Sunday, November 15, 2009
Insuring critical illness
I have often been asked if it is advisable to buy insurance to cover critical illness. It is difficult for me to answer this question. It is likely that the customer has been advised by an insurance agent to buy critical illness policy to cover medical bills, which can amount to $100,000 or more, and for the loss of income during the period of treatment.
The large cost of medical treatment is usually exaggerated and the chance of incurring a large bill is small, especially as there is the option to be treated in a subsidised ward.
In most cases, the medical bills can be covered by Medishield or private Shield, which pays for the major portion of large hospital bills. The patient has to pay only the deductible and coinsurance.
Some insurance agent advised on the need to insure the loss of income during treatment of the critical illness. However, you must consider the the risk of loss of income does not arise only from critical illness. It is more likely to arise from unemployment and retrenchment, which is higher than the risk of critical illness.
The best way to protect against loss of income is to have adequate savings. If you save 15% of your monthly earnings, it will take you 10 years to accumulate savings amounting to two years of earnings. This is likely to be more than the sum that you can insure under a critical illness policy.
The accumulated saving can be used not only for critical illness, but also for unemployment and other emergencies. Furthermore, you also do not have to worry about the exclusions in a critical illness policy.
If you wish to cover for critical illness, make sure that you do not pay more than 0.4% of the insured sum. If you insure for $100,000, the premium should not exceed $400 a year. If you take a critical illness term coverage for 10 years, the cost should be lower.
However, if you cannot buy a critical illness cover at a fair price. it is better for you to be uninsured. The chance of getting a critical illness during the first 10 years for a young person is quite low. The priority is to accumulate sufficient savings as early as possible. This is explained in my book on Financial Planning. Get a free copy here.
Tan Kin Lian
The large cost of medical treatment is usually exaggerated and the chance of incurring a large bill is small, especially as there is the option to be treated in a subsidised ward.
In most cases, the medical bills can be covered by Medishield or private Shield, which pays for the major portion of large hospital bills. The patient has to pay only the deductible and coinsurance.
Some insurance agent advised on the need to insure the loss of income during treatment of the critical illness. However, you must consider the the risk of loss of income does not arise only from critical illness. It is more likely to arise from unemployment and retrenchment, which is higher than the risk of critical illness.
The best way to protect against loss of income is to have adequate savings. If you save 15% of your monthly earnings, it will take you 10 years to accumulate savings amounting to two years of earnings. This is likely to be more than the sum that you can insure under a critical illness policy.
The accumulated saving can be used not only for critical illness, but also for unemployment and other emergencies. Furthermore, you also do not have to worry about the exclusions in a critical illness policy.
If you wish to cover for critical illness, make sure that you do not pay more than 0.4% of the insured sum. If you insure for $100,000, the premium should not exceed $400 a year. If you take a critical illness term coverage for 10 years, the cost should be lower.
However, if you cannot buy a critical illness cover at a fair price. it is better for you to be uninsured. The chance of getting a critical illness during the first 10 years for a young person is quite low. The priority is to accumulate sufficient savings as early as possible. This is explained in my book on Financial Planning. Get a free copy here.
Tan Kin Lian
Low birth rate and immigration
I saw a news report that Japan, which is suffering from low birth rates and an aging population, is thinking about making changes to be more attractive to immigrants. This is similar to the situation and solution adopted in Singapore.
In my view, a better approach is to deal with the underlying causes for the low birth rates. Due to insecurity caused by globalization, many people are now spending more years to get a higher education, and are starting work later. They have to work long hours to establish a career. They dare not think about the commitment to raise a family.
The people from the less developed countries do not have this same type of worry. The cost of living is low. They are willing to raise more children and supply them as immigrants to the more developed countries.
Is this type of arrangement good for the world? I think that it is better for a country to grow its own local population rather than rely on immigrants.
In my view, a better approach is to deal with the underlying causes for the low birth rates. Due to insecurity caused by globalization, many people are now spending more years to get a higher education, and are starting work later. They have to work long hours to establish a career. They dare not think about the commitment to raise a family.
The people from the less developed countries do not have this same type of worry. The cost of living is low. They are willing to raise more children and supply them as immigrants to the more developed countries.
Is this type of arrangement good for the world? I think that it is better for a country to grow its own local population rather than rely on immigrants.
Choice of modes of travel
I planned a visit from London to Canterbury and was surprised to see the choice of travel by coach (cheaper) and by train (more connection times). This is an example of the positive aspect of competition between the different modes of travel. I hope that the transport system in Singapore can provide a similar choice and encourage real competition. Read here.
Distributor of torchlights
Someone expressed an interest to distribute my rechargeable torchlight with locator, but did not give any contact information. He can contact me at kinlian@gmail.com. This offer is also available for those who are interested to distribute my books.
Saturday, November 14, 2009
Practice your skills in financial trading with Pro-Trader
You can practice your skills in trading in the futures market with Pro-Trader. It is fun. Learn about how news affecting prices of future products and the unpredictability of the markets (which is a reality in life). Learn how to respond to events and market trends. Read this document.
You can ask a few friends to challenge each other by logging into the same game, created by the first player. It can be quite fun. It is also educational, as you get the chance to interpret how events affect the prices of the various products - and see which player make the best moves. Good luck.
Fee on bank overdraft
A friend told me that the bank in America have an unfair practice to levy the overdraft fee on many transactions during a month.
For example, if the customer has a few transactions that may result in an overdraft, the bank will debit the largest transaction first to cause the account to be overdrawn. All subsequent transactions will be overdraft and each will attract an overdrawn fee. It may result in the fee being applied to many transactions in a month.
The US Congress is passing a law to disallow a bank from this kind of practice and to require the bank to debit the transactions in the chronological order that they have been received.
I find this type of practice to be dishonest. However, the bank seems to be able to get away with it, and a new law has to be passed to stop them from continuing with it. It seems that the standard of honesty has dropped to a low level and that bankers need a law to tell them what is honesty.
For example, if the customer has a few transactions that may result in an overdraft, the bank will debit the largest transaction first to cause the account to be overdrawn. All subsequent transactions will be overdraft and each will attract an overdrawn fee. It may result in the fee being applied to many transactions in a month.
The US Congress is passing a law to disallow a bank from this kind of practice and to require the bank to debit the transactions in the chronological order that they have been received.
I find this type of practice to be dishonest. However, the bank seems to be able to get away with it, and a new law has to be passed to stop them from continuing with it. It seems that the standard of honesty has dropped to a low level and that bankers need a law to tell them what is honesty.
Subscribe to:
Posts (Atom)