Dear Mr. Tan,
I read your post,asking for readers to post bank interest rate.
Below is a website updated now and then about interest rate at different bank:
http://singapore-savings-account-rates.blogspot.com/
Yours sincerely,
Wei En
Wednesday, March 10, 2010
Financial crisis in Ireland and USA
This article shows the key causes of the financial crisis in Ireland and USA. Read it, I get the feeling that the same factors apply to Singapore.
Decreasing Term Assurance
It is difficult to buy Decreasing Term Assurance in Singapore, as many life insurance companies are not keen to offer this product. I hope that this situation will change and some companies may sieze this market opportunity.
Let me explain the concept of Decreasing Term Assurance. Suppose you earn $4,000 a month and you need to set aside $2,000 for the upkeep of the family. You should choose a Term of 25 years, so that your youngest child will be independent at the end of that period. You will need a sum assured of $2,000 X 12 X 25 = $600,000. As each year passes, you need a lower cover, as the period of dependency reduces by one year. Your sum assured can reduce by $24,000 a year.
I assume that you have bought insurance to cover the mortgage of your home, so the home will be fully paid in the event of premature death. The $2,000 a month is adequate to cover the needs of the family.
If you buy insurance for $600,000 at age 30 for 25 years, and you wish to sum assured to remain level, you have to pay an annual premium (estimated) of $1,000. If you buy a Decreasing Term, the annual premium will reduce to $400 (or therabouts). By passing less on the premium, you can have more savings in a low cost fund for your future retirement.
Tan Kin Lian
Let me explain the concept of Decreasing Term Assurance. Suppose you earn $4,000 a month and you need to set aside $2,000 for the upkeep of the family. You should choose a Term of 25 years, so that your youngest child will be independent at the end of that period. You will need a sum assured of $2,000 X 12 X 25 = $600,000. As each year passes, you need a lower cover, as the period of dependency reduces by one year. Your sum assured can reduce by $24,000 a year.
I assume that you have bought insurance to cover the mortgage of your home, so the home will be fully paid in the event of premature death. The $2,000 a month is adequate to cover the needs of the family.
If you buy insurance for $600,000 at age 30 for 25 years, and you wish to sum assured to remain level, you have to pay an annual premium (estimated) of $1,000. If you buy a Decreasing Term, the annual premium will reduce to $400 (or therabouts). By passing less on the premium, you can have more savings in a low cost fund for your future retirement.
Tan Kin Lian
Benefit Illustration of new plans
Dear all,
Below are the benefit illustration and policy summary for the 4 newer products since 2008 for ntuc income. They are all based on 30 yr-old male customer. Do note that all figures are projected and "hope for the best", unless stated unequivocally as Guaranteed.
1. Vivolife $100K sum assured & pay for 20yrs
2. Revosave $50K sum assured & pay for 25yrs
3. Sail $50K single premium & tenor of 30yrs
4. Vivolink regular ILP $500/mth
Consultant
Below are the benefit illustration and policy summary for the 4 newer products since 2008 for ntuc income. They are all based on 30 yr-old male customer. Do note that all figures are projected and "hope for the best", unless stated unequivocally as Guaranteed.
1. Vivolife $100K sum assured & pay for 20yrs
2. Revosave $50K sum assured & pay for 25yrs
3. Sail $50K single premium & tenor of 30yrs
4. Vivolink regular ILP $500/mth
Consultant
Disability income insurance
A reader sent to me a brochure about a disability income insurance called PaySecure. It shows an example for a person aged 30 insuring for $3,000 a month payable on disability (excluding the first 90 day) until age 55. The monthly premium is about 1% of the insured sum, i.e. about $30. The premium rate is not guaranteed and may be adjusted based on future experience.
The features of this plan looks quite satisfactory, but it is better for the consumer to get a benefit illustration of this plan specific to your age and personal circumstances. You can send the benefit illustration to me.
The consumer should also ask the insurance company to provide the loss ratio (i.e. the ratio of claims paid to the premiums received). If the loss ratio is 60% to 70%, the insurance is fairly priced. This method is explained in my book, Practical Guide on Financial Planning. If the insurance company refuses to provide this information, you should not buy the product as you may be unfairly charged.
The features of this plan looks quite satisfactory, but it is better for the consumer to get a benefit illustration of this plan specific to your age and personal circumstances. You can send the benefit illustration to me.
The consumer should also ask the insurance company to provide the loss ratio (i.e. the ratio of claims paid to the premiums received). If the loss ratio is 60% to 70%, the insurance is fairly priced. This method is explained in my book, Practical Guide on Financial Planning. If the insurance company refuses to provide this information, you should not buy the product as you may be unfairly charged.
Interest rate on bank deposits
Can you share information on the interest rate that you earn on savings account, save-as-you-earn account and fixed deposit of the banks. Show the following:
1. type of account
2. duration (for fixed deposit)
3. bank
4. amount invested
5. interest rate
6. any special condition, e.g. special terms for preferred customer
1. type of account
2. duration (for fixed deposit)
3. bank
4. amount invested
5. interest rate
6. any special condition, e.g. special terms for preferred customer
Yield on life insurance policies
A consumer sent me the benefit illustration for three plans. I have calculated the yield to be as follows:
If you are investing for 10 years or longer, you should aim to get at least 4% per annum.
Tan Kin Lian
Plan | Term | Yield p.a. | Reduction in yield |
Growth - single premuim | 5 yrs | 2.94% | |
Growth Link (AIM) - single premium | 30 yrs | 3.52% | 1.73% |
Revosave - monthly premium | 15 yrs | 2.82% | 2.43% |
The return on the growth plan is fairly satisfactory. The return for the other two plans are not attractive, considering the duration of investment. The are based on a projected yield of 5.25%. If the actual yield is lower, the yield on the policy will be lower than illustrated.
If you are investing for 10 years or longer, you should aim to get at least 4% per annum.
Tan Kin Lian
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