I am expecting a very interesting AGM come at this month. Already the styles of the ex CEO and present CEO are very different. The former engages policy holders, while the latter eschews from even replying to their emails.

I can only surmise the common refrain from the policy holders on that day to be….

“Please don’t cut my annual bonus in my policies! Grrrrr……”

Dear Mr Tan,

Just to make it clear in the 1st place, I am not well versed in financial instruments and am not working in any financial institutions. I am a customer of Income for a long time to come since the 90s.

I would like you to know how I feel about the products and services that Income has provided during the years.
From all your hypes about the products and services in Income during your reign, you stressed on them provides good returns and value. I beg to differ. I had policies from other insurance companies like Great Eastern and AIA as well as unit trusts invested with banks. From a layman terms they are performing and giving better returns then the products that you had provided during your time in Income. A few of your investment products have performed the worst (which i had invested in). Even worst than the bank interest rates. One should wonder as why they had not soared when the market booms. Since then some of the unit trusts had exipred and returned a paltry sum to their investors because of the capital protection.

One may wonder what had happened? Did Income during your reign did not pay enough for its employees or agents to work harder or just enough to feed them without extras? These do not seemed to be the case for other insurance companies. They even provided extra bonus for their policy holders even though their fees are higher and these outshines the fees that i am paying. I do know that a company cannot afford to pay peanuts (not Golden Peanuts) to get gold in return. You pay peanuts you get monkeys. All salary should peg to performance – not say you earn more because you work harder you had to be penalised. I should say Income should not have paid you any salary because you have done so badly.

i’ve seen in your postings that insurance agents or any other marketing agents cannot be paid so much. How do you derive they are being paid too much? I would presume you were being paid too much because your stocks are not performing. Like a company who sells new and sophisticated products, you cannot expect the masses to just know about them without marketing agents or your insurance agents to promote and explain to them. Instead when my unit trusts is going to expire, I had received calls from your staffs to ask me to invest in other products without explaining to me why? I refused and told them get my agent to explain to me.

You kept telling the masses to go direct an skipping the agents to save those few dollars. I’d rather pay for an informed decision. If any thing happened, I can’t get anybody to ask any questions and help cause I did not pay a fee to get my jobs done easier. Going through the company myself will bring me a whole lot of headaches, as you know yourself that it is not so straight forward to make a claim. If you can get any Ah Soh and Ah Peks to just know all these products just by telling them the names, i’ll will 100% go and buy your products.

From my observation, you seemed to be very bitter in leaving Income and had a host of resentment against the company. It does seemed that just when to start to advertise yourself (your pictures everywhere) in the letters that were sent to policy holders, you where asked to leave but Income graciously asked you to resign instead. I remembered that at that time there were alot of commotions about the agents’ commissions and your bickering with some top management staffs.

Best regards
Income customer

Dear ohmyohmy

I have seen similar comments posted before. I believe that your comments are not the true feelings of a policyholder, but are posted to slander me.

If you are really truthful about your bad experience with the products that you bought from NTUC Income during my time, you can send an e-mail to me at kinlian@gmail.com.

But I declare that the return from the capital protected fund, managed by a bank, was bad. This issue had been addressed on several occasions in the past. I held several meetings with the policyholders to explain the background on this issue.

I believe that customers of many other insurance companies and banks had similar bad experiences with this product.

The best way to prevent slanderous postings is to have forumers all register for an account in TOC. The account registration will require his name and email address. That way, each forumer is accountable for what he says in the forum. Not totally foolproof, but at least that’s a start.

Raymond,

Personally, I’d like to think – and hope – that we Singaporeans can discuss and debate (even vigorously) without being ‘coerced’ to. I am not really in favour of making our readers register before they can comment.

But I am open to the option – if most people feel that way.

By the way, so far, I am happy and grateful that mostly the comments here have been civil and respectful.

