3 yrs) up 1900 points
When will the market correct? And by how much?
1993 (1 yr) up 1000 points
1997-98 (2 yrs) down 1000 points
1999 (1 yr) up 1500 points
2000-02 (3 yrs) down 1200 points
2003-06 (3 yrs) up 1900 points
When will the market correct? And by how much?
Looking for a part time Personal Assistant
UPDATE: I HAVE RECEIVED MANY RESPONSES TO THIS ADVERTISEMENT. I AM LIKELY TO FIND A SUITABLE CANDIDATE FROM THOSE THAT HAVE RESPONDED. I WILL ONLY DECIDE IN A FEW WEEK'S TIME. I WILL NOT BE REPLYING TO NEW RESPONSES. SORRY.
----------------------------------------------------------------------
I wish to look for a part time Personal Assistant.
The candidate has to be familiar with Microsoft office software, access information on the internet, able to contact people over the telephone and e-mail, arrange travel and appointments, look after administrative matters.
The candidate can work from home. My work should take just a few hours each week. I will send my requests by e-mail. Perferably, the candidate should live in Ang Mo Kio, Bishan or Toa Payoh.
If you or your friend are interested, send a resume to me at kinlian@gmail.com. The starting date is around 1 April 2007.
----------------------------------------------------------------------
I wish to look for a part time Personal Assistant.
The candidate has to be familiar with Microsoft office software, access information on the internet, able to contact people over the telephone and e-mail, arrange travel and appointments, look after administrative matters.
The candidate can work from home. My work should take just a few hours each week. I will send my requests by e-mail. Perferably, the candidate should live in Ang Mo Kio, Bishan or Toa Payoh.
If you or your friend are interested, send a resume to me at kinlian@gmail.com. The starting date is around 1 April 2007.
Sunday, February 4, 2007
Website to learn about insurance
There is a website that you can learn about insurance.
KnowYourInsurance
It is easy to learn and fun. You can take a test to check your understanding. Each topic should take only 20 minutes, or less.
About 300 people visit this website everyday. 40 learned a topic and 15 took the test.
You have the chance to win the following:
* Logic9 pocketbook
* Creative Divi Cam 428 worth $329.00!
Some popular topics:
Investment Linked Plan
Travel Insurance
Medical Insurance
Saving for Education
Life Annuity
Home Insurance
Nomination of Beneficiary
Personal Accident
Personal Accident Infectious Disease Plan (PA+ID)
Reverse Mortgage
Living Policy
and others.
KnowYourInsurance
It is easy to learn and fun. You can take a test to check your understanding. Each topic should take only 20 minutes, or less.
About 300 people visit this website everyday. 40 learned a topic and 15 took the test.
You have the chance to win the following:
* Logic9 pocketbook
* Creative Divi Cam 428 worth $329.00!
Some popular topics:
Investment Linked Plan
Travel Insurance
Medical Insurance
Saving for Education
Life Annuity
Home Insurance
Nomination of Beneficiary
Personal Accident
Personal Accident Infectious Disease Plan (PA+ID)
Reverse Mortgage
Living Policy
and others.
Can I change my fund to reduce risk?
Dear Mr Tan
I have the followings 2 policies which was purchased 13 years ago.
1) Investment Linked Insurance
This living policy was bought in 1996 and the premium invest in the Singapore Managed Fund, as at today cash value returns is about breakeven of the total premium I had paid and I believe this is becasue of the recent good performance of the SGX.
Please advice how can I protect the cash value as it depends on the performance of the stock markets. Should I switch to another fund eg their Asia or Global Fund?.
2) Asian Equity Fund
I have invested in this fund for about 10 years the value now is about 70% more than the capital I have invested. Should I cash out this investment now or leave it?
W
-------------------
Dear W
I suggest the you ask the insurance company to tell you the charges that you have to bear for the following:
* annual fund management fee
* mortality charge
You should also compare the performance of the fund with similar funds in the same category in the CPFIS website.
