I wish to downgrade from a private Shield to Medishield. I have a lot of trouble with this request.
My enquiry to the insurance company was not properly answered. I was given a form to cancel my private Shield, but there was no mention about the downgrade to Medishield. I have to ask again for them to answer this question.
I search the CPF website. They said that the member can downgrade from a private Shield to Medishield at any time, but did not indicate how this can be done. I have to write to them for instructions - as I am not able to find the instructions in the website.
I prefer to be self-insured and pay out-of-pocket for my hospital charges. However, if the medical charges are very expensive, I can opt to be treated in a subsidised ward.
http://www.tankinlian.com/articles/health.html
Monday, December 15, 2008
Fair charges on life insurance policy
If a policyholder save $500 a month for 20 years and earn 5% per annum, the gross gain for the period will be $76,000. However, the total deduction to cover the various charges is likely to take away about 45% of this gain. This will leave a net gain of about $41,000 only. This reduces the yield to 2.8%. The reduction in yield is 2.2% (which is rather high).
A fair deduction should be about 25% of the gross gain. This will give a better return to the policyholder, about 4.1%. The reduction in yield is 0.9% (which is quite fair). This reduction is to cover the cost of life insurance, expenses and profit margin.
During the time that I headed a life insurance company, I was able to give a better return to the policyholder by keeping the expenses low and giving a larger share of the profit to the policyholders. They were able to get a better return. The reduction of yield for an endowment policy is about 1%.
Here is a rule of thumb, if you are buying a life insurance policy:
> look at the assumed yield
> look at the net yield, after deducing the charges
> calculate the reduction in yield
> if the reduction is 1% for an endowment policy or 1.5% for a whole life policy, the yield is fair.
> if the reduction in yield exceed these benchmarks, the charges are probably too high.
You can ask the insurance agents to point out these figures that should be shown in the benefit illustration for the policy.
A fair deduction should be about 25% of the gross gain. This will give a better return to the policyholder, about 4.1%. The reduction in yield is 0.9% (which is quite fair). This reduction is to cover the cost of life insurance, expenses and profit margin.
During the time that I headed a life insurance company, I was able to give a better return to the policyholder by keeping the expenses low and giving a larger share of the profit to the policyholders. They were able to get a better return. The reduction of yield for an endowment policy is about 1%.
Here is a rule of thumb, if you are buying a life insurance policy:
> look at the assumed yield
> look at the net yield, after deducing the charges
> calculate the reduction in yield
> if the reduction is 1% for an endowment policy or 1.5% for a whole life policy, the yield is fair.
> if the reduction in yield exceed these benchmarks, the charges are probably too high.
You can ask the insurance agents to point out these figures that should be shown in the benefit illustration for the policy.
Fair compensation from insurance companies
Dear Kin Lian,
Here are two articles from Bloomberg News. They illustrated the tactic employed by insurers in U.S, as taught by Mckinsey.
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=auNrNZBzb1NE
http://www.bloomberg.com/apps/news?pid=20601170&refer=home&sid=aIOpZROwhvNI
One paragraph said: "State Farm changed its approach to settling claims after
McKinsey & Co., a New York-based consulting firm, told the insurer it could increase profits by paying out less in auto accident claims and home disasters, according to evidence presented in civil court cases."
Another paragraph said: " When a policyholder files a claim, first make a low offer,
McKinsey advised Allstate. If a client accepts the low amount, Allstate should treat the person with good hands, McKinsey said. If the customer protests or hires a lawyer, Allstate should fight back."
I hope local insurers won't adopt the same approach for more profit. Please take good care of yourself.
Dennis
Here are two articles from Bloomberg News. They illustrated the tactic employed by insurers in U.S, as taught by Mckinsey.
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=auNrNZBzb1NE
http://www.bloomberg.com/apps/news?pid=20601170&refer=home&sid=aIOpZROwhvNI
One paragraph said: "State Farm changed its approach to settling claims after
McKinsey & Co., a New York-based consulting firm, told the insurer it could increase profits by paying out less in auto accident claims and home disasters, according to evidence presented in civil court cases."
