Saturday, March 20, 2010
Survey - land banking
If you have been caught in a land banking product, and you wish to meet other investors in the same situation, give your particulars here.
Guaranteed renewable - for motor insurance?
Some insurance contracts are guaranteed renewable. The insurance company has to renew the policy based on its standard rates. The insurance company cannot refuse to renew the insurance, or to charge a higher rate based on the claim record of the individual person. (However, the insurance company can revised its standard rates based on its claims experience, but the same rate must apply to the whole class of policyholders).
This feature is standard for long term health insurance. It is a standard feature of the Medishield or the private Shield in Singapore. I hope that the guaranteed renewable feature can be extended to motor insurance.
At present a motorists may find that after a large accident claim, their insurance premium may be loaded by 50% to 100%, in addition to losing their no-claim bonus. They have to accept these harsh terms, as no other insurance company may accept them. They may suffer this penalty even if they have many years of accident free record.
At present, no insurance company offers this guaranteed renewable feature, even for motorists with good driving records. If you find an insurance company that does offers this feature in the future, it is better to insure with this insurance company even if the premium rate is 10% higher.
Tan Kin Lian
This feature is standard for long term health insurance. It is a standard feature of the Medishield or the private Shield in Singapore. I hope that the guaranteed renewable feature can be extended to motor insurance.
At present a motorists may find that after a large accident claim, their insurance premium may be loaded by 50% to 100%, in addition to losing their no-claim bonus. They have to accept these harsh terms, as no other insurance company may accept them. They may suffer this penalty even if they have many years of accident free record.
At present, no insurance company offers this guaranteed renewable feature, even for motorists with good driving records. If you find an insurance company that does offers this feature in the future, it is better to insure with this insurance company even if the premium rate is 10% higher.
Tan Kin Lian
Managing personal risks
A working person faces the following risks:
a) premature death
The chance of (a) and (b) occurring during the working life is quite low, perhaps less than 5%. By getting bad advice from insurance agents, they spend too much of their savings to insure against these risk.
Most people (i.e. 95%) are likely to face the risk of (c) and (d). This risk can be best managed through personal savings. The savings should be invested to earn a good rate of return and can be withdrawn without penalty, e.g. through a low cost investment fund. The personal savings can be used to cover cash flow needs during a temporary period of unemployment, without the need to depend on borrowings which incur a high interest burden. If the savings are invested prudently, they will provide an adequate amount for retirement.
Many investment products offer a poor yield of 2% per annum. By investing on their own in a low cost investment fund, they can get a much higher yield, for example, 5% per annum. The difference in yield is taken away in distribution cost and other charges by the financial institution.
Here is the difference in the accumulated amount at the end of 35 years from a monthly saving of $500.
Many people invest their hard earned savings in a life insurance policy to earn a net yield of 2% per annum. If they invest on their own in a low cost investment fund, they may be able to earn a higher yield, which could potentially give them 86% more.
They only need to spend 5% of their savings to buy a low cost decreasing term insurance. If this is taken off $569,000, they will still get a net balance of $540,000, which is still much higher than $306,000. They will accumulate sufficient savings in 20 years - so the insurance becomes less essential.
As an alternative, they can also buy a personal accident insurance for $300,000 at a premium of about $200 a year. Most of the risk of premature death is caused by accident.
Summary: the key priority is to have adequate savings (say 15% to 20% of your earnings, in addition to CPF) and to invest it in a low cost insurance fund to earn an adequate rate of return. Spend not more than 5% of your savings on term or personal accident insurance.
Tan Kin Lian
a) premature death
b) serious illness and disability
c) unemployment
d) insufficient income during retirementThe chance of (a) and (b) occurring during the working life is quite low, perhaps less than 5%. By getting bad advice from insurance agents, they spend too much of their savings to insure against these risk.
