A policyholder showed a benefit illustration to me. The policy was taken by the parent during the past 14 years. The cash value now is $6,515 and the total premiums paid for 14 years is $7,630. The policy has not reached the break-even point after 14 years, which makes it a poor investment for the parent.
The benefit illustration for the next 5 years should a guaranteed cash valu e of $9,605 and a total cash value, including the non-guaranteed portion, of $13,474. The yield for the next 5 years is 0.88% (based on the guaranteed value) or 8.81% (based on the non-guaranteed value). I advised the policyholder to continue the policy for the next 5 years and hope to get the non-guaranteed value at that time, rather than to terminate the policy now for a poor cash value.
If the non-guaranteed value of $13,474 is paid at the end of 19 years, the yield for the premiums paid over 19 years is 2.57%. This is not attractive, but it is at least better than taking a loss now (based on 14 years). Although the amount of $13,474 is not guaranteed, there is the likelihood that the actual payout will be close to this figure.
Tip: It is better to avoid taking a life insurance policy (other than a term insurance policy) in the first place, but if you have already taken the policy for several years, it is usually better to continue the policy, rather than to terminate it.
Tan Kin Lian
Read Practical Guide on Financial Planning
Friday, August 6, 2010
National Day and Foreigners
Read this article.
My view
It is all right for Singapore to welcome foreigners, especially those who have the intention of making Singapore as their home for the long term. However, the local Singaporeans, especially the males, should not be placed at a severe disadvantage on employment and national service liability.
I have raised this issue many times during the past 25 years, and the problems remain unresolved. This is bad for the future of our society - for the local and the new citizens.
Our national pledge refer to "equality and justice". We should not have practices that go against these principles. They are principles (not aspirations) that concern the governance and fabric of our society.
To all local and new citizens and residents, Happy 45th National Day.
My view
It is all right for Singapore to welcome foreigners, especially those who have the intention of making Singapore as their home for the long term. However, the local Singaporeans, especially the males, should not be placed at a severe disadvantage on employment and national service liability.
I have raised this issue many times during the past 25 years, and the problems remain unresolved. This is bad for the future of our society - for the local and the new citizens.
Our national pledge refer to "equality and justice". We should not have practices that go against these principles. They are principles (not aspirations) that concern the governance and fabric of our society.
To all local and new citizens and residents, Happy 45th National Day.
Universal Life
I have written a FAQ to explain this new life insurance product which is popular in some countries and may become popular in Singapore. It is similar to a unit linked policy. Interest is credited on the savings in the policy, usually at a rate that is higher than savings with a bank. However, consumers should be aware about the charges, which are usually not explained by the agent.
www.tankinlian.com (Ask Mr. Tan or Latest)
www.tankinlian.com (Ask Mr. Tan or Latest)
Thursday, August 5, 2010
DBS and computer glitch
Mr Tan,
I hope to solicit your comment on the forum titled “why not fines?” (ST forum 6 August 2010) for DBS service breakdown. I read with curiosity and I have some questions:
(a) Why there is no fine? Does it mean that the terms and conditions already provide covering for DBS for such service down time event? Maybe, as a result, MAS can only issue warning? Why there is a discrepancy in the treatment of structured notes where there is specific provision in the statute for mis-selling and MAS did not conduct independent investigation to individual cases? Is this a double standard in the handling of structured notes and this computer glitch? Have we over-blown the engineers error, while keeping silent when immoral act could have occurred in a large scale?
(b) MAS punished DBS by requiring to “set aside additional $230m against operational risks” (ST 5 August 2010). What is the meaning of this punishment? Who is entrusted to have oversight how this $230m is to be disbursed and accounted for? Who will ensure that DBS will not buy computers and charge the disbursement to this fund, hypothetically speaking? Who will have oversight that the fund spent benefit consumers specifically?
(c) What is the real accounting entry for setting up such a fund in response to the “punishment”? I guess it would be debit “fund for operational risk” and credit “retained earnings”. If there were the case, there will be no effect to the income statement of DBS and will have minimum impact to DBS. As such, this “punishment” may look more like an exercise of “journal entry”. I think MAS may have unintentionally sent a wrong impression on its resolve in dispensing this punishment.
From Cashew Nut
http://www.straitstimes.com/STForum/Story/STIStory_562625.html
My view
I am not clear about the purpose of the "punishment" meted to DBS. By asking DBS to increase its capital, it does not really affect the bottom line. Anyway, it is likely that DBS already had more than sufficient capital to meet the "punishment".
