Many governments around the world are short sighted. They want to reduce the cost of the public sector, so they cut down on the number of people employed in the public service, such as teachers, doctors, nurses and policemen. This is ostensibly to reduce the burden on the tax-payers.
If there are insufficient people to provide the public services, relatively to the size of the population, the standard will drop, as these public employers are overworked, overstretched and overstressed. The standard of teaching, health care and public order must surely drop.
There has to be a proper balance. We need an adequate number of people to provide the public service and must be willing to pay the appropriate tax to fund these services.
If the public service is not provided adequately, the people will have to arrange for these services privately. It may be more costly and the standard may be inferior. In some countries, the residents have to engage their own security guards to look after their housing estates. They have to pay more to get private health care and education.
An adequately staffed public service also helps to create employment and put more people into useful occupations. If there is inadequate work in the productive occupations, the excess manpower may be channeled into unproductive work, such as the speculative activities in the financial sector and marketing of investment scams.
There is no need for the public sector to crowd out the private sector. They can co-exist. The public sector can provide for the needs of the lower and middle income groups. The higher income groups can pay more to get private health care, education or other services. They can get personal and better quality attention, but they pay more. The public sector will be around to offer a choice and keep a reasonable limit on the charges of the private sector.
Singapore used to have a good balance between the public and private sector. I hope that we can go back to the good old days.
Tan Kin Lian
Saturday, September 19, 2009
RED Portal (8) - Search by sector
Which are the housing projects in sector 59 (Bukit Timah, King Albert Park) with the highest benchmark price (BMP) and the highest amenity index (AMX)?
Go to the RED portal and select sector 59. It displays a table of housing projects in that sector. Click twice on BMP to sort by benchmark price in descending order. You will see the following:
Click twice on AMX and you will see the following:
Click on View to see more details about the housing project. Click on * to see a Price Chart.
Tan Kin Lian
Go to the RED portal and select sector 59. It displays a table of housing projects in that sector. Click twice on BMP to sort by benchmark price in descending order. You will see the following:
Year Units BMP AMX
59 STERLING, THE Condo 232 1025 22
59 1 KING ALBERT Condo 1997 101 816 38
59 CHUN TIN COURT Condo 763 42
59 CAVENDISH PARK Condo 1996 254 745 10
59 PALM RESIDENCE Condo 2005 32 729 15
59 PANDAN VALLEY Condo 1979 623 714 4
Click twice on AMX and you will see the following:
Year Units BMP AMX
9 CHUN TIN COURT Condo 0 0 763 42
59 RAINBOW GARDENS Condo 1985 64 501 39
59 MEADOWLODGE Condo 2005 64 708 39
59 1 KING ALBERT Condo 1997 101 816 38
59 SUN COURT Condo 1985 0 377 38
Click on View to see more details about the housing project. Click on * to see a Price Chart.
Tan Kin Lian
Make traditional policies good for consumers
I wish to address the questions: What is wrong with traditional policies, such as whole life, endowment or critical illness, which have been sold for decades? Can the shortcomings be corrected?
The shortcomings are:
a) High upfront charges - as much as 160% of the annual premium
b) Lack of transparency
c) Fair distribution of bonus
These shortcomings can be overcome by:
a) Reduce upfront charges
b) Adopt the asset share method - improve transparency and ensure fair distribution of bonus.
Using the asset share approach, the insurance company has to give an annual statement to the policyholder showing the premiums paid, the charges taken out of the premium (for mortality risk and expenses) and the interest credited (based on the investment yield earned by the fund) and the asset share. The asset share has to be paid to the policyholder on the termination of the policy.
This transparency will help to reduce the upfront charge (as consumers will never agree to have 160% of their annual premium taken away). The transparency and competition will make the upfront charge to disappear one day (similar to opening a savings account in a bank!)
