Ask for relevant information

Dear Mr. Tan

I read your blog today on the "Bonus that reflect the actual experience" and "A poor yield on single premium endowment expired in 2 month time" with a projected return of 3.06%.

Will it be a scenario that the 10 year Growth plan compare to a 5 year plan bought in the same period - 10 year may only get a little bit higher return upon maturity since smoothing start in April this year.Let us take two policies as an example.

5 year plan for $50K from 01 May 2003 and matured on 30 April 2008 for $58,100-00 @ 3.06% against a 10 year plan buying at the same year.
(details removed)

REPLY

I suggest that you write to ask NTUC Income on the following:

a) What is the cash value of your policy now, if you terminate it

b) What is the yield on the cash value

c) What is the projected maturity value of the policy?

d) What is the yield at that time.

e) What is the yield earned by the Life Insurance fund during the years that your policy has been in force, and the projected yield up to the maturity date.

Perhaps you will be able to get a better idea when Income gives the above information to you.

Bonus that reflect the actual experience

Siewkhim asked if NTUC Income has responded to my question about adjusting the bonus to reflect the "actual experience".

I had sent a question regarding the maturity value of the 5-year Growth policy belonging to my wife that will be maturing in August. I pointed out that the maturity value is far short of and does not reflect the "actual experience" during the past five years. I have received a reply that my issue will be attended to "officially". I have not received any further communication after two weeks.

This is the style adopted in most organisations of Singapore. Keep the customer waiting. Do not engage in any conversation. When you are finally ready, give an official reply and defend it strongly. It reflects a disrepect for the rights of the customer.

As this is a complicated matter, I will wait for another one or two weeks, before I take it up at a higher level.

I also intend to raise the issue of the bonuses and cash values of other existing policies that are far short of the "actual experience". A few of my personal policies fall in this category.

Outsourcing of work

Some government agencies identify their non-core activities and engaged in outsourcing the work. Some examples are cleaning of premises and answering of telephone calls.

Most people are familiar with the tendering approach, as follows:

> specify the standard of work
> award the work to the contractor that gives the lowest cost.

The consequence is that the contractor will find the cheapest source of labour, including foreign workers. Eventually, the standard of service deteriorates. Wages continue to be depressed.

There is another way of approaching this outsourcing of non-core work, as follows:

> specify the contract price, including the wages to be paid to the workers
> award the work to the contractor that is able to give the best standard of service.

If a specified wage is given, the focus is to select the best candidates for the job. This will ensure better standard and quality of service. The contractor's task is to ensure that the human and other resources are organised efficiently to meet the rapid changes in the business environment.

I hope that more attention can be paid to this new method of outsourcing, which is based on quality of service, rather than reducing cost.

Saving regular to buy a Life Annuity

Dear Mr. Tan,
From what i know most insurance company annunity plan premium are lump sum. Do you know any company (beside Z) that premium can be paid monthly till age 65.

REPLY
In my view, it is better to invest in a low cost investment fund to get a good return on your savings until your retirement age (which can be at, before or after age 65 ).

You can take the savings to buy a life annuity (by paying a lump sum premium) at that time. This gives you the greatest flexibility and a better yield.

Read these FAQs:
http://www.tankinlian.com/faq/savings.html
http://www.tankinlian.com/faq/life.html

Switching to a new rider for Shield plan

Dear Mr. Tan,
I just received a notice from X advising existing policy holders of the Plus Rider to switch to the Assist Rider. The rationale being that it will assist policyholders to save more in the long run. Medical cost according to their notice has increased as much as 30%. The difference between the Plus Rider and the Assist Rider is that the Plus Rider ensures that the patient does not have to co-pay whereas the Assist Rider would require the patient to pay up to $2000 or 10% of whatever is claimable. The Plus Rider will no longer be available to new policy holders.

What is your view? Would you switch to this? Do I have to take a healthcheck in order to renew my policy or are existing applicants automatically ensured coverage?

REPLY
You have the choice of discontinuing the rider or switching to the new rider. I hope that this FAQ can help you to make your decision:
http://www.tankinlian.com/faq/shield.html

You are not required to do a healtheck to switch to the new rider.