I read in disbelief that the ex-CEO of NTUC Income could only give one advice pertaining to insurance planning, that is, to “buy term”. What happened to analyzing the needs of the clients and understanding the risk profiles of his client?. By peddling term insurance as a “one-size-fit -all” solution is way too simplistic and his “followers” may suffer dearly for it. Heeding a wrong advice does come with a cost. I hope his readers will keep an open mind for their own benefit.
Mr Tan has neglected to educate his readers the full features of whole life policies and term policies, focusing narrowly on the premium. He failed to paint a complete picture to help his readers understand the mechanisms behind insurance pricing.
As Insurance is a mathematical science, it cannot be explained with a few simple words.
I will try to address only some of the features which he failed to address.
Firstly I will illustrate using the following two examples of Mr A and Mr B (non-smoker, aged 30)
Mr A bought an NTUC Income Vivolife policy (sum assured $100,000).
His premium is $4251.75 a yr, payable for 10 yrs but the coverage is lifetime.
This policy pays a minimum of $125,000 for death, critical illness or permanent total disability. It also pays $300,000 for accidental death. There is a cash value for this policy from year two and the cash value and sum assured continue to grow even though Mr. A stops paying premium. The policy grows in value because it participates in the profits of the insurance company.
Mr. B bought a 30 yrs Term policy (Living rider-sum assured $100,000). His premium is $422 a yr, payable for 30 yrs. His coverage of $100,000 remains the same throughout the term.
What happens to the policy if the following happens:
1. Both died at a year later – Mr. B “seems” to be better off because he paid only $422. Mr A paid ten times more but his family receives $125,000. The extra premium of $3800 ($4252 less $422) got him $25,000 extra coverage. If the death is caused by an accident, Mr A’s family gets $300,000,that’s 300% more than Mr.B’s family.
2. Both decides to terminate their policies at year 10. Mr. A is better off because he would get back $41,896 (total premium paid is $42,517.) So his policy cost him only $621 for 10 yrs of coverage. That works out to $62.10 a year. Mr. B paid $4,220 and gets nothing back.
3. Both gets cancer at age 40. Mr. A gets $127,576. Mr. B gets a flat payout of $100,000.
4. Both lost their jobs at age 50, and depleted all their cash savings. Mr. A is better off as he does not need to pay any premium and yet has full coverage. Mr. A is able to use some of the cash value in his policy. For Mr. B, if he has to choose between buying food for his children and paying his premium, he would choose the former. Sadly, in 1996, 2002 and 2001, many people lost their jobs and their insurance coverage.
5. Both are alive and well at age 60. Mr. A is better off. His policy has a value of $100,000 (the premium he paid has earned 4%p.a, similar to a zero coupon bond). He has a choice to cash out or leave it or to convert it into an annuity. For Mr. B, his policy expires worthless. Total premium paid and gone is $12,669.
Looking at Singapore’s life expectancy, scenario 5 would seem highly probable but one can never be sure… Depending on client’s needs, a combination of whole life and term may provide the necessary coverage.
Mr. Tan would argue that Mr B must “invest the difference”. That sad truth is that in reality, most people would have invest and “lost the difference” or “spent the difference” or simply “left the difference sitting in the bank”. In the current volatile market, only the cash values of traditional whole life policy continue to climb surely and steadily.
With regards to Mr Tan’s remarks about decreasing term insurance. He only pointed out that it is cheaper than term policy. He failed to highlight to his readers that the policyholder would be paying the same premium dollar yearly for a coverage that diminishes in value. This means that the policy gets more expensive with each passing year, as the policyholder is paying the same absolute dollar for a smaller amount of protection. So, in hiding this fact, is he being dishonest?
Note:
Whole life policies are very similar to zero coupons.The definition from Wikipedia-“A Zero coupon bond (also called a discount bond or deep discount bond) is a bond bought at a price lower than its face value, with the face value repaid at the time of maturity. It does not make periodic interest payments, or so-called “coupons,” hence the term zero-coupon bond. Investors earn return from the compounded interest all paid at maturity plus the difference between the discounted price of the bond and its par (or redemption) value. Examples of zero-coupon bonds include U.S. Treasury bills, U.S. savings bonds, and long-term zero-coupon bonds.”

Dear Catherine Choong

You can read these FAQs to understand why I recommend buy term and invest the difference.

http://www.tankinlian.com/faq/savings.html
http://www.tankinlian.com/faq/

Life insurance is important for a family,but it can be low cost insurance, covering death, accidents and critical illness. I invite readers to read my FAQ to make an informed choice.

http://www.tankinlian.com/faq/choice.html

The remaining savings, invested in a low cost fund, is likely to give an accumulated value that will be more than the face value of the policy at the end of 30 years. The policyholder does not need to die or suffer a critical illness to get this face value. The invested fund is likely to produce this sum.

http://www.tankinlian.com/faq/savings.html

A higher accumulated value in an investment fund (compared to a lower cash value in a life insurance policy) will give more money for the policyholder to spend during his or her retirement years. This is an important function of financial planning that is not well served by a life insurance policy, due to its high cost structure.

Although the return from an investment fund is subject to volatility, it is not a serious matter for a long term investor. This point is covered in my FAQ. A life insurance policy with a high terminal bonus, also provides uncertain cash value, and is less transparent.

The life insurance policy gives a poor return due to the “effect of deduction”. This is the huge sum that is taken away from the policyholder to pay the marketing expenses and other charges.

My general analysis is on the life insurance products commonly sold in the market. I believe that the “effect of deduction”, in the case of NTUC Income, are lower than the market. It is for you, as the adviser, to tell the policyholder about this lower effect of deduction and demonstrate the value of the Vivolife product.

Someone showed me a benefit illustration for Vivolife. I was surprised that the cash value at the end of 20 years still showed a poor yield. I hope that this is an aberration, and that the yield for most other Vivolife products are better. Perhaps you can show some examples, illustrating the total premiums paid for 20 years, the cash value and the “effect of deduction” for the 20 years.