It is difficult to make a judgement on timing. I decided to sell my STI tracker fund about two months ago, and the market has increased by 20% since.
In my case, I felt that the market was too high and decided to take profit. I invested my proceeds in the money market fund of NTUC Income to earn 3% interest.
See www.income.coop/faq on Flexi Cash.
All the best for your decision.
Tan Kin Lian
I have the followings 2 policies which was purchased 13 years ago.
1) Investment Linked Insurance
This living policy was bought in 1996 and the premium invest in the Singapore Managed Fund, as at today cash value returns is about breakeven of the total premium I had paid and I believe this is becasue of the recent good performance of the SGX.
Please advice how can I protect the cash value as it depends on the performance of the stock markets. Should I switch to another fund eg their Asia or Global Fund?.
2) Asian Equity Fund
I have invested in this fund for about 10 years the value now is about 70% more than the capital I have invested. Should I cash out this investment now or leave it?
W
-------------------
Dear W
I suggest the you ask the insurance company to tell you the charges that you have to bear for the following:
* annual fund management fee
* mortality charge
You should also compare the performance of the fund with similar funds in the same category in the CPFIS website.
It is difficult to make a judgement on timing. I decided to sell my STI tracker fund about two months ago, and the market has increased by 20% since.
In my case, I felt that the market was too high and decided to take profit. I invested my proceeds in the money market fund of NTUC Income to earn 3% interest.
See www.income.coop/faq on Flexi Cash.
All the best for your decision.
Tan Kin Lian
Every 6 years?
The Singapore stockmarket perform well every 6 years. It reached a peak in 1994, 2000 and 2006.
It dipped in 1996 (Asian Financial crisis) and 2002 (corporate scandals), ie about 2 years after reaching its high point. Will it crash in 2008?
I observe that the markets moved up to a very high level when the foreign funds move in. After making the profit, the foreign funds take profit and moved out. This caused the market to fall significantly.
Be careful. Watch out for the outflow of the foreign funds.
It dipped in 1996 (Asian Financial crisis) and 2002 (corporate scandals), ie about 2 years after reaching its high point. Will it crash in 2008?
I observe that the markets moved up to a very high level when the foreign funds move in. After making the profit, the foreign funds take profit and moved out. This caused the market to fall significantly.
Be careful. Watch out for the outflow of the foreign funds.
Saturday, February 3, 2007
Part Time Work for Seniors
I will try to build up a demand for part time work for seniors, between age 50 to 75.
The suitable work are those around the neighbourhood. This is to avoid travel long distance. The types of work are:
* customer service in shops, bus terminus, MRT stations
* nursing and care of elderly, children and disabled
* administrative work to support small business
A suitable rate is $6 per hour. A higher rate is justified for work that require special skills.
The part time work can be for 25 hours a week or 100 hours a month. At the rate of $6, the earnings can be $600. The government provides the Workfare Bonus which can add another $50 a month.
As the seniors have probably retired from full time work, a monthly income of $600 to $800 can be a useful supplement to their savings. It is also useful to keep occupied.
I hope that this can lead to the creation of many service jobs in the neighbourhood.
The suitable work are those around the neighbourhood. This is to avoid travel long distance. The types of work are:
* customer service in shops, bus terminus, MRT stations
* nursing and care of elderly, children and disabled
* administrative work to support small business
A suitable rate is $6 per hour. A higher rate is justified for work that require special skills.
The part time work can be for 25 hours a week or 100 hours a month. At the rate of $6, the earnings can be $600. The government provides the Workfare Bonus which can add another $50 a month.
As the seniors have probably retired from full time work, a monthly income of $600 to $800 can be a useful supplement to their savings. It is also useful to keep occupied.
I hope that this can lead to the creation of many service jobs in the neighbourhood.
Traffic Congestion in Many Cities
Most cities around the world face the problem of traffic congestion.
