The adviser is required to disclose to you about the charges, when you buy a life insurance policy. Read the answer to Q8 in this FAQ. Read the rest of this FAQ:
http://www.moneysense.gov.sg/publications/guides_publications/Consumer_Portal_FAAGuide.html
Q8: What information is a FA representative required to disclose to me when recommending an investment product?
A: When recommending a unit trust or life insurance policy, a FA representative is required to disclose to you the key features of the product including the following:
1. Nature and aim of the product Whether the product is a life insurance policy or a unit trust, and whether it is meant for protection, savings or investment.
2. Benefits of the productInformation on the amount and timing for payment of benefits and whether the benefits are guaranteed or non-guaranteed.
3. Risks of the productDetails of the risk factors that may result in the benefits payable being less than the illustrated values (for a life insurance policy), and the risks stated in the prospectus or profile statement (for a unit trust).
4. Details of the product providerThe business address and permitted activities of the product provider, and the relationship between the product provider and the FA.
5. Fees and charges to be borne by youDetails of the amount and nature of fees and charges to be paid by you, and the frequency of payment.
Sunday, December 7, 2008
The Online Citizen celebrates its second anniversary
The Online Citizen celebrates its second anniversary. Visit this website for the speeches on "Social Justice and Fairness". It also contains an update of the class action for the minibonds and credit linked notes.
http://theonlinecitizen.com/2008/12/toc-celebrates-its-2nd-year-anniversary/
http://theonlinecitizen.com/2008/12/toc-raised-social-issues-for-people-at-2nd-anniversary/
Six months ago, TOC has an average of 3,000 visitors a day. Today, it has an average of 15,000 visitors a day - a five fold increase. TOC is the work of about 60 volunteers - young and not so young. I write a article weekly for TOC.
Congratulations to TOC. It is becoming an important source of alternative news and views about Singapore.
http://theonlinecitizen.com/
http://theonlinecitizen.com/2008/12/toc-celebrates-its-2nd-year-anniversary/
http://theonlinecitizen.com/2008/12/toc-raised-social-issues-for-people-at-2nd-anniversary/
Six months ago, TOC has an average of 3,000 visitors a day. Today, it has an average of 15,000 visitors a day - a five fold increase. TOC is the work of about 60 volunteers - young and not so young. I write a article weekly for TOC.
Congratulations to TOC. It is becoming an important source of alternative news and views about Singapore.
http://theonlinecitizen.com/
Adviser is required to disclose and explain the charge
Dear Mr. Tan
I wanted to terminate my ID2 and was told that I have to pay a charge of 15% of the premium for 5 years, making a total of 75%. I was not aware of this charge, which was not disclosed to me by the adviser. Is it true that I have to pay this charge? Is it a fair charge?
REPLY
During my time, I recall that the charge for ID2 is 15% for 3 years only. The total of 45% was much lower than an average of 150% charged in the market. I was not aware that the charge has been increased to 15% for 5 years. You can check with the adviser.
If you have not been informed by the adviser about the charge at the time that you bought the policy, you can lodge a complaint with MAS. The adviser is required to disclose and explain the charge to you, as set out in A5 of Q8 in this attached document from MAS:
http://www.moneysense.gov.sg/publications/guides_publications/Consumer_Portal_FAAGuide.html
I wanted to terminate my ID2 and was told that I have to pay a charge of 15% of the premium for 5 years, making a total of 75%. I was not aware of this charge, which was not disclosed to me by the adviser. Is it true that I have to pay this charge? Is it a fair charge?
REPLY
During my time, I recall that the charge for ID2 is 15% for 3 years only. The total of 45% was much lower than an average of 150% charged in the market. I was not aware that the charge has been increased to 15% for 5 years. You can check with the adviser.
If you have not been informed by the adviser about the charge at the time that you bought the policy, you can lodge a complaint with MAS. The adviser is required to disclose and explain the charge to you, as set out in A5 of Q8 in this attached document from MAS:
http://www.moneysense.gov.sg/publications/guides_publications/Consumer_Portal_FAAGuide.html
Offer of 30% compensation
Two investors met me at Speaker's Corner yesterday. They received offer from their distributor (stockbroker) of 30% compensation and are given a deadline to accept it. They asked for my advice.
My view is that a fair compensation is 50%. If the distributor offers 50%, you should accept it.
For the 30% offer, I suggest that you let it lapse and wait for a better offer. If you wait until February, the prospect of the class action may be clearer. At that time, your option will be clearer.
However, if you are willing to take 30% and call it quits, you should decide on your own. It is better than nothing.
My view is that a fair compensation is 50%. If the distributor offers 50%, you should accept it.
For the 30% offer, I suggest that you let it lapse and wait for a better offer. If you wait until February, the prospect of the class action may be clearer. At that time, your option will be clearer.
However, if you are willing to take 30% and call it quits, you should decide on your own. It is better than nothing.
The CDO time-bomb
The CDO timebomb – how it works and why it could sink or save the world economy
Wednesday, 19 November 2008
Alan Kohler
http://www.smartcompany.com.au/Free-Articles/The-Briefing/20081119-The-CDO-timebomb--how-it-works-and-why-it-could-sink-or-save-the-world-economy-Kohler.html
Extracts:
.... the bankers who created the synthetic CDOs knew exactly what they were doing. These were not simply investment products created out of thin air and designed to give their sales people something from which to earn fees – although they were that too.
