Hi Mr. Tan,
In view of the market volatility, I have been advised by my financial adviser to switch to commodity related fund (Pru Global Basics ). I invest in a wrap account and am entitled to free switching. I am not sure if i have made the right decision because the value of this fund keep dropping. I hope you could enlighten me.
REPLY
I am not able to advice on selecting the right market sector at any point of time. I normally advise people to invest in a well diversified fund comprising of all market sectors and to invest for the long term.
Read my FAQ at www.tankinlian.com/faq "Investing your savings".
Friday, July 25, 2008
Improve public transport in Singapore
Read the suggestions here and give your views:
http://theonlinecitizen.com/2008/07/an-express-alternative/
http://singaporepublictransport.blogspot.com/
http://theonlinecitizen.com/2008/07/an-express-alternative/
http://singaporepublictransport.blogspot.com/
Did you buy a high cost ILP?
A few months ago, a university student showed me a benefit illustration for an investment linked policy that was being proposed to him. He was still studying and had no source of income. His mother wanted to buy the policy for him. He asked my advice.
The benefit illustration contained 24 pages of details. It is incomprehensible to most people, unless it is "explained" by the adviser. The student was clearly confused.
Here are the key figures. The monthly premium is $200 (which would represent 10% of the income of a graduate who started to work).
At the end of 42 years, when he reached age 65, the total premiums paid would have been $50,400 and the non-guaranteed surrender value would have been $53,900 (if the life fund earned 5% p.a.) or $185,900 (if the life fund earned 9% p.a.). The next column showed the effect of deduction to be $341,915.
What is this effect of deduction, and why is this figure so big?
Hidden on one of the 24 pages are the following explanation:
The deduction relate to all the charges taken from the policy. These include distribution costs, expenses, mortality and morbidity costs, surrender penalty, expected transfers to shareholders and expected tax payments. The figures illustrated relate to the effect of deductions based on the projected investment rate of return of 9% p.a.
Wow! This means that if the Life Fund was able to earn 9% p.a., the insurance company would take away $341,915 and leave the policyholder with a cash value at 65 of only $185,900. The policyholder would get only 35% of the total (which includes the savings). The insurance company and the adviser would get most of the remainder.
If the Life Fund earned only 5% p.a. , the insurance company would have taken away nearly all of the investment return and give back only the savings (in deflated dollars) to the the policyholder.
How many people have bought this type of policy at these astronomical charges? Maybe 1 million Singaporeans? How many each year? Maybe, 100,000 people?
Are you one of these people? Check your benefit illustration. Ask your insurance adviser (who was supposed to take care of your interest and explain this fact to you at the time of sale). Ask your insurance company. If you feel that you have been shortchanged, and was not properly advised at the time of the sale, you should lodge a complaint with the regulator (i.e. MAS).
I hope that the regulator will put a stop to these type of high and excessive charges, which is unfair to unsuspecting consumers. The adviser is likely to avoid mentioning this high charges to the consumer.
The benefit illustration contained 24 pages of details. It is incomprehensible to most people, unless it is "explained" by the adviser. The student was clearly confused.
Here are the key figures. The monthly premium is $200 (which would represent 10% of the income of a graduate who started to work).
At the end of 42 years, when he reached age 65, the total premiums paid would have been $50,400 and the non-guaranteed surrender value would have been $53,900 (if the life fund earned 5% p.a.) or $185,900 (if the life fund earned 9% p.a.). The next column showed the effect of deduction to be $341,915.
What is this effect of deduction, and why is this figure so big?
Hidden on one of the 24 pages are the following explanation:
The deduction relate to all the charges taken from the policy. These include distribution costs, expenses, mortality and morbidity costs, surrender penalty, expected transfers to shareholders and expected tax payments. The figures illustrated relate to the effect of deductions based on the projected investment rate of return of 9% p.a.
Wow! This means that if the Life Fund was able to earn 9% p.a., the insurance company would take away $341,915 and leave the policyholder with a cash value at 65 of only $185,900. The policyholder would get only 35% of the total (which includes the savings). The insurance company and the adviser would get most of the remainder.
If the Life Fund earned only 5% p.a. , the insurance company would have taken away nearly all of the investment return and give back only the savings (in deflated dollars) to the the policyholder.
How many people have bought this type of policy at these astronomical charges? Maybe 1 million Singaporeans? How many each year? Maybe, 100,000 people?
