The hurricanes have a name, starting with A, B up to Z using female names. After 26 hurricanes, a new series is started with A, B up to Z using male names. The current names are (male) Gustav, Hanna and Ike.
Gustav (which has just passed) was earlier feared to be as bad as Katrina a few years ago, but it finally did not cause much damage.
CORRECTION
The names of the hurricanes alternate between male and female names, starting from A followed by B, etc. Here is a list of names of hurricanes:
http://www.nhc.noaa.gov/aboutnames.shtml
Saturday, September 6, 2008
Friday, September 5, 2008
The New Paper - Truth of Life Insurance Payout
The New Paper has a special report on "The truth of Life Insurance Payout" in its
September 6 edition.
I recommend to all policyholders to read this special report. It shows that the amounts paid out to policyholders on a surrendered or matured policy is far short of the "asset share" of the policy. Many policyhoders are being paid far less than a "fair amount".
If you fall in this category, I suggest that you should write to the Monetary Authority of Singapore to ask them to take up the matter with your insurance company.
I have written to the Consumer Association to raise the following matter with MAS:
1. Is the amount paid to the policyholder of a surrendered or matured policy quite close to the "individual liability” in respect of the policy? Is the insurance company allowed to pay out an amount that is far short of this “individual liability”? The individual liability is required to be computed by the insurance company for each policy and reported in total in the annual return to MAS.
2. In the interest of transparency and fairness, can MAS require the insurance company to disclose the "individual liability", upon the request of the policyholder of a terminated policy, so that the policyholder is aware of the amount of the "individual liability" that is held back from him?
3. Is it fair for a policyholder, on surrender of a policy, to be getting back less than the premiums paid after 10 years or longer, when the insurance company is able to retain up to 40% of the "individual liability" from the policyholder?
4. Why is it not possible for Singapore to adopt the practice in Malaysia and other countries, which requires the insurance company to pay out the “asset share” on a terminated policy after it has been held for more than a certain period? The “asset share” is similar to the “individual liability” reported in the annual return to MAS. This payout appears to be fairer and is much higher than the cash value now given to a policyholder in Singapore.
5. Can MAS ask the insurance company to disclose the total cash value of all policies, to allow it to be compared with the “sum of the individual liability in respect of each policy” as reported in the annual return? This will allow the public to know the amount that is held back by the insurance company, if all the policies were terminated.
September 6 edition.
I recommend to all policyholders to read this special report. It shows that the amounts paid out to policyholders on a surrendered or matured policy is far short of the "asset share" of the policy. Many policyhoders are being paid far less than a "fair amount".
If you fall in this category, I suggest that you should write to the Monetary Authority of Singapore to ask them to take up the matter with your insurance company.
I have written to the Consumer Association to raise the following matter with MAS:
1. Is the amount paid to the policyholder of a surrendered or matured policy quite close to the "individual liability” in respect of the policy? Is the insurance company allowed to pay out an amount that is far short of this “individual liability”? The individual liability is required to be computed by the insurance company for each policy and reported in total in the annual return to MAS.
2. In the interest of transparency and fairness, can MAS require the insurance company to disclose the "individual liability", upon the request of the policyholder of a terminated policy, so that the policyholder is aware of the amount of the "individual liability" that is held back from him?
3. Is it fair for a policyholder, on surrender of a policy, to be getting back less than the premiums paid after 10 years or longer, when the insurance company is able to retain up to 40% of the "individual liability" from the policyholder?
4. Why is it not possible for Singapore to adopt the practice in Malaysia and other countries, which requires the insurance company to pay out the “asset share” on a terminated policy after it has been held for more than a certain period? The “asset share” is similar to the “individual liability” reported in the annual return to MAS. This payout appears to be fairer and is much higher than the cash value now given to a policyholder in Singapore.
5. Can MAS ask the insurance company to disclose the total cash value of all policies, to allow it to be compared with the “sum of the individual liability in respect of each policy” as reported in the annual return? This will allow the public to know the amount that is held back by the insurance company, if all the policies were terminated.
