Here is my advice to a motorist who is involved in an accident. In all cases take photographs of the damages to both vehicles, using your mobile phone. Send the photos and the particulars of both drivers to your insurance company. Take this action, even if both parties agree not to make any claim, especially if the damage is quite minor. The photos will protect you against any inflated claims that may be lodged against you in the future.
Tan Kin Lian
Monday, June 7, 2010
An unfair life insurance policy
A policyholder sent to me a benefit illustration of a 20 year endowment policy bought four years ago. This policy provide a sum assured of $100,000 and requires an annual premium of $6,000. It pays an annual cash dividend which can be re-invested to earn an interest rate (illustrated at 3% per annum).
The first year's premium is entirely taken away. For each subsequent year, the cash value increases by about $5,000. This means that the cost of insurance is $1,000 to insure $100,000. The cost of this cover under a group insurance should be less than $100 a year.
If the policyholder keeps the policy to maturity at the end of 20 years, the benefit illustration shows a return of about 3% per annum, but a large portion of this return is not guaranteeed and may not be realised. If the policyholder terminates the policy at any time, including the 19th year, a large part of the potential gain is forfeited. The cash value in most years is less than the total premium that has been invested.
This type of policy goes against the concept of fairness. Why should a large part of the gain be taken away on the 19th year? Surely, in the case of a participating policy, there is the principle that the policyholder should be entitled to 90% of the surplus, rather than have this share to be confiscated.
It is time for our regulator to look into this type of practices that are quite unfair for consumers. Although the features of this policy is shown in the benefit illustration, the consumers (including those who are well educated) cannot be savvy enough to know about these catches.
I encourage all consumers to join FISCA (http://www.fisca.sg/), to attend the FISCA talk on financial planning, and to buy my book, Practical Guide on Financial Planning. Be educated, so that you do not fall frey to bad financial products in the future (even if you cannot do much about the bad products that you have been sold in the past).
Tan Kin Lian
The first year's premium is entirely taken away. For each subsequent year, the cash value increases by about $5,000. This means that the cost of insurance is $1,000 to insure $100,000. The cost of this cover under a group insurance should be less than $100 a year.
If the policyholder keeps the policy to maturity at the end of 20 years, the benefit illustration shows a return of about 3% per annum, but a large portion of this return is not guaranteeed and may not be realised. If the policyholder terminates the policy at any time, including the 19th year, a large part of the potential gain is forfeited. The cash value in most years is less than the total premium that has been invested.
This type of policy goes against the concept of fairness. Why should a large part of the gain be taken away on the 19th year? Surely, in the case of a participating policy, there is the principle that the policyholder should be entitled to 90% of the surplus, rather than have this share to be confiscated.
It is time for our regulator to look into this type of practices that are quite unfair for consumers. Although the features of this policy is shown in the benefit illustration, the consumers (including those who are well educated) cannot be savvy enough to know about these catches.
I encourage all consumers to join FISCA (http://www.fisca.sg/), to attend the FISCA talk on financial planning, and to buy my book, Practical Guide on Financial Planning. Be educated, so that you do not fall frey to bad financial products in the future (even if you cannot do much about the bad products that you have been sold in the past).
Tan Kin Lian
FIFA World Cup
Many people are still angry at the high price of $90 to watch the FIFA World Cup on cable television. They compared it to the price 4 years ago, which was just a fraction of this price.
It is sad to see that the cost of this item has increased many fold, due to the wrong kind of competition, i.e. competing for the rights to broadcast the matches, rather than to bring down the price for consumers.
The lesson has now been learnt, and changes have been made for the future, i.e. to require content owners to broadcast on several platforms.
Back to the World Cup. If the price of $90 is divided by the number of matches, the cost per match is relatively low and can be shared by several members of the family. Even friends can be invited. Compare this with the cost of watching one match at stadium, which must be more than $100.
It will be a good idea for several neighbours to share the price of $90 and to arrange to watch the games together. It will foster the spirit of neighbourliness.
Tan Kin Lian
It is sad to see that the cost of this item has increased many fold, due to the wrong kind of competition, i.e. competing for the rights to broadcast the matches, rather than to bring down the price for consumers.
The lesson has now been learnt, and changes have been made for the future, i.e. to require content owners to broadcast on several platforms.
Back to the World Cup. If the price of $90 is divided by the number of matches, the cost per match is relatively low and can be shared by several members of the family. Even friends can be invited. Compare this with the cost of watching one match at stadium, which must be more than $100.
It will be a good idea for several neighbours to share the price of $90 and to arrange to watch the games together. It will foster the spirit of neighbourliness.
Tan Kin Lian
Price of security
Singapore used to be a safe, peaceful and orderly place. People respect the law. There are sufficient law enforcement officers who are dedicated to their jobs and are respected.
This situation has changed. We hardly see a policman on the road today. Many people prefer comfortable jobs in offices, especially the banks, rather than be a policeman on the beat. There must be an increase in crime in recent years, although they are not reflected in the statistics. Are the statistics reliable?
