Are bonuses declared fairly?

Dear Mr Tan,
I have come to realise my folly in buying substantial insurance for myself and family ranging from endowments, whole life, etc. All along, I am told buying insurance is also saving for the future - how wrong I have been. Now I am aware that term life is still the best in terms of value. Now I have to consider how to handle the current policies that I have, especially those where I have to pay for "life".

Last month, I received a Bonus Notice that informed me of the reversionary bonus for 2008 (Endowment policy). I was told that "Due to current market conditions, your Projected Matuity Value at this point in time is revised to $71,491 from $87,786. This revision is done to reflect the reduction in value of the fund's assets."

I bought this policy in 1997. The yearly premium of $1,400 is deducted from my CPF OA account. At that time, the projected return is much more than if I leave the money in CPF. In Feb 2008 that I was told the projected maturity value is $87,786, with a yield to maturity of 4.41%.

In one year, I am now informed of this drastic reduction in just 2 sentences. What I cannot comprehend is the way life insurance company is able to decide unilaterally whatever value they want to reduce even when it affects the insurance buyers so much. In that case, the insurance buyers always lose, insurers always win.

In good times, the insurers make money, then in bad times, the insurance company still make money by just reducing bonuses on the insurance policies. There is no equity. Will you help me to understand why this is so?

REPLY 
The question that you asked has troubled me a lot in the past two years.

When I was in charge of NTUC Income, I made sure that the policyholders are given a fair deal. In bad years, the bonus are reduced, but in good years, the bonus are increased.

I now get the impression that many insurance companies are not practicing a fair approach in treating their policyholders.

I suggest that you should raise your question with MAS or with the Consumer Association of Singapore (CASE) and see if they are willing to take up this point as a matter of public interest or consumer protection.

SCMP: Minibond meetings

Minibonds meeting. About 50 investors who suffered losses after buying Lehman Brothers' minibonds protest at the Hong Kong Association of Banks in Central yesterday. They asked to meet association chairman Peter Wong Tung-shun, and their five-hour protest ended after the association agreed to arrange a meeting between the two sides on Thursday.

China Daily: are leaders retired?

"Public interest would not be adequately served by making known the names of the redundant leaders. It is more important to publicize where the dismissed leaders are placed.

 

Otherwise, there is every risk of the ejected excess being placed in positions elsewhere. The process calls for the utmost transparency.

 

Once a leader, always a leader until retirement, seems to have become a tacitly prevalent rule. As a result, quite a number of people do their best to get promoted not for doing a better job but for the benefits of the position.

 

Leadership entails not only benefits but also accountability. Unless the principle of acountability is enforced, just trimming the flab will neither raise efficiency nor make leaders discharge their duties in a responsible manner."

May the rulers be righteous

Dear Mr. Tan Kim Lian, 

While I am inspired by your selfless effort to embark on the mission of educating Singaporeans on issues relating to insurance, financial investment and current affair, I think it is a matter of dire urgency to educate Singaporeans on the importance of political awareness. This will decide if Singapore as a society has a bright future. 

For too long, the ruling elites have successfully succumbed the population into political apathy through undemocratic oppression, threats of litigation and many other shrewd social engineering strategies. At the same time, the past few decades have seen economic prosperity largely because of the world economy and the hardworking culture of the local population who just wanted to earn a decent living. This complacency with a good life of the population has encouraged the ruling elites to justify their one-party rule by advancing the fallicious argument that the "too-good" life Singaporeans are enjoying cannot afford a two-party system and instilling the fear of not having the right talents to run the country, except those handpicked by the founding father. 

This politcal apathy is a "killer" for the well being of Singapore. Foremost is to educate Singaporeans that a policy decided and implemented by the ruling elite, without thorough debate, discussion and scrutiny by the citizens, could end up having a disastrous impact on the future generations. This is not always felt immediate or the near term but until many years later. Some good examples are the elitist "graduate mother scheme", "the stop at two scheme", "Speak Mandarin scheme suppressing the proliferation of dialects", the victimisation of "Nanyang University" for political motive, and even the use of CPF for investment and housing has now become a constant concern for retirement. 

Therefore, I urge you to focus your effort on educating Singaporens to speak up politically. Do not be complacent with the "good" life we have had, we must continue to play our part as responsible citizens and in all fairness to our children, our children;s children, to monitor, scrutinise and question polices mandated by the ruling elites. Singaporeans have to become aware that the ruling elites are not messiahs, saviours, gods, otherwise we would not have the current financial crisis we are going throught right now with the huge GIC and Temasek looses of monety belonging to Singaporeans. 

Available for rental: Thomson View #17-xx

This 2 bedroom apartment (1,300 sf) is available for rental in May 2009. Monthly rental $2,100. View details. Interested? send email to kinlian@gmail.com

Insurance company disallow revival of policy

A friend approached me for help. He took a policy more than 10 years ago. Recently, he overlooked to pay his premium and his policy "lapsed". He wanted to revive the policy after one year, but was told that this is not allowed.

I asked him to get the reply in writing. From my understanding, a policy should be allowed to be revived within a few years, as long as the policyholder is able to provide evidence of good health. In this case, the lapsation was due to an oversight, due to poor service by the agent and the office in not reminding the policyholder.

In the policy condition, there is a provision for an automatic premium loan or for a paid up policy. These options should be explained to the policyholder. It was not done, as my friend was not told about them.

Sometimes, the agent wanted to get the policyholder to take up a new policy to replace the old policy. This could be a reason why they said that the policy cannot be revived.

In my friend's case, he called the office. I wonder if the customer service office is also adopting the same approch, to get the policyholder to take up a new policy? If this is the case, it will be unethical and against the interest of the policyholder.

This could be another example of taking the policyholder "for a ride". By getting the reply in writing, it will be possible for the policyholder to lodge a complaint with FIDREC or with MAS. 

Tan Kin Lian

Advice from three religion on how to handle debt

Read this.