Life insurance products can give good value
Some people argued that whole life, whole life limited premium and other life insurance products can meet the needs of certain categories of people and can be considered as good products.
This is correct.
Life insurance products can be designed to be good for consumers. They become bad products when they are designed to pay high commission to the agent and give poor value to the consumer. This high cost is not disclosed to the consumer.
Unfortunately, most of the products in the Singapore market are designed to be high cost, good for the agent and bad for the consumer. Up to two years of the premium are taken away to pay the commission and marketing expenses. If the monthly premium is $300, the amount of the hard earng savings taken away from the policyholder can be as much as $7,200.
This is a lot of money to be taken away from the unsuspecting policyholder, and is not told to the policyholder at the point of sale. This fact is hidden in the Benefit Illustration among 20 pages of confusing information.
If the charges are kept at a reasonable level, say a maximum of half year's premium (which is still a lot of money) and this is clearly disclosed to the policyholder, then a whole life, endowment or investment linked policy can be considered to be a good product and is suitable for most people.
This is correct.
Life insurance products can be designed to be good for consumers. They become bad products when they are designed to pay high commission to the agent and give poor value to the consumer. This high cost is not disclosed to the consumer.
Unfortunately, most of the products in the Singapore market are designed to be high cost, good for the agent and bad for the consumer. Up to two years of the premium are taken away to pay the commission and marketing expenses. If the monthly premium is $300, the amount of the hard earng savings taken away from the policyholder can be as much as $7,200.
This is a lot of money to be taken away from the unsuspecting policyholder, and is not told to the policyholder at the point of sale. This fact is hidden in the Benefit Illustration among 20 pages of confusing information.
If the charges are kept at a reasonable level, say a maximum of half year's premium (which is still a lot of money) and this is clearly disclosed to the policyholder, then a whole life, endowment or investment linked policy can be considered to be a good product and is suitable for most people.
Annual General Meeting of NTUC Income
Two readers of my blog, SiewKhim and Falcon, have posted comments asking me to raise issues on behalf of policyholders at the next annual general meeting of NTUC Income.
I have posted a request for them to send their e-mail address to me, so that a meeting can be arranged.
I did not receive any response from SiewKhim. Falcon wrote an e-mail to me, but did not reply to my e-mail.
I like to ask them to contact me at kinlian@gmail.com.
I have posted a request for them to send their e-mail address to me, so that a meeting can be arranged.
I did not receive any response from SiewKhim. Falcon wrote an e-mail to me, but did not reply to my e-mail.
I like to ask them to contact me at kinlian@gmail.com.
Thursday, September 4, 2008
Bad advice given by the agent
Dear Mr.Tan,
I had read some of your articles about insurance and would like to seek your advice.
It is sad to learn that the current practices by insurance companies and their agents are not as ethical as what they claim in their mission statement or business code of ethics. It is also too late for my wife to realize that her entire CPF savings (ordinary and special) is now suffering heavy loss after being misled by an insurance agent in November 2007.
All along, ordinary people like my wife took insurance agent as professional and able to give reliable and accurate information. However, such trust was shattered after she was misled to loss-making investment-link policies. The way that he pushed the high risk bank-stock-link funds before the stock crash to unaware customer as low-risk investment still upset me today.
Although we complained about the agent's misrepresentation in Feb 2008 and got him admitting his 'ignorance' of the stock market, our request to annul the policies was rejected without clear explanation. His unethical use of national annuity scheme to scare my wife into putting her entire CPF savings in the dubious policies was also unanswered.
We contacted FIDREC but pulled out halfway due to stress and forlorn hope because my wife had already signed the Know Your Client Financial Needs Analysis Form which binds her to everything.
I have some questions below and I wonder you could offer your opinions.
1) Can stock-link-fund-selling agent ignore stock market warnings such as US housing credit crisis, US recession, banks' losses, etc? Isn't he a professional in his industry?
