I received this e-mail from a friend. It is entitled "A SALUTE TO ALL THE KIDS WHO WERE BORN IN THE 1930's 40's, 50's, and 60's"
Here is a section from this e-mail:
QUOTE
We drank water from the tap and NOT from a bottle.
We would spend hours on the terrace under bright sunlight flying our kites, without worrying about the UV effect which never ever affected us.
We shared one soft drink with four friends, from one bottle and NO ONE actually died from this.
UNQUOTE
I came from this generation. But I want to be frank. I think some of my generation probably died from diarrhoea, BUT IT WAS PROBABLY NOT REPORTED.
Monday, April 30, 2007
Making the incredible credible
It is not easy for many to deal with abstracts. Many find it more interesting and rewarding to deal with tangible things like money and what money can buy.
However we also need people who can handle the abstracts. Read the story in Lee Kum Tatt's blog about how to make the incredible credible.
Tan Kin Lian
However we also need people who can handle the abstracts. Read the story in Lee Kum Tatt's blog about how to make the incredible credible.
Tan Kin Lian
Feeder service in Hong Kong
I found this information from Wikipedia. I have simplified it for easy reading.
The Kowloon-Canton Railway Corporation operates 20 KCR feeder bus routes to complement its rail systems.
The routes provide access to and between many KCR stations for thousands of passengers everyday. The fleet comprises of 143 air conditioned buses and provide service for 19 hours every day.
The integrated fare system allows the rail passengers who use Octopus cards to enjoy the free feeder bus services that link many housing estates to the stations.
The Kowloon-Canton Railway Corporation operates 20 KCR feeder bus routes to complement its rail systems.
The routes provide access to and between many KCR stations for thousands of passengers everyday. The fleet comprises of 143 air conditioned buses and provide service for 19 hours every day.
The integrated fare system allows the rail passengers who use Octopus cards to enjoy the free feeder bus services that link many housing estates to the stations.
How to control spam mail
Sent to 2 newspapers.
30 April 2007
Editor
The government is introducing legislation to control unsolicited advertising mail, also called "spam" mail. It will require the advertisers to indicate "ADV" in the mail and to allow an option to "unsubscribe".
Some people are sceptical about this measure. They think that it will not work. It may encourage the advertisers to increase their mailing, as it is now specifically authorised.
I think that this new measure is a step in the right direction. It should help control the unsolicited mail to a certain extent.
I like to suggest an additional measure:
* require the advertiser to register with an approved website
* the opt-out list should be managed by the website
* the advertiser has to comply with the opt-out list managed by the website
* the website can require the advertiser to pay a fee for this service
* the government can approve a few of these websites.
I believe that this measure will help to further control the proliferation of unsolicited mail.
Tan Kin Lian
30 April 2007
Editor
The government is introducing legislation to control unsolicited advertising mail, also called "spam" mail. It will require the advertisers to indicate "ADV" in the mail and to allow an option to "unsubscribe".
Some people are sceptical about this measure. They think that it will not work. It may encourage the advertisers to increase their mailing, as it is now specifically authorised.
I think that this new measure is a step in the right direction. It should help control the unsolicited mail to a certain extent.
I like to suggest an additional measure:
* require the advertiser to register with an approved website
* the opt-out list should be managed by the website
* the advertiser has to comply with the opt-out list managed by the website
* the website can require the advertiser to pay a fee for this service
* the government can approve a few of these websites.
I believe that this measure will help to further control the proliferation of unsolicited mail.
Tan Kin Lian
Renting your car
If you are travelling overseas for a few weeks, what do you do with your car?
Some owners rent out their car to a stranger.
This could be dangerous. The stranger could use the car for illegal purpose. The renting is not allowed under the insurance policy. If there is any accident, your insurance policy will not cover you.
It is all right for you to let your car be used by a family member or a friend, with your permission.
But you should not let it be used by a stranger under a renting arrangement (unless you get the agreement of the insurance company to cover it).
Some owners rent out their car to a stranger.
This could be dangerous. The stranger could use the car for illegal purpose. The renting is not allowed under the insurance policy. If there is any accident, your insurance policy will not cover you.
It is all right for you to let your car be used by a family member or a friend, with your permission.
But you should not let it be used by a stranger under a renting arrangement (unless you get the agreement of the insurance company to cover it).
www.map.gov.sg
Many people use www.streetdirectory.com.sg to access a street map of Singapore.
There is another similar service provided free by the Singapore Land Authority. It allows search by address, building and postal code. It is much easier to use and is not cluttered with advertisements.
www.map.gov.sg
There is another similar service provided free by the Singapore Land Authority. It allows search by address, building and postal code. It is much easier to use and is not cluttered with advertisements.
www.map.gov.sg
Role of an agent
An agent play a useful role under the following circumstances:
* where you are the principal
* where you pay the agent an agreed commission to carry out a specified duty for you
* where you pay the agent out of your profit.
When you buy an insurance product from an agent who is paid by the insurance company, you are placed at a disadvantage as a customer:
* you are not familiar with the product
* you have to depend on the advise of the agent (who is pay by the insurance company)
* the agent may offer you a product with a high commission, which is added to your premium.
It is better for you to choose a product, such as term or accident insurance, where you can make a comparison between the prices charged by different insurance companies.
In this case, you want a broker who is able to shop on your behalf to get the best rate. It is better for you to pay an agreed fee to the broker, so that he can get the best "net rate" for you.
This advice applies to other products, where the price and structure is not transparent to the customer.
You should be especially careful when the agent is highly trained to sell you a hyped up product, such as those sold through multi-level marketing.
* where you are the principal
* where you pay the agent an agreed commission to carry out a specified duty for you
* where you pay the agent out of your profit.
When you buy an insurance product from an agent who is paid by the insurance company, you are placed at a disadvantage as a customer:
* you are not familiar with the product
* you have to depend on the advise of the agent (who is pay by the insurance company)
* the agent may offer you a product with a high commission, which is added to your premium.
It is better for you to choose a product, such as term or accident insurance, where you can make a comparison between the prices charged by different insurance companies.
In this case, you want a broker who is able to shop on your behalf to get the best rate. It is better for you to pay an agreed fee to the broker, so that he can get the best "net rate" for you.
This advice applies to other products, where the price and structure is not transparent to the customer.
You should be especially careful when the agent is highly trained to sell you a hyped up product, such as those sold through multi-level marketing.
Pyramid scheme
Source: Wikipedia
A pyramid scheme is a non-sustainable business model that involves the exchange of money primarily for enrolling other people into the scheme, usually without any product or service being delivered.
Pyramid schemes have existed for at least a century. Matrix schemes use the same system as a pyramid; here, the victims pay to join a waiting list for a desirable product which only a fraction of them can ever receive.
There are other commercial models using cross-selling such as multi-level marketing or party planning which are legal and sustainable, although there is a significant grey area in many cases.
Most pyramid schemes take advantage of confusion between genuine businesses and complicated but convincing moneymaking scams. The essential idea behind each scam is that the individual makes only one payment, but is promised to somehow receive exponential benefits from other people as a reward.
A common example might be an offer that, for a fee, allows the victim to sell the same offer to other people. Each sale includes a fee to the original seller.
Clearly, the flaw is that there is no end benefit; the money simply travels up the chain, and only the originator (or at best a very few) wins in swindling his followers.
Of course, the people in the worst situation are the ones at the bottom of the pyramid: those who subscribed to the plan, but were not able to recruit any followers themselves.
To embellish the act, most such scams will have fake referrals, testimonials, and information.
A pyramid scheme is a non-sustainable business model that involves the exchange of money primarily for enrolling other people into the scheme, usually without any product or service being delivered.
Pyramid schemes have existed for at least a century. Matrix schemes use the same system as a pyramid; here, the victims pay to join a waiting list for a desirable product which only a fraction of them can ever receive.
There are other commercial models using cross-selling such as multi-level marketing or party planning which are legal and sustainable, although there is a significant grey area in many cases.
Most pyramid schemes take advantage of confusion between genuine businesses and complicated but convincing moneymaking scams. The essential idea behind each scam is that the individual makes only one payment, but is promised to somehow receive exponential benefits from other people as a reward.
A common example might be an offer that, for a fee, allows the victim to sell the same offer to other people. Each sale includes a fee to the original seller.
Clearly, the flaw is that there is no end benefit; the money simply travels up the chain, and only the originator (or at best a very few) wins in swindling his followers.
Of course, the people in the worst situation are the ones at the bottom of the pyramid: those who subscribed to the plan, but were not able to recruit any followers themselves.
To embellish the act, most such scams will have fake referrals, testimonials, and information.
Asset allocation in a nutshell
Source: Wikipedia
The best-performing asset varies from year to year and is not easily predictable. A mixture of asset classes is more likely to meet your goals.
Different asset classes offer non-correlated returns. Diversification reduces the overall risk in terms of the variability of returns for a given level of expected return. Diversification is "the only free lunch you will find in the investment game."
Academic research has shown the importance of asset allocation, and the problems of active management. This explains the steadily rising popularity of passive investment styles using index funds.
Here are the asset classes:
* cash (i.e., money market accounts)
* Bonds: investment grade or junk (high yield); government or corporate; short-term, intermediate, long-term; domestic, foreign, emerging markets
* stocks: value or growth; large-cap versus small-cap; domestic, foreign, emerging markets
* real estate
* foreign currency
* natural resources
* precious metals
* luxury collectables such as art, fine wine and automobiles
* other
The best-performing asset varies from year to year and is not easily predictable. A mixture of asset classes is more likely to meet your goals.
Different asset classes offer non-correlated returns. Diversification reduces the overall risk in terms of the variability of returns for a given level of expected return. Diversification is "the only free lunch you will find in the investment game."
Academic research has shown the importance of asset allocation, and the problems of active management. This explains the steadily rising popularity of passive investment styles using index funds.
Here are the asset classes:
* cash (i.e., money market accounts)
* Bonds: investment grade or junk (high yield); government or corporate; short-term, intermediate, long-term; domestic, foreign, emerging markets
* stocks: value or growth; large-cap versus small-cap; domestic, foreign, emerging markets
* real estate
* foreign currency
* natural resources
* precious metals
* luxury collectables such as art, fine wine and automobiles
* other
Ranking of Products
COMMENT IN MY BLOG
As consumers, we are constantly being pressured or lured to buy products which are of marginal value, hyped up products.
Some of these products for example financial, communication services are being pushed very aggresively. Its hard to find an honest broker nowaday and someone of good status who can give independent advice on what product to buy. Your various articles on this issue must certainly strike a cord with the public. I hope you will be able to inspire further action to help the consumers.
Someone should start a rating on product of solid value and give them a ranking as a guide for the consumers at large. I think Dr Money has something like this already. Perhaps this can be expanded further and more publicity given to his website.
Monsoon
Here is the link for Dr Money's rating
As consumers, we are constantly being pressured or lured to buy products which are of marginal value, hyped up products.
Some of these products for example financial, communication services are being pushed very aggresively. Its hard to find an honest broker nowaday and someone of good status who can give independent advice on what product to buy. Your various articles on this issue must certainly strike a cord with the public. I hope you will be able to inspire further action to help the consumers.
Someone should start a rating on product of solid value and give them a ranking as a guide for the consumers at large. I think Dr Money has something like this already. Perhaps this can be expanded further and more publicity given to his website.
Monsoon
Here is the link for Dr Money's rating
Term insurance up to age 65
Hi Mr Tan,
I will introduce your blog to my friends as they are frank and good advice for the public.
Although the term insurance for public officers are attractive ,you will not be insured when you leave your company. Is there any other term policy that will cover till your retirement age continuously?
------------------------------
REPLY
You can buy i-Term (level or decreasing) from NTUC Income to cover up to age 65. You will find the premium rate to be quite attractive. It is guaranteed and level for the entire term.
The head of group insurance in NTUC Income told me that from 1 January 2007, a public officer who leaves public service can opt to continue the coverage under the public officer group insurance scheme. This is good news.
I will introduce your blog to my friends as they are frank and good advice for the public.
Although the term insurance for public officers are attractive ,you will not be insured when you leave your company. Is there any other term policy that will cover till your retirement age continuously?
------------------------------
REPLY
You can buy i-Term (level or decreasing) from NTUC Income to cover up to age 65. You will find the premium rate to be quite attractive. It is guaranteed and level for the entire term.
The head of group insurance in NTUC Income told me that from 1 January 2007, a public officer who leaves public service can opt to continue the coverage under the public officer group insurance scheme. This is good news.
Investment Tips, April 2007
1. How should I invest a capital sum to earn a fairly attractive return with low risk (for a person who is above 50 years old)?
You have the following options:
* invest in fixed deposit to earn about 1.8% p.a.
* invest in a money market fund to earn about 3% p.a.
* invest in equities in a large, well diversified, low cost fund to earn about 6% p.a. over 10 to 20 years
* invest in a single premium endowment policy (to earn about 4% p.a. over 10 years)
* invest in a life annuity (if you are above 60 years)
Under normal circumstances, it is better to invest in equities in a large, well diversified, low cost fund. However, the global stockmarket is at a high level at the present time. It may be better to wait for the global stockmarket to correct to a lower level before you invest a large sume.
In the meantime, you can invest your savings in the money market and earn a modest rate of return. You have the flexibility to withdraw from the money market fund at any time, without any penalty, and change to another investment.
If you are above 60 years, you can invest in a life annuity to give you a monthly income (say $500 to $2,000) to meet your living expenses over your lifetime. The return from the life annuity is quite satisfactory (say 5% p.a. or more) and can grow with bonus. The remaining savings can be invested in the money market fund to
wait for the right time to move into equities.
Check this website for the latest yield: www.askdrmoney.com
2. How should I invest my regular savings (for a person below 45 years old)?
You should save about 10% to 20% of your monthly earnings. You can invest it in a large, well diversified, low cost fund that is invested mainly in global equities.
Although the global stockmarket is at a high level, it is all right to start now, as you are investing a monthly sum for the next 10 to 30 years. You will be able to ride out the good and bad years, and get a fairly attractive rate of return. The average return for global equities is more than 7% p.a. over the past 10 to 30 years.
3. How should I select my investment fund?
You can invest in a unit trust or an insurance fund. Make sure that the initial charge is less than 3% and the annual charge is less than 1.5%. You should choose a large fund, with total assets of more than $500 million, so that is is well diversified. It is better to invest in a fund that is benchmarked to a global market
index, rather than a fund that is invested in a specific sector (eg technology, energy) or a specific country (eg China, India).
4. How do I get my insurance protection?
You should buy a decreasing term assurance that will expire when you are 60 years old or your youngest child reaches 25 years. For example, if you are 30 years now and you wish to be insured for $300,000 decreasing over 30 years, your insurance will start at $300,000 and will reduce by $10,000 a year. The cost of this insurance is very affordable.
It is all right for the sum insured to reduce each year, as this is offset by the increase in your savings. At any time, the total amount of your savings and the insurance should be more than your target sum of $300,000. Beyond age 60, you probably do not need any life insurance, as your children have grown up and are
independent.
You will need medical insurance to take care of your medical expenses. This can be secured through a Shield plan (available through the Ministry of Health or a private insurer). The plan should be sufficient to cover you against catastropic illness, including the cost of treating a critical illness.
5. Should I buy an endowment or whole life policy now?
If you are considering to buy a new policy, a better choice is:
* buy a decreasing term insurance plan for the protection
* invest your savings in a large, well diversified, low cost fund
This combination give you flexibility and a better return over the long term. The upfront cost is usually lower than buying an endowment or whole life policy.
6. Should I continue with the endowment or whole life policy taken previously?
You should check the current cash value and the projected cash value at the maturity date or when you reach age 60. You can work out the future yield on the policy, and compare it with alternative investments.
You should also find out how much of the projected cash value is guaranteed. For the non-guaranteed portion, you may have to apply an adjustment, in case the insurance company is not able to meet the projection.
Generally, it is better to continue the existing insurance policies that you have taken previously, as you have already incurred the high, upfront cost.
When you have retired from work, you may wish to convert your whole life policy into a paid up policy for a reduced sum insured. This will free you from continuing to pay the insurance premium. If you do not need the insurance cover, you can also terminate the whole life policy and receive its cash value.
Tan Kin Lian
You have the following options:
* invest in fixed deposit to earn about 1.8% p.a.
* invest in a money market fund to earn about 3% p.a.
* invest in equities in a large, well diversified, low cost fund to earn about 6% p.a. over 10 to 20 years
* invest in a single premium endowment policy (to earn about 4% p.a. over 10 years)
* invest in a life annuity (if you are above 60 years)
Under normal circumstances, it is better to invest in equities in a large, well diversified, low cost fund. However, the global stockmarket is at a high level at the present time. It may be better to wait for the global stockmarket to correct to a lower level before you invest a large sume.
In the meantime, you can invest your savings in the money market and earn a modest rate of return. You have the flexibility to withdraw from the money market fund at any time, without any penalty, and change to another investment.
If you are above 60 years, you can invest in a life annuity to give you a monthly income (say $500 to $2,000) to meet your living expenses over your lifetime. The return from the life annuity is quite satisfactory (say 5% p.a. or more) and can grow with bonus. The remaining savings can be invested in the money market fund to
wait for the right time to move into equities.