I have other point about an inflexible life insurance policy that forces the policyholder to continue paying the premiums and imposing a big penalty on early termination. This is not fair to the general public.

During the time that I headed NTUC Income, I declared high annual bonus and provided higher cash value (compared to the market), so that the policyholders who cannot continue the policy does not suffer a large penalty.

I believe that a flexible savings plan invested in a low cost fund is better for the policyholders in this modern time. Many of them are now investing in low cost unit trusts and mutual funds available from other platforms.

I hope that the life insurance industry and advisers can rise to the challenge to give good value products to the large number of people who entrust their future to us.

Tan Kin Lian

Dear Andrew, kudos to you and your team’s revamped website. Let’s hope everybody continues to be civil here… :)

seveneleven Says:
May 7, 2008 at 11:18 am
Many thanks to Mr Tan for his advice. However, was this properly disseminate and educated to your agent when you were in NTUC income? Was it NTUC Income policy to ensure that the consumer were made to pay for the unnecessay?

It makes me wonder why you have suddenly become a crusader for the NTUC Income policy holder?

Gabriel Sim Says:
May 7, 2008 at 11:30 am
Insurance agents will almost never inform you of the most cost effective polices as these yield the most miserable commissions. I believe that nowadays agents only earn commission off your life policies for the first 5 yrs or so. Unlike previously when they took a cut of your premiums over the entire duration of the policy.

This has lead to predatory practices where agents attempt to sell the most expensive policies to make it worth their while.

It is ludicrous for us to continue to pay higher premiums for lower coverages and lower bonus distributions.

“return on maturity which is 15% to 30% higher than similar products in the market”

Mr Tan Kin Lian – might i ask what you mean by ’similar products’? are you comparing to products offered by other insurance companies or are you referring to investment products offered by lets say the banks?

Gary Teoh Says:
May 7, 2008 at 11:30 am
Insurance agent gave me a bad impression,they want our commission only,after 3 years or 5,when no more commission, they disappear,I lost a lot whether in insurance or unit trust.Can’t trust them any more.

Currently Spared Says:
May 7, 2008 at 12:17 pm
From what I understand, the concept of insurance is collective protection. Meaning if 100 individuals pay for an insurance and let’s say 1 person actually claim before maturity, then the rest are basically providing the payout to this individual. As return, you get collective protection. I fail to see this being reflected and so is it significant? I think a complete picture is needed for fairness and also, I am not denying that agents have families to feed too. Just my dime worth.

gorgorsitioeh Says:
May 7, 2008 at 1:23 pm
Hi Mr Tan, thank you for your insightful advice to many disadvantaged policyholders of NTUC Income, some of whom would probably be as disgrunted as you at present.

However, like some people, I am intrigued as well as to why you have suddenly become a crusader for your former company’s policyholders. You are, or rather, you used to be a former NTUC Income man (since you had chosen to draw a clear line to deviate yourself from the present management by not commenting on the new policies introduced after your departure), and you didn’t leave the company for a very long time, so as to speak. It makes me wonder if you have some other motive for doing this, whether it is political or not, or whether you have substantial solid backing to make such a loud statement on a government-friendly newspaper. After all, you used to be a NTUC Income man.

Once again, thank you very much.

omongpapkosong Says:
May 7, 2008 at 5:37 pm
Mr Tan Kin Lian you are a very brave man and I greatly admire you.
Singaporeans needs more men like you.
Thanks for your advice.

MadameG Says:
May 7, 2008 at 8:59 pm
Dear Mr Tan,

With all due respect, your advice can be obtained from reputable financial planners, who do not earn commissions from sale of any financial products (However, a word of warning. Some “financial planners” are actually insurance agents). Such is the current state of the insurance industry – your ‘confession’ says it all.

Your statement “These policies give a return on maturity which is 15% to 30% higher than similar products in the market.” does not support your own point that one should NOT buy those life insurance policies. I do not see how this could absolve your position.

I am not so sure what are your motives for this article – an atonement or public penance of some sort, perhaps?. However, in the context of financial truth, this is most welcome.

Perhaps, you could reveal more on other non-life insurance products. Of particular interest ($$$), the so called “medical” insurance in Singapore.

SuperNanny Says:
May 8, 2008 at 12:11 am
It is quite interesting a number of readers think Mr Tan has a personal agenda. Nonetheless, being quite a math-idiot (heavily penalized in our education system), I read Mr Tan’s article and don’t really have a hoot what he’s saying. They are really too technical for me.

I think in life, you can’t plan too much and you shouldn’t be so picky to the point of counting pennies and cents. Everyone’s got to make a living, so why not just chill out and let your agents earn their dough. Instead, focusing your energies doing what you enjoy is more important and as a result you can earn more too.