Reply: It is difficult for the fund agent to know that the market will be so bad. If they know, nobody will be transacting in the market.
2) These funds follow STI intimately; can agent ignore STI's sliding from historical peak late Oct 2007 and sell the funds at highest prices? Isn't his financial advice guided by the "buy low sell high" principle? This goes against Income's claim that they care about client's interest and are social responsible.
Reply: It is difficult for the fund agent to know that the market will be so bad. If they know, nobody will be transacting in the market.
3) Is it ethical to use annuity scheme to scare and influence client's decision, instead of sound financial judgment?
Reply: The agent should not use the national annuity scheme to scare the investor into making stock market investments.
4) The business law governing fund selling seems to be flawed. We only realized now that the Financial Needs Analysis Form, done casually, is holding the policy holder solely responsible. Isn't this document a likely signed blank check which could be rigged by unscrupulous agents?
Reply: The financial needs analysis should have been done properly and not casually.
5) Isn't there a mechanism to prevent such suicide-like buying of funds when all the indicators point to a looming stock crash? Can such crash prophets by George Solos, Warren Buffett and Jim Rogers be totally ignored and risks as high as such not mentioned to clients during the selling presentation?
Reply: It is difficult to know if the market will go up or down, at any point of time. One can only know with the benefit of hindsight. Your wife has made a long term investment. You should hold the investment for many years. It is likely to recover.
I made a personal investment myself around that time, and my investment is showing a big loss now. So, I was not aware that the market can be so bad. But I have to wait for it to recover.
I had read some of your articles about insurance and would like to seek your advice.
It is sad to learn that the current practices by insurance companies and their agents are not as ethical as what they claim in their mission statement or business code of ethics. It is also too late for my wife to realize that her entire CPF savings (ordinary and special) is now suffering heavy loss after being misled by an insurance agent in November 2007.
All along, ordinary people like my wife took insurance agent as professional and able to give reliable and accurate information. However, such trust was shattered after she was misled to loss-making investment-link policies. The way that he pushed the high risk bank-stock-link funds before the stock crash to unaware customer as low-risk investment still upset me today.
Although we complained about the agent's misrepresentation in Feb 2008 and got him admitting his 'ignorance' of the stock market, our request to annul the policies was rejected without clear explanation. His unethical use of national annuity scheme to scare my wife into putting her entire CPF savings in the dubious policies was also unanswered.
We contacted FIDREC but pulled out halfway due to stress and forlorn hope because my wife had already signed the Know Your Client Financial Needs Analysis Form which binds her to everything.
I have some questions below and I wonder you could offer your opinions.
1) Can stock-link-fund-selling agent ignore stock market warnings such as US housing credit crisis, US recession, banks' losses, etc? Isn't he a professional in his industry?
Reply: It is difficult for the fund agent to know that the market will be so bad. If they know, nobody will be transacting in the market.
2) These funds follow STI intimately; can agent ignore STI's sliding from historical peak late Oct 2007 and sell the funds at highest prices? Isn't his financial advice guided by the "buy low sell high" principle? This goes against Income's claim that they care about client's interest and are social responsible.
Reply: It is difficult for the fund agent to know that the market will be so bad. If they know, nobody will be transacting in the market.
3) Is it ethical to use annuity scheme to scare and influence client's decision, instead of sound financial judgment?
Reply: The agent should not use the national annuity scheme to scare the investor into making stock market investments.
4) The business law governing fund selling seems to be flawed. We only realized now that the Financial Needs Analysis Form, done casually, is holding the policy holder solely responsible. Isn't this document a likely signed blank check which could be rigged by unscrupulous agents?
Reply: The financial needs analysis should have been done properly and not casually.
5) Isn't there a mechanism to prevent such suicide-like buying of funds when all the indicators point to a looming stock crash? Can such crash prophets by George Solos, Warren Buffett and Jim Rogers be totally ignored and risks as high as such not mentioned to clients during the selling presentation?