Anyway, I do not think that DBS merits any punishment. They might have slackened and caused some inconvenience to its customers, but it was not deliberate. They have probably suffered a bad reputation already.
I hope to solicit your comment on the forum titled “why not fines?” (ST forum 6 August 2010) for DBS service breakdown. I read with curiosity and I have some questions:
(a) Why there is no fine? Does it mean that the terms and conditions already provide covering for DBS for such service down time event? Maybe, as a result, MAS can only issue warning? Why there is a discrepancy in the treatment of structured notes where there is specific provision in the statute for mis-selling and MAS did not conduct independent investigation to individual cases? Is this a double standard in the handling of structured notes and this computer glitch? Have we over-blown the engineers error, while keeping silent when immoral act could have occurred in a large scale?
(b) MAS punished DBS by requiring to “set aside additional $230m against operational risks” (ST 5 August 2010). What is the meaning of this punishment? Who is entrusted to have oversight how this $230m is to be disbursed and accounted for? Who will ensure that DBS will not buy computers and charge the disbursement to this fund, hypothetically speaking? Who will have oversight that the fund spent benefit consumers specifically?
(c) What is the real accounting entry for setting up such a fund in response to the “punishment”? I guess it would be debit “fund for operational risk” and credit “retained earnings”. If there were the case, there will be no effect to the income statement of DBS and will have minimum impact to DBS. As such, this “punishment” may look more like an exercise of “journal entry”. I think MAS may have unintentionally sent a wrong impression on its resolve in dispensing this punishment.
From Cashew Nut
http://www.straitstimes.com/STForum/Story/STIStory_562625.html
My view
I am not clear about the purpose of the "punishment" meted to DBS. By asking DBS to increase its capital, it does not really affect the bottom line. Anyway, it is likely that DBS already had more than sufficient capital to meet the "punishment".
Anyway, I do not think that DBS merits any punishment. They might have slackened and caused some inconvenience to its customers, but it was not deliberate. They have probably suffered a bad reputation already.
Pick the right stocks
Picking the right stock is a matter of practice and experience. Do you know how to read the trend of the market? The price of any stock is supposed to reflect all the available information. But, experience shows that certain indicators may influence the market for a period of time, before it is moved to other indicators.
But, where can you acquire the practice and experience, if you do not have the chance to manage a portfolio? You can practice with this simulation game. It is built to be realistic and reflect the real world. But, to acquire the skill, you have to practice and practice.
http://tankinlian.com/admin/file.aspx?id=112
After reading the Guide, you can go to www.easysearch.sg and click on Pro-Investor.
Tan Kin Lian
But, where can you acquire the practice and experience, if you do not have the chance to manage a portfolio? You can practice with this simulation game. It is built to be realistic and reflect the real world. But, to acquire the skill, you have to practice and practice.
http://tankinlian.com/admin/file.aspx?id=112
After reading the Guide, you can go to www.easysearch.sg and click on Pro-Investor.
Tan Kin Lian
TKL Website - visitors
I received 640 visitors to my TKL website yesterday. It was a big jump, compared to an average of 300 during the past few days. The website has only been revamped for about three weeks. My previous website received only about 20 visitors a day.
The new website is based on a new structure, which I describe as "document centric". I believe that it is more useful to the public, compared to the HTML centric structure of most websites. The popular tabs are "Ask Mr. Tan", "Latest" and "Information".
I am keen to market my website structure to large organisations and government agencies that have many interactions with the public. Details are found in my website, under the category called "Consultancy".
www.tankinlian.com
Consultancy
http://tankinlian.com/Information.aspx?CatID=1
Tan Kin Lian
The new website is based on a new structure, which I describe as "document centric". I believe that it is more useful to the public, compared to the HTML centric structure of most websites. The popular tabs are "Ask Mr. Tan", "Latest" and "Information".
I am keen to market my website structure to large organisations and government agencies that have many interactions with the public. Details are found in my website, under the category called "Consultancy".
www.tankinlian.com
Consultancy
http://tankinlian.com/Information.aspx?CatID=1
Tan Kin Lian
US Presidential Citizen's Award
Read this article from the White House.
My view
Singapore has a similar award for citizens for National Day. Perhaps, we can make the award as exciting as the USA?
My view
Singapore has a similar award for citizens for National Day. Perhaps, we can make the award as exciting as the USA?
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