I have some NTUC policies (lol, I don’t even really remember the names), and I’m going to just leave it status quo. Have about half a million of insurance, yah so think that should be enough? Really don’t feel like spending time to go down to that AGM and haggle like in a market.

Adrian Khiat Says:
May 8, 2008 at 12:09 am
It was disappointing to see you condemning Financial Advisers so actively barely one year you left NTUC Income.
One year ago, people from NTUC Income respected your hardwork as you go around Singapore giving endless Seminars and promoting plans from NTUC Income. They paid tribute to you when you left and you left with full respect.

Today, you were telling everyone don’t buy these plans anymore because new plans are not of good value. You also changed you mind that old plans that you used to promote are also of no good value now.

We cannot stop you airing your views. Maybe you want to get the best Citizen or Singaporean award by being a noble person who are willing to give advice by not getting a single cent. You can spend all your time in your blog teaching people not to invest in Unit Trust or get any Life Insurance because you have already build up a good wealth from the company you are condemning.

I cannot disagree that Standards of Insurance Professional need improvement or some Financial Advisers deserve their rewards by selling the inappropriate plans but I do not agree that they should be slaughtered overnight.

The knowledge gained by Financial Advisers are through years of studies and experience. I do not want to argue that some Life Insurance is ok if supported by Term Insurances. Many Financial Advisers deserve some commission or advisory fees. It was unfortunate that the structure are not in place to pay the well deserved and really professional advisers.

If you truly care for the industry, help to think of good ways to improve the situation unless you think the best way is to make a name for yourself by killing everyone in the industry. Or maybe you are trying to gain publicity for the new company that you just set up.

Adrian Khiat

Adrian Khiat Says:
May 8, 2008 at 12:34 am
It is disappointing to see that the person who left NTUC Income barely one year ago, condemning all Financial Advisers in Singapore. One year ago, I remembered seeing Mr Tan going round Singapore in Community Centres and in Bras Basah Centre giving Seminars after Seminars. He was actively promoting plans from NTUC Income.

Today, all the plans he used to promote became lousy plans and the new plans introduced are also lousy plans because he feels that the adviser should not be paid too much. There was “rumours” previously that he tried to capped the commission of his mobile financial consultants. This commission issue, with other issues, prompted the then GM, Mr Stanley Jeremiah to leave. Two tigers cannot live on the same mountain.

I have to agree that not all Financial Advisers are ethical or giving the right advice. But there are many, who keep upgrading, well read with industry knowledge and worked hard for the interest of the people. Its not right to say that an adviser is unethical just because he sold a Life Policy. A life policy may be appropriate if, after a proper analysis, the policyholder and adviser conclude that a Life Policy might be a better choice. I’ll not like to elaborate the advantages of a Life Policy when coupled with a Term policy.

I hope Mr Tan is not trying to gain publicity for his new company that he set up or are being bitter with the new management for gaining market share agressively that he could not achieve during the last 2 years as CEO. His new company works best when all Financial Advisers in Singapore are slaughtered. He is willing to give free advices in his blog with all his free time because he had already accumulate sufficient wealth from the company he is not condemning. He don’t need an income, many of us still need to.

What an interesting personality.

Adrian Khiat

Tan Kin Lian Says:
May 8, 2008 at 9:10 am
A few people have asked about my motive in revealing the truth about life insurance, and how it reconcile with the products that are sold by NTUC Income during my time.

I have always held the view the the products must be priced fairly for consumers. The premium comprise of the cost of insurance, the marketing expense and administrative expense, with the balance being invested to accumulate the cash value and bonuses payable under the policy.

For marketing expenses, it was necessary to pay a fair remuneration to the agent to sell the life insurance. The commission rates paid to agents and agency managers in the market were far too high. The commission rates paid by NTUC Income were at a much lower level.

Administrative expenses were kept low. There were no extravagrancy. We were frugal. I felt that this should be so, as most of our policyholders were from the ordinary people who has to work hard to earn their monthly income.

The remaining premium were invested to accumulate the cash values and bonuses payable under the policy. The bonuses are distributed to all policyholders fairly.

NTUC Income pays a lower level of tax as a cooperative society. This helps to offset the marketing and administrative expenses, and give an attractive return to the policyholders.

Most insurance policies sold by NTUC Income in the earlier years enjoyed a high rate of bonus and gave an attractive return to the policyholders. A yield of more than 5% (even 6%) over the past 20 years can be considered to be quite good.

After leaving NTUC Income, I have more time to study what is really happening in the market. I get more feedback from the general public about the insurance plans that they have bought from other insurance companies.

I was also asked about the structured financial products sold by the banks and other distributors. These products have many of the bad characteristics of high cost life insurance products.

It becomes quite clear to me about how the general public is being exploited by the bad products offered by the financial services industry. They took away high charges (not properly explained by the financial advisers) and gave a poor return to consumers. I decided to be more active in giving my views in my blog.

