A policyholder was sold the Yield 15 which provided a payout of 3% per annum. During a volatile period a few months ago, the insurance company offered a 100% payback of the investment, less all the interest coupons that were paid. The policyholder, on the advice of her children, decided to accept the payback offer and to lose the interest. At that time, the market price of the investment was around 90. She was afraid that the investment could drop further and in the worst case, be worth nothing.
In the subsequent months, she found that the price of the investment had improved and there is a good chance that it would safely reach the maturity period with a 100% payback. She regretted her decision to accept the payback offer and losing the 15% interest (i.e. 3% for 5 years).
I told her that she made the right decision at that time. Some investors of certain series of Pinnacle Notes had lost the entire investment due to the failure of a certain number of entities. This could have happened to her Yield 15. It is better to be safe than sorry.
She should not think about the 15% that she had lost. Her actual loss is only 5% (i.e the fixed deposit rate of interest for 5 years). She should not count the higher rate of 3% which is for a more risky product.
My same comment will apply to policyholders who accepted the payback offer from Great Easter Life on the GreatLink Choice (which is a similar product).
Tan Kin Lian
Sunday, April 25, 2010
For the benefit of the future generation
A retired couple told me that they invested more than $500,000 in mini-bonds, yield 15 and equity-linked notes. There financial products were recommended to them by their bank relationship manager as being better than fixed deposits and paying a yield of 3% or 5%. The risks were not explained to them at that time.
The money came from a lifetime of hard work and prudent savings. They lost more than 30% of the total invested amount. Their complaint to FIDREC was dismissed, although they felt that they had a strong case of mis-selling. The wife felt the sense of injustice to be so strong that she wanted her family to emigrate from Singapore.
I told them that the chance of being accepted into another coutnry is small, as they are already in their 60s. Most countries accept immigrants who are younger, as they do not want retirees to benefit from their health care and pension systems. I also advised them to think about the 70% that they had recovered, rather than the 30% that they lost.
Furthermore, it is better to stay in Singpaore and speak against injustice, so that the system can be changed for the benefit of the future generation.
Tan Kin Lian
The money came from a lifetime of hard work and prudent savings. They lost more than 30% of the total invested amount. Their complaint to FIDREC was dismissed, although they felt that they had a strong case of mis-selling. The wife felt the sense of injustice to be so strong that she wanted her family to emigrate from Singapore.
I told them that the chance of being accepted into another coutnry is small, as they are already in their 60s. Most countries accept immigrants who are younger, as they do not want retirees to benefit from their health care and pension systems. I also advised them to think about the 70% that they had recovered, rather than the 30% that they lost.
Furthermore, it is better to stay in Singpaore and speak against injustice, so that the system can be changed for the benefit of the future generation.
Tan Kin Lian
General election
Read this article by Lucky Tan.
My comments
This is an excellent article. It is written in a style that is far superior to what I am able to write.
My comments
This is an excellent article. It is written in a style that is far superior to what I am able to write.
Circle Line (MRT)
I took my first ride on the extended Circle Line yesterday from Dhoby Ghaut to Bras Basah. It was an enjoyable ride. The walking distance between the platforms from the NE Line and Circle Line was quite acceptable.
On my return journey, I took the Circle Line from Bras Basah to Bishan to change to the NE Line. Although the distance and travelling time is longer, I could get a seat, as the train is not crowded.
This new line has expanded the capacity of the train system and should be able to give the commuters a more comfortable ride.
The Circle Line allows commuters from the North to get to Tampines or Changi by changing at Bishan to Paya Lebar. It took 6 stops, compared to 13 stops from Bishan to Raffles City and to Paya Lebar on the NE Line and the EW Line.
If I travel light, I will go to airport from my home by train and return by train.
Tan Kin Lian
On my return journey, I took the Circle Line from Bras Basah to Bishan to change to the NE Line. Although the distance and travelling time is longer, I could get a seat, as the train is not crowded.
This new line has expanded the capacity of the train system and should be able to give the commuters a more comfortable ride.
The Circle Line allows commuters from the North to get to Tampines or Changi by changing at Bishan to Paya Lebar. It took 6 stops, compared to 13 stops from Bishan to Raffles City and to Paya Lebar on the NE Line and the EW Line.
If I travel light, I will go to airport from my home by train and return by train.
Tan Kin Lian
Saturday, April 24, 2010
An accountable Parliament
General election may be held in Singapore during the next six to 12 months. It is important for Singaporeans to vote wisely for a candidate who can best represent their views in Parliament. It is preferable for the elected MP to be able to be a full time MP, as much time is needed to understand the views of the people and to initiate and debate legislation in Parliament.
The candidate should be quite well educated but need not be a corporate leader. It is more important that the candidate should be sincere, competent (as an elected leader) and be willing to serve the people. There are at least two members of the current parliament that meets this description. We need to have more elected leaders of this type.
At election time, the mainstream media will focus on the negative aspects of some candidates. The voters should be aware of the bias of the media and understand that it takes a lot of personal sacrifice and courage for some candidates to stand for election to be a voice of the people in parliament. We should look at their positive aspects and be ready to give them a chance.
The above views are shared by the majority of the people who participated in a survey held a few motnhs ago. The results of this survey are shown here.
The aim is to have a Parliament that reflects the views of the people and to approve legislation and government policies that are good for the country and the people.
Tan Kin Lian
The candidate should be quite well educated but need not be a corporate leader. It is more important that the candidate should be sincere, competent (as an elected leader) and be willing to serve the people. There are at least two members of the current parliament that meets this description. We need to have more elected leaders of this type.
At election time, the mainstream media will focus on the negative aspects of some candidates. The voters should be aware of the bias of the media and understand that it takes a lot of personal sacrifice and courage for some candidates to stand for election to be a voice of the people in parliament. We should look at their positive aspects and be ready to give them a chance.
The above views are shared by the majority of the people who participated in a survey held a few motnhs ago. The results of this survey are shown here.
The aim is to have a Parliament that reflects the views of the people and to approve legislation and government policies that are good for the country and the people.
Tan Kin Lian
Payment of commission
Some financial advisers have complained about not receiving the commission on policies that they have sold based on the unfair practice of their advisory firm or the insurance company. An insurance adviser approached me to air this problem. While the advisers are being bashed (sometimes unfairly), they also face problems of their own.
Here is a letter of complaint to the papers (but not relating to the insurance industry).
Here is a letter of complaint to the papers (but not relating to the insurance industry).
Vista product
Hi Mr Tan,
I bought a investment product named Vista for nearly a year now. I just re-read the policy document and felt that the financial planner had not clearly explained to me the product. The product is an ILP and not what I understood as a normal mutual fund. I realised the costs are high and the surrender value can be significantly lower than total premiums paid in early years of the policy.
Can you advise where I can get help to surrender the policy at no or minimum loss, on grounds of mis-selling?
REPLY
Please approach FISCA at www.fisca.sg. they charge an admin fee of $50 and will help you to write a complaint to FIDREC. The chance of getting redress is uncertain, but is worth a try.
I bought a investment product named Vista for nearly a year now. I just re-read the policy document and felt that the financial planner had not clearly explained to me the product. The product is an ILP and not what I understood as a normal mutual fund. I realised the costs are high and the surrender value can be significantly lower than total premiums paid in early years of the policy.
Can you advise where I can get help to surrender the policy at no or minimum loss, on grounds of mis-selling?
REPLY
Please approach FISCA at www.fisca.sg. they charge an admin fee of $50 and will help you to write a complaint to FIDREC. The chance of getting redress is uncertain, but is worth a try.
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