Check this website for the latest yield: www.askdrmoney.com
2. How should I invest my regular savings (for a person below 45 years old)?
You should save about 10% to 20% of your monthly earnings. You can invest it in a large, well diversified, low cost fund that is invested mainly in global equities.
Although the global stockmarket is at a high level, it is all right to start now, as you are investing a monthly sum for the next 10 to 30 years. You will be able to ride out the good and bad years, and get a fairly attractive rate of return. The average return for global equities is more than 7% p.a. over the past 10 to 30 years.
3. How should I select my investment fund?
You can invest in a unit trust or an insurance fund. Make sure that the initial charge is less than 3% and the annual charge is less than 1.5%. You should choose a large fund, with total assets of more than $500 million, so that is is well diversified. It is better to invest in a fund that is benchmarked to a global market
index, rather than a fund that is invested in a specific sector (eg technology, energy) or a specific country (eg China, India).
4. How do I get my insurance protection?
You should buy a decreasing term assurance that will expire when you are 60 years old or your youngest child reaches 25 years. For example, if you are 30 years now and you wish to be insured for $300,000 decreasing over 30 years, your insurance will start at $300,000 and will reduce by $10,000 a year. The cost of this insurance is very affordable.
It is all right for the sum insured to reduce each year, as this is offset by the increase in your savings. At any time, the total amount of your savings and the insurance should be more than your target sum of $300,000. Beyond age 60, you probably do not need any life insurance, as your children have grown up and are
independent.
You will need medical insurance to take care of your medical expenses. This can be secured through a Shield plan (available through the Ministry of Health or a private insurer). The plan should be sufficient to cover you against catastropic illness, including the cost of treating a critical illness.
5. Should I buy an endowment or whole life policy now?
If you are considering to buy a new policy, a better choice is:
* buy a decreasing term insurance plan for the protection
* invest your savings in a large, well diversified, low cost fund
This combination give you flexibility and a better return over the long term. The upfront cost is usually lower than buying an endowment or whole life policy.
6. Should I continue with the endowment or whole life policy taken previously?
You should check the current cash value and the projected cash value at the maturity date or when you reach age 60. You can work out the future yield on the policy, and compare it with alternative investments.
You should also find out how much of the projected cash value is guaranteed. For the non-guaranteed portion, you may have to apply an adjustment, in case the insurance company is not able to meet the projection.
Generally, it is better to continue the existing insurance policies that you have taken previously, as you have already incurred the high, upfront cost.
When you have retired from work, you may wish to convert your whole life policy into a paid up policy for a reduced sum insured. This will free you from continuing to pay the insurance premium. If you do not need the insurance cover, you can also terminate the whole life policy and receive its cash value.
Tan Kin Lian
More moderate return in the future
Hi Mr Tan
An agent from NTUC showed the advertisement on "Best Kept Secret" to me. The return of 6% on endowment plan is attractive. If I buy this plan, will I get 6% return for the next 20 years? This is better than other types of investments and give life insurance cover to me as well.
-----------------------
MY REPLY:
The return of 6% was achieved during the past 25 years. Interest rate was high (say 6%-8% p.a.) during most of the past years, and the economy achieved high growth rates. The return on the life insurance fund averaged about 8% during these years.
Looking forward, I expect the investment yield to be more modest, maybe 6% p.a. After deducting for the cost of insurance and charges, I expect the return on whole life and endowment plans to be more modest, maybe 3% to 4% per annum. (But, I could be wrong!)
Still, the return from NTUC Income should be better than similar plans from other insurance companies, due to their lower expenses and higher bonus distributed to policyholders (remember: Income is a cooperative).
However, I usually advise people to invest in a flexible plan, such as the Ideal plan. You can read more about it in my FAQ: Financial Planning for the Young.
An agent from NTUC showed the advertisement on "Best Kept Secret" to me. The return of 6% on endowment plan is attractive. If I buy this plan, will I get 6% return for the next 20 years? This is better than other types of investments and give life insurance cover to me as well.
-----------------------
MY REPLY:
The return of 6% was achieved during the past 25 years. Interest rate was high (say 6%-8% p.a.) during most of the past years, and the economy achieved high growth rates. The return on the life insurance fund averaged about 8% during these years.
Looking forward, I expect the investment yield to be more modest, maybe 6% p.a. After deducting for the cost of insurance and charges, I expect the return on whole life and endowment plans to be more modest, maybe 3% to 4% per annum. (But, I could be wrong!)
Still, the return from NTUC Income should be better than similar plans from other insurance companies, due to their lower expenses and higher bonus distributed to policyholders (remember: Income is a cooperative).
However, I usually advise people to invest in a flexible plan, such as the Ideal plan. You can read more about it in my FAQ: Financial Planning for the Young.
Shall I continue Eldershield?
Dear Mr Tan
I need your frank advice. Should I continue with Eldershield? I read a letter in the Straits Times that the claim rate is very low, and that the insurance company is making a lot of profit.
Your advice, please.
-------------------
REPLY:
The claim rate is low now, because most of the insured people are still young. The experience in other countries show that the claim rate under this type of insurance will increase sharply after age 70 or 80 years.
You are only required to pay premium up to age 65, and you will be insured for a lifetime (without paying any more premium).
If the insurance company (ie NTUC Income or Great Eastern Life) make a profit of this scheme, they are required to give a refund of 50% of the profit every 5 years.
I suggest that you should continue to participate in the scheme.
I need your frank advice. Should I continue with Eldershield? I read a letter in the Straits Times that the claim rate is very low, and that the insurance company is making a lot of profit.
Your advice, please.
-------------------
REPLY:
The claim rate is low now, because most of the insured people are still young. The experience in other countries show that the claim rate under this type of insurance will increase sharply after age 70 or 80 years.
You are only required to pay premium up to age 65, and you will be insured for a lifetime (without paying any more premium).
If the insurance company (ie NTUC Income or Great Eastern Life) make a profit of this scheme, they are required to give a refund of 50% of the profit every 5 years.
I suggest that you should continue to participate in the scheme.
Capital guaranteed product
It is a bad idea to invest in a capital guaranteed "structured" product.
Why?
Read FAQ:Structured Investment Product.
See the right panel below the Chinese graphic. Select "Financial Planning Tips".
Why?
Read FAQ:Structured Investment Product.
See the right panel below the Chinese graphic. Select "Financial Planning Tips".
Increase the investment in a life annuity
Dear Mr Tan
Since 2002, I have bought four separate annuity policies (total of $150,000 in single premium) with NTUC Income. The annuity payout will commence from age 62.
I am now 59 yrs old and a retiree. I am thinking of buying another annuity policy of a single premium of $50,000 with annual payout to commence from age 67. I can realise this sum from the sale of my stock investments.
What is your advice?
-----------------------------------------------
REPLY
You have invested a total of about $150,000 in life annuity. The additional life annuity will increase the total to $200,000. I think that this is a good idea.
------------------------------------------------
FROM INSURANCE ADVISER
Dear
Thank you for putting your trust with NTUC Income.
Most people take Annuity Policy from NTUC Income. Over the years, under the leadership of Mr Tan Kin Lian, many started to enjoy the wonderful benefits from our plan.
In fact, the annuity gives you more money from year to year. We have annual bonuses added to your monthly annuity. This bonus is compounded, hence the annuity grows.
The stock market is at all time high now, it is a good move to take profit and invest the money in the Annuity plan.
If you have a dependent, our life annuity can serves as a love gift to him/her for life.
Since 2002, I have bought four separate annuity policies (total of $150,000 in single premium) with NTUC Income. The annuity payout will commence from age 62.
I am now 59 yrs old and a retiree. I am thinking of buying another annuity policy of a single premium of $50,000 with annual payout to commence from age 67. I can realise this sum from the sale of my stock investments.
What is your advice?
-----------------------------------------------
REPLY
You have invested a total of about $150,000 in life annuity. The additional life annuity will increase the total to $200,000. I think that this is a good idea.
------------------------------------------------
FROM INSURANCE ADVISER
Dear
Thank you for putting your trust with NTUC Income.
Most people take Annuity Policy from NTUC Income. Over the years, under the leadership of Mr Tan Kin Lian, many started to enjoy the wonderful benefits from our plan.
In fact, the annuity gives you more money from year to year. We have annual bonuses added to your monthly annuity. This bonus is compounded, hence the annuity grows.
The stock market is at all time high now, it is a good move to take profit and invest the money in the Annuity plan.
If you have a dependent, our life annuity can serves as a love gift to him/her for life.
Simplify the feedback form
A feedback form in the website asked for 12 pieces of information, before I can enter the feedback in the content box. Three pieces (ie name, e-mail and telephone) is sufficient for their purpose. The designer should be more considerate and simplify this matter for the general user.
Sunday, April 29, 2007
Encashing my life insurance policies
I asked for the current cash value of my life insurance policy, and the projected cash value in 10 years time. Based on the figures, I was able to compute the yield for the next 10 years. (NOTE: this is not the same as the actual yield for the entire duration of the policy).
I have decided to give up policy #2, as it gives a poor return for the next 10 years. I will keep the other policies in force.
Some policies (eg #1 and #6) show a high yield for the next 10 years. This is due to the low surrender values now. It is better for me to keep these policies in force to earn a better yield.
All these policies are with NTUC Income.
If you wish to review your life insurance policies, ask your insurance company or adviser to provide the above figures to you. You can make a better decision.
Life insurance policies in my name
Yield
1. Endowment SP 5.4%
2. Living 1.7%
3. Living 2.9%
4. Umbrella 4.4%
5. Protection 4.0%
Life insurance policies in my wife's name
Yield
6. Endowment SP 8.4%
7. Living 4.1%
SP: single premium paid, ie no further premium payable
I have decided to give up policy #2, as it gives a poor return for the next 10 years. I will keep the other policies in force.
Some policies (eg #1 and #6) show a high yield for the next 10 years. This is due to the low surrender values now. It is better for me to keep these policies in force to earn a better yield.
All these policies are with NTUC Income.
If you wish to review your life insurance policies, ask your insurance company or adviser to provide the above figures to you. You can make a better decision.
Yield of 3.41%
Dear Mr Tan
Please calculate the yield for me on this policy:
* Surrender value now: S$11239.
* Annual premium: S$519.
* Surrender value in 2018: $23,165.
* Sum assured $25,000 (whole life policy)
---------------
REPLY:
My calculation shows a yield of 3.41% p.a. for the next 11 years. As this is a whole life policy, the yield is probably satisfactory. I suggest that you can keep this policy.
Please calculate the yield for me on this policy:
* Surrender value now: S$11239.
* Annual premium: S$519.
* Surrender value in 2018: $23,165.
* Sum assured $25,000 (whole life policy)
---------------
REPLY:
My calculation shows a yield of 3.41% p.a. for the next 11 years. As this is a whole life policy, the yield is probably satisfactory. I suggest that you can keep this policy.
Term Insurance
I found this information from the life insurance manager of NTUC Income:
* they offer term insurance (level and decreasing)
* they offer living benefit (level only) to cover death and 30 dread disease
Most people prefer to take up the level cover for term and living benefit. The decreasing term is less popular.
In my view, term insurance is suitable (whether level or decreasing cover).
* they offer term insurance (level and decreasing)
* they offer living benefit (level only) to cover death and 30 dread disease
Most people prefer to take up the level cover for term and living benefit. The decreasing term is less popular.
In my view, term insurance is suitable (whether level or decreasing cover).
Senior Housing
Source: www.senioroutlook.com
As more people get older in Singapore (and I fall into this category), it is important to understand how other countries are providing more housing options for seniors.
I searched the website and found this interesting explanation.
---------------------------------------------
ADULT DAY CARE
Adult daycare offers a safe environment for adults during daytime hours to participate in a variety of planned programs including social activities, nutritional, nursing and rehabilitation services.
INDEPENDENT LIVING
Ideal for individuals who do not require personal or medical care, but choose not to live alone or at home. Most facilities are equipped with standard safety features to make it easier for residents to get around. It is a wonderful place for seniors to be with others that share similar interests.
Many recreational activities are planned by the community, including day field trips, shopping excursions and on-premise projects. Most facilities offer optional meal plans for residents and the majority of apartments are equipped with a kitchen so the resident can prepare their own meals.
ASSISTED LIVING
An excellent choice for people who choose not to live on their own, but do not necessarily require 24-hour care. Assisted living facilities offer a homelike atmosphere with trained professionals who are available to help residents with their daily routines. An activity coordinator arranges both on and off premise activities for residents.
NURSING HOMES
Offer 24-hour a day care for those who can no longer live independently. Nursing homes are equipped with medical professionals and supplies to offer specialized care for those with severe illnesses or injuries.
Trained staff members assist residents with personal and daily activities such as getting out of bed, bathing, eating, using the bathroom and regulating medications. Nursing home facilities offer daily meal plans, laundry, housekeeping, medical services and a wide array of planned recreational activities.
RETIREMENT COMMUNITIES
Retirement communities comprise an entire campus of living choices from private homes and independent living to assisted living and even skilled nursing facilities. The residents can age in a place without having to relocate.
As more people get older in Singapore (and I fall into this category), it is important to understand how other countries are providing more housing options for seniors.
I searched the website and found this interesting explanation.
---------------------------------------------
ADULT DAY CARE
Adult daycare offers a safe environment for adults during daytime hours to participate in a variety of planned programs including social activities, nutritional, nursing and rehabilitation services.
INDEPENDENT LIVING
Ideal for individuals who do not require personal or medical care, but choose not to live alone or at home. Most facilities are equipped with standard safety features to make it easier for residents to get around. It is a wonderful place for seniors to be with others that share similar interests.
Many recreational activities are planned by the community, including day field trips, shopping excursions and on-premise projects. Most facilities offer optional meal plans for residents and the majority of apartments are equipped with a kitchen so the resident can prepare their own meals.
ASSISTED LIVING
An excellent choice for people who choose not to live on their own, but do not necessarily require 24-hour care. Assisted living facilities offer a homelike atmosphere with trained professionals who are available to help residents with their daily routines. An activity coordinator arranges both on and off premise activities for residents.
NURSING HOMES
Offer 24-hour a day care for those who can no longer live independently. Nursing homes are equipped with medical professionals and supplies to offer specialized care for those with severe illnesses or injuries.
Trained staff members assist residents with personal and daily activities such as getting out of bed, bathing, eating, using the bathroom and regulating medications. Nursing home facilities offer daily meal plans, laundry, housekeeping, medical services and a wide array of planned recreational activities.
RETIREMENT COMMUNITIES
Retirement communities comprise an entire campus of living choices from private homes and independent living to assisted living and even skilled nursing facilities. The residents can age in a place without having to relocate.
Natural disasters
Source: Wikipedia
Singapore is quite safe and free of natural disasters. We may not be aware about the perils that affect other countries, except when it hits the global news. Anyway, many insurance policies exclude natural disasters.
Here is an explanation about the types of natural disasters.
-------------------------------------------------------------
A natural disaster is the consequence of the combination of a natural hazard (a physical event e.g. volcanic eruption, earthquake, landslide) and human activities.
Human vulnerability, caused by the lack of appropriate emergency management, leads to financial, structural, and human losses.
The resulting loss depends on the capacity of the population to support or resist the disaster, their resilience.
Types of natural disasters:
* Avalanche
* Earthquake
* Lahar
* Landslides and Mudflows
* Sinkholes
* Supervolcano
* Flood
* Limnic eruption
* Maelstrom
* Seiche
* Tsunami
* Blizzard
* Drought
* Hailstorm
* Heat wave
* Hurricanes, Tropical cyclones, and Typhoons
* Ice age
* Ice storm
* Tornado
* Wildfire
* Epidemic
* Famine
* Solar flare
To learn more, read the full posting in Wikipedia.
Singapore is quite safe and free of natural disasters. We may not be aware about the perils that affect other countries, except when it hits the global news. Anyway, many insurance policies exclude natural disasters.
Here is an explanation about the types of natural disasters.
-------------------------------------------------------------
A natural disaster is the consequence of the combination of a natural hazard (a physical event e.g. volcanic eruption, earthquake, landslide) and human activities.
Human vulnerability, caused by the lack of appropriate emergency management, leads to financial, structural, and human losses.
The resulting loss depends on the capacity of the population to support or resist the disaster, their resilience.
Types of natural disasters:
* Avalanche
* Earthquake
* Lahar
* Landslides and Mudflows
* Sinkholes
* Supervolcano
* Flood
* Limnic eruption
* Maelstrom
* Seiche
* Tsunami
* Blizzard
* Drought
* Hailstorm
* Heat wave
* Hurricanes, Tropical cyclones, and Typhoons
* Ice age
* Ice storm
* Tornado
* Wildfire
* Epidemic
* Famine
* Solar flare
To learn more, read the full posting in Wikipedia.
Pay a fixed fee to a broker
It is better to pay a fixed fee to an insurance broker, so that they can find the best deal for you. The fixed fee is agreed between you and the broker.
