Avoid whole life policies

Many people are badly advised by insurance agents into buying whole life insurance. Being expensive (compared to term insurance), the consumer has inadequate insurance for their needs.

The agent says that "term insurance will expire after 20 years, and you will not be uninsured at that time".

Many people are unduly concerned about this point. It is largely irrelevant. Most people only need adequate life insurance to cover premature death when their children are young. An insurance period of 20 years is quite adequate to meet this need.

Beyond 20 years, they need to have sufficient savings for their retirement. As a whole life policy provide a poor return, it will not meet this purpose. Many people who invested most of their savings in whole life policies received a poor deal.

I fall into this category. Two of my whole life Living policies have not even reach the breakeven point after more than 10 years. Fortunately for me, they represent only a small part of my total savings.

The return on my two Living policies are far below what is due to me, if my insurance company had distributed bonuses fairly, based on the actual experience of the fund. As these are participating policies, there is an expectation that the insurance company has to act fairly, but they did not. The return on similar policies offered by other insurance companies are probably worse, as they have higher expenses.

It is best to avoid all types of life insurance policies, except for term insurance. Many insurance companies overcharge on their term insurance policies, to push consumers into buying whole life policies. You can compare the premium rates with the benchmark provided in this FAQ:

http://www.tankinlian.com/faq/benchmark.html

If you wait for a few more months, a new life insurance company will be offering term insurance at an attractive rate.

If you have the opportunity, you should join a group insurance scheme, such as a plan offered by SAF, SAFRA or your employer. It does not matter that the term insurance is on a yearly renewable basis.

Whole Life by Limited Premium

Hi Mr. Tan,
I understand that Buy term and invest the rest strategy and I believe this strategy is better, but would it be risky to buy all insurance on term insurance? Shouldn't one buy at least one small whole life insurance to hedge as well as to keep it for life. Term insurance do not cover for life, if so , it would be very expensive as well.

Should the term insurance lapse for any reasons, the person would be without any insurance coverage. Shouldnt one buy one limited whole life payment for WL, like what you did?

REPLY
Limited payment whole life has high expenses and does not give value for money. When the Term insurance expires, you will have sufficient savings (if you have invested the savings) and you do not need life insurance any more.

I bought whole life insurance many years ago, but they are not necessary for me now. I get a poor return on these policies. Some of them have still not reach the breakeven point after more than 10 years. Anyway, they represent only a small part of my total savings, so it does not matter to me.

Read this FAQ:
http://www.tankinlian.com/faq/savings.html

Taxi fare surcharges

Read this letter:
http://www.asiaone.com/Motoring/News/Story/A1Story20071120-37566.html

Read about taxi fares in other cities:
http://www.singaporepublictransport.blogspot.com/

A few weeks ago, Comfort taxi imposed a 30 cent diesel surchage due to higher prices. As fuel prices have dropped 20% during the past few weeks, perhaps they should withdraw the surcharge (which they promised to).

I did some research and found this statement from Comfort. It looks like the diesel surcharge will continue for quite a long time:

http://en.china.cn/content/d343963,7ba501,1912_6577.html

The trend is your friend

When you trade (or invest) in stocks or other market products, it is important to catch the right trend, so that you get a better price. Catching the right price is a skill that is difficult to acquire. You can practice with a simulation game, that is developed to be realistic and close to real life.

http://project.projects.tankinlian.com/trader/

Is this the right time to invest in stocks?

I think that this may be a good time to invest in stocks. The reasons are:

> The last few months of the year are usually good for stocks
> Oil and commodity prices are moderating
> The stock markets have fallen 30% during the past year

Will the global economy recover? Will there be more bad news? On balance, I think that the bad news have probably been discounted.

Taxi fares in other cities

I made a comparsion of taxi fares and service in a few cities:
www.singaporepublictransport.blogspot.com

More cars, so more ERP

Read about the views expressed in the Online Citizen:
http://theonlinecitizen.com/2008/08/more-cars-so-more-erps/#comment-17687

Read about public transport in:
www.singaporepublictransport.blogspot.com

Transfer of shares to family members

The Singapore Exchange allows a shareholder to transfer shares to a family member at a nominal fee of $10 per transfer per share. This arrangement applies only to a transfer to a family member only.

To transfer shares to any other person, the shareholder has to sell the shares through the exchange, and pay the normal fees (which are much higher).

20 year Term Insurance

I advice consumers to buy a 20 year Term Insurance (or 30 year Decreasing Term insurance).

Some people felt that they need whole life insurance. They must have been "sold" this idea by an insurance agent. Here is the reason why a 20 year Term Insurance is suitable for most people:

http://www.youtube.com/watch?v=sGDgYLCpnDo&feature=related

At present, Decreasing Term insurance is not available in the market. It will be available in 2009.

Here are some benchmark premium rates:

http://www.tankinlian.com/faq/benchmark.html

Joke: accurate but totally useless

A skydiver is blown off-course and lands in a tree in a remote area. After dangling from branches for an hour, he spots a hiker walking by. "Excuse me," yells the parachutist, "but could you tell me where I am?"

The hiker looks up and says, "Yes, you're twenty feet above the ground." "Thank you," replies the skydiver, "You must be an Singaporean."

"What makes you say that?" asked the hiker.

The skydiver answered, "Because what you just told me was 100% accurate, but totally worthless!"

Educational videos on Life Insurance

View these videos:

Whole Life vs Term
http://www.youtube.com/watch?v=yQZ1285SkgY&feature=related

Susie Orman – Life Insurance
http://www.youtube.com/watch?v=sGDgYLCpnDo&feature=related

Term vs Cash Value Life Insurance
http://www.youtube.com/watch?v=7zGRDIVKUh4