What is the underlying cause? Poor public transport system. It forces many people to buy their personal cars. This adds to the traffic congestion problem. Things get worse.
Our traffic system in Singapore used to be quite good. In recent years, the roads are getting congested. We are facing the same problem as other cities.
Here are my views on how to tackle the underlying problems:
* put more buses and trains on the road
* make supply more than demand
* this will encourage more people to use the public transport
* during the initial period for each route, there is a deficit that needs to be financed by tax revenue
* the operations can be managed by a private operator, with a subsidy for the initial period
* the private operator can tender to run the service
* the charges are fixed
Using this approach, the private operator will have the incentive to operate efficiently. There is a public service that will attract commuters to use it (as it is partially financed by tax revenue). When more people use public transport, there will be less cars on the road.
I hope that my concept can be tried.
What is the underlying cause? Poor public transport system. It forces many people to buy their personal cars. This adds to the traffic congestion problem. Things get worse.
Our traffic system in Singapore used to be quite good. In recent years, the roads are getting congested. We are facing the same problem as other cities.
Here are my views on how to tackle the underlying problems:
* put more buses and trains on the road
* make supply more than demand
* this will encourage more people to use the public transport
* during the initial period for each route, there is a deficit that needs to be financed by tax revenue
* the operations can be managed by a private operator, with a subsidy for the initial period
* the private operator can tender to run the service
* the charges are fixed
Using this approach, the private operator will have the incentive to operate efficiently. There is a public service that will attract commuters to use it (as it is partially financed by tax revenue). When more people use public transport, there will be less cars on the road.
I hope that my concept can be tried.
Choice of Insurance Plans
Many people are confused with the common insurance plans.
Here is a brief description of the various insurance plans provided by NTUC Income. It helps the consumer to decide of the following plans.
Protection - whole life policy to pay the sum assured plus bonus on death
Living - whole life policy to pay the sum assured plus bonus on death or on the confirmed diagnosis of any of 30 dread disease
20 year Term - pays the sum assured on death during the term; policy cease at the end of the term
20 year Decreasing Term - pays the sum assured on death during the term; the sum assured reduces by 5% each year during the term
20 year Living benefit - pays the sum assured on death or occurence of any of 30 dread disease during the term.
To decide on the plan that suits your budget, you need to know approximately how much each plan cost, and the amount of insurance that you can afford.
You can find some sample figures at
Insurance Plans
Other Tips
Personal Website
Here is a brief description of the various insurance plans provided by NTUC Income. It helps the consumer to decide of the following plans.
Protection - whole life policy to pay the sum assured plus bonus on death
Living - whole life policy to pay the sum assured plus bonus on death or on the confirmed diagnosis of any of 30 dread disease
20 year Term - pays the sum assured on death during the term; policy cease at the end of the term
20 year Decreasing Term - pays the sum assured on death during the term; the sum assured reduces by 5% each year during the term
20 year Living benefit - pays the sum assured on death or occurence of any of 30 dread disease during the term.
To decide on the plan that suits your budget, you need to know approximately how much each plan cost, and the amount of insurance that you can afford.
You can find some sample figures at
Insurance Plans
Other Tips
Personal Website
Floods in Jakarta
I was in Jakarta during the past three days.
The flood was bad. It caused traffic congestion as the vehicles had to move slowly through the flooded roads. Some broke down, causing further bottlenecks.
Many homes did not have electricity.
About one third of the employees could not get to work, due to lack of electricity or public transport.
It took me 2 1/2 hours to travel from the city center to the airport. In normal days, it should have taken less than 1 hour. I nearly missed my flight.
The flood was bad. It caused traffic congestion as the vehicles had to move slowly through the flooded roads. Some broke down, causing further bottlenecks.
Many homes did not have electricity.
About one third of the employees could not get to work, due to lack of electricity or public transport.
It took me 2 1/2 hours to travel from the city center to the airport. In normal days, it should have taken less than 1 hour. I nearly missed my flight.
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