This is my personal reply to Adrian Khiat, whom I know well. Adrian is a fair person, although he has recently written a strong criticism of me.

I am concerned about the change in the bonus structure affecting 310,000 policies sold earlier by NTUC Income. I am also conerned about the move by NTUC Income to be more “like the industry”. They destroy the values that NTUC Income stood for, as a cooperative society, during the time that I headed it.

I do not wish to interfere with the new management of NTUC Income in respect of the way that they manage NTUC Income now and the new products that they introduce.

My wish is that they keep the old bonus structure for the old policies that were sold earlier, based on the benefit illustrations that were promised to the policyholders. There should not be an unilateral and arbitrary change.

The management can make an offer to these policyholders to move to the “new bonus structure”. Let it be voluntary.

There are some good life insurance products in the market. Some other products can be improved by reducing the marketing and other costs, and offering fair terms to consumers.

In this way, the life insurance industry can do its “noble” role of serving the public by truly serving them with the insurance protection and a fair return on their savings.

Daily SG: 8 May 2008 « The Singapore Daily Says:
May 8, 2008 at 11:30 am
[...] Discourse – vinyarb: What raffles place ghost? [Thanks Richard] – The Online Citizen: The truth about life insurance – Rambling Librarian: Singapore Police Force in YouTube (or “Should our SPF have a [...]

Boboshooter Says:
May 8, 2008 at 12:16 pm
Dear Adrian,

Other than him being the ex-NTUC Income CEO, I don’t know Mr Tan or what his new business is, or whether he has a vested interest in saying what he says, but one thing is for sure – I am far more inclined to agree with him than with you.

What Mr Tan is saying, as anyone who’s studied finance 101 can tell you, is that there is nothing mysterious or wonderous about life insurance or investment-linked insurance. Deconstructed, they are simply a packaging of a term insurance together with a savings or investment into one scheme.

As such, there is no financial or moral justification for the intrinsic insurance costs of such policies to be ten times higher than an equivalent term insurance (according to Mr Tan).

If what Mr Tan says about the 10x higher cost is correct (and I’m quite sure from his background he knows what he’s talking about), strictly speaking from a finance angle, I am highly dubious that a life policy can ever be better choice under any circumstances.

I think the only reason why such policies sell so well is that the so-called “Financial Advisers” push them hard as they are much more lucrative to sell; and financially less savvy purchasers continue to be “suckered” into it without being aware that they are getting less than what they should get. I agree with Mr Tan that this is downright dishonesty and smacks of conflict of interests.

If your main justification for the “right” to sell such policies is the financial adviser’s own rice bowl, where does that leave the the policyholder, whose interest is supposed to come first?

In parting, I’d like to draw your attention back to the meaning of term you used – “Financial Adviser”. What does that the term “Finance” and “Adviser” signify to you?

Boboshooter

Wilfred Ling Says:
May 8, 2008 at 12:28 pm
Dear Mr. Tan Kin Lian,

You have created quite a stir in the industry. Some people thinks you are wrong, some others think you have another motive while others believe what you are doing is right.

In whatever you do, if your conscience is clear, let those who criticized you not prevent you from doing the good work.

If your conscience is not clear, I appeal to you to listen to your own conscience.

All the best.

Tan Kin Lian Says:
May 8, 2008 at 12:35 pm
This is my reply to Adrian Khiat.

I wish to acknowledge the large numbers of insurance agents who have to work hard to earn an income to feed a family.

I hope that insurance companies can design products that are fair to consumers, give good value and offer an adequate remuneraton to the insurance agents. During the time I headed NTUC Income, I adopted this approach.

It is possible for insurance agents to play a “noble” role of selling life insurance, without any disadvantage to the customers. If the agent works hard, it is possible to earn more than enough to feed the family, more than other jobs that they are capable to do. It can also be fulfulling to help many families.

Under my approach, it may not be possible for the insurance agents to be super rich. At least they have the satisfaction that they are giving good value and not taking advantage of the trust of their customers. They are giving honest advice as a financial adviser.

I hope that, in the future, more people will buy good value insurance products directly from the insurance company, without the need for agents to sell the products to them. There will be more salaried jobs for insurance advisers. This will improve productivity and reduce the cost to the consumers. It will also give more stable sales jobs.

Blacktshirt Says:
May 8, 2008 at 12:38 pm
Hi Mr Tan,

Would that suggest that almost all the policies in the market are not to the benefit of the life to be insured?

Derivative Says:
May 8, 2008 at 12:44 pm
Boboshooter

Very well said. People are sometimes confused with complex names / jargons / formula with the actual value to be received (if they ever received it).

Just look at the recent sub-prime debacle, very fanciful. And look at some of the big names which got hit. Well, they are supposed to be the experts and darlings of high finance right.

