Dear Mr. Tan,
I came across your blog and decided to ask for advise. I am married and have 4 children. I live in a HDB flat.
Recently i chalked up about $30,000 of credit cards debt. I decided to respond to an advertisement that offers to consoidate the debt with the banks. I believe that I can pay my debt, but I have to change my spending habits. They charge a fee. Is this a good solution? I did find out there is one local agency 'CCS' that deal with this situation. Can they help too?
REPLY
You can approach Credit Counselling Singapore.
They will be able to help you.
They give free advice.
Here is their website:
http://www.ccs.org.sg/
Tuesday, September 2, 2008
Joke: I am a crook
A drunk wanders into the lounge of a hotel where an insurance convention is being held, intent on causing trouble. He yells, "I think all insurance agents are crooks, and if anyone doesn't like it, come up and do something about it.
"Immediately, a man runs up to the drunk and says, "You take that back!
"The drunk snears and replies, "Why, are you an agent?"
"No," the man replies, "I'm a crook."
"Immediately, a man runs up to the drunk and says, "You take that back!
"The drunk snears and replies, "Why, are you an agent?"
"No," the man replies, "I'm a crook."
Mis-information of consumers
A policyholder wrote to me as follows: "I sign on a ILP in 2005. I paid $100 every month through Giro. The agent told me I can only withdraw after six years. So far I had invested $36,000 but the return is $27000."
This statement shows the poor state of affairs in Singapore. After paying the premium for 3 years, the policyhholder is still not aware about his contractual rights under this policy, namely:
> He can withdraw his ILP at any time (and not after 6 years)
> The high charges deducted from his premuims represents a certain proportion of his loss
> He does not know that he can approach his insurance company to get an explanation
The Benefit Illustration given at the point of sale should provide a clear explanation to the policyholder. But, most of the Benefit Illustrations are very confusing.
This statement shows the poor state of affairs in Singapore. After paying the premium for 3 years, the policyhholder is still not aware about his contractual rights under this policy, namely:
> He can withdraw his ILP at any time (and not after 6 years)
> The high charges deducted from his premuims represents a certain proportion of his loss
> He does not know that he can approach his insurance company to get an explanation
The Benefit Illustration given at the point of sale should provide a clear explanation to the policyholder. But, most of the Benefit Illustrations are very confusing.
Twisting of ILP to Revosave
Dear Mr Tan,
I sign on a ILP in 2005. I paid $100 every month through Giro. The agent told me I can only withdraw after six years. So far I had invested $36,000 but the return is $27000.
Today another agent explained to me that this ILP will not make any gain for the next three years. Since I have a living policy which muture at 65, he reconmented a RevoSave Policy, which can earn bonus and insure for permenent disablity and death.
I am 58 year old and want to save for my retirement. I found that I rather pay the similar amount to the RevoSave. He told me I can withraw the ILP anytime, it is true? Shall I terminate the ILP and take the RevoSave?
REPLY
The Revosave is not suitable to save for retirement, especially for someone at your age. It gives a poor return. You should continue with your existing ILP.
The new agent is trying to "twist" your policy, but getting you to terminate an existing policy and take up a new policy (i.e. Revosave) so that he can earn a high commission on the new policy. You should ask the agent to explain how much commission he can earn from the new policy.
Here is an explanation about twisting:
http://tankinlian.blogspot.com/2008/08/understanding-twisting-and-churning.html
You should lodge a compliant with the insurance company or Monetary Authority of Singapore about the unethical advice given by the agent.
I sign on a ILP in 2005. I paid $100 every month through Giro. The agent told me I can only withdraw after six years. So far I had invested $36,000 but the return is $27000.
Today another agent explained to me that this ILP will not make any gain for the next three years. Since I have a living policy which muture at 65, he reconmented a RevoSave Policy, which can earn bonus and insure for permenent disablity and death.
I am 58 year old and want to save for my retirement. I found that I rather pay the similar amount to the RevoSave. He told me I can withraw the ILP anytime, it is true? Shall I terminate the ILP and take the RevoSave?
REPLY
The Revosave is not suitable to save for retirement, especially for someone at your age. It gives a poor return. You should continue with your existing ILP.
The new agent is trying to "twist" your policy, but getting you to terminate an existing policy and take up a new policy (i.e. Revosave) so that he can earn a high commission on the new policy. You should ask the agent to explain how much commission he can earn from the new policy.
Here is an explanation about twisting:
http://tankinlian.blogspot.com/2008/08/understanding-twisting-and-churning.html
You should lodge a compliant with the insurance company or Monetary Authority of Singapore about the unethical advice given by the agent.
Premium for the Shield rider is too high
I usually advice people to buy the Shield plan, without the rider to cover the Deductible. If you are hospitalised, you can pay the Deductible from your Medisave. This does not need to be insured.
Here is the reason:
> Assume that the chance of being hospitalised for your age band is 10%
> The Deductible (to cover B1 class) is $2,000.
> The cost of claims is $200 (i.e. 10% X $2,000)
> The premium that you have to pay is about $300 (usually 50% more than the cost of claims).
> $100 each year goes towards the expenses, including commission to the agent.
If you insure for 10 years, you have to pay a total premium of $3,000 and are likely to make 1 claim of $2,000. The additional $1,000 goes to pay expenses.
Here is the reason:
> Assume that the chance of being hospitalised for your age band is 10%
> The Deductible (to cover B1 class) is $2,000.
> The cost of claims is $200 (i.e. 10% X $2,000)
> The premium that you have to pay is about $300 (usually 50% more than the cost of claims).
> $100 each year goes towards the expenses, including commission to the agent.
If you insure for 10 years, you have to pay a total premium of $3,000 and are likely to make 1 claim of $2,000. The additional $1,000 goes to pay expenses.
Structured products that are fair to consumers
Financial institutions have been designing structured products that are unsuitable for consumers. They are marketed with misleading advertisements and convassers.
Here are my suggestions on how to ensure that these structured products are designed to be fair to consumers:
http://www.tankinlian.com/articles/structuredi.html
Here are my suggestions on how to ensure that these structured products are designed to be fair to consumers:
http://www.tankinlian.com/articles/structuredi.html
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