They were specifically designed to protect the banks against default by the most leveraged companies in the world. And of course the banks knew better than anyone else who they were.
As one part of the bank was furiously selling loans to these companies, another part was furiously selling insurance contracts against them defaulting, to unsuspecting investors who were actually a bit like “Lloyds names” – the 1500 or so individuals who back the London reinsurance giant.
Except in this case very few of the “names” knew what they were buying. And nobody has any idea how many were sold, or with what total face value.
Wednesday, 19 November 2008
Alan Kohler
http://www.smartcompany.com.au/Free-Articles/The-Briefing/20081119-The-CDO-timebomb--how-it-works-and-why-it-could-sink-or-save-the-world-economy-Kohler.html
Extracts:
.... the bankers who created the synthetic CDOs knew exactly what they were doing. These were not simply investment products created out of thin air and designed to give their sales people something from which to earn fees – although they were that too.
They were specifically designed to protect the banks against default by the most leveraged companies in the world. And of course the banks knew better than anyone else who they were.
As one part of the bank was furiously selling loans to these companies, another part was furiously selling insurance contracts against them defaulting, to unsuspecting investors who were actually a bit like “Lloyds names” – the 1500 or so individuals who back the London reinsurance giant.
Except in this case very few of the “names” knew what they were buying. And nobody has any idea how many were sold, or with what total face value.
Saturday, December 6, 2008
Two sources of loss on your investment
Hi Mr. Tan,
I was surfing the internet and came across your website. Recently, I feel very depressed becuase I realised I was conned by my own advisor who is also a friend of mine. I trusted her too much. I bought a few policies with her. Due to the bad market situation, I lost $X (my hard-earned money) for investing in unit trusts.
I would like to check with you on what I should do. The following is what i bought from her in 2006/2007:
(details deleted)
For the whole life policy, I have to pay 18 months of premiums to pay for her service. I really didn't know that till I clicked on the Askdrmoney link on your website.
For the pure unit trust with no insurance. I put in $1800 to try to average out the prices of my unit prices due to recession. I'm paying 3% for the comission. Now my unit trusts dropped from $Y to $Z. I feel stupid for paying 3% commission. So I terminated the monthly contribution of $1,800. Have i done the right thing?
After reading your website, i realised my agent really earning a lot. She can go for holiday every year. e.g. she just came back from California. As for me, I saved every single cent of my money...
I feel so frustrated that I really feel like terminating every single policy that i bought fr her. Should I do that?
D
REPLY
The loss that you have incurred come from the following sources:
a) Paper loss on your investments, due to the fall in the market
b) Loss due to the expenses charges deducted from your life insurance policies.
For (a), you will recover the paper loss when the market recovers in a few years' time. As a long term investor, you can wait for a better time to realise your investment.
For (b), you have already incurred the expense charges in the past. You should consider if the future expense charges compared to the alternative types of investments. If most of the charges have already been deducted, it is better to keep the investments and look towards the future. If there are still heavy charges to be deducted from the future, you can terminate the policies.
You should make your decision after getting the relevant facts.
If you need independent financial advice and is willing to pay a modest fee, you can consult the following:
http://tankinlian.blogspot.com/2008/12/financial-advice-for-fee.html
I was surfing the internet and came across your website. Recently, I feel very depressed becuase I realised I was conned by my own advisor who is also a friend of mine. I trusted her too much. I bought a few policies with her. Due to the bad market situation, I lost $X (my hard-earned money) for investing in unit trusts.
I would like to check with you on what I should do. The following is what i bought from her in 2006/2007:
(details deleted)
For the whole life policy, I have to pay 18 months of premiums to pay for her service. I really didn't know that till I clicked on the Askdrmoney link on your website.
For the pure unit trust with no insurance. I put in $1800 to try to average out the prices of my unit prices due to recession. I'm paying 3% for the comission. Now my unit trusts dropped from $Y to $Z. I feel stupid for paying 3% commission. So I terminated the monthly contribution of $1,800. Have i done the right thing?
After reading your website, i realised my agent really earning a lot. She can go for holiday every year. e.g. she just came back from California. As for me, I saved every single cent of my money...
I feel so frustrated that I really feel like terminating every single policy that i bought fr her. Should I do that?
D
REPLY
The loss that you have incurred come from the following sources:
a) Paper loss on your investments, due to the fall in the market
b) Loss due to the expenses charges deducted from your life insurance policies.
For (a), you will recover the paper loss when the market recovers in a few years' time. As a long term investor, you can wait for a better time to realise your investment.
For (b), you have already incurred the expense charges in the past. You should consider if the future expense charges compared to the alternative types of investments. If most of the charges have already been deducted, it is better to keep the investments and look towards the future. If there are still heavy charges to be deducted from the future, you can terminate the policies.
You should make your decision after getting the relevant facts.
If you need independent financial advice and is willing to pay a modest fee, you can consult the following:
http://tankinlian.blogspot.com/2008/12/financial-advice-for-fee.html
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