Are you one of these people? Check your benefit illustration. Ask your insurance adviser (who was supposed to take care of your interest and explain this fact to you at the time of sale). Ask your insurance company. If you feel that you have been shortchanged, and was not properly advised at the time of the sale, you should lodge a complaint with the regulator (i.e. MAS).
I hope that the regulator will put a stop to these type of high and excessive charges, which is unfair to unsuspecting consumers. The adviser is likely to avoid mentioning this high charges to the consumer.
Joke: A lawyer sleep in the barn
A Jew, a Hindu, and a lawyer were traveling from Chicago to Los Angeles when their car broke down late one night in Kansas. They walked to the nearest farm house and explained their situation to the farmer who answered the door.
"Ya'll be welcome to spend the night here if you want", the farmer said. "The only problem is I only have room for two. One of you will have to sleep in the barn."
"I will," exclaimed the Jew, and with that the men went to retire. A short time later came a knock at the door. It was the Jew.
"I'm sorry", the Jew said, "but I can't sleep in the barn. There's a pig in there, and my religion forbids me to sleep in the same room as a pig."
"Then I will go sleep in the barn" exclaimed the Hindu, and once more the men went to retire. Soon there came another knock at the door. It was the Hindu.
"I am very sorry", the Hindu said, "but I cannot sleep in the barn either. There is a cow in there, and my religion forbids me to sleep in the same room as a cow."
"Oh, for gosh sakes!", the lawyer cried. I'll go sleep in the damn barn!" and once again the men went to retire.
A few minutes later there came yet another knock at the door. It was the cow and the pig...
Raymond T
"Ya'll be welcome to spend the night here if you want", the farmer said. "The only problem is I only have room for two. One of you will have to sleep in the barn."
"I will," exclaimed the Jew, and with that the men went to retire. A short time later came a knock at the door. It was the Jew.
"I'm sorry", the Jew said, "but I can't sleep in the barn. There's a pig in there, and my religion forbids me to sleep in the same room as a pig."
"Then I will go sleep in the barn" exclaimed the Hindu, and once more the men went to retire. Soon there came another knock at the door. It was the Hindu.
"I am very sorry", the Hindu said, "but I cannot sleep in the barn either. There is a cow in there, and my religion forbids me to sleep in the same room as a cow."
"Oh, for gosh sakes!", the lawyer cried. I'll go sleep in the damn barn!" and once again the men went to retire.
A few minutes later there came yet another knock at the door. It was the cow and the pig...
Raymond T
Low return for 10 years
Dear Mr. Tan
I bought a Pru-link Assurance Account policy with sum assured of $120,000, crisis cover (critical illness) of $60,000, and a disability provider of just $6,000. I pay a yearly premium $3,800.
The policy started in Jan 1999 and the current surrender value is just $20,170/-
I would like to know what I should do with this policy since it is not excatly making good money. The surrender policy is much lesser than the total premiums paid to date which the policy is coming close to its 10th year.
REPLY
You can ask the insurance company to give you a projection for the next 5 years, say up to the 15th year, based on 5% and 7% gross investment yield, and deducting the charges. You may get a better idea about whether to continue or stop the policy.
I bought a Pru-link Assurance Account policy with sum assured of $120,000, crisis cover (critical illness) of $60,000, and a disability provider of just $6,000. I pay a yearly premium $3,800.
The policy started in Jan 1999 and the current surrender value is just $20,170/-
I would like to know what I should do with this policy since it is not excatly making good money. The surrender policy is much lesser than the total premiums paid to date which the policy is coming close to its 10th year.
REPLY
You can ask the insurance company to give you a projection for the next 5 years, say up to the 15th year, based on 5% and 7% gross investment yield, and deducting the charges. You may get a better idea about whether to continue or stop the policy.
4 months to settle a claim
Dear Income
I am delighted to receive the claims discharge voucher and cheque. I am extremely thankful for my resolved dispute, but, regrettedly my problem was only solved after I see the MP and approached Mr Tan Kin Lian. Why can't X solve my problem 4 months ago in a friendly manner? I want to be a kind and friendly person, why must he force me to be a typical complainingly Singaporean?
