TKL Intelligence Quiz Vol 3

Have you heard about the Intelligence Quiz created by Albert Einstein? If has baffled many people over the past decades. The quiz is contained in this website, together with the technique to solve it.

If you enjoy this type of logic quiz, my new book TKL Intelligence Quiz Vol 3 has been released. Vol 1 and 2 have been sold out. You can buy Vol 3 at the major bookstores ($7.90). The book contain the tips and 72 puzzles (24 puzzles at each of 3 level).

You can also buy this book or other books at this website and enjoy a discount of 15% when you enter the promotion code - BLOG (valid until 28 February 2010). Many secondary and tertiary students enjoy this type of logic puzzles as it helps to train their logical mind.

To order, click here.

Tan Kin Lian

Social insurance

Some types of insurance cannot be operated on a private basis, e.g. unemployment insurance and health insurance, due to the problem of underwriting. Some people will not be able to have access to insurance due to their higher risk factors, e.g. certain types of occupation or poor health.

These insurances have to be operated by the state (through social insurance) and is made compulsory for every eligible person. There is no need for underwriting, as everybody is covered for the standard benefits,which are  usually provided at a basic level. The insured people pay a premium that meet a major portion of the cost and any deficit is usually funded through tax revenue.

There are significant savings in operating a social insurance scheme, as there is no marketing and underwriting expenses. There is lower administrative expenses. The saving in cost can amount to 30% to 40% of the premium that would be charged by a private insurer for a similar set of benefits.

It is possible for a state scheme to be abused but this can be controlled - as it would be a crime to cheat the state. A state scheme may be operated inefficiently, but this can be properly managed.

It is better for the basic needs of the people to be provided by social insurance and for the private sector to provide additional benefits on top of the state benefits.

Tan Kin Lian

Giving up an existing investment-linked policy

Dear Mr Tan,
I currently have an investment link life policy. I calculate my loss to be $6000. I decide to surrender this policy and take up term insurance. Is my decision to surrender this policy a wise choice? Should I buy the term insurance from Aviva or NTUC?

REPLY
Normally, it is better to continue an existing policy, rather than to terminate it, as you have already incurred the upfront cost. However, you should look at the continuing cost, before you take your decision.

I suggest that you ask both Avivia and NTUC Income to give you a quote for the term insurance. You can compare the premium rates and make your decision based on the facts.

You can get more guidance from my book, Practical Guide on Financial Planning. It can be bought here:
http://projects.easyapps.sg/iShop/public/common/Order.aspx

Switching to a new policy with special benefits

Sometimes, a new life insurance product is introduced with an additional benefit, such as the waiver of premium during retrenchment.  This type of rider usually has small print to restrict the entitlement to the benefit, such as circumstances of retrenchment or the waiting period.

While the value of this type of rider is debatable, it should not be used as a reason for a policyholder to terminate an existing policy to switch to this new policy. The policyholder will incur a large loss on the existing policy by making this switch, and will have to pay the upfront cost again on the new policy.

Switching policies is a costly exercise and should be avoided. An ethical agent will not give this type of wrong or harmful advice to their customers.

Tan Kin Lian