Tan Kin Lian Says:
May 8, 2008 at 1:50 pm
Some people asked if I have a motive, that is, if I am setting up another insurance company to offer low cost products?

My motive is to offer to the people the option to buy low cost products, i.e. term insurance and investment funds. This topic has been covered in my blog and website over the past year:

http://www. tankinlian.blogspot.com/
http://www. tankinlian.com/
http://www. tankinlian.com/faq

Many people have asked me where they can buy low cost term insurance and investment funds. I have directed them to the following:

> insurance companies, mostly NTUC Income
> invest in the STI ETF, through a stockbroker
> invest in unit trust, through an internet platform, e.g. Fundsupermart, Dollardex, POEMS

I am now advising a life insurance company in Singapore to offer these low cost products. I hope that they will be avialble in 6 to 12 months time. This has been mentioned a few times in my blog during the past weeks.

I hope that my actions in educating the public and advising a “new” life insurance company, will spur the existing life insurance companies, i.e the big boys, to offer low cost products as well. This will be to the advantage of the large numbers of people who need the “noble” service of life insurance.

Some people have pointed out that I have earned enough money from my previous job, and I do not need to earn more money now. This is correct. I am doing what I can to offer an alternative, which I hope will benefit many people.

I want to thank the large number of ordinary people who have expressed their views in support of my effort. It has been very difficult for me to endure the personal attacks of people with vested interests.

seveneleven Says:
May 8, 2008 at 2:11 pm
Dear Mr Tan
It is good to know that your intention is to teach as well as offer a low cost productive financial products to the mass, who mostly are simply unware and rely on the finanical agents for advice.
However, it cannot be blamed that the masses to be suspicious of your intention as you have been a “govt man” until you retired. Furthermore, you have been silence on your ex-company products until you retired and becomes critical and crusading the policies holders.
Like what you say, you cannot stop people from saying what they like but if your conscience is clear, you have nothing to be afraid.

palindrome Says:
May 8, 2008 at 2:22 pm
This reply goes to Mr Tan, Wilfred Ling, Adrian.

Dear Sirs,

This post is not on the new bonus structure, which I have no comments. I wish to discuss on the topic of Term versus Whole Life, which is the essence of the article. I would like to hear your views and opinions, both from an actuarial and financial practioners’ perspectives.

Mr Tan has said on many occasions that everyone should buy Term, and highlighted premiums for Whole Life is many times more expensive. This is an undeniable fact, when we merely look at it at face value.

However, I disagree everyone will definitely benefit from a Term, which is your underlying premise. This is because the assumption is that the person is prudent enough to firstly save and secondly invest.

We are not living in an utopian society. It is a fact; past, present and future that there is a sizable number of people who do not save and invest. For these group of people, whole life insurance is one of the more feasible methods to help them accumulate wealth, as well as give protection. It provides a long-term discipline for them to save and let compounding does it trick. This is clearly better than letting them put money in the bank and hence the temptation to spend.

Also, how many people knows how to invest? We have heard so many real cases of people losing their homes, going crazy, suicide etc during financial crisis. E.g 1997 Asian financial crisis, 2000 dot-com crisis, 2003 SARS crisis, 2007 sub-prime crisis. Are most people really better off investing on their own? And to take the argument further, investing is really both an art and science; not many people can do both of them well. The best part is people only talk about winnings and not their loss. How many really go down to calculate their real yield in investing?

I believe Mr Tan is a very smart person, and one who is very capable. However, I don’t think Mr Tan has ever managed a clientele in which he has met people across a wide spectrum of society. He has spent most of his life managing a company. Thus, although in theory and assuming we live in a utopian society, I agree very much with Mr Tan, I think the advise of asking everyone to buy Term is not appropriate in the real world we live in.

My concern really is that Mr Tan is a public figure, and if indeed his philosophy is too idealistic, will that harm more people than help them? How practical is the idealogy of counting pennies in reduction in yield, effects of deduction etc etc when one is in actual fact better off getting an insurance policy to save?

To sum it up, my argument put forth is this. Consider the practicality of the world we live in, and choose the appropriate action to take. One size does not fit all.

Please take this discussion to be one that is grounded in intellectual debate, many thanks for reading.

Be open Says:
May 8, 2008 at 2:43 pm
Dear Mr. Tan

We need people of your influence and intensive knowledge of the industry to speak your mind – not constrained by the need to answer to any current office / anyone. Personal agenda or not, two sides (or more sides) of the story are always better than one so that more viewpoints can be taken into consideration.