Under this arrangement, the broker is obliged to return back any commission that they get from the principal. Quite often, the saving in getting the best deal is more than the fee that you have to pay.
Under this arrangement, the broker is obliged to return back any commission that they get from the principal. Quite often, the saving in getting the best deal is more than the fee that you have to pay.
What is a broker?
Source: Wikipedia
In commerce, a broker is a party that mediates between a buyer and a seller. A broker who also acts as a seller or as a buyer becomes a principal party to the deal.
Distinguish agent: one who acts on behalf of a principal.
A brokerage is a firm that acts as a broker.
Types of financial brokers
* Business broker
* Commodity broker
* Forex Broker
* Insurance broker
* Investment broker
* Mortgage broker
* Real estate broker
* Stock broker
In commerce, a broker is a party that mediates between a buyer and a seller. A broker who also acts as a seller or as a buyer becomes a principal party to the deal.
Distinguish agent: one who acts on behalf of a principal.
A brokerage is a firm that acts as a broker.
Types of financial brokers
* Business broker
* Commodity broker
* Forex Broker
* Insurance broker
* Investment broker
* Mortgage broker
* Real estate broker
* Stock broker
Saturday, April 28, 2007
Insurance course at a local university
Mr Tan
I saw some of your postings that are quite general in nature, and are obtained from sources in the internet. Why are you positing them? What is Wikipedia?
-----------------------
REPLY
I am preparing the materials for an insurance course to be taught in a local university. They cover insurance, risk management, marketing and related matters.
Although I obtained them from the stated sources, I often have to edit and simplify them for easy reading. I think that they are useful for the general public as well.
I hope that my regular visitors find them to be useful.
I like Wikipedia. It is like an encyclopedia. It is written by volunteer experts all over the world. They contribute their knowledge to Wikipedia in a collaborate effort.
You can search Google for Wikipedia.
I saw some of your postings that are quite general in nature, and are obtained from sources in the internet. Why are you positing them? What is Wikipedia?
-----------------------
REPLY
I am preparing the materials for an insurance course to be taught in a local university. They cover insurance, risk management, marketing and related matters.
Although I obtained them from the stated sources, I often have to edit and simplify them for easy reading. I think that they are useful for the general public as well.
I hope that my regular visitors find them to be useful.
I like Wikipedia. It is like an encyclopedia. It is written by volunteer experts all over the world. They contribute their knowledge to Wikipedia in a collaborate effort.
You can search Google for Wikipedia.
Invest in large, well diversified fund
Dear Mr Tan
I like the commentary in the "investment tips, April". I have investments in an emerging market fund and global internet fund. Is it a good time to sell them?
--------------------
MY REPLY
I am not familiar with the two funds that you have invested. I am not able to comment on them.
My general comments are:
* emerging stock market are now at a high level
* small markets (including Singapore) are subject to high volatility and outflow of foreign funds
* generally, I prefer to invest in large, well diversified, low cost funds (e.g. global equity) and to keep invested for the long term.
I like the commentary in the "investment tips, April". I have investments in an emerging market fund and global internet fund. Is it a good time to sell them?
--------------------
MY REPLY
I am not familiar with the two funds that you have invested. I am not able to comment on them.
My general comments are:
* emerging stock market are now at a high level
* small markets (including Singapore) are subject to high volatility and outflow of foreign funds
* generally, I prefer to invest in large, well diversified, low cost funds (e.g. global equity) and to keep invested for the long term.
Telemarketing
Source: Wikipedia
Telemarketing is a method of direct marketing in which a salesperson uses the telephone to solicit prospective customers to buy products or services.
Telemarketing can also include recorded sales pitches programmed to be played over the phone via automatic dialing.
Different types of activities:
* Lead Generation, the gathering of information
* Sales, using persuasion to sell a product or service
* Outbound, proactive marketing to prospective and pre-existing customers
* Inbound, react to incoming orders and requests for information.
Telemarketing may be done from a company office, from a call centre, or from home. It may involve either a live operator or a recorded message.
An effective telemarketing process often involve two or more calls. The first call determines the customer’s needs. The final call motivates the customer to make a purchase.
Prospective customers are identified by various means, including past purchase history, previous requests for information, credit limit, competition entry forms, and application forms.
Telemarketing techniques are also applied to other forms of electronic marketing using e-mail or fax messages, in which case they are frequently considered spam.
Telemarketing is a method of direct marketing in which a salesperson uses the telephone to solicit prospective customers to buy products or services.
Telemarketing can also include recorded sales pitches programmed to be played over the phone via automatic dialing.
Different types of activities:
* Lead Generation, the gathering of information
* Sales, using persuasion to sell a product or service
* Outbound, proactive marketing to prospective and pre-existing customers
* Inbound, react to incoming orders and requests for information.
Telemarketing may be done from a company office, from a call centre, or from home. It may involve either a live operator or a recorded message.
An effective telemarketing process often involve two or more calls. The first call determines the customer’s needs. The final call motivates the customer to make a purchase.
Prospective customers are identified by various means, including past purchase history, previous requests for information, credit limit, competition entry forms, and application forms.
Telemarketing techniques are also applied to other forms of electronic marketing using e-mail or fax messages, in which case they are frequently considered spam.
Means test
Means test refers to an investigative process undertaken to determine whether or not an individual or family is eligible to receive certain types of benefits from the government.
The "test" can consist of quantifying the party's income, or assets, or a combination of both.
Examples of means testing in the healthcare sector include Medicaid (USA), Medifund (Singapore) and Medical Cards (Ireland) [1].
The "test" can consist of quantifying the party's income, or assets, or a combination of both.
Examples of means testing in the healthcare sector include Medicaid (USA), Medifund (Singapore) and Medical Cards (Ireland) [1].
Eldershield
ElderShield is an insurance scheme introduced by the Ministry of Health (Singapore) to provide financial help to people with severe disabilities.
About 1 in 12 elderly persons suffer from disabilities as a result of aging and illness and are not able to do simple everyday activities.
They may need expensive, long term care. ElderShield provides $300 cash payout every month (for up to 60 months) to those who are not able to do 3 or more Activities of Daily Living. These activities are washing, feeding, dressing, toileting, mobility and transferring.
This sum of money will reduce the financial burden of patients and their families as it can be used to pay for nursing and medical care at home or in institutions.
The Eldershield scheme covers all CPF account holders who reached aged 40. They can opt out of the scheme.
The premiums can be paid out of the policyholder's Medisave account or the accounts of their spouse, parents, children or grandchildren. Premiums can also be paid in cash. They have the choice to pay a regular premium uo to age 65 years or a single premium.
About 1 in 12 elderly persons suffer from disabilities as a result of aging and illness and are not able to do simple everyday activities.
They may need expensive, long term care. ElderShield provides $300 cash payout every month (for up to 60 months) to those who are not able to do 3 or more Activities of Daily Living. These activities are washing, feeding, dressing, toileting, mobility and transferring.
This sum of money will reduce the financial burden of patients and their families as it can be used to pay for nursing and medical care at home or in institutions.
The Eldershield scheme covers all CPF account holders who reached aged 40. They can opt out of the scheme.
The premiums can be paid out of the policyholder's Medisave account or the accounts of their spouse, parents, children or grandchildren. Premiums can also be paid in cash. They have the choice to pay a regular premium uo to age 65 years or a single premium.
Disability insurance
Disability insurance will provide you with 30 – 60% of your present income tax free if you are injured and unable to work. Some employers provide disability insurance as part of their benefits package, either covering the cost in full or in part.
If you are self-employed or not covered by your employer, you can purchase disability insurance from a number of insurance sources.
You can buy disability insurance to cover a percentage of your current income if you are injured. The percentage, and any cap on the amount you receive is generally dependent on the disability insurance company you purchase from, as well as the type of coverage you elect to carry.
Be sure to shop around and read the policy carefully. The cheapest premium rate may not be the best deal since there are wide variations in the terms of coverage between different insurance companies. Shopping around and comparing rates can often yield a significant savings.
If you are self-employed or not covered by your employer, you can purchase disability insurance from a number of insurance sources.
You can buy disability insurance to cover a percentage of your current income if you are injured. The percentage, and any cap on the amount you receive is generally dependent on the disability insurance company you purchase from, as well as the type of coverage you elect to carry.
Be sure to shop around and read the policy carefully. The cheapest premium rate may not be the best deal since there are wide variations in the terms of coverage between different insurance companies. Shopping around and comparing rates can often yield a significant savings.
Friday, April 27, 2007
A new computer system for the civil service
A friend told me.
The civil service plans to spend $2.5 billion on implementing a new computer system.
$1.5 billion is for the purchase of the personal compuers (including software) to be placed on the desktop of 60,000 civil servants. This works out to $25,000 per civil servant. It seems to be quite a large sum to spend for each person.
The civil service plans to spend $2.5 billion on implementing a new computer system.
$1.5 billion is for the purchase of the personal compuers (including software) to be placed on the desktop of 60,000 civil servants. This works out to $25,000 per civil servant. It seems to be quite a large sum to spend for each person.
Loop system for bus service
Dear Mr Tan
Beside the hub system, how about loop system - say bus from AMK to the city area - we could have a bus that goes various stops around AMK then direct by expressway to the city and then it do various stop before returning by express way.
This can be done say during peak hours so that there will be capacity passengers to fill up the bus and the passenger can avoid the extra time transferring bus. The LOOP service can use the HUB as one of the stop in AMK.
I think this can easily be tried out at same time as the HUB system in running to see which is better.
Monsoon
----------------------------------------------------
MY REPLY:
Your system is worth trying. The advantage is that it avoids a change of bus.
Under the hub system, we will have a feeder service to pick up commuters within the estate and bring them to the hub.
We may have different feeder systems to bring the commuters from different sections of the estate, so that the travelling time is shorter. We can also use light buses so that the waiting time is shorter (as there are more buses providing the service).
The express bus can run at specified times, according to a schedule.
Although the hub system requires one or two change of bus, it will be acceptable when you get used to it. It is good to exercise anyway.
Beside the hub system, how about loop system - say bus from AMK to the city area - we could have a bus that goes various stops around AMK then direct by expressway to the city and then it do various stop before returning by express way.
This can be done say during peak hours so that there will be capacity passengers to fill up the bus and the passenger can avoid the extra time transferring bus. The LOOP service can use the HUB as one of the stop in AMK.
I think this can easily be tried out at same time as the HUB system in running to see which is better.
Monsoon
----------------------------------------------------
MY REPLY:
Your system is worth trying. The advantage is that it avoids a change of bus.
Under the hub system, we will have a feeder service to pick up commuters within the estate and bring them to the hub.
We may have different feeder systems to bring the commuters from different sections of the estate, so that the travelling time is shorter. We can also use light buses so that the waiting time is shorter (as there are more buses providing the service).
The express bus can run at specified times, according to a schedule.
Although the hub system requires one or two change of bus, it will be acceptable when you get used to it. It is good to exercise anyway.
Driving under difficult conditions
I drove my wife to the bus station at 6 am this morning. It was dark and raining. The roads were poorly lit.
I used the GPS navigation system to guide me to my destination. It was very useful. The system could "see" in the dark, and gave instructions on the turns, ahead of time.
I use the Packard Bell system. It works well. You can buy it at Funan Center for less than $800 (special discount).
I used the GPS navigation system to guide me to my destination. It was very useful. The system could "see" in the dark, and gave instructions on the turns, ahead of time.
I use the Packard Bell system. It works well. You can buy it at Funan Center for less than $800 (special discount).
Hub and spokes
I am in favour of a feeder system to bring commuters to bus terminals and MRT stations. It operates like the hub and spoke system used in airlines. Details below.
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Most of the 12 major U.S. passenger airlines use a hub-and-spoke network to route their plane traffic.
A hub is a central airport that flights are routed through, and spokes are the routes that planes take out of the hub airport.
Most major airlines have multiple hubs. It allow them to offer more flights for passengers.
Atlanta is a hub that serves many other cities throughout the U.S. and around the world.
The hub-and-spoke system became the norm for most major airlines after the U.S. federal government deregulated the airlines in 1978.
Under the direct-route, or point-to-point, system used prior to deregulation, airlines were forced by the federal government to fly directly between two small markets.
This resulted in many flights that were routinely half empty, which resulted in airlines losing money. Today, most airlines have at least one central airport that their flights have to go through. From that hub, the spoke flights take passengers to select destinations.
A good example of a hub-and-spoke system is that of Delta Airlines, which has its hub at Hartsfield Atlanta International Airport.
Let's say you are in Charleston, SC, and want to go to Memphis, TN. There's probably not a lot of demand for a Charleston-to-Memphis flight, so the airline flies you from Charleston to Atlanta, and then from Atlanta to Memphis via a connecting flight.
The purpose of the hub-and-spoke system is to save airlines money and give passengers better routes to destinations.
Airplanes are an airline's most valuable commodity, and every flight has certain set costs. Each seat on the plane represents a portion of the total flight cost.
For each seat that is filled by a passenger, an airline lowers its break-even price, which is the seat price at which an airline stops losing money and begins to show a profit on the flight.
Not all airlines use the hub-and-spoke approach. For example, Southwest Airlines is one of the exceptions to the hub-and-spoke network system. It uses the old-fashioned point-to-point system, hauling people short distances with few connecting flights.
However, Southwest offers very few non-stop flights on longer routes. At the end of 2000, Southwest served approximately 306 one-way, non-stop city pairs. It's point-to-point system provides a more direct route than a hub-and-spoke airline can offer.
---------------------------------------------------------------------------------
Most of the 12 major U.S. passenger airlines use a hub-and-spoke network to route their plane traffic.
A hub is a central airport that flights are routed through, and spokes are the routes that planes take out of the hub airport.
Most major airlines have multiple hubs. It allow them to offer more flights for passengers.
Atlanta is a hub that serves many other cities throughout the U.S. and around the world.
The hub-and-spoke system became the norm for most major airlines after the U.S. federal government deregulated the airlines in 1978.
Under the direct-route, or point-to-point, system used prior to deregulation, airlines were forced by the federal government to fly directly between two small markets.
This resulted in many flights that were routinely half empty, which resulted in airlines losing money. Today, most airlines have at least one central airport that their flights have to go through. From that hub, the spoke flights take passengers to select destinations.
A good example of a hub-and-spoke system is that of Delta Airlines, which has its hub at Hartsfield Atlanta International Airport.
Let's say you are in Charleston, SC, and want to go to Memphis, TN. There's probably not a lot of demand for a Charleston-to-Memphis flight, so the airline flies you from Charleston to Atlanta, and then from Atlanta to Memphis via a connecting flight.
The purpose of the hub-and-spoke system is to save airlines money and give passengers better routes to destinations.
Airplanes are an airline's most valuable commodity, and every flight has certain set costs. Each seat on the plane represents a portion of the total flight cost.
For each seat that is filled by a passenger, an airline lowers its break-even price, which is the seat price at which an airline stops losing money and begins to show a profit on the flight.
Not all airlines use the hub-and-spoke approach. For example, Southwest Airlines is one of the exceptions to the hub-and-spoke network system. It uses the old-fashioned point-to-point system, hauling people short distances with few connecting flights.
However, Southwest offers very few non-stop flights on longer routes. At the end of 2000, Southwest served approximately 306 one-way, non-stop city pairs. It's point-to-point system provides a more direct route than a hub-and-spoke airline can offer.
Judge a person's character for a job
I suggested that the interviewers should judge the candidates' character, before selecting the candidate for a job. Here are some responses from others:
--------------------------
How do you assess character in the short span of an interview? That's not enough to have character, you need knowledge, skills, getting on with people skills as well. Character is important but not sufficient for a person to stay on a job.
If he has a good character but is a dunce, the company will stay where it is, no innovations...probably still using windows 3.1 and typewriters.Please comment
----------------------------
How long do you need to judge a person's character? Among other things, acadamic achievements meant something: attitude. Character is not Attitude.
----------------------------
MY REPLY:
In my opinion, it is easier to judge a person's character, than his competence, in an interview.
The interviewers can ask a few questions about the person's attitude towards life, values and his behaviour in past situations.
Many Singaporeans prefer to rely on paper record, rather than to make this judgement. This is why there are not comfortable about my suggestion.
I wish to clarify that the basic qualification is still important. For a technical job, the technical skills and knowledge are still required. But, they should not be the key factor in making the final selection of the suitable candidate.
--------------------------
How do you assess character in the short span of an interview? That's not enough to have character, you need knowledge, skills, getting on with people skills as well. Character is important but not sufficient for a person to stay on a job.
If he has a good character but is a dunce, the company will stay where it is, no innovations...probably still using windows 3.1 and typewriters.Please comment
----------------------------
How long do you need to judge a person's character? Among other things, acadamic achievements meant something: attitude. Character is not Attitude.
----------------------------
MY REPLY:
In my opinion, it is easier to judge a person's character, than his competence, in an interview.
The interviewers can ask a few questions about the person's attitude towards life, values and his behaviour in past situations.
Many Singaporeans prefer to rely on paper record, rather than to make this judgement. This is why there are not comfortable about my suggestion.
I wish to clarify that the basic qualification is still important. For a technical job, the technical skills and knowledge are still required. But, they should not be the key factor in making the final selection of the suitable candidate.