Another paragraph said: " When a policyholder files a claim, first make a low offer,
McKinsey advised Allstate. If a client accepts the low amount, Allstate should treat the person with good hands, McKinsey said. If the customer protests or hires a lawyer, Allstate should fight back."
I hope local insurers won't adopt the same approach for more profit. Please take good care of yourself.
Dennis
REPLY
I will explore giving the proposed Financial Services Consumer Association (FISCA) a role to help members get fair compensation for their insurance claims. This will make it more valuable for members to join FISCA. This service will be available for existing members only, in respect of a claim that arises after they have joined FISCA.
Search for a private property
I started to search for a private property, as the property prices must have corrected. I went to StreetSine and found it to be very useful. Here is the link:
http://www.streetsine.com
I looked for new condominium projects in districts 1, 2 and 3 and saved them in MyOrganiser. I looked at each project, to see the price trends and the properties available for sale. Several of the projects have shown a 20% reduction in price in recent months. The price may fall another 10% to 20% more, but it is time to understand the market.
There is a useful SQI index which gives points for the amenities in the nearby areas. Most importantly, I could see the map and the distance to the MRT station.
I was able to view "List Nearby Properties" to see the properties that are available for sale. I was able to send a SMS to the advertiser, which is usually a property agent. This is a convenient way to search for a property.
http://www.streetsine.com
I looked for new condominium projects in districts 1, 2 and 3 and saved them in MyOrganiser. I looked at each project, to see the price trends and the properties available for sale. Several of the projects have shown a 20% reduction in price in recent months. The price may fall another 10% to 20% more, but it is time to understand the market.
There is a useful SQI index which gives points for the amenities in the nearby areas. Most importantly, I could see the map and the distance to the MRT station.
I was able to view "List Nearby Properties" to see the properties that are available for sale. I was able to send a SMS to the advertiser, which is usually a property agent. This is a convenient way to search for a property.
Offer of voluntary assistance
Mr. Paul Smith wishes to offer voluntary assistance to anyone who needs help in the following areas:
> writing complaints to banks
> writing complaints to FIDREC
> give moral support
> attend interview with bank or FIDREC
If you need his help, you can e-mail him at stopdisc@hotmail.com
BACKGROUND
Mr. Smith's wife invested in a credit linked note. She had a difficult time to making the complaint to the bank. Mr. Smith helped her during the process. He finds that the bank did not treat the customer fairly. He now wishes to offer his voluntary assistance to other customers who faced similar difficulty.
Mr. Smith is willing to help the investor in the interview with the bank or FIDREC, but he needs the investor to sign a mandate for him to attend the interview.
> writing complaints to banks
> writing complaints to FIDREC
> give moral support
> attend interview with bank or FIDREC
If you need his help, you can e-mail him at stopdisc@hotmail.com
BACKGROUND
Mr. Smith's wife invested in a credit linked note. She had a difficult time to making the complaint to the bank. Mr. Smith helped her during the process. He finds that the bank did not treat the customer fairly. He now wishes to offer his voluntary assistance to other customers who faced similar difficulty.
Mr. Smith is willing to help the investor in the interview with the bank or FIDREC, but he needs the investor to sign a mandate for him to attend the interview.
Distributor can recover the compensation from the issurer of the credit linked notes
Some investors asked me if they can expect the distributor to compensate for 50% of the loss, when they only earn 3% to 5% as commission to distribute the product. Perhaps 30% is adequate.
I suggest that the distributor should compensate 50% and get the subrogation rights to recover their loss from the issuer of the credit notes. Apart from Lehman Brothers, the other issurers are still in business and are able to compensate the distributors. The distributors can also seek to recover their loss from the receiver of Lehman Brothers.
By acting in this manner, the distributors will be able to win back the trust of their customers, and also reduce their actual loss.
I suggest that the distributor should compensate 50% and get the subrogation rights to recover their loss from the issuer of the credit notes. Apart from Lehman Brothers, the other issurers are still in business and are able to compensate the distributors. The distributors can also seek to recover their loss from the receiver of Lehman Brothers.
By acting in this manner, the distributors will be able to win back the trust of their customers, and also reduce their actual loss.
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