In fact, I am more concerned that some people are questioning your motive in order to plant discouragement so that a particular set of views / belief system is maintained within this powerful insurance industry.

quantifier Says:
May 8, 2008 at 3:28 pm
Dear Mr Palindrome,

Your reasoning has a flaw and you seem to have vested interest in your comments. You are saying that, not all people has an appetite to invest, that’s why they should just let so-called ‘expert’ like insurance companies to do the job for them. If the people agreed to pay 2 years premium to let insurance companies do the job, then I have no say. However, most of the cases, people are not aware of commission structure, and this is exploited by ‘financial advisor’. The reason of ‘caught by stock market’ is heavily used by agents a lot as an excuse to buy whole-life and ILP. From my simple observation, there is no difference that Insurance Companies will be caught by the market movement. So whether I invest my own money or let insurance companies to invest, I am exposed to the same market. So why should I pay 2 years premium to the so-called ‘expert’ if I’m still caught by the market movement? I am better off investing the fund by myself.

Look at Great Eastern results and how they are caught by sub-prime debacle too. To what I see, there is no differences in how I and they invest their funds.

palindrome Says:
May 8, 2008 at 5:01 pm
Dear Mr Quantifier,

I agree that everyone is exposed to the same market risk, i.e. the systematic risk that seeks to reward investors in the long-run. But this is not the grounding of my argument.
I look forward to you responding to debate against my points.

I am putting forth my point that the world we live in is such that not all people have the knowledge/discipline to save and invest. Buying term is detrimental for such people. I am not sure if you know such people, but I know a few. Thus for such people, insurance may be a good option.

The benefit of an insurer’s life fund is that it is always invested and hence benefits from the market in the long-term. Of course, I need to add that this can be done by you too, if you can conquer your inner fear of market crash and a short-term paper loss. Some can, and some just can’t.

On your point of commission, I have an experience on it. Some five years ago, I bought my first life insurance from a good friend. Needless to say, since we are good friends, I did not question on her commission. I think this is the real issue for most people, that they buy from people they know well (usually, I guess), and hence do not ask seeminigly sensitive questions. I supposed those more savvy ones can take a look at the cost of distribution in their quotations.

On the other hand, I also agree that term may be good for some too. Just to set the record straight, I have no whole life plan now, and I don’t sell. If an agent is like me, writing replies in his productive hours, he will have to eat grass soon

On a final point, I wish to say that this reply of mine is not in favour of term or whole life. What I am putting forth is on the basis that everyone is different, and some are better off with whole life. And thus, for anyone to propose everyone to buy term is not appropriate.

I look forward to a good and gentlemanly debate.

Boboshooter Says:
May 8, 2008 at 5:38 pm
Dear Palindrome,

From your comments, to put in simply, what you are essentially saying is that in the real world, the layman does not know how to invest, and he were to do so, he is likely to lose his pants anyway. Since he doesn’t know better, it is justifiable for an insurance company to overcharge this person through opaquely structured products because he is already “better off”?

Sounds like exploitation to me.

I also disagree with your view that the layman is “better off” letting the insurance company help enforce discipline in savings.

If nothing goes wrong for that layman for that 20-odd years the policy is in force, the policyholder gets little more than what he would have got if he had the same discipline to put his money in a bank.

However, in the event there is sudden financial hardship like business failure or job retrenchment, you can always take out your money in the bank without loss to tide over. Not so, for the insurance-linked policy holder. For more than half of the life of the policy, your returns are likely to be negative. What’s the point of compounding when you are starting off with a big minus sign?

As many endowment or savings policy holders found out to their great dismay (esp. during times of the financial crisis you pointed out above) when they tried to surrender their policies prematurely due to financial hardship, they suffered huge losses.

The insurance companies will argue that we are not comparing apples to apples here because the policy holder had an element of insurance coverage whereas the bank depositer did not. However, none of those insurance companies, I bet you, will be prepared to reveal a breakdown of the embedded cost of that insurance element, which will only take their computers in the acturial department a few milleseconds to calculate.

For sake of brevity, I will not even start discussion about the risk-return profile of insurance company’s investments versus a bank’s, versus the type of returns that they give to their clients.

There is an old joke about insurance that you only make money when you are dead. For endowment / savings policyholders, that is sadly but probably true.

Adrian Khiat Says:
May 8, 2008 at 6:04 pm
Apologies if I am too harsh on my words and gone out of point in the topic. Mr Tan is a man of strong principles and he holds on to his ideals very strongly. This, I know very clearly.

I have to agree that many advisers are not well qualified and are selling high premium plans not suitable for clients. Most of the time, these advisers are selling excessive Life Policies and not taking care of client’s interest.

Many are taught and pressured to do that by their managers and company. They do not upgrade themselves to understand the flaws in what they are doing. I understand that Mr Tan is trying to get rid of such advisers.

But in my opinion, we have to be gradual and sensitive as we implement things that will improve the situation. If his comments like “high commission to agents”, “High expenses due to commissions to your agents”, “your agent get a large part of your premium”, etc… The clients thought we get a high commission by selling anything. The monetary factor kept appearing in their mind. They have no idea how much our time and effort is worth. As a Singaporean, they will normally pay as little as possible.