Long Travelling Time on Buses
Commuters complained about the long waiting and travelling time on buses.
Reason? This is due mainly to the current system of bus services:
* there are nearly 300 bus services covering different combinations of travel
* each service has up to 60 stops
* it takes about 75 minutes (off-peak) or 2 hours (peak) to complete the full journey
* up to 10 services can pass by a particular stop
* the commuter has to wait up to 15 minutes for a particular bus
Here is how a different system can look like:
* 30 express services can cover the major roads in Singapore
* each express service can have about 5 stops
* feeder services using small buses can take passengers to the express or MRT stops
* waiting time for a feeder service is less than 3 minutes
* there are more stops for feeder service
* the total waiting and travelling time can reduce by about 30% (my estimate)
You can read my posting about a similar arrangement used in Kowloon, Hong Kong.
Reason? This is due mainly to the current system of bus services:
* there are nearly 300 bus services covering different combinations of travel
* each service has up to 60 stops
* it takes about 75 minutes (off-peak) or 2 hours (peak) to complete the full journey
* up to 10 services can pass by a particular stop
* the commuter has to wait up to 15 minutes for a particular bus
Here is how a different system can look like:
* 30 express services can cover the major roads in Singapore
* each express service can have about 5 stops
* feeder services using small buses can take passengers to the express or MRT stops
* waiting time for a feeder service is less than 3 minutes
* there are more stops for feeder service
* the total waiting and travelling time can reduce by about 30% (my estimate)
You can read my posting about a similar arrangement used in Kowloon, Hong Kong.
Asset allocation for your long term savings
Dear Mr Tan
I have invested my monthly savings in the NTUC combined fund (Growth). I am thinking of increasing my monthly savings. Should I invest it in the NTUC Global equity or in the Combined fund? What are your views about the NTUC Technology fund?
-----------------
MY REPLY:
My preference is to invest my long term savings in the Combined Fund (Growth) or in Global Equity.
It is all right to have a small allocation, say 20%, of the total savings invested in the Technology fund, if you are interested in this sector.
I have invested my monthly savings in the NTUC combined fund (Growth). I am thinking of increasing my monthly savings. Should I invest it in the NTUC Global equity or in the Combined fund? What are your views about the NTUC Technology fund?
-----------------
MY REPLY:
My preference is to invest my long term savings in the Combined Fund (Growth) or in Global Equity.
It is all right to have a small allocation, say 20%, of the total savings invested in the Technology fund, if you are interested in this sector.
A good plan for a young family
Dear Mr Tan
I am in my early 30s. I recently brought a 30 yrs decreasing term insurance covered $300K for myself & $100K for my wife. I have a standalone Critical Illness policy for myself & my wife. I have a Disability Income policy to cover myself only. We are both insured under NTUC Enhanced MediShield with Plus Rider.
I like to keep my saving in Money Market Fund for liquidity & invest the rest in ETF (eg. streetTrack STI).
What is your advice?
--------------------------------
MY REPLY:
Your approach sounds like a great idea.
Which insurance company did you buy the decreasing term and critical illness cover from? I understand that NTUC Income has the lowest rates (according to a survey by Business Times).
I am in my early 30s. I recently brought a 30 yrs decreasing term insurance covered $300K for myself & $100K for my wife. I have a standalone Critical Illness policy for myself & my wife. I have a Disability Income policy to cover myself only. We are both insured under NTUC Enhanced MediShield with Plus Rider.
I like to keep my saving in Money Market Fund for liquidity & invest the rest in ETF (eg. streetTrack STI).
What is your advice?
--------------------------------
MY REPLY:
Your approach sounds like a great idea.
Which insurance company did you buy the decreasing term and critical illness cover from? I understand that NTUC Income has the lowest rates (according to a survey by Business Times).
Law of trusts
Source: Wikipedia
In common law, a trust is an arrangement whereby money or property is owned and managed by one person (or persons, or organizations) for the benefit of another.
A trust is created by a settlor, who entrusts some or all of his property to people of his choice (the trustees). The trustees are the legal owners of the trust property (or trust corpus), but they are obliged to hold the property for the benefit of one or more individuals or organizations (the beneficiary, a.k.a. cestui que use or cestui que trust), usually specified by the settlor.
The trustees owe a fiduciary duty to the beneficiaries, who are the "beneficial" owners of the trust property.
The trust is governed by the terms of the trust document, which is usually written and in deed form. It is also governed by local law.
In the United States, the settlor is also called the trustor, grantor, donor, or creator.
--------------------------------------
PERSONAL NOTE:
I know of a large trust, where the beneficiary wish to make a generous donation to a charity, but the trustees refused. The beneficiary is not able to get the trustee to change their mind.
In common law, a trust is an arrangement whereby money or property is owned and managed by one person (or persons, or organizations) for the benefit of another.
A trust is created by a settlor, who entrusts some or all of his property to people of his choice (the trustees). The trustees are the legal owners of the trust property (or trust corpus), but they are obliged to hold the property for the benefit of one or more individuals or organizations (the beneficiary, a.k.a. cestui que use or cestui que trust), usually specified by the settlor.
The trustees owe a fiduciary duty to the beneficiaries, who are the "beneficial" owners of the trust property.
The trust is governed by the terms of the trust document, which is usually written and in deed form. It is also governed by local law.
In the United States, the settlor is also called the trustor, grantor, donor, or creator.
--------------------------------------
PERSONAL NOTE:
I know of a large trust, where the beneficiary wish to make a generous donation to a charity, but the trustees refused. The beneficiary is not able to get the trustee to change their mind.
Letter from my ex-colleague
Printed in Today paper on 26 April 2007.
Editor
Today Paper
I refer to Mr PN Balji's commentary, "Two good leaders who missed being great", (TODAY, 24 April 2007).
Mr Balji described Mr Tan Kin Lian's management style when he was the chief executive officer of NTUC Income. He stated that "Every press release, even an innocuous one-line statement, had to be approved by him. Every advertisement had to be vetted by him. It was central control all the way".
In my opinion, this statement is totally incorrect.
I have had the privilege to work with Mr Tan for more than 13 years in marketing, as well as in office support services. He believed in developing his managers, encouraging them to take responsibilities and make decisions within their job scopes. There was a system of escalation for higher-level decision making.
From my perspective, the officers and managers in NTUC Income were empowered to make and execute operational decisions. The functions I am familiar with, including advertising, do not function any differently.
Peter Ng Kee Choon
(I am writing in my personal capacity)
Editor
Today Paper
I refer to Mr PN Balji's commentary, "Two good leaders who missed being great", (TODAY, 24 April 2007).
Mr Balji described Mr Tan Kin Lian's management style when he was the chief executive officer of NTUC Income. He stated that "Every press release, even an innocuous one-line statement, had to be approved by him. Every advertisement had to be vetted by him. It was central control all the way".
In my opinion, this statement is totally incorrect.
I have had the privilege to work with Mr Tan for more than 13 years in marketing, as well as in office support services. He believed in developing his managers, encouraging them to take responsibilities and make decisions within their job scopes. There was a system of escalation for higher-level decision making.
From my perspective, the officers and managers in NTUC Income were empowered to make and execute operational decisions. The functions I am familiar with, including advertising, do not function any differently.
Peter Ng Kee Choon
(I am writing in my personal capacity)
Thursday, April 26, 2007
Reply to "Two Great Leaders Who Miss Being Great"
26 April 2007
Editor
Today Paper
I refer to your editorial by Mr P N Balji entitled "Two Great Leaders Who Miss Being Great".
Mr Balji made the following statement about me, "Every press release, even an innocuous one-line statement, had to be approved by him. Every advertisement had
to be vetted by him. It was central control all the way".
This statement is incorrect.
NTUC Income handled our media statements and advertisements in the following manner:
* The media relations manager was authorised to provide information to the media, without getting prior clearance from me. She was only required to get the facts approved by the relevant business manager.
* To ensure that the facts are correct and worded in the proper perspective, she sent a copy of their statement (at the time of release to the journalist) to a few key people, including me. This allowed the recipients to correct any mistakes before they are finally printed in the paper. It also met the tight deadline required by the
journalist.
* The same arrangement was applied to our advertisements. In this case, there was usually no pressure of time.
In past years, many press statements from NTUC Income were issued in the name of the business managers. Some statements were issued without my prior knowledge, although an e-mail might have been sent for my information.
NTUC Income was able to get many of our views reported in the newspapers. It applied to all the media, including Today paper.
The approach adopted by NTUC Income was more open and relaxed that most other organisations. It could hardly be described as "central control all the way".
Mr Balji also made a statement about my unwillingness to find a successor. This is incorrect and did injustice to several general managers in NTUC Income who, in my opinion, are suitable to take over as the chief.
Tan Kin Lian
Editor
Today Paper
I refer to your editorial by Mr P N Balji entitled "Two Great Leaders Who Miss Being Great".
Mr Balji made the following statement about me, "Every press release, even an innocuous one-line statement, had to be approved by him. Every advertisement had
to be vetted by him. It was central control all the way".
This statement is incorrect.
NTUC Income handled our media statements and advertisements in the following manner:
* The media relations manager was authorised to provide information to the media, without getting prior clearance from me. She was only required to get the facts approved by the relevant business manager.
* To ensure that the facts are correct and worded in the proper perspective, she sent a copy of their statement (at the time of release to the journalist) to a few key people, including me. This allowed the recipients to correct any mistakes before they are finally printed in the paper. It also met the tight deadline required by the
journalist.
* The same arrangement was applied to our advertisements. In this case, there was usually no pressure of time.
In past years, many press statements from NTUC Income were issued in the name of the business managers. Some statements were issued without my prior knowledge, although an e-mail might have been sent for my information.
NTUC Income was able to get many of our views reported in the newspapers. It applied to all the media, including Today paper.
The approach adopted by NTUC Income was more open and relaxed that most other organisations. It could hardly be described as "central control all the way".
Mr Balji also made a statement about my unwillingness to find a successor. This is incorrect and did injustice to several general managers in NTUC Income who, in my opinion, are suitable to take over as the chief.
Tan Kin Lian
A Matter of the Mind
Dr Lee Kum Tatt is passionate and determined to do what he has decided to do. He has a strong mind of his own. This is needed to overcome obstacles in his life. Some people consider him to be a "stubborn" person.
You can read about his "stubborn" views in bis blog
I share some of his "stubborn" quality.
You can read about his "stubborn" views in bis blog
I share some of his "stubborn" quality.
Plan with different charges
FIRST POSTED IN DECEMBER 2007.
Dear Mr. Tan,
NTUC Income has several plans, such as IB1, IB2, IB4 and Flexi-cash with different policy charges? I was angry that the adviser from the business center did not tell me about IB1 which don't need to pay annual policy fee. I have a friend who signed for ID2 plan. He learned later from your blog that ID7 plan (no need to pay 45% fee) was available.
Many advisors from business center only talk about Life or Limited Life, but did not recommend Term or Decreasing Term.
REPLY:
Sometimes, the earlier plans are withdrawn by the company and are not available for the adviser to sell.
Generally, it is true that the adviser prefer to sell a plan that give higher commission to them - at the expense of the customer. Some "honest" advisers will recommend the plan that gives the best value to the customer.
The 45% fee under ID2 is low, compared to similar plans in the market (which takes away up to 150%). See http://www.askdrmoney.com/
Dear Mr. Tan,
NTUC Income has several plans, such as IB1, IB2, IB4 and Flexi-cash with different policy charges? I was angry that the adviser from the business center did not tell me about IB1 which don't need to pay annual policy fee. I have a friend who signed for ID2 plan. He learned later from your blog that ID7 plan (no need to pay 45% fee) was available.
Many advisors from business center only talk about Life or Limited Life, but did not recommend Term or Decreasing Term.
REPLY:
Sometimes, the earlier plans are withdrawn by the company and are not available for the adviser to sell.
Generally, it is true that the adviser prefer to sell a plan that give higher commission to them - at the expense of the customer. Some "honest" advisers will recommend the plan that gives the best value to the customer.
The 45% fee under ID2 is low, compared to similar plans in the market (which takes away up to 150%). See http://www.askdrmoney.com/
Feeder and express bus services
Many people expressed unhappiness with the long waiting and travelling times for buses.
A solution is to have an express bus that have just a few stops between the terminal points. Commuters will need to take a feeder bus to the terminal points on the selected stops. This means one or two change of buses. Is this acceptable?
I am now used to this mode of transport. I take the MRT to Yio Chu Kang station and change to a bus to reach my home. I have to walk part of the way, but the exercise does me good.
I encourage commuters to accept one or two change of buses. This is more efficient and will shorten the travelling time.
A solution is to have an express bus that have just a few stops between the terminal points. Commuters will need to take a feeder bus to the terminal points on the selected stops. This means one or two change of buses. Is this acceptable?
I am now used to this mode of transport. I take the MRT to Yio Chu Kang station and change to a bus to reach my home. I have to walk part of the way, but the exercise does me good.
I encourage commuters to accept one or two change of buses. This is more efficient and will shorten the travelling time.
False resume to get a job
I saw on television that a prominent person in USA had to resign, as she had given a false resume in applying for a job.
A few weeks ago, a local newspaper also reported this situation in Singapore. It seems to be quite common for a person to give a false statement to get a job. The penalty is light.
In my view, a person who deliberately makes a false statement in a resume is committing a crime, and is really cheating. The culprit should be punished criminally.
In recruiting people, I do not give much weight to paper qualification or past working experience. I judge a person based on character, and look later at the actual performance in the job.
A few weeks ago, a local newspaper also reported this situation in Singapore. It seems to be quite common for a person to give a false statement to get a job. The penalty is light.
In my view, a person who deliberately makes a false statement in a resume is committing a crime, and is really cheating. The culprit should be punished criminally.
In recruiting people, I do not give much weight to paper qualification or past working experience. I judge a person based on character, and look later at the actual performance in the job.
Index funds
Hi Mr Tan,
For more investment help and questions, please visit www.diehards.org. It is a website set up by Bogleheads to help fellow investors.
indexfundfan
For more investment help and questions, please visit www.diehards.org. It is a website set up by Bogleheads to help fellow investors.
indexfundfan
Great websites
Most websites contained too much information.
I like websites that are simple, neat and have just a few pieces of relevant information.
My vote goes to the following websites:
* Google homepage (for search)
* Direct Line in the UK (ie insurance website)
* Aviva's website in Singapore (ie insurance website)
* NTUC Income's website
* Bedok Transport (surprise!)
I like websites that display a call center number in their homepage. They should encourage the customer to call and talk to a person.
I like websites that are simple, neat and have just a few pieces of relevant information.
My vote goes to the following websites:
* Google homepage (for search)
* Direct Line in the UK (ie insurance website)
* Aviva's website in Singapore (ie insurance website)
* NTUC Income's website
* Bedok Transport (surprise!)
I like websites that display a call center number in their homepage. They should encourage the customer to call and talk to a person.
Wednesday, April 25, 2007
Buy i-Term from NTUC Income?
Mr. Tan,
I've bought the SAF Group Term Insurance by Aviva (at that time it's by ICS) during my NS days and had gradually increased the sum assured from $20K to $150K over the years.
Recently I’m thinking of increasing it to $200K. If the term insurance from NTUC Income is cheaper, I might consider canceling it and take up a $200K term insurance with NTUC Income instead.
The SAF Group Term Insurance by Aviva covers both death and TPD. It also comes with a (optional) rider that covers the 30 major illnesses.
Does the NTUC Income term insurance come along with a rider that covers the 30 major illnessed? Is it cheaper compared to the SAF Group Term Insurance when considering both the main term insurance and the rider?
Terence
-----------------
Dear Terence
You can get a quotation at NTUC Income's website, www.income.coop
i-Term and compare with your existing premium payable to Aviva.
You can also call NTUC Income's Business Center and talk to a consultant.
NTUC Income allows you to buy a Living Benefit plan, which covers death, permanent disability and 30 critical illness.
I've bought the SAF Group Term Insurance by Aviva (at that time it's by ICS) during my NS days and had gradually increased the sum assured from $20K to $150K over the years.
Recently I’m thinking of increasing it to $200K. If the term insurance from NTUC Income is cheaper, I might consider canceling it and take up a $200K term insurance with NTUC Income instead.
The SAF Group Term Insurance by Aviva covers both death and TPD. It also comes with a (optional) rider that covers the 30 major illnesses.
Does the NTUC Income term insurance come along with a rider that covers the 30 major illnessed? Is it cheaper compared to the SAF Group Term Insurance when considering both the main term insurance and the rider?
Terence
-----------------
Dear Terence
You can get a quotation at NTUC Income's website, www.income.coop
i-Term and compare with your existing premium payable to Aviva.
You can also call NTUC Income's Business Center and talk to a consultant.
NTUC Income allows you to buy a Living Benefit plan, which covers death, permanent disability and 30 critical illness.
Avoid market timing
Hi Mr Tan,
While I appreciate your insights into many insurance issues (especially buying term insurance), your market timing posts are certainly not among them; in fact it could be detrimental to encourage market timing.