Some countries (e.g. Malaysia) have already adopted the asset share method and also placed a modest cap on the upfront charge. If a similar approach is adopted in Singapore, I will be happy to recommend the whole life, endowment and critical illness plans as being good for consumers.
tan Kin Lian
The shortcomings are:
a) High upfront charges - as much as 160% of the annual premium
b) Lack of transparency
c) Fair distribution of bonus
These shortcomings can be overcome by:
a) Reduce upfront charges
b) Adopt the asset share method - improve transparency and ensure fair distribution of bonus.
Using the asset share approach, the insurance company has to give an annual statement to the policyholder showing the premiums paid, the charges taken out of the premium (for mortality risk and expenses) and the interest credited (based on the investment yield earned by the fund) and the asset share. The asset share has to be paid to the policyholder on the termination of the policy.
This transparency will help to reduce the upfront charge (as consumers will never agree to have 160% of their annual premium taken away). The transparency and competition will make the upfront charge to disappear one day (similar to opening a savings account in a bank!)
Some countries (e.g. Malaysia) have already adopted the asset share method and also placed a modest cap on the upfront charge. If a similar approach is adopted in Singapore, I will be happy to recommend the whole life, endowment and critical illness plans as being good for consumers.
tan Kin Lian
Arbitrary decisions on health insurance claims
This article contains several letters on arbitrary and illogical decisions taken by health insurance companies on insurance claims. They argue for regulation.
Duration of Term Assurance
As a rule of thumb, the correct duration for a term assurance should be 25 years or up to age 60 (if shorter). If you look at the benchmark premiums shown in this FAQ, you will find that the premium is affordable for a large amount of insurance.
The purpose of term assurance is to provide a capital sum in the event of premature death during the years when your children are still young. After 25 years, your children would have grown up and are likely to be independent. If you make adequate savings during the 25 years, you will have sufficient savings to meet your financial needs after that period. There is no further need for life assurance.
Under a decreasing term insurance, the protection reduces each year over the term. For example, if you insure for $300,000 over 25 years, the protection will reduce by $12,000 a year. Although the protection reduces, it can be compensated by the increased saving that you have put aside each year. Regular saving is an important part of your financial plan. The cost of decreasing term assurance is less than half of the cost of level term assurance for the same duration.
The purpose of term assurance is to provide a capital sum in the event of premature death during the years when your children are still young. After 25 years, your children would have grown up and are likely to be independent. If you make adequate savings during the 25 years, you will have sufficient savings to meet your financial needs after that period. There is no further need for life assurance.
Under a decreasing term insurance, the protection reduces each year over the term. For example, if you insure for $300,000 over 25 years, the protection will reduce by $12,000 a year. Although the protection reduces, it can be compensated by the increased saving that you have put aside each year. Regular saving is an important part of your financial plan. The cost of decreasing term assurance is less than half of the cost of level term assurance for the same duration.
You can buy a term assurance that covers critical illness as well. The cost is about 2 times of a basic term assurance that covers death only, but will be still quite affordable.
You have the choice of paying a level premium for the entire term or to pay a premium that varies according to your age. Both methods are suitable. For most people, a level premium is probably better, as they do not have to worry about whether the higher premium charged each year is at a fair rate.
You have the choice of paying a level premium for the entire term or to pay a premium that varies according to your age. Both methods are suitable. For most people, a level premium is probably better, as they do not have to worry about whether the higher premium charged each year is at a fair rate.
There is no need to buy life assurance for more than 25 years or beyond age 60. The premium will be too high. Some insurance agents recommend term insurance up to age 75, which is unnecessary and costly There is no need to buy life assurance for more than 25 years or beyond age 60. The premium will be too high. Some insurance agents recommend term insurance up to age 75, which is not necessary and too costly (and give higher commission to the agent).
Tan Kin Lian
Financial planning - Practical Steps (draft 4)
CyCab - Driverless Electric Vehicle
I will be visiting a research facility in France that is developing a driverless electric vehicle, called the Cycab. The visit will be in late November. Read more about this vehicle in various blog postings here. Watch an intereseting animated video about this vehicle.
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