Adrian Khiat
http:// akhiat.blogspot.com/

F2 Says:
May 8, 2008 at 6:04 pm
Dear quantifier,

You seem to have misread palindrome. It is quite apparent that he is supporting CHOICE for the Consumer, who can be broadly classified in 2 groups:

(1) The savvy investor – who knows the market and understands his own risk appetite. If you know how to invest, go ahead and invest on your own but beware of the pitfalls.

(2) The layman investor – who may not be kept updated on market movements or have the know-hows on personal financial planning. If you are not too confident about investment, you COULD (not should) potentially engage professional help.

Also, I think your argument is no better. How sure are you to say that MOST people are not aware of commission structure? Surely any intellectually sound person investing in insurance/unit trust/stocks know that no financial advice by a agent/broker is free of charge. These guys, like you and I, do need to earn a living.

You seem to imply that you are the Category #1 consumer. If so, by all means invest without an adviser. No one is stopping you.

Daniel Says:
May 8, 2008 at 6:46 pm
Singapore should disallow the deduction of life insurance premiums on income tax returns. That deduction is encouraging people to purchase more expensive policies. Insurance agents will point out that a term policy won’t maximize the tax benefit, and thus a more expensive whole life policy is a better policy. Indeed, it’s not bad advice to at least consider the tax savings in your calculation. But this tax write-off unnecessarily complicates the formula and may make some people more susceptible to purchasing a policy that is too expensive for them.

Tan Kin Lian Says:
May 8, 2008 at 7:15 pm
I wish to respond to Adrian Khait comment at 25.

For most life insurance companies, the total commissions paid to agents and agency managers on a whole life, endowment, critical illness, education and investment linked policy takes away about two years of premium, give or take a few months.

For NTUC Income, the commission is about half of the market level for most regular premium policies and about one quarter for investment linked policies. So my remarks about the high commission is more properly applied to the market and not NTUC Income.

Some people may still argue that the commission rates paid by NTUC Income is still high, compared to the actual value of the advice that is provided. This is debatable.

As long as it is properly disclosed to the consumer and is accepted by the consumer, AND THE CONSUMER IS FAIRLY INFORMED ABOUT THE CHARGES OF SIMILAR INVESTMENTS, then the adviser has done his job ethically.

I was responsible to approve the commission rates payable on NTUC Income products during my years at the helm, so I take responsibility if some people consider them to be excessive.

Eveline Says:
May 8, 2008 at 10:31 pm
Whether or not people have the discipline and knowledge to save and invest is immaterial to the discussion. The real question is whether life insurance is the best tool for this.

People buy life (whole) insurance for two purposes (so they think) – for protection (insurance) and for investment. They think that a life policy will do both.

That is true, but is life insurance the best way to do so? I do not think so.

You can get term insurance for 1/10 the cost (this is also my own experience as I have an ILP). Life insurance loses out.

You can invest in a low cost fund (STI ETF comes to mind) paying less than 0.3% sales charge and 0.3% yearly expenses. Tell me which life insurance charge this kind of low fees? Life insurance loses out again.

Lack discipline? You can arrange with a broker to invest a fixed sum every month into the fund.

If people have the knowledge and discipline in investment and savings, I submit that life insurance would be regarded as a very lousy option indeed. It is precisely because people can’t be bothered or don’t have the discipline to read up on financial products that some companies and agents take advantage of this, and push life products.

Eveline Says:
May 8, 2008 at 10:47 pm
With reference to Mr Tan’s comments in 26, the requirement to disclose charges is meaningless to those who have no idea what the jargon is. What is supposed to be included in the “distribution charge”? LIA says it “includes cash payments in the form of commission, costs of benefits and services paid to the distribution channel”. I know what commission is, but what the hell are the rest?

At least I can read English. What about those who can’t understand the table at all.

Maybe as long as you print the distribution cost on the table, that’s considered disclosure. There is no requirement to explain what distribution cost actually is.

chang Says:
May 8, 2008 at 10:58 pm
Dear Adrian,
I follow Mr. Tan Blog’s daily while he was INcome CEO. It was after I attended a seminar talk conducted by Mr. Tan , I understand the concept of buy term and invest the balance. I fully agreed with this idea. I asked whether should I cancelled the old Income policy to buy term and was advised against it.

To say today he advised people to buy term instead of other plans ,that is not true.
I hope it is not because your pockets are ‘hurted’ and you write hashed comments about Mr. Tan.

Everyone has different needs and means.

After talking to a few slimming specialists, I know swimming is the BEST excercise for me to loose weight, but i dont feel comfortable with it. so, i choose to go for a slower process weight loosing control programme like stroll a few more steps at home..it may works but of course not as effective as swimming, but i enjoy it…that is my choice.

You can give all the best recommendations, however, the final decision maker is stil the client. They should buy a plan whereby they feel more comfortable with as they are the one who pay for it.