If an investor has an investment plan, stick to it. (If you don't have one, create one!) Market timing is not going to work.
Many writers have already documented that market timing does not work. Read up John Bogle's book in more detail if you must or ask him personally if you managed to get to meet him in future.
indexfundfan
--------------------------
MY REPLY:
You are right about John Bogle's advice to avoid market timing. He advised to stay invested all the way. I generally follow this principle.
I wish to make an exception in this instance (when the market is irrationally exuberant). I have seen what happened when foreign funds move out of a small Singapore market. (This situation does not apply to America or the global market).
There is a difference between "market timing" and "strategic asset allocation". I shall write about it in a separate posting.
You are also right about "market timing". Half of the time, one will get it wrong.
You can get to read my views in my website, Ask Mr Tan. Look for point 7 in Investment Tips, April 2007.
While I appreciate your insights into many insurance issues (especially buying term insurance), your market timing posts are certainly not among them; in fact it could be detrimental to encourage market timing.
If an investor has an investment plan, stick to it. (If you don't have one, create one!) Market timing is not going to work.
Many writers have already documented that market timing does not work. Read up John Bogle's book in more detail if you must or ask him personally if you managed to get to meet him in future.
indexfundfan
--------------------------
MY REPLY:
You are right about John Bogle's advice to avoid market timing. He advised to stay invested all the way. I generally follow this principle.
I wish to make an exception in this instance (when the market is irrationally exuberant). I have seen what happened when foreign funds move out of a small Singapore market. (This situation does not apply to America or the global market).
There is a difference between "market timing" and "strategic asset allocation". I shall write about it in a separate posting.
You are also right about "market timing". Half of the time, one will get it wrong.
You can get to read my views in my website, Ask Mr Tan. Look for point 7 in Investment Tips, April 2007.
Term insurance at Aviva's website
Hi Mr. Tan,
Thanks for your great and informative blog. I’ve learnt quite a lot from the regular reading of your blog…
For the term insurance from Aviva, are you referring to the SAF Group Term Insurance by Aviva? Or is it another term insurance for the general public?
--------------------------------------
REPLY:
I was referring to the term insurance offered to the general public, which is published in Aviva's website. You can use Google search to look for "Aviva". They have an advertisement.
I believe that Aviva offers a term insurance to soldiers in SAF at a much lower premium rate. It is a good deal for our soldiers. NTUC Income offers a similar attractive deal to public officers.
Thanks for your great and informative blog. I’ve learnt quite a lot from the regular reading of your blog…
For the term insurance from Aviva, are you referring to the SAF Group Term Insurance by Aviva? Or is it another term insurance for the general public?
--------------------------------------
REPLY:
I was referring to the term insurance offered to the general public, which is published in Aviva's website. You can use Google search to look for "Aviva". They have an advertisement.
I believe that Aviva offers a term insurance to soldiers in SAF at a much lower premium rate. It is a good deal for our soldiers. NTUC Income offers a similar attractive deal to public officers.
Improve public transport
Here is a comment posted in my blog:
I agree that more trains and buses are needed to facilitate public transportion. Not many people willing to take bus here for both the waiting time and traveling time are too long.
Currently the government hopes to solve the traffic problem through promotion of intelligent traffic information, establishment of a comprehensive information platform. It is a good idea. But, we do need a better and simple system, but maybe they need to do more which might cut off their profit.
How to encourage more people to take bus as daily transportation, and how to solve transportation problems of residents in HDB hubs of some towns?
I think the establishment of express bus service is an effective way. By withdrawing and merging some stops or across the Central Expressway, commuters spend less traveling time between office and home. Thus more people will choose bus services.
For example, there are more and more HDB flats in Sembawang now, however, there are not enough bus lines in this area.
Rockluck
I agree that more trains and buses are needed to facilitate public transportion. Not many people willing to take bus here for both the waiting time and traveling time are too long.
Currently the government hopes to solve the traffic problem through promotion of intelligent traffic information, establishment of a comprehensive information platform. It is a good idea. But, we do need a better and simple system, but maybe they need to do more which might cut off their profit.
How to encourage more people to take bus as daily transportation, and how to solve transportation problems of residents in HDB hubs of some towns?
I think the establishment of express bus service is an effective way. By withdrawing and merging some stops or across the Central Expressway, commuters spend less traveling time between office and home. Thus more people will choose bus services.
For example, there are more and more HDB flats in Sembawang now, however, there are not enough bus lines in this area.
Rockluck
Dance Appreciation at the Esplanade
Don't miss Singapore Dance Theatre's Dance Appreciation Series on 1 May, 4pm, at the Esplanade Concert Hall.
This May Day Special allows audience members to learn about contemporary dance expressions and to hear about the inspiration behind the new works within the main season of Impressions.
Tickets can be purchased at the amazingly low price of $11 (inclusive of $1 SISTIC fee), and are available from SISTIC 6348-5555 or www.sistic.com.sg
This May Day Special allows audience members to learn about contemporary dance expressions and to hear about the inspiration behind the new works within the main season of Impressions.
Tickets can be purchased at the amazingly low price of $11 (inclusive of $1 SISTIC fee), and are available from SISTIC 6348-5555 or www.sistic.com.sg
Sold too early?
Hi Mr Tan,
You have sold all your SGX ETF mid last year, at that time you were saying it was too high.
Since then the market is up abt 30+ %. Now that you said the market is too high and you sold half(and not all) your stock,prob you do not want to miss the uptrend totally in case you are wrong this time. The thing here is that, nobody can time the market correctly.
Though you may be right this time, but you were wrong the other time. A true investor buy/sell a company based on its valuation, company competitive chracteristics, managements and not whether the market is too high/low.
Just my 2 cents comments. I am worried your comments are influencing people, which may or may not be correct.
-------------------
MY REPLY:
You are right.
When I sold the ETF, it had appreciated by 50% over my purchase price (bought two years earlier). I felt that it was adequate. (At that time, my ETF represented 20% of my total stock market investments).
At the current level of the Singapore stock market, I am reducing my other shares (bought more than 15 years ago) by 50%. I will wait for a lower level to re-invest in the ETF.
Under normal circumstances, I do not time the market. At the current level, I want to reduce my holdings.
Anyway, the reduction is being made in stages.
You have sold all your SGX ETF mid last year, at that time you were saying it was too high.
Since then the market is up abt 30+ %. Now that you said the market is too high and you sold half(and not all) your stock,prob you do not want to miss the uptrend totally in case you are wrong this time. The thing here is that, nobody can time the market correctly.
Though you may be right this time, but you were wrong the other time. A true investor buy/sell a company based on its valuation, company competitive chracteristics, managements and not whether the market is too high/low.
Just my 2 cents comments. I am worried your comments are influencing people, which may or may not be correct.
-------------------
MY REPLY:
You are right.
When I sold the ETF, it had appreciated by 50% over my purchase price (bought two years earlier). I felt that it was adequate. (At that time, my ETF represented 20% of my total stock market investments).
At the current level of the Singapore stock market, I am reducing my other shares (bought more than 15 years ago) by 50%. I will wait for a lower level to re-invest in the ETF.
Under normal circumstances, I do not time the market. At the current level, I want to reduce my holdings.
Anyway, the reduction is being made in stages.
Term insurance - Income & Aviva
If you are male 20 years and you wish to insure $100,000 for 20 years:
NTUC Income: monthly premium of $13.40 fixed for 20 years. Total: $3,216
Aviva: monthly premium of $20 for first 10 years, and $30 for next 10 years. Total $$6600
Conclusion: the premium payable to Aviva is 2 times of NTUC Income. It is better to buy the term insurance from NTUC Income.
NTUC Income: monthly premium of $13.40 fixed for 20 years. Total: $3,216
Aviva: monthly premium of $20 for first 10 years, and $30 for next 10 years. Total $$6600
Conclusion: the premium payable to Aviva is 2 times of NTUC Income. It is better to buy the term insurance from NTUC Income.
Hedge fund
Source: Wikipedia
A hedge fund is a private investment fund charging a performance fee and typically open to only a limited number of investors. Hedge funds are largely open to accredited investors only. They have grown in the public securities and private investment markets.
Hedge funds are not currently subject to any direct regulation by the SEC, the NASD, or other federal regulating commissions, unlike mutual funds, pension funds, and insurance companies. Some funds that trade commodity futures contracts are considered to be commodity pools, regulated by the Commodity Futures Trading Commission and National Futures Association.
The term is not tightly defined, but is used to distinguish such funds from retail investment funds, such as mutual funds that are available to the general public.
Retail funds tend to be highly regulated, limited to holding a specific range of financial assets such as bonds, equities or money market instruments. Retail funds tend to have a restricted ability to borrow, leverage or hedge their investments, though they may have the ability to hedge via derivative contracts.
Hedge funds are limited only by the terms of the contracts governing the particular fund. Hedge funds may be either long or short assets and may enter into futures, swaps and other derivative contracts. In this way, hedge funds can follow more complex investment strategies.
The funds, often organized as limited partnerships, typically invest on behalf of high-net-worth individuals and institutions. Their primary objective is often to preserve investors' capital by taking positions whose returns are not closely correlated to those of the broader financial markets.
Because of the substantial risks involved in unregulated, complex, and leveraged investments, hedge funds are normally open only to professional, institutional or otherwise accredited investors. This restriction is often implemented through limits on participating investors or minimum investment amounts.
A hedge fund is a private investment fund charging a performance fee and typically open to only a limited number of investors. Hedge funds are largely open to accredited investors only. They have grown in the public securities and private investment markets.
Hedge funds are not currently subject to any direct regulation by the SEC, the NASD, or other federal regulating commissions, unlike mutual funds, pension funds, and insurance companies. Some funds that trade commodity futures contracts are considered to be commodity pools, regulated by the Commodity Futures Trading Commission and National Futures Association.
The term is not tightly defined, but is used to distinguish such funds from retail investment funds, such as mutual funds that are available to the general public.
Retail funds tend to be highly regulated, limited to holding a specific range of financial assets such as bonds, equities or money market instruments. Retail funds tend to have a restricted ability to borrow, leverage or hedge their investments, though they may have the ability to hedge via derivative contracts.
Hedge funds are limited only by the terms of the contracts governing the particular fund. Hedge funds may be either long or short assets and may enter into futures, swaps and other derivative contracts. In this way, hedge funds can follow more complex investment strategies.
The funds, often organized as limited partnerships, typically invest on behalf of high-net-worth individuals and institutions. Their primary objective is often to preserve investors' capital by taking positions whose returns are not closely correlated to those of the broader financial markets.
Because of the substantial risks involved in unregulated, complex, and leveraged investments, hedge funds are normally open only to professional, institutional or otherwise accredited investors. This restriction is often implemented through limits on participating investors or minimum investment amounts.
Return on NTUC Income's funds
I have just received a report showing the return on NTUC Income's funds:
Most of the funds produced great returns, after fees. As the fees are quite low, most of the returns go to the policyholders. The Technology fund continues to disappoint. I hope that it will do better in 2007.
Name of Fund 1 year 2 year
2006 2005/06
Combined Fund (Growth) 11.7% 22.8%
Combined Fund (Balanced) 8.8% 17.0%
Combined Fund (Conservative) 5.8% 11.1%
Singapore Equity 30.8% 51.0%
Global Equity 11.9% 25.8%
Technology -4.8% 0.0%
Most of the funds produced great returns, after fees. As the fees are quite low, most of the returns go to the policyholders. The Technology fund continues to disappoint. I hope that it will do better in 2007.
Sell Singapore shares?
Dear Mr Tan
I read that you are selling your Singapore shares. Can you tell us why?
------------------
MY REPLY:
I find the stock market to be too high. I have decided to sell 50% of my shares and re-invest the money in the money market fund to earn 3% interest. If the stock market corrects downwards by 20% (i.e. ST index at 2,700), I will re-invest in the market.
I read that you are selling your Singapore shares. Can you tell us why?
------------------
MY REPLY:
I find the stock market to be too high. I have decided to sell 50% of my shares and re-invest the money in the money market fund to earn 3% interest. If the stock market corrects downwards by 20% (i.e. ST index at 2,700), I will re-invest in the market.
Lecture on insurance
I have been asked by a local university to teach a course on insurance. It comprises of 15 lessons of 3 hours. I have not accepted it yet.
I am now doing research on the topics to be covered in the course. I search Google to get the materials from Wikipedia, educational and corporate websites. It is an interesting exercise.
There is so much useful material that can be obtained from the internet.
I am now doing research on the topics to be covered in the course. I search Google to get the materials from Wikipedia, educational and corporate websites. It is an interesting exercise.
There is so much useful material that can be obtained from the internet.
Tuesday, April 24, 2007
Liability
What is liability in the insurance context? I found this definition in WiseGeek, obtained through Google search.
In legal terms, the word liability refers to fault. The person who is at fault is liable to another because of his or her actions or failure to act.
One example is in the case of a crime. The liability of the offending party may include providing restitution for damage to property or paying medical bills in the case of physical injury.
Another example of liability in the legal realm is an automobile accident. The person who caused the accident, through action or omission, is liable to the injured party.
Liability insurance exists for just such a purpose. It covers the expenses of the injured party, including damage to the vehicle or other property as well as a certain amount of medical expenses, and may reimburse the injured party for attorney's fees if civil action is required.
In legal terms, the word liability refers to fault. The person who is at fault is liable to another because of his or her actions or failure to act.
One example is in the case of a crime. The liability of the offending party may include providing restitution for damage to property or paying medical bills in the case of physical injury.
Another example of liability in the legal realm is an automobile accident. The person who caused the accident, through action or omission, is liable to the injured party.
Liability insurance exists for just such a purpose. It covers the expenses of the injured party, including damage to the vehicle or other property as well as a certain amount of medical expenses, and may reimburse the injured party for attorney's fees if civil action is required.
Accident
What is an accident? I found this definition from Wikipedia, obtained through Google search. It is important to understand this term, as it affects what is covered in an insurance policy.
An accident is a detrimental event that occurs unexpectedly and unintentionally. Physical examples include unintended collisions or falls, being injured by touching something sharp, hot, or electric, or ingesting poison.
Non-physical examples are unintentionally revealing a secret or otherwise saying something incorrectly, forgetting an appointment, etc.
50,425 people were killed in accidents (not including car accidents) in the U.S. in 1995, which is 19 people in 100,000.
Often, accidents are investigated so that we can learn how to avoid them in the future. This is sometimes called root cause analysis, but does not generally apply to accidents that cannot be predicted with any certainty. For example, a root cause of a purely random incident may never be identified, and thus future similar accidents remain "accidental."
The informal term "freak accident" may refer to an unfortunate event that may seem exceedingly unlikely to happen by chance. This term may be used to imply doubts about whether the event actually was an accident.
An accident is a detrimental event that occurs unexpectedly and unintentionally. Physical examples include unintended collisions or falls, being injured by touching something sharp, hot, or electric, or ingesting poison.
Non-physical examples are unintentionally revealing a secret or otherwise saying something incorrectly, forgetting an appointment, etc.
50,425 people were killed in accidents (not including car accidents) in the U.S. in 1995, which is 19 people in 100,000.
Often, accidents are investigated so that we can learn how to avoid them in the future. This is sometimes called root cause analysis, but does not generally apply to accidents that cannot be predicted with any certainty. For example, a root cause of a purely random incident may never be identified, and thus future similar accidents remain "accidental."
The informal term "freak accident" may refer to an unfortunate event that may seem exceedingly unlikely to happen by chance. This term may be used to imply doubts about whether the event actually was an accident.
Reduce my holdings of Singapore shares
I sold off another 10% of my portfolio of Singapore shares. The total sales for this month is 37%. My target is to reduce my portfolio by 50% within the next few days. I have another 13% more to go.
I believe that the Singapore market is too high. I like to take profit and keep my money in the money market fund to earn 3% interest.
I am keeping my holdings in the combined funds with NTUC Income for the time being. They are largely invested in global equities and bonds, and are more diversified.
I believe that the Singapore market is too high. I like to take profit and keep my money in the money market fund to earn 3% interest.
I am keeping my holdings in the combined funds with NTUC Income for the time being. They are largely invested in global equities and bonds, and are more diversified.
Estimated yield for next 10 years
Dear Mr Tan,
I saw your posting about the yield on your and your wife's life insurance policies for the next 10 years. How do you calculate the figures? How can I do the same calculation for my own policies?
Another question, why do the yields vary so much between 2% and 8%? Are they from the same insurance company?
--------------------------
MY REPLY
All my policies are with NTUC Income.
I ask them to give me the following figures for my life insurance policies:
* what is the current cash value (if I terminate my policy now)
* what is the annual premium
* what is the projected cash value in 10 years time (including projected future bonus)
With these 3 figures, I can compute the yield.
These are the projected yield for the next 10 years. They are not the actual yield over the entire duration of the contract.
The difference in yield is due to the method used to calculate the cash value and distribute the bonus for different types of contracts. Sometimes, the methods are not consistent.
You can ask your insurer to give you the same 3 sets of figures. If you send the figures to me, I will be able to compute the yield for you, using my financial calcuator. It is quite easy.
