Locked into a poor policy

 A consumer showed me the benefit illustration of a 21 year anticipated endowment policy taken 18 years ago for a large life insurance company. She paid $2,000 a year, comprising of $1,500 for the basic policy and $500 for the critial illness rider.

The projected maturity value in 3 years time is $25,000. The premiums paid for 21 years is $42,000, comprising of $31,500 for the basic policy and $10,500 for the rider.

I found the premium for the critcal illness rider (which does not provide any return) to be too expensive for the small amount of cover. The return on the main policy is negative, and is lower than the total premiums that was paid.

The consumer asked if she should stop the policy now, as the return is negative. The cash value for 18 years of premium is so poor, that she had no choice but to continue the policy.

This large insurance company must have sold more than 100,000 policies of this plan (just my guess). The policyholders had no choice but to accept the negative return for 20 years of savings.

It is very sad that the consumers in Singapore have to suffer this type of treatment. They were financially unsavvy and trusted the insurance agents. However, these agents sold them a bad product, which was made worse by the cut in bonus rates and the reduction in the interest that is credited on the installment payments.

Consumers should avoid most types of life insurance products that give a poor yield on their savings. They should buy term insurance and save in a low cost investment fund, such as the STI ETF available on the Singapore Exchange.

Read my book, Practical Guide on Financial Planning.

Winner of Quiz 6-1

10 correct entries (i.e. Henry) were received. The winner, selected by a draw conducted by the computer software, was Kuan Say Yong (Sxxxx3771). Congratulations.

Please send an e-mail to kinlian@gmail.com giving your mobile number Ifor verification) and address. The prize (Intelligence Quiz Vol 3) will be sent to you.

This intelligence quiz requires some skill. You can get the tips from the book. Quiz 6-2 is now open for you to try your skill and luck.

Wisdom on How to Live Life (Book 2)

Humans being the most intelligent species and having lived on Earth for thousands of years, we are yet nowhere near to a life of peace, love, joy and harmony. This book contains a story of a young man, Tom, who had a second and a third conversation with Guru Harry. These are continuations of their first conversation which is contained in the book "Wisdom on How to Live Life". Guru Harry epitomizes someone from a spiritual society who offers a way of living which can lead to peace, love, joy and harmony.

Through these conversations, Tom learnt that (1) how to find out our interest and mission in life, (2) why meditation is important, (3) what we have left after losing everything, (4) why it is better to believe that people die at a time of their own choosing, (5) what we should do after becoming enlightened, (6) what life is like without a body, (7) which concept of God is more empowering, (8) what is the real power of believing we are divine, (9) why it is important to believe that God and I are one, and (10) why we should transform Earth into heaven.

Tommy Wong

Tommy Wong's books (Vol 1 and 2) can be bought here.

Caught off-guard

Read this article entitled being cuaght off-guard

Wisdom on How to Live Life

Here are some comments on Amazon website on the book by Dr. Tommy Wong.

Discussion of "Wisdom on How to Live Life" on Amazon

I came across Tommy Wong's books whist carrying out a search on 'spirituality' and am pleased I did. His whole way of writing and explanations are simple and make so much sense. I have read and reviewed books by Eckhart Tolle which I thought were good, but these books by Tommy are much better in my opinion and deserve to be read widely. I hate to use cliche's by these books are definitely lifechangers. I cannot recommend them highly enough. So impressed am I that I will buy any future book if he decides to write more. Are there other people who have read his books and feel the same way?


A. J. Bray

Financial awareness

Hi Mr Tan,
I am running  a small business. I have heard from friends that I should buy unit trust but do not know how to do it and which company to look for. I also heard that foreign currency deposit is butter than insurance as I do not need to commit so long.

A couple of years ago, I had placed some hard earned savings with Sunshine Empire and was very disappointed that I could not get back anything. I was actually angry why the firm could run in Singapore and had so many investors, but I have lost hope in getting back my money.

Can you advise me as to which company can advise me on unit trust and has lower distribution cost? Is placing my savings with Income a wise move? Which investment firm would accept investment under my corporate sole proprietorship account? Is it secure or should I only be satisfied with returns from fixed deposit under corporate account?

REPLY
Please attend the talk on financial planning organised by FISCA (http://www.fisca.sg/). You will be given a copy of the book, Practucal Guide on Financial Planning. It will answer most of your questions. You can also buy the book here, http://www.easysearch.sg/

Corporate E-mails

Here are some tips on the use of corporate e-mails for small and large companies. They allow a company to operate smoothly in spite of changes in staff and to have several staff work together in handling replies to third parties. It can improve the company's productivity significantly and reduce the scope for confusion.

Tan Kin Lian