Sunday, June 27, 2010

Slur on our reputation

Singapore is getting a bad reputation at international circles.

I watch a CNBC program where a financial expert was being interviewed on the new financial regulation measures that are being introduced in the US Congress. He has a vested interested to continue the old practice as it allows his firm to get more business and make more money. He reply was that, if the new bill is passed, the US banks will move their operations overseas, for example, "Singapore". He mentioned only Singapore and did not mention Hong Kong or other financial centers.

This gives the impression that Singapore is ready to attract the international banks to continue their risky and shady business, that has caused the collapse of the global financial system.

The financial business that is being attracted to Singapore may create jobs for the bank employees and wealth managers. But it came at a heavy price for the local people. With the liberal environment, the banks have been selling risky structured products to many consumers, who have lost large sums of money.

I wish to ask our leaders. Is it worthwhile to develop the financial center in this way, i.e. the slur on our reputation and the loss suffered by ordinary folks?

Tan Kin Lian

Low cost insurance

This is an invitation to the insurance agents who read my blog.

If you know of any insurance company that offers individual term, critical illness or personal accident cover that is close to the benchmark for the SAF group insurance scheme (and I allow a margin of 30% higher), you can send details to me for posting in my blog. I will also include your contact e-mail and mobile phone, and recommend the consumers to approach you.

UPDATE
Two persons have responded to my request. I need a table to be produced showing the premium rate for certain ages (every 5 years) and durations (every 5 years up to 25 years). If I find the rate to be within 30% of the SAF group rates, I will post the rates and the contact of the financial adviser, and recommend the consumders to approach them.

Please quote a sum assured of $300,000 for term insurance and $100,000 for critical illness cover and the insurance company that offers these rates.

Quiz 6-2

Try this Quiz. A prize will be given to the winner, selected by a draw. Closing date 3 July 2010.

High cost of medical care

Some insurance agents will tell you stories about people they know, who have to incur high cost of medical care for critical illness. They did not tell you about the frequency of these expensive cases, and they tend to exaggerate the amount that is involved. I know of many people who are treated for early stage cancer and have recovered, and they do not have to spend too much on medical bills.

If you look at the number of these high bill cases, you will find that they are much less frequent than deaths through traffic and other accidents.

It is more important to have adequate life insurance, for 5 to 10 years of earnings, that can be purchased through affordable term insurance. You can insure under the group insurance offered to SAF, SAFRA, public officers and trade union members. The cost of insurance is low, as shown in this benchmark.

For insurance against cost of medical care, you are already covered by your employer. You only need to take up Basic Medishield (as you may need it if you are no longer working).

If you wish to buy critical illness cover, you can opt for the SAF critical illness cover for $100,000 at a premium of only $10 a month (available through SAF). This insurance is valid up to age 45. You can discontinue it after 45 (to avoid paying 4 times of the premium). By that time, you should have sufficient savings.

If you are not able to get this cover, it is all right to go without it, as the bill is covered by your employer or the Basic Medishield.

Do not waste your money on expensive medical insurance or private Shield plan or critical illness cover, especially the plan that is recommended by most insurance agents. The money can be invested to earn an accumulated sum for your retirement or other future needs.

For your savings, it is best to invest in a low cost investment fund. This is explained in Practical Guide on Financial Planning.  Youc an also attend the monthly talk by FISCA on financial planning.

Tan Kin Lian