In this article, I explain what is a participating life assurance policy and how are the reversionary bonus ro cash dividend calculated for these policies, and why this type of policies should be avoided by consumers in Singapore.
www.tankinlian.com (see Latest or Ask Mr. Tan)
For alternative types of investments that give a better yield, read Practical Guide on Financial Planning
Saturday, August 7, 2010
Singapore Exchange
In this FAQ, I explain why it is better to invest in the financial products traded in the Singapore Exchange (SGX) compared to other platforms, such as the products offered by banks and marketing intermediaries. The SGX offers a wide range of products at transparent prices with narrow spreads and allow you to buy or sell the same prodcut. However, unit trusts are not traded on the SGX.
www.tankinlian.com (click on Ask Mr. Tan or Latest)
www.tankinlian.com (click on Ask Mr. Tan or Latest)
Choose your life insurance company carefully
You have to choose your life insurance company carefully, as you have to stick with them for 20 years or more. If you choose the wrong company, you will see a large part of your savings taken away from you. What are the factors to look for in choosing the company? Go to my website, click on "Ask Mr. Tan" and search for "Choose".
www.tankinlian.com
www.tankinlian.com
Friday, August 6, 2010
No dream too bold
Here is a National Day message from a Singaporean.
My view
I agree with his views. We have made commitments on the goals of Singapore, in our National Day songs and pledges. Many people share the same aspirations. We only need to match deeds with words - the mark of integrity.
My view
I agree with his views. We have made commitments on the goals of Singapore, in our National Day songs and pledges. Many people share the same aspirations. We only need to match deeds with words - the mark of integrity.
Marketing flyers
Read this letter.
My view
I receive several marketing flyers every day from property agents trying to sell properties that I am not interested in or asking me to sell my property, which I am also not interested in. I throw away these marketing flyers without looking at them. I also ignore the flyers on new property launches of residential, commercial and industrial estates.
It is so wasteful to be spending so much money on marketing materials that go into the waste basket. The people who make money are the printers and the distributors of the materials. The property agents do not mind wasting this money, because they can make a big killing when the close a transaction, i.e. a few thousand dollars or tens of thousand. They only need to close one transaction every few months to earn a living.
Another wasteful practice is the marketing flyers sent by banks with their monthly statements and credit card statements.
Why is Singapore so wasteful? Why should the public pay so much in commission to the property agent? This inefficiency and wastefulness adds to the cost of living and the cost of doing business.
Tan Kin Lian
My view
I receive several marketing flyers every day from property agents trying to sell properties that I am not interested in or asking me to sell my property, which I am also not interested in. I throw away these marketing flyers without looking at them. I also ignore the flyers on new property launches of residential, commercial and industrial estates.
It is so wasteful to be spending so much money on marketing materials that go into the waste basket. The people who make money are the printers and the distributors of the materials. The property agents do not mind wasting this money, because they can make a big killing when the close a transaction, i.e. a few thousand dollars or tens of thousand. They only need to close one transaction every few months to earn a living.
Another wasteful practice is the marketing flyers sent by banks with their monthly statements and credit card statements.
Why is Singapore so wasteful? Why should the public pay so much in commission to the property agent? This inefficiency and wastefulness adds to the cost of living and the cost of doing business.
Tan Kin Lian
Existing Life Policy
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
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
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.
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