Most people (i.e. 95%) are likely to face the risk of (c) and (d). This risk can be best managed through personal savings. The savings should be invested to earn a good rate of return and can be withdrawn without penalty, e.g. through a low cost investment fund. The personal savings can be used to cover cash flow needs during a temporary period of unemployment, without the need to depend on borrowings which incur a high interest burden. If the savings are invested prudently, they will provide an adequate amount for retirement.
Many investment products offer a poor yield of 2% per annum. By investing on their own in a low cost investment fund, they can get a much higher yield, for example, 5% per annum. The difference in yield is taken away in distribution cost and other charges by the financial institution.
Here is the difference in the accumulated amount at the end of 35 years from a monthly saving of $500.
Interest Accumulated %
rate savings
2% $306,000 100%
3% $374,000 122%
4% $460,000 155%
5% $569,000 186%
Many people invest their hard earned savings in a life insurance policy to earn a net yield of 2% per annum. If they invest on their own in a low cost investment fund, they may be able to earn a higher yield, which could potentially give them 86% more.
They only need to spend 5% of their savings to buy a low cost decreasing term insurance. If this is taken off $569,000, they will still get a net balance of $540,000, which is still much higher than $306,000. They will accumulate sufficient savings in 20 years - so the insurance becomes less essential.
As an alternative, they can also buy a personal accident insurance for $300,000 at a premium of about $200 a year. Most of the risk of premature death is caused by accident.
Summary: the key priority is to have adequate savings (say 15% to 20% of your earnings, in addition to CPF) and to invest it in a low cost insurance fund to earn an adequate rate of return. Spend not more than 5% of your savings on term or personal accident insurance.
Tan Kin Lian
Workers prefer job security
People are becoming "nesters,"
who prefer to stay in one career or with one employer for their entire career.
...a disconnect
between what such "nesters" want and the growing trends that are shaping the global workforce: an increasing emphasis on flexible staff and short-term employment,
more offshoring and part-time work.
http://www.reuters.com/
Universal Studio Singapore
Many people think that Universal Studio Singapore will fail. They point to the other theme parks that failed, e.g. Har Par Villa, Tang Dynasty City and Asian Village (also in Sentosa). They point to the hot climate, limited land space (due to high cost of land) and the small population base.
I think that USS has a good chance to succeed. Here are the positive factors:
a) It is better to be in a hot climate, rather than a cold climate (i.e. winter). USS only needs to create shade and breeze to make it more comfortable. Technology allows this to happen.
b) The compactness is an advantage, as there is no need to walk far from one ride to the next.
c) The closeness of Sentosa to the city and hotels is also an advantage. The tourist does not have to spend two hours to get to the theme park (which is the travelling time for most theme parks around the world).
The management of USS can turn the disadvantages into advantages, and make USS successful (against the odds).
Tan Kin Lian
I think that USS has a good chance to succeed. Here are the positive factors:
a) It is better to be in a hot climate, rather than a cold climate (i.e. winter). USS only needs to create shade and breeze to make it more comfortable. Technology allows this to happen.
b) The compactness is an advantage, as there is no need to walk far from one ride to the next.
c) The closeness of Sentosa to the city and hotels is also an advantage. The tourist does not have to spend two hours to get to the theme park (which is the travelling time for most theme parks around the world).
The management of USS can turn the disadvantages into advantages, and make USS successful (against the odds).
Tan Kin Lian
A safe environment
Singapore used to be a safe place. But in recent years, the situation has changed. Many people are feeling less safe in Singapore due to the large influx of foreigners and to inadequate policing action. Do you find Singapore to be less safe than before? Give your views here.
Problem with private insurance
Private insurance is aimed at maximizing profits. They will deny or restrict coverage for people who need insurance most. They will increase the premium on renewal on those who had claims. Those who are caught by these practices have no choice, as other insurance companies will not accept them. These points are raised by President Obama in his speech urging reform of the health care system in America. This same challenges apply to motor insurance in Singapore.
Experiences with websites
Please share your experiences with websites of big organisations. Which website is easy to use? Which is terrible?
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