Reply: It is difficult to know if the market will go up or down, at any point of time. One can only know with the benefit of hindsight. Your wife has made a long term investment. You should hold the investment for many years. It is likely to recover.
I made a personal investment myself around that time, and my investment is showing a big loss now. So, I was not aware that the market can be so bad. But I have to wait for it to recover.
Agent does not explain clearly
Many people read my blog regularly. When they meet me, they told me, "I like your blog. It helps me to understand the insurance policies that I have bought over the years. The agent did not explain the policy clearly to me".
Why are insurance companies continuing to design complicated insurance products that their agents are not able to explain to the customer?
Here is the secret. The agent does not want to tell you the truth. If they do, you will not buy the product, because it gives poor value to the consumer. The agent finds a way to make your buy the porduct, without really understanding it.
The regulator requires the agent to give a Benefit Illustration. It does not help, as the Benefit Illustration is confusing to the consumer (and even to an expert like me).
Why are insurance companies continuing to design complicated insurance products that their agents are not able to explain to the customer?
Here is the secret. The agent does not want to tell you the truth. If they do, you will not buy the product, because it gives poor value to the consumer. The agent finds a way to make your buy the porduct, without really understanding it.
The regulator requires the agent to give a Benefit Illustration. It does not help, as the Benefit Illustration is confusing to the consumer (and even to an expert like me).
Twisting of existing life policies
Dear Mr Tan,
I am a young, single working adult. I've met up with two financial planners. One is from a reputatble affliated insurance company (X) and another is a independent financial advisor (Y).
X recommends me to buy a limited whole life plan (coverage of 100K) and a private hospitalisation plan and some other riders such asdiability income. The total premiums payable per month is around 250. Previously I've already bought a ILP ffrom X (100k coverage) and I have another 50K coverage from a whole life plan that my parents bought for me since young ($50 per month).
Y recommends me to cancel the 50K whole life plan that my parents bought for me and buy a term plan including HnS for only 100 (coverage of 250k), and invest the rest.
I understand this is in line with your "buy term, and invest the rest" strategy. But do I have to cancel the plan that my parents have been paying since 13 years ago?
And what is your opinion on limited whole life plan?
REPLY
You should continue your existing policies. Do not terminate them to buy the recommended new policy.
The agents X and Y are trying to "twist" your policy. Read this blog to understand what is "twisting": http://tankinlian.blogspot.com/search?q=twisting
If you wish to "but term and invest the difference", you should choose a 20 or 30 year term and not term to 100 years - which is like whole life insurance. The agent is cunning, and is trying to make a sale at your expense.
Avoid the whole life limited payment plan. It is expensive and give poor values. Do not cancel any existing policy to buy a new policy with high charges.
I am a young, single working adult. I've met up with two financial planners. One is from a reputatble affliated insurance company (X) and another is a independent financial advisor (Y).
X recommends me to buy a limited whole life plan (coverage of 100K) and a private hospitalisation plan and some other riders such asdiability income. The total premiums payable per month is around 250. Previously I've already bought a ILP ffrom X (100k coverage) and I have another 50K coverage from a whole life plan that my parents bought for me since young ($50 per month).
Y recommends me to cancel the 50K whole life plan that my parents bought for me and buy a term plan including HnS for only 100 (coverage of 250k), and invest the rest.
I understand this is in line with your "buy term, and invest the rest" strategy. But do I have to cancel the plan that my parents have been paying since 13 years ago?
And what is your opinion on limited whole life plan?
REPLY
You should continue your existing policies. Do not terminate them to buy the recommended new policy.
The agents X and Y are trying to "twist" your policy. Read this blog to understand what is "twisting": http://tankinlian.blogspot.com/search?q=twisting
If you wish to "but term and invest the difference", you should choose a 20 or 30 year term and not term to 100 years - which is like whole life insurance. The agent is cunning, and is trying to make a sale at your expense.
Avoid the whole life limited payment plan. It is expensive and give poor values. Do not cancel any existing policy to buy a new policy with high charges.
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