We have seen an increse in cheating cases involving motor insurance claims and sales of unregulated financial products. Thre are insufficient manpower in the law enforcement agencies to investigate these cases.
On the other hand, we have many older people who remain unemployed for many years. The younger people have taken over their jobs in the offices. But, there are insufficient people who want to be policemen.
The home affairs ministry may celebrate their ability to meet the key performance indicator of reducing manpower cost (which may earn a performance bonus for the people in charge), but this is at the expense of security in our society.
The recent incident of grafitti on the MRT train is an example of how bad things have become. What if there was a bomb planted in the train?
Something is wrong with the priorities in our society.
Tan Kin Lian
This situation has changed. We hardly see a policman on the road today. Many people prefer comfortable jobs in offices, especially the banks, rather than be a policeman on the beat. There must be an increase in crime in recent years, although they are not reflected in the statistics. Are the statistics reliable?
We have seen an increse in cheating cases involving motor insurance claims and sales of unregulated financial products. Thre are insufficient manpower in the law enforcement agencies to investigate these cases.
On the other hand, we have many older people who remain unemployed for many years. The younger people have taken over their jobs in the offices. But, there are insufficient people who want to be policemen.
The home affairs ministry may celebrate their ability to meet the key performance indicator of reducing manpower cost (which may earn a performance bonus for the people in charge), but this is at the expense of security in our society.
The recent incident of grafitti on the MRT train is an example of how bad things have become. What if there was a bomb planted in the train?
Something is wrong with the priorities in our society.
Tan Kin Lian
Sunday, June 6, 2010
Inflated claim
Many motorists have encountered this experience. The car in front stopped suddenly. The car at the bank knocked into the bumper. It was a small scratch. Both parties agreed not to file any claims.
Later, the motorist of the rear car received a claim, usually through a lawyer, for a sum that is way above the actual damages. It seemed that the damages have been inflated. If you do not settle the claim, the lawyer would file a legal suit and take you to court.
What would you do, if you received an exaggerated claim? Share your views here.
Tan Kin Lian
Later, the motorist of the rear car received a claim, usually through a lawyer, for a sum that is way above the actual damages. It seemed that the damages have been inflated. If you do not settle the claim, the lawyer would file a legal suit and take you to court.
What would you do, if you received an exaggerated claim? Share your views here.
Tan Kin Lian
Land banking - Gathering on 12 June
The leaders of the investor group are arranging a gathering of investors as follows:
Date: Saturday 12 June 2010
Time: 10.30 am
Place: Speaker's Corner, Hong Lim Park
They wish to organise the investors to seek the recovery of their investments on the land banking products. If you are involved in this product, you can attend the gathering and submit your particulars and make contact with the other investors. The gathering can decide on collective action.
They have invited me to speak at this gathering. The organisers will be alerting the media for this gathering to be publicised and covered.
Please take part in this survey.
Date: Saturday 12 June 2010
Time: 10.30 am
Place: Speaker's Corner, Hong Lim Park
They wish to organise the investors to seek the recovery of their investments on the land banking products. If you are involved in this product, you can attend the gathering and submit your particulars and make contact with the other investors. The gathering can decide on collective action.
They have invited me to speak at this gathering. The organisers will be alerting the media for this gathering to be publicised and covered.
Please take part in this survey.
Morality and money
Would a reputable lawyer advise a client to write a contract that is "within the law" but in essence is cheating the public?
Many people consider this situation to be all right for the following reasons:
- it is all about making money, i.e. legal fees
- their duty is to the client (who pays their fees)
- if the law is not clear, it is acceptable for the lawyer to take advantage of the unclarity.
I wonder if the lawyer has a duty that is above making money? Do they have a moral duty to ensure that the society is honest and fair?
I remember an episode in the move "Godfather" where the inhouse lawyer consider it to be his duty to protect the mafia family from being prosecuted under the law, but in all other respects, what the mafia family does is not his concern. Has this type of thinking invaded our society?
The shady practices used to be the work of small time lawyers who seek quick profit. In recent years, these types of practices appear to be acceptable to reputable firms, who have become motivated by greed.
Tan Kin Lian
Many people consider this situation to be all right for the following reasons:
- it is all about making money, i.e. legal fees
- their duty is to the client (who pays their fees)
- if the law is not clear, it is acceptable for the lawyer to take advantage of the unclarity.
I wonder if the lawyer has a duty that is above making money? Do they have a moral duty to ensure that the society is honest and fair?
I remember an episode in the move "Godfather" where the inhouse lawyer consider it to be his duty to protect the mafia family from being prosecuted under the law, but in all other respects, what the mafia family does is not his concern. Has this type of thinking invaded our society?
The shady practices used to be the work of small time lawyers who seek quick profit. In recent years, these types of practices appear to be acceptable to reputable firms, who have become motivated by greed.
Tan Kin Lian
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