I saw your posting about the yield on your and your wife's life insurance policies for the next 10 years. How do you calculate the figures? How can I do the same calculation for my own policies?
Another question, why do the yields vary so much between 2% and 8%? Are they from the same insurance company?
--------------------------
MY REPLY
All my policies are with NTUC Income.
I ask them to give me the following figures for my life insurance policies:
* what is the current cash value (if I terminate my policy now)
* what is the annual premium
* what is the projected cash value in 10 years time (including projected future bonus)
With these 3 figures, I can compute the yield.
These are the projected yield for the next 10 years. They are not the actual yield over the entire duration of the contract.
The difference in yield is due to the method used to calculate the cash value and distribute the bonus for different types of contracts. Sometimes, the methods are not consistent.
You can ask your insurer to give you the same 3 sets of figures. If you send the figures to me, I will be able to compute the yield for you, using my financial calcuator. It is quite easy.
Personal accident policy
A financial firm offers an unsecured loan at a high interest rate. They also offer a rider as follows:
For an additional amount of 1.25% of your monthly outstanding, your outstanding loan amount will be covered in case of your accidental death, accidental total and permanent disability and terminal illness.
For a loan of $10,000 the annual premium is $125. This is more than 10 times of the normal rate.
If you pay $125 for a personal accident policy, you can be insured for $125,000 a year (not $10,000).
Search Google for "personal accident" and find out what is being offered in Singapore.
For an additional amount of 1.25% of your monthly outstanding, your outstanding loan amount will be covered in case of your accidental death, accidental total and permanent disability and terminal illness.
For a loan of $10,000 the annual premium is $125. This is more than 10 times of the normal rate.
If you pay $125 for a personal accident policy, you can be insured for $125,000 a year (not $10,000).
Search Google for "personal accident" and find out what is being offered in Singapore.
Claim review committee
Thomas Phua posted this comment in my blog.
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Many home theft insurance must be followed by forcible entry. This is a little outdated as thief today are quite skillful and well trained.
I had a case that came in from window and no sign of forcible entry. Then NTUC Income rejected the claim and I appealled.
Then CEO, Mr Tan agreed with me on the way thief enters by the window, though no forcible entry, paid on ex-gratia. I believe no insurer will pay based on Mr Tan's understanding then. Mr Tan's reason was, there is actual lost due to theft.
Thomas Phua
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I wish to explain how the decision was made.
NTUC Income has a claims review committee chaired by a general manager. I am not involved in the committee. The appeal was submitted to the committee. They decided, based on its merits.
I do provide some of my personal views on appeal cases. Sometimes, the committee agrees with me. Sometimes, they politely take a different view. I believe that the committee has acted fairly.
--------------------------------
Many home theft insurance must be followed by forcible entry. This is a little outdated as thief today are quite skillful and well trained.
I had a case that came in from window and no sign of forcible entry. Then NTUC Income rejected the claim and I appealled.
Then CEO, Mr Tan agreed with me on the way thief enters by the window, though no forcible entry, paid on ex-gratia. I believe no insurer will pay based on Mr Tan's understanding then. Mr Tan's reason was, there is actual lost due to theft.
Thomas Phua
-----------------------------------
I wish to explain how the decision was made.
NTUC Income has a claims review committee chaired by a general manager. I am not involved in the committee. The appeal was submitted to the committee. They decided, based on its merits.
I do provide some of my personal views on appeal cases. Sometimes, the committee agrees with me. Sometimes, they politely take a different view. I believe that the committee has acted fairly.
Fixed deposit interest rate
An elderly person has $50,000 of fixed deposit that is maturing soon. He asked for my advice on how to invest this sum.
I asked him to read my Invesment Tips, April 2007
My preference is to invest in the Money Market Fund under NTUC Income, which yields a money market rate of about 3% to 3.5%. It has very low risk. During the past few months, I have invested most of my savings in this fund.
I searched for "fixed deposit" under Google, and found the following interest rate offered by DBS Bank and UOB bank for deposit above $50,000:
3 month: 1.7%
12 month: 1.8%
I am not sure if they offer a higher interest rate for seniors, say 0.25%. Perhaps, you can call them to find out, if you are interested to invest in them.
I asked him to read my Invesment Tips, April 2007
My preference is to invest in the Money Market Fund under NTUC Income, which yields a money market rate of about 3% to 3.5%. It has very low risk. During the past few months, I have invested most of my savings in this fund.
I searched for "fixed deposit" under Google, and found the following interest rate offered by DBS Bank and UOB bank for deposit above $50,000:
3 month: 1.7%
12 month: 1.8%
I am not sure if they offer a higher interest rate for seniors, say 0.25%. Perhaps, you can call them to find out, if you are interested to invest in them.
Comfortable SMRT train ride
I took the SMRT train from Raffles City to Yio Chu Kang at 4 pm today. To my surprise and delight, I was able to get a seat. It is the first time in many train rides that I have this comfort.
I hope that SMRT will put more trains during the peak and off peak hours. It will give more comfort to the commuters and get more people to take the train (instead of driving their cars on the congested roads).
I hope that SMRT will put more trains during the peak and off peak hours. It will give more comfort to the commuters and get more people to take the train (instead of driving their cars on the congested roads).
Monday, April 23, 2007
Shopping for Travel Insurance
I search an internet portal for travel insurance. They offered the most competitive rates extracted from many insurance companies in the United Kingdom.
Here are my findings:
* the difference between the lowest and highest in the top 20 quotes can be as much as three times
* the plans indicate coverage of GBP 10 million, but this applies only to emergency evacuation.
* the actual payouts for accident injury and hospital stay is quite modest, and close to the level offered in Singapore.
Conclusion: it pays to shop for your travel insurance. Do not pay more than SGD 4 for each day of coverage. Look at the amount that you are covered for accident, medical expenses and loss of baggage, as they represent the key payouts.
Here are my findings:
* the difference between the lowest and highest in the top 20 quotes can be as much as three times
* the plans indicate coverage of GBP 10 million, but this applies only to emergency evacuation.
* the actual payouts for accident injury and hospital stay is quite modest, and close to the level offered in Singapore.
Conclusion: it pays to shop for your travel insurance. Do not pay more than SGD 4 for each day of coverage. Look at the amount that you are covered for accident, medical expenses and loss of baggage, as they represent the key payouts.
Get the right assumptions
Dear Mr Tan,
I am 37 years old. If I save $20,000 a year for next 18 years at 5% return, I would accummulate about $500,000 when I reach 55 years old.
With this amount being place in an annuity for next 25 years at 3%, I would only be getting about $2,000 a month from 55 to 80 years old.
With inflation, the real value of the annuity will be less than $2,000 and may not be sufficient for life beyond 55 years old.
How realistic is the return of 5%? Many funds have mentioned returns of higher than 5%, but there are possibilities that the funds may not generate such a return, as there are always up's and down's.
---------------------------------
MY REPLY:
I suggest that you re-calculate the figures on the following assumptions:
* the retirement age should be 65 (instead of 55)
* the investment return can be increased to 6% per annum
With the revised assumptions, you will be able to get a higher annuity payment on your retirement. Even after deducting for the effect of inflation (say at 2% per annum), your annuity income should be quite adequate.
You can read about the annuity in this FAQ
I am 37 years old. If I save $20,000 a year for next 18 years at 5% return, I would accummulate about $500,000 when I reach 55 years old.
With this amount being place in an annuity for next 25 years at 3%, I would only be getting about $2,000 a month from 55 to 80 years old.
With inflation, the real value of the annuity will be less than $2,000 and may not be sufficient for life beyond 55 years old.
How realistic is the return of 5%? Many funds have mentioned returns of higher than 5%, but there are possibilities that the funds may not generate such a return, as there are always up's and down's.
---------------------------------
MY REPLY:
I suggest that you re-calculate the figures on the following assumptions:
* the retirement age should be 65 (instead of 55)
* the investment return can be increased to 6% per annum
With the revised assumptions, you will be able to get a higher annuity payment on your retirement. Even after deducting for the effect of inflation (say at 2% per annum), your annuity income should be quite adequate.
You can read about the annuity in this FAQ
Travel Insurance from the Portal
I searched Google for Travel Insurance. I found a product that covers medical, emergency evacuation, baggage and several adventurous sports. The premium is USD14 for 7 days.
The advertisement claimed a saving of 50% from a similar product offered through a travel agent.
Their coverage is written in clear language. It explained the sports that are covered, and those that are excluded.
A similar coverage from NTUC Income cost SGD 20 (deluxe plan) or SGD 15 (classic plan), plus a loading of 25% or 50% for some specified hazardous sports.
The advertisement claimed a saving of 50% from a similar product offered through a travel agent.
Their coverage is written in clear language. It explained the sports that are covered, and those that are excluded.
A similar coverage from NTUC Income cost SGD 20 (deluxe plan) or SGD 15 (classic plan), plus a loading of 25% or 50% for some specified hazardous sports.
Travel agent sells travel insurance
When I booked for my travel package to Gold Coast, the travel agent offered a travel insurance to me. I declined.
Why?
I find the premium to be too high. The travel agent usually receives a high commission (maybe 30% or more of the premium).
The travel agent has to compete to offer an attractive price for the travel package (as other travel agents offer similar products). They make a big profit on the travel insurance.
It is better to shop for your travel insurance separately. If not, at least you can find out what is offered directly by the insurance company. Try Google search.
Why?
I find the premium to be too high. The travel agent usually receives a high commission (maybe 30% or more of the premium).
The travel agent has to compete to offer an attractive price for the travel package (as other travel agents offer similar products). They make a big profit on the travel insurance.
It is better to shop for your travel insurance separately. If not, at least you can find out what is offered directly by the insurance company. Try Google search.
Invest the settlement in an annuity
I read an article about receiving a monthly payment, instead of a lump sum, in the case of an injury settlement.
Briefly:
If a person is involved in an accident at work (workers compensation claim), or a automobile accident, the injured person would usually receive a lump sum as a settlement.
It was felt that the injured person would wisely invest that money so they would have an income for the rest of their lives. As it turns out that was not the case in most situations.
Therefore, in some countries, it was decided that the large sum would be distributed on a periodic basis; monthly, quarterly or annually.
An agreement was made between the injured party, the lawyers (for both sides) a financial advisor and the defendant. The defendant would purchase an annuity for the distribution of funds through an Insurance Company. This distribution allows the injured person to live off the proceeds for a specified duration or the duration of recovery.
The injured party already has the challenge to deal with the after effects and worries of an accident and has to adjust to a new lifestyle. The annuity frees the injury person from the worry of investing the settlement.
Briefly:
If a person is involved in an accident at work (workers compensation claim), or a automobile accident, the injured person would usually receive a lump sum as a settlement.
It was felt that the injured person would wisely invest that money so they would have an income for the rest of their lives. As it turns out that was not the case in most situations.
Therefore, in some countries, it was decided that the large sum would be distributed on a periodic basis; monthly, quarterly or annually.
An agreement was made between the injured party, the lawyers (for both sides) a financial advisor and the defendant. The defendant would purchase an annuity for the distribution of funds through an Insurance Company. This distribution allows the injured person to live off the proceeds for a specified duration or the duration of recovery.
The injured party already has the challenge to deal with the after effects and worries of an accident and has to adjust to a new lifestyle. The annuity frees the injury person from the worry of investing the settlement.
Home content insurance
Extracted from a website:
A home contents insurance policy should cover everything you would take with you if you moved home.
This would typically include all your furniture, household goods, food and drink, televisions, videos, computers, stereo equipment, clothing and valuables, usually up to a stated limit.
Often insurers will put an uppermost limit on the amount that they will pay out for certain items or groups of items. Whilst this is typically less than the total sum insured, be aware of any maximum sums payable for these individual items.
Boats, caravans and motors are normally insured separately.
Claims are usually made after a burglary or a fire but a policy should also pay if your possessions are damaged or lost as a result of an explosion, water leaks or if your home is vandalised. Always check to make sure these events are covered.
Many policies will also cover your legal liability in the home. You should check whether you are covered if you accidentally injure another person or damage their property. Most policies pay damages for which you are legally liable up to a certain limit.
A home contents insurance policy should cover everything you would take with you if you moved home.
This would typically include all your furniture, household goods, food and drink, televisions, videos, computers, stereo equipment, clothing and valuables, usually up to a stated limit.
Often insurers will put an uppermost limit on the amount that they will pay out for certain items or groups of items. Whilst this is typically less than the total sum insured, be aware of any maximum sums payable for these individual items.
Boats, caravans and motors are normally insured separately.
Claims are usually made after a burglary or a fire but a policy should also pay if your possessions are damaged or lost as a result of an explosion, water leaks or if your home is vandalised. Always check to make sure these events are covered.
Many policies will also cover your legal liability in the home. You should check whether you are covered if you accidentally injure another person or damage their property. Most policies pay damages for which you are legally liable up to a certain limit.
Life Insurance Settlement
I saw an advertisement entitled "life insurance settlement". The advertiser may be able to offer a higher surrender value for your life insurance policy.
Here is an abstract from the website:
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A Life Settlement allows an individual 70 and older to turn their non-performing or unnecessary asset, a life insurance policy, into cash.
A life settlement may be considered when maintaining premium expense becomes prohibitive, a more affordable policy is being considered, there are changes in trust, tax or estate planning, a key-man policy is no longer required, beneficiaries are self sufficient and for a myriad of other financial reasons.
Quite often, utilizing a life settlement option may be the wisest and most ideal financial option.
------------------------------
You can find more details by clicking on the advertisement or searching Google for "life insurance settlement" or "cash your policy".
Here is an abstract from the website:
---------------------------------
A Life Settlement allows an individual 70 and older to turn their non-performing or unnecessary asset, a life insurance policy, into cash.
A life settlement may be considered when maintaining premium expense becomes prohibitive, a more affordable policy is being considered, there are changes in trust, tax or estate planning, a key-man policy is no longer required, beneficiaries are self sufficient and for a myriad of other financial reasons.
Quite often, utilizing a life settlement option may be the wisest and most ideal financial option.
------------------------------
You can find more details by clicking on the advertisement or searching Google for "life insurance settlement" or "cash your policy".
Home content insurance
In the past, most owners take up fire insurance on their property to meet the requirements of the financing body.
Singapore is relatively safe from natural disasters and crime.
The situation is changing, as follows:
* people now have more valuables in their home
* there are more foreigners, especially from poorer countries, working here
* even the Singaporeans may be forced by circumstances into crime
In other countries, insurance on home content is quite popular. The coverage is more comprehensive than similar products in Singapore.
We need to develop better products to meet the expanding needs. I shall be making some research into this area.
If you are interested, you can search for "content insurance" to see what is being covered.
Singapore is relatively safe from natural disasters and crime.
The situation is changing, as follows:
* people now have more valuables in their home
* there are more foreigners, especially from poorer countries, working here
* even the Singaporeans may be forced by circumstances into crime
In other countries, insurance on home content is quite popular. The coverage is more comprehensive than similar products in Singapore.
We need to develop better products to meet the expanding needs. I shall be making some research into this area.
If you are interested, you can search for "content insurance" to see what is being covered.
Have a lower yield target of 6%
Dear Mr.Tan
I am now 30 years old, and have just started investing. Currently, I hold the following:
Fixed Income: 100k in Fixed deposits @ 2.8%
Unit trust: 100k worth in 5 products, expecting 8% p.a. or more
I am aiming for 10-15% returns, yet unwilling to risk, thus 50% in the FD. I have opened an account in Australia and invested some funds as FD @ 6.5%p.a.
How would you go ahead to invest and have a safe yet higher returns?
-----------------------
MY REPLY:
I suggest that you read my FAQ on "Financial Tips for the Young". It gives some information that is relevant to your situation.
Your target of 10% to 15% is too high. Over the long term, equities earn an average of 6% to 8% per annum.
If you target 8% on the risky portion of your portfolio (say 50%) and 3% on the safe portion (say 50%), your average yield will be 5.5%. This is a reasonable expectation.
Personally, I wanted to invest in Aus$ and NZ$ but an expert told me that the current level of these currencies is too high. So, I backed down. Do be careful when you invest in foreign currency.
Generally, I prefer to invest in a large, well diversified low cost fund, such as the combined fund of NTUC Income (see www.income.coop/faq) or in the STI tracker fund in the SGX.
I am now 30 years old, and have just started investing. Currently, I hold the following:
Fixed Income: 100k in Fixed deposits @ 2.8%
Unit trust: 100k worth in 5 products, expecting 8% p.a. or more
I am aiming for 10-15% returns, yet unwilling to risk, thus 50% in the FD. I have opened an account in Australia and invested some funds as FD @ 6.5%p.a.
How would you go ahead to invest and have a safe yet higher returns?
-----------------------
MY REPLY:
I suggest that you read my FAQ on "Financial Tips for the Young". It gives some information that is relevant to your situation.
Your target of 10% to 15% is too high. Over the long term, equities earn an average of 6% to 8% per annum.
If you target 8% on the risky portion of your portfolio (say 50%) and 3% on the safe portion (say 50%), your average yield will be 5.5%. This is a reasonable expectation.