In April 2008, after calling the hotline, X got back to me and said confidently "I have checked the claims. EVERYTHING IS CORRECT". He probably thought I am a fool and he can bluff me by telling me that. I then sent him all the proofs of my claim dispute, but he played pattern to me for the past 4 months by telling me:
"Still processing"
"Waiting for hospital to resubmit claims"
"still processing"
"Finalising"
"still doing"
"Waiting for officer in charge to finalise claims" (i said "huh? i thought u r the officer in charge?")
Recently X told me that the officer in charge is Y, another person. I got her contact and called her, but over the phone she did not know my case. Hence the past 4months basically nothing was done, except X's smoking words. I am very sure X "played pingpong" and push the whole matter to another junior officer after failing to smoke me and shake me away for 4months.
Last week Y promised that she will settle by this week. Indeed she has delivered her promise - I have received the discharge voucher and cheque.
I am sure Y put in lots of hard work to speed up my claims these past week. I sincerely thank her hardwork for expediting my case and solve it up. Now I neither need to go to independent parties nor publicise my dispute.
Y was friendly to hear my problems and ackowledge receipt of my documents sent to her. Unlike X who never email me at all ever since the start of this whole problem. Absolutely nothing!!! Does he knows how to use an email?
But now I am wondering does X ever exist at all or am I dreaming?
With sincere thanks for resolving dispute.
P
I am delighted to receive the claims discharge voucher and cheque. I am extremely thankful for my resolved dispute, but, regrettedly my problem was only solved after I see the MP and approached Mr Tan Kin Lian. Why can't X solve my problem 4 months ago in a friendly manner? I want to be a kind and friendly person, why must he force me to be a typical complainingly Singaporean?
In April 2008, after calling the hotline, X got back to me and said confidently "I have checked the claims. EVERYTHING IS CORRECT". He probably thought I am a fool and he can bluff me by telling me that. I then sent him all the proofs of my claim dispute, but he played pattern to me for the past 4 months by telling me:
"Still processing"
"Waiting for hospital to resubmit claims"
"still processing"
"Finalising"
"still doing"
"Waiting for officer in charge to finalise claims" (i said "huh? i thought u r the officer in charge?")
Recently X told me that the officer in charge is Y, another person. I got her contact and called her, but over the phone she did not know my case. Hence the past 4months basically nothing was done, except X's smoking words. I am very sure X "played pingpong" and push the whole matter to another junior officer after failing to smoke me and shake me away for 4months.
Last week Y promised that she will settle by this week. Indeed she has delivered her promise - I have received the discharge voucher and cheque.
I am sure Y put in lots of hard work to speed up my claims these past week. I sincerely thank her hardwork for expediting my case and solve it up. Now I neither need to go to independent parties nor publicise my dispute.
Y was friendly to hear my problems and ackowledge receipt of my documents sent to her. Unlike X who never email me at all ever since the start of this whole problem. Absolutely nothing!!! Does he knows how to use an email?
But now I am wondering does X ever exist at all or am I dreaming?
With sincere thanks for resolving dispute.
P
Become sales oriented and may tell lies
1. Why is NTUC offering this Capital Plus? A non-NTUC agent said that NTUC is trying to raise funds. I am afraid they will drag for a few months and the interest will become lower than 2%
Reply: I do not know the answer.
2. Is the Growth policy a safe product ? I read NTUC has been over declaring the bonus in the past years .
Reply: It should be quite safe.
3. I had a NTUC life policy for 5 years. The surrender value stated in BI is $2200, but when I surrendered it, it was $1900. I surrender the policy to change to a limited pay whole life like Vivolife.
Reply: It is better to keep the life policy. Do not surrender it to buy another life policy, as you will be incurring the upfront cost again.
4. I am afraid the same thing may happen to the Growth policy, i.e. overpromise, under deliver. I think without you, Ntuc income has changed to be more sales oriented and have more tendency to tell lies. Don't know whether they really want to help people?
Reply: I do not know the answer.
2. Is the Growth policy a safe product ? I read NTUC has been over declaring the bonus in the past years .
Reply: It should be quite safe.
3. I had a NTUC life policy for 5 years. The surrender value stated in BI is $2200, but when I surrendered it, it was $1900. I surrender the policy to change to a limited pay whole life like Vivolife.
Reply: It is better to keep the life policy. Do not surrender it to buy another life policy, as you will be incurring the upfront cost again.
4. I am afraid the same thing may happen to the Growth policy, i.e. overpromise, under deliver. I think without you, Ntuc income has changed to be more sales oriented and have more tendency to tell lies. Don't know whether they really want to help people?
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