Personally, I wanted to invest in Aus$ and NZ$ but an expert told me that the current level of these currencies is too high. So, I backed down. Do be careful when you invest in foreign currency.
Generally, I prefer to invest in a large, well diversified low cost fund, such as the combined fund of NTUC Income (see www.income.coop/faq) or in the STI tracker fund in the SGX.
Sunday, April 22, 2007
Anticipated endowment sold badly
Thomas Phua posted this comment in my blog. I have edited it.
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ANTICIPATED ENDOWMENT POLICY
The sales pitch by the bancassurance agent is "Auntie, you put $4000 a year and every 3 years you receive $3000, this is better than interest.
Sounds good and logical.
The auntie who fell for the sales pitch is 53 years old. For the next 21 years, each year she has to pay $4000 and every 3 years gets $3000. At the end of 21 years, the maturity will be much less than the total premium. Can she continue to pay the premium until age 74?
I hope the bancassurance agent will have some consideration for old folks who walked into the bank. These are hard earned money of old folks. Bear a thought for them. There are other ways for you to make your sales and earn your commission.
Thomas Phua
-----------------------------------------
ANTICIPATED ENDOWMENT POLICY
The sales pitch by the bancassurance agent is "Auntie, you put $4000 a year and every 3 years you receive $3000, this is better than interest.
Sounds good and logical.
The auntie who fell for the sales pitch is 53 years old. For the next 21 years, each year she has to pay $4000 and every 3 years gets $3000. At the end of 21 years, the maturity will be much less than the total premium. Can she continue to pay the premium until age 74?
I hope the bancassurance agent will have some consideration for old folks who walked into the bank. These are hard earned money of old folks. Bear a thought for them. There are other ways for you to make your sales and earn your commission.
Thomas Phua
Balance profit and service
When public transport is privatised, the operators find ways to increase their profits. They decide to buy long buses (actually two buses joined together ) to save on manpower cost.
The long bus means occupies the space of two buses. They are difficult to manouver and congest the road. As they have twice the capacity, the waiting time for a bus is doubled (compared to single bus).
Is Singapore short of manpower? No! The excess manpower is used less productively, to drive taxis or to operate small retail outlets.
The outcome? Poor public transport service. Congested roads.
We need a better way to use the manpower in the economy. In this instance, the free market and the profit motive do not produce the desired outcome. The regulators have to step in, to ensure that there is a proper balance between profit and service.
The interest of the wider community has to be safeguarded.
The long bus means occupies the space of two buses. They are difficult to manouver and congest the road. As they have twice the capacity, the waiting time for a bus is doubled (compared to single bus).
Is Singapore short of manpower? No! The excess manpower is used less productively, to drive taxis or to operate small retail outlets.
The outcome? Poor public transport service. Congested roads.
We need a better way to use the manpower in the economy. In this instance, the free market and the profit motive do not produce the desired outcome. The regulators have to step in, to ensure that there is a proper balance between profit and service.
The interest of the wider community has to be safeguarded.
Travel insurance - emergency evacuation
When you buy travel insurance, check if they provide emergency evacuation.
Why is this important?
If you meet with an accident, and you need to be flown back immediately to your home country for treatment, the cost of arranging an air ambulance can be as much as SGD 100,000.
This will be covered by the travel insurance (if it is included as part of the standard package).
When I was with NTUC Income, there were more claims under this item, compared to death or injury caused by accidents. This is an important benefit.
Why is this important?
If you meet with an accident, and you need to be flown back immediately to your home country for treatment, the cost of arranging an air ambulance can be as much as SGD 100,000.
This will be covered by the travel insurance (if it is included as part of the standard package).
When I was with NTUC Income, there were more claims under this item, compared to death or injury caused by accidents. This is an important benefit.
Travel Portal - Zuji, Priceline
I enter "Budget Airlines" in Google Search and found the ad by Priceline.
I tested it for my trip to Brussels. It gave the same best deal (ie the same price) from British Air.
Two other airlines also advertise their special offers. I checked on the European airline, as they cover Brussels. Their best price is 50% higher than British Air.
Conclusion: It is better to try a portal, such as Zuji or Priceline. They can give the best deal. You can approach your favourite airline directly and see if they can match.
I tested it for my trip to Brussels. It gave the same best deal (ie the same price) from British Air.
Two other airlines also advertise their special offers. I checked on the European airline, as they cover Brussels. Their best price is 50% higher than British Air.
Conclusion: It is better to try a portal, such as Zuji or Priceline. They can give the best deal. You can approach your favourite airline directly and see if they can match.
Booking an air ticket through the internet
I started to learn how to book an air ticket through the internet.
I found Zuji in Google Search. I asked to book a return air ticket from Singapore to Brussels in September. They searched all the airlines and come back with the best offer from British Air. It cost less than SGD 2,000 for an economy class ticket.
For the same trip on Singapore Air, the ticket will cost SGD 8,000. Singapore Air is not competitive for this sector.
I did another search for a return ticket for Tokyo in August. The cheapest ticket is from Philippines Air. I decided to fly by Singapore Air, although the price is about 50% higher.
I could buy the ticket directly from Singapore Air slightly cheaper than Zuji. The difference is the service fee from Zuji.
If you want a cheap ticket, you can try Zuji. I find it to be a very convenient way to get first level information about what is available. I can decide later, if I prefer another airline. At least I know how much is the difference.
I found Zuji in Google Search. I asked to book a return air ticket from Singapore to Brussels in September. They searched all the airlines and come back with the best offer from British Air. It cost less than SGD 2,000 for an economy class ticket.
For the same trip on Singapore Air, the ticket will cost SGD 8,000. Singapore Air is not competitive for this sector.
I did another search for a return ticket for Tokyo in August. The cheapest ticket is from Philippines Air. I decided to fly by Singapore Air, although the price is about 50% higher.
I could buy the ticket directly from Singapore Air slightly cheaper than Zuji. The difference is the service fee from Zuji.
If you want a cheap ticket, you can try Zuji. I find it to be a very convenient way to get first level information about what is available. I can decide later, if I prefer another airline. At least I know how much is the difference.
Money market fund
I have a large amount of my personal savings invested in the Money Market Fund under NTUC Income.
I just checked the website and found the following:
* unit price as at 1 April was 1.059
* unit price appreciated by 0.86% over past 3 months, or 3.4% annualised
* unit price appreciated by 1.8% over past 6 months, or 3.6% annualised
Although interest rate in the money market softened recently, the yield on the money market fund continue to be above 3%.
I am satisified with this yield.
I just checked the website and found the following:
* unit price as at 1 April was 1.059
* unit price appreciated by 0.86% over past 3 months, or 3.4% annualised
* unit price appreciated by 1.8% over past 6 months, or 3.6% annualised
Although interest rate in the money market softened recently, the yield on the money market fund continue to be above 3%.
I am satisified with this yield.
Is Gold a good investment?
A knowledgeable person in the Gold trade told me that the price of gold is "not high" compared to Oil. There is potential for Gold to appreciate. I do not know if this is correct.
Anyway, I asked Dr Money for his views. He wrote an article about it previously. He sent an updated article to me, which now applies in his blog.
I shall be monitoring this asset class for the next few months. According to Dr Money, the best way to invest in gold is through an exchange traded fund (ETF). Another alternative is paper gold.
Anyway, I asked Dr Money for his views. He wrote an article about it previously. He sent an updated article to me, which now applies in his blog.
I shall be monitoring this asset class for the next few months. According to Dr Money, the best way to invest in gold is through an exchange traded fund (ETF). Another alternative is paper gold.
Saturday, April 21, 2007
Road Safety
Thomas Phua asked me to write something about road safety in my blog. I have edited his message. You can see his own posting in his blog
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Mr Tan,
I am on the road every day, on a motorcycle. I observe that many drivers lack concern for other motorists. I often met with a close shave with other drivers due to their poor judgement or disregard for the safety of others.
My brother was involved in an accident last year. He was lucky to survive. I am helping him to claim against third party.
I am surprised that the taxi driver reported that my brother hit his taxi instead.
This is really absurd. The taxi driver that nearly killed a motorcyclist. Yet, he made a false report. The police found him to be guilty, based on the physical evidence of the accident. I hope that the driver will at least admit their fault, when someone is injured.
I feel that many motorcyclists died because of the poor judgement and careless attitude of motorists.
Thomas Phua
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Mr Tan,
I am on the road every day, on a motorcycle. I observe that many drivers lack concern for other motorists. I often met with a close shave with other drivers due to their poor judgement or disregard for the safety of others.
My brother was involved in an accident last year. He was lucky to survive. I am helping him to claim against third party.
I am surprised that the taxi driver reported that my brother hit his taxi instead.
This is really absurd. The taxi driver that nearly killed a motorcyclist. Yet, he made a false report. The police found him to be guilty, based on the physical evidence of the accident. I hope that the driver will at least admit their fault, when someone is injured.
I feel that many motorcyclists died because of the poor judgement and careless attitude of motorists.
Thomas Phua
Buy motor insurance direct
Hi Mr Tan,
When I was overseas, I could buy motor insurance directly through a call center and get a 10% discount. Why is this not available in Singapore?
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MY REPLY:
If you call the insurance company directly, they will give the discount to you. But, they do not advertise this discount, as it may upset their insurance agents.
You can get a quotation from their website beforehand. When you call them, you already know what is the normal premium. You can ask for the discount. See if they give it to you.
You can enter "motor insurance" in Google search and see if you can locate any of these websites in Singapore.
When I was overseas, I could buy motor insurance directly through a call center and get a 10% discount. Why is this not available in Singapore?
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MY REPLY:
If you call the insurance company directly, they will give the discount to you. But, they do not advertise this discount, as it may upset their insurance agents.
You can get a quotation from their website beforehand. When you call them, you already know what is the normal premium. You can ask for the discount. See if they give it to you.
You can enter "motor insurance" in Google search and see if you can locate any of these websites in Singapore.
Cost of investing
John Bogle said in his book, that an individual investing on his own incurs an average trading cost of 1.5% per year.
If he invests in a mutual fund, the total "all in" costs comes to 3% to 3.5% per year. This comprise of management fee, operating expenses, sales charges, brokerage commissions, spreads and market impact costs.
He advocates investing in an index fund, and holding it "forever". The cost reduces to less than 0.5% per annum.
The difference is very big, over a period of 10 or 20 years.
You can read his speeches in Bogle speeches
If he invests in a mutual fund, the total "all in" costs comes to 3% to 3.5% per year. This comprise of management fee, operating expenses, sales charges, brokerage commissions, spreads and market impact costs.
He advocates investing in an index fund, and holding it "forever". The cost reduces to less than 0.5% per annum.
The difference is very big, over a period of 10 or 20 years.
You can read his speeches in Bogle speeches
Planning a holiday at Gold Coast
I use Google search to look for "Gold Coast". It gave me a good idea about the different types of accommodation that are available and the prices. It also showed me the photos of the facilities. I will probably choose a high rise apartment with a view of the sea.
Success factors for NTUC Income
I have been invited by the Australian Friendly Society Association to speak at their conference and share the success factors of NTUC Income. The conference is in June.
They asked me to discuss the following:
* what sort of competition has NTUC Income faced?
* how does NTUC Income distinguish itself from its competitors?
* what are the primary values that drive NTUC Income's business?
* are these values important in driving the success of its business?
* how does NTUC Income engage its members (customers)?
* what part does the customers' involvement play in the success of NTUC Income?
I shall be covering some of these points in my blog.
The conference is held at the Gold Coast. I shall take a holiday there as well. It will be my first vacation in this wonderful part of the world.
They asked me to discuss the following:
* what sort of competition has NTUC Income faced?
* how does NTUC Income distinguish itself from its competitors?
* what are the primary values that drive NTUC Income's business?
* are these values important in driving the success of its business?
* how does NTUC Income engage its members (customers)?
* what part does the customers' involvement play in the success of NTUC Income?
I shall be covering some of these points in my blog.
The conference is held at the Gold Coast. I shall take a holiday there as well. It will be my first vacation in this wonderful part of the world.
Change in occupation
Some personal accident policy requires you to declare a change in occupation. If you do not declare, the policy may be void.
Check your policy to see if there is such a requirement. Better still, choose a policy that does not have this requirement.
Check your policy to see if there is such a requirement. Better still, choose a policy that does not have this requirement.
Feeder services
I suggest that feeder services should be introduced to ply certain districts and bring the commutters to the MRT trains or bus terminals.
The feeder services can be operated using light buses, like in Hong Kong.
They can serve a useful purpose of providing transport to the neighbourhood malls, schools or community facilities.
These services should be farmed out to small operators, and not placed under the large transport operators.
It is easier for the public to learn how to use the local feeder services. Many people find the current bus services to be too complicated to use.
If you agree with this suggestion, please vote in LTA portal
The feeder services can be operated using light buses, like in Hong Kong.
They can serve a useful purpose of providing transport to the neighbourhood malls, schools or community facilities.
These services should be farmed out to small operators, and not placed under the large transport operators.
It is easier for the public to learn how to use the local feeder services. Many people find the current bus services to be too complicated to use.
If you agree with this suggestion, please vote in LTA portal
Selling your life insurance policy
If you are not able to continue with your life insurance policy, the insurer will pay its cash value to you. This cash value is calculated by the insurer to give them a profit when you surrender.
You may be able to find a buyer who is willing to pay a higher amount to buy the life insurance policy from you. The buyer will continue to pay the premium and collect the maturity or death benefit.
This breaks the monopoly of the insurer who issue the policy. This competition may force the insurer to pay a higher cash value to their policyholder.
There is a moral risk that the buyer of the policy may benefit substantially on the premature death of the policyholder. Apparently, this is allowed by law.
Someone has set up an operation in Singapore to buy over the life insurance policy from the policyholder. If you look for "sell endowment" in Google search, you may be able to find some links to this service.
You may be able to find a buyer who is willing to pay a higher amount to buy the life insurance policy from you. The buyer will continue to pay the premium and collect the maturity or death benefit.
This breaks the monopoly of the insurer who issue the policy. This competition may force the insurer to pay a higher cash value to their policyholder.
There is a moral risk that the buyer of the policy may benefit substantially on the premature death of the policyholder. Apparently, this is allowed by law.
Someone has set up an operation in Singapore to buy over the life insurance policy from the policyholder. If you look for "sell endowment" in Google search, you may be able to find some links to this service.
Life insurance with regular paybacks
Some life insurers market a whole life or endowment policy with regular pay-backs every one, two or three years. They sell large numbers of these policies.
This type of plan give poor value to the customers. Here is the reason:
* the insurer charges the normal premium for the basic policy
* they add an additional premium for the regular payback
* the additional premium has to loaded to cover the commission and expenses
For example, if the regular pay-back is $3,000 every 3 years, the insurer has to add $1,000 plus $100 (to cover commisison and expenses). It does not make sense for the customer to pay an additional $1,100 a year to get $3,000 every 3 years.
This is not transparent to the customer. The customer is not aware that he is paying an incurring additional expenses for this benefit. He is worse off.
Somehow the insurance agent is able to make this plan look more attractive than its reality. This is the power of false marketing.
This type of plan give poor value to the customers. Here is the reason:
* the insurer charges the normal premium for the basic policy
* they add an additional premium for the regular payback
* the additional premium has to loaded to cover the commission and expenses
For example, if the regular pay-back is $3,000 every 3 years, the insurer has to add $1,000 plus $100 (to cover commisison and expenses). It does not make sense for the customer to pay an additional $1,100 a year to get $3,000 every 3 years.
This is not transparent to the customer. The customer is not aware that he is paying an incurring additional expenses for this benefit. He is worse off.
Somehow the insurance agent is able to make this plan look more attractive than its reality. This is the power of false marketing.
Friday, April 20, 2007
Critical illness
I use Google search to find out about "critical illness" policies available in other countries.
The websites are mainly from the United Kingdom. They offer critical illness on a level or decreasing cover, similar to term insurance.
I wanted to compare the premium rates in the UK with those in Singapore.So far, I am not able to get the comparable premium rates, as the websites are managed by brokers who insist on "talking" to me. I shall continue to try.
Some of the websites are quite educational and informative.
The websites are mainly from the United Kingdom. They offer critical illness on a level or decreasing cover, similar to term insurance.
I wanted to compare the premium rates in the UK with those in Singapore.So far, I am not able to get the comparable premium rates, as the websites are managed by brokers who insist on "talking" to me. I shall continue to try.
Some of the websites are quite educational and informative.
Decreasing term with living benefit
Hi Mr Tan.
I am 24 years old. I like to know whether there is term insurance longer than 20 years. Does a 20 year term insurance auto-renews itself when it ends? Do you recommend buying decreasing term (e.g.$100k) and living benefit (e.g.$50k) together?
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REPLY
You can buy a term longer than 20 years. It is available for 30 years or to cease at a specified age, say 65 years.
The term policy does not auto-renew itself. It will cease at the end of the term. You should buy term insurance for the entire period that you need the insurance.
It is a good idea to buy a decreasing term assurance and a living benefit (to cover critical illness). The living benefit can also be for a specified term.
I am 24 years old. I like to know whether there is term insurance longer than 20 years. Does a 20 year term insurance auto-renews itself when it ends? Do you recommend buying decreasing term (e.g.$100k) and living benefit (e.g.$50k) together?
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REPLY
You can buy a term longer than 20 years. It is available for 30 years or to cease at a specified age, say 65 years.
The term policy does not auto-renew itself. It will cease at the end of the term. You should buy term insurance for the entire period that you need the insurance.
It is a good idea to buy a decreasing term assurance and a living benefit (to cover critical illness). The living benefit can also be for a specified term.
How to invest in index funds
According to John Bogle, it is better to invest in the entire market through an index fund.
If you wish to invest in an index fund in Singapore, the closest that you can invest is the STI tracker fund, that is traded on the Singapore Exchange.
If you go outside of Singapore, there are many hundreds of choices. You can find out more using Google search to look for "index funds". Some of the websites provide educational materials.
If you wish to invest in an index fund in Singapore, the closest that you can invest is the STI tracker fund, that is traded on the Singapore Exchange.
If you go outside of Singapore, there are many hundreds of choices. You can find out more using Google search to look for "index funds". Some of the websites provide educational materials.
Planning for a retirement income
Hi Mr Tan.
I am 37 years old. If I save $20,000 a year for next 18 years at 5% return, I would accummulate about $500,000 when I reach 55 years old.
With this amount being place in an annuity for next 25 years at 3%, I would only be getting about $2,000 a month from 55 to 80 years old.
With inflation, the real value of the annuity will be less than $2,000 and may not be sufficient for life beyond 55 years old.
How realistic is the return of 5%? Many funds have mentioned returns of higher than 5%, but there are possibilities that the funds may not generate such a return, as there are always up's and down's.
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My reply:
You can read the FAQ in my website, www.tankinlian.com/faq. You can get some useful information that will answer your questions.
I suggest that you re-calculate the figures on the following assumptions:
* the retirement age should be 65 (instead of 55)
* the investment return can be increased to 6% per annum
With the revised assumptions, you will be able to get a higher annuity payment on your retirement. Even after deducting for the effect of inflation (say at 2% per annum), your annuity income should be quite adequate.
You can visit the business center of NTUC Income and talk to an insurance consultant.
I am 37 years old. If I save $20,000 a year for next 18 years at 5% return, I would accummulate about $500,000 when I reach 55 years old.
With this amount being place in an annuity for next 25 years at 3%, I would only be getting about $2,000 a month from 55 to 80 years old.
With inflation, the real value of the annuity will be less than $2,000 and may not be sufficient for life beyond 55 years old.
How realistic is the return of 5%? Many funds have mentioned returns of higher than 5%, but there are possibilities that the funds may not generate such a return, as there are always up's and down's.
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My reply:
You can read the FAQ in my website, www.tankinlian.com/faq. You can get some useful information that will answer your questions.
I suggest that you re-calculate the figures on the following assumptions:
* the retirement age should be 65 (instead of 55)
* the investment return can be increased to 6% per annum
With the revised assumptions, you will be able to get a higher annuity payment on your retirement. Even after deducting for the effect of inflation (say at 2% per annum), your annuity income should be quite adequate.
You can visit the business center of NTUC Income and talk to an insurance consultant.
Feedback on Public Transport
Visit the Land Transport Authority;s portal to give your feedback on how to improve the public transport system in Singapore.
LTA
LTA
More trains needed during off-peak hours
I took the SMRT train from Dhoby Ghaut to Yio Chu Kang at 10.45 pm. I had to wait a long time for the train to come. When it arrived, the station was packed with commuters.
The train was fully loaded all the way to Yio Chu Kang station. Most of the commuters crowded near the door of the train. It is difficult for other commuters to leave or enter the train.
This is late in the evening, during off-peak hours.
I hope that SMRT will operate more trains during off peak hours, so that the commuters do not have to wait a long time and stand in a crowded train for most of the journey. I hope that they can offer a more comfortable ride for commuters during the off-peak hours.
If you agree with my suggestion, go to this portal and vote on it.
The train was fully loaded all the way to Yio Chu Kang station. Most of the commuters crowded near the door of the train. It is difficult for other commuters to leave or enter the train.
This is late in the evening, during off-peak hours.
I hope that SMRT will operate more trains during off peak hours, so that the commuters do not have to wait a long time and stand in a crowded train for most of the journey. I hope that they can offer a more comfortable ride for commuters during the off-peak hours.
If you agree with my suggestion, go to this portal and vote on it.
Thursday, April 19, 2007
Term insurance in USA - risk factors
Here are the risk factors used to price term insurance rates in the USA
* if you are overweight by 20%, you pay a 15% to 35% more in premium
* if you are a smoker, you pay 100% more in premium
* if you quit smoking for more than 5 years, you enjoy the non-smoker rate
* if you quit smoking for 1 year, you pay 15% to 50% more in premium
* if a family member had cancer or depression, you pay 30% to 50% more in premium
* if a family member had heart disease or stroke, you pay 100% more in premium
You enjoy the lowest premium if:
* you are within the standard weight
* you are a non-smoker or quit more than 5 yers ago
* a family member did not die from cancer, depression or heart disease
If you have the risk factors, your premium can go up by 100%. The actual increase differ from one company to another. You can get a lower loading, if you shop around.
* if you are overweight by 20%, you pay a 15% to 35% more in premium
* if you are a smoker, you pay 100% more in premium
* if you quit smoking for more than 5 years, you enjoy the non-smoker rate
* if you quit smoking for 1 year, you pay 15% to 50% more in premium
* if a family member had cancer or depression, you pay 30% to 50% more in premium
* if a family member had heart disease or stroke, you pay 100% more in premium
You enjoy the lowest premium if:
* you are within the standard weight
* you are a non-smoker or quit more than 5 yers ago
* a family member did not die from cancer, depression or heart disease
If you have the risk factors, your premium can go up by 100%. The actual increase differ from one company to another. You can get a lower loading, if you shop around.
Book early to enjoy lower hotel rates
I few weeks ago, I visited the website of a specific hotel in Philadephia and found the room rate to be USD 160. I was not able to confirm the booking at that time. I made the booking today. The rate for the same room increased to USD 240.
Lesson: book early to enjoy a lower rate.
Lesson: book early to enjoy a lower rate.
Term insurance rates in USA
I visited a portal to get the term insurance rates in New York state for the following:
male, non-smoker, no medical condition, standard weight
To qualify for the low rates shown above, you must be in very good health. If your health is not in the top group, you may have to pay a higher rate (say up to 50% or 100% more).
The top 5 insurers are those that offered the most competitive rates.
The premium rates charged in Singapore is about 30% to 50% higher, but they apply to a broader group of people in reasonably good health.
If you wish to get a quote for our own comparsion, you can search for a Google Ad on the right panel". If you cannot find this ad, you can use the Google search and ask for "term insurance.
male, non-smoker, no medical condition, standard weight
monthly premium for $100,000 for 20 year term
Entry New York state Singapore
age from top 5 insurers
30 $10.32 to $12.77 $13.40
35 $10.32 to $13.56 $18.90
To qualify for the low rates shown above, you must be in very good health. If your health is not in the top group, you may have to pay a higher rate (say up to 50% or 100% more).
The top 5 insurers are those that offered the most competitive rates.
The premium rates charged in Singapore is about 30% to 50% higher, but they apply to a broader group of people in reasonably good health.
If you wish to get a quote for our own comparsion, you can search for a Google Ad on the right panel". If you cannot find this ad, you can use the Google search and ask for "term insurance.
How to get low term insurance rates
Hi Mr Tan,
I clicked on a website on your right side of your blog, that advertise term insurance. They ask me to enter the Zip code. How do I provide it?
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My reply:
The website must be from America. The insurance charge charge different rates for different states in the country. So, you need to have a Zip code to get the actual rates. I am not familiar with the Zip codes in USA.
Try to look for a website that allows you to enter the state. Maybe, you can choose New York or California.
Anyway, you are not able to buy term insurance from the USA. You can only find out what their rates are, to compare with the term insurance offered in Singapore.
Some of the websites (that appear in the right panel of my blog under Google Ads) offer rates in Singapore. It allows you to compare the rates and make the best choice.
I hope that more insurers in Singapore will offer their term insurance rates on-line. You can get the rates from NTUC Income under its i-term contract. And compare with the rates from USA.
I clicked on a website on your right side of your blog, that advertise term insurance. They ask me to enter the Zip code. How do I provide it?
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My reply:
The website must be from America. The insurance charge charge different rates for different states in the country. So, you need to have a Zip code to get the actual rates. I am not familiar with the Zip codes in USA.
Try to look for a website that allows you to enter the state. Maybe, you can choose New York or California.
Anyway, you are not able to buy term insurance from the USA. You can only find out what their rates are, to compare with the term insurance offered in Singapore.
Some of the websites (that appear in the right panel of my blog under Google Ads) offer rates in Singapore. It allows you to compare the rates and make the best choice.
I hope that more insurers in Singapore will offer their term insurance rates on-line. You can get the rates from NTUC Income under its i-term contract. And compare with the rates from USA.
Common Sense Investing
John Bogle is the founder and former CEO of Vanguard Mutual Fund Group. It is among the largest fund managers in the world.
Here is the foreward to his book on Common Sense Investing:
Investing is all about common sense. Owning a diversified portfolio of stocks and holding it for the long term is a winner's game. Try to beat the stock market is theretically a zero-sum game (for every winner, there must be a loser) and after the substantial costs of investing all deducted, it becomes a loser's game.
Common sense tell us - and history confirms - that the simplest and most efficient investment strategy is to buy and hold all of the nation's publicly held businesses at very low cost. The classic index fund that owns this market portfolio is the only investment that guarantees you with your fair shre of stock market returns.
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In my words: invest in a large, well diversified, low cost fund.
Here is the foreward to his book on Common Sense Investing:
Investing is all about common sense. Owning a diversified portfolio of stocks and holding it for the long term is a winner's game. Try to beat the stock market is theretically a zero-sum game (for every winner, there must be a loser) and after the substantial costs of investing all deducted, it becomes a loser's game.
Common sense tell us - and history confirms - that the simplest and most efficient investment strategy is to buy and hold all of the nation's publicly held businesses at very low cost. The classic index fund that owns this market portfolio is the only investment that guarantees you with your fair shre of stock market returns.
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In my words: invest in a large, well diversified, low cost fund.
Call your insurer first
If you are covered for medical insurance, and you need to go for medical treatment, what should you do first?
Call the insurance company.
Give your particulars. Ask them to explain what is covered under the medical insurance. Ask about the limits for each category of coverage and the exclusions.
Tell the insurer about the estimate cost of treatment given by your doctor. They may be able to advice if the estimate is reasonable, and if there are better, more cost effective alternatives.
Be better informed. Do not be shy to ask.
Call the insurance company.
Give your particulars. Ask them to explain what is covered under the medical insurance. Ask about the limits for each category of coverage and the exclusions.
Tell the insurer about the estimate cost of treatment given by your doctor. They may be able to advice if the estimate is reasonable, and if there are better, more cost effective alternatives.
Be better informed. Do not be shy to ask.
Claim on several accident policies
Dear Mr Tan
If I have several personal accident policy, and something happens to me, can my family make a claim on all the policies?
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My reply:
If you are insured under several personal accident or life insurance policies, you can make a claim on all of them. There is no limit to the total amount that can be claimed under these policies that cover a human life.
The situation is different for insurance policies that are intended to reimburse you for the actual loss, such as a fire insurance policy or a medical expense policy. Under these policies, you will only be paid for the amount that you have incurred.
For example, if your house is burned down by a fire, and the cost of rebuilding the house is $500,000, you can claim up to this amount only, even though you may have insured for a much larger sum.
Similarly, if you have several medical expense policy, you can only claim for the amount of your medical bills, even though the insured sum under all the policies may be higher.
The principle is: you cannot make any gain under a "reimbursement" policy.
If I have several personal accident policy, and something happens to me, can my family make a claim on all the policies?
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My reply:
If you are insured under several personal accident or life insurance policies, you can make a claim on all of them. There is no limit to the total amount that can be claimed under these policies that cover a human life.
The situation is different for insurance policies that are intended to reimburse you for the actual loss, such as a fire insurance policy or a medical expense policy. Under these policies, you will only be paid for the amount that you have incurred.
For example, if your house is burned down by a fire, and the cost of rebuilding the house is $500,000, you can claim up to this amount only, even though you may have insured for a much larger sum.
Similarly, if you have several medical expense policy, you can only claim for the amount of your medical bills, even though the insured sum under all the policies may be higher.
The principle is: you cannot make any gain under a "reimbursement" policy.
Write a Will
Hi Mr Tan,
Do you advice people to write a will? What happens if there is no will? Will the assets be distributed unfairly?
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My reply:
Here is my view as a non-lawyer.
You should write a will if you have fairly large estate, say more than $1 million, and you have specific ideas about how the assets are to be distributed on your death.
If there is no will, the legal position is that the estate will be distributed according to the intestate law. In most cases, the surviving spouse will get 50 percent and the remainder will be distributed equally among the children.
In practice, the family members will decide how best to distribute the assets among themselves. They may wish to give a larger share to a poorer member of the family. This can be decided by agreement among the members.
If there is a dispute, and the matter is brought to court, the distribution will be made according to the intestate law.
It is usually better to have a will. If you change your mind later, you can write a new will. The cost of a standard will is quite modest.
Do you advice people to write a will? What happens if there is no will? Will the assets be distributed unfairly?
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My reply:
Here is my view as a non-lawyer.
You should write a will if you have fairly large estate, say more than $1 million, and you have specific ideas about how the assets are to be distributed on your death.
If there is no will, the legal position is that the estate will be distributed according to the intestate law. In most cases, the surviving spouse will get 50 percent and the remainder will be distributed equally among the children.
In practice, the family members will decide how best to distribute the assets among themselves. They may wish to give a larger share to a poorer member of the family. This can be decided by agreement among the members.
If there is a dispute, and the matter is brought to court, the distribution will be made according to the intestate law.
It is usually better to have a will. If you change your mind later, you can write a new will. The cost of a standard will is quite modest.
Wednesday, April 18, 2007
Insurance payout are tax-free
Hello Mr Tan
I had brought the NTUC Income FlexiCash policy last year. Is the payout subject to tax? In general, will payout of life insurance be subjected to tax?
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My reply:
All payout from life insurance policies, including flexi-cash, are NOT subject to tax.
I had brought the NTUC Income FlexiCash policy last year. Is the payout subject to tax? In general, will payout of life insurance be subjected to tax?
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My reply:
All payout from life insurance policies, including flexi-cash, are NOT subject to tax.
Advantages of taking a bus
I am now a regular commuter of the public bus.
Here are the advantages of taking a bus to your destination:
* I relax and let someone do the driving
* I am usually able to get a seat, eg during offpeak period
* It is economical, ie one fifth of the taxi fare
* I have the chance to exercise, i.e walk to the bus stop and to the destination
* I can think while waiting for the bus or on the journey
The only disadvantage is that it take more time. But, it is all right if I leave early and allow more time for the journey.
Here are the advantages of taking a bus to your destination:
* I relax and let someone do the driving
* I am usually able to get a seat, eg during offpeak period
* It is economical, ie one fifth of the taxi fare
* I have the chance to exercise, i.e walk to the bus stop and to the destination
* I can think while waiting for the bus or on the journey
The only disadvantage is that it take more time. But, it is all right if I leave early and allow more time for the journey.
More insurers offer term insurance policies
NTUC Income offered attractive term insurance rates under its i-Term policy.
Recently, I read that Prudential has also advertised its term insurance rates. I do not know if their rates are as attractive as NTUC Income.
I am glad that more life insurers are promoting term insurance. It will allow more people to have adequate life insurance coverage at a low cost.
They can invest their savings in an investment fund to get a better return. Read more in this FAQ
Recently, I read that Prudential has also advertised its term insurance rates. I do not know if their rates are as attractive as NTUC Income.
I am glad that more life insurers are promoting term insurance. It will allow more people to have adequate life insurance coverage at a low cost.
They can invest their savings in an investment fund to get a better return. Read more in this FAQ
Where to find part time work?
Dear Mr Tan
I like your suggestion for seniors to find part time work near the home. But where can we find the work? Please advice.
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My reply:
The Center for Seniors will launch its call center soon. You can call the hotline and give the following information:
* your name
* your postal district
* types of work that you are interested in
* your expected pay per hour of work
I have approached three several large organisations. They are willing to support this initiative and provide part time work for seniors. The initial number is about 300 part time jobs, but this can increase, if the pilot exercise is successful. The rate of pay is between $6 to $8 per hour.
More details will be announced within the next few weeks.
I like your suggestion for seniors to find part time work near the home. But where can we find the work? Please advice.
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My reply:
The Center for Seniors will launch its call center soon. You can call the hotline and give the following information:
* your name
* your postal district
* types of work that you are interested in
* your expected pay per hour of work
I have approached three several large organisations. They are willing to support this initiative and provide part time work for seniors. The initial number is about 300 part time jobs, but this can increase, if the pilot exercise is successful. The rate of pay is between $6 to $8 per hour.
More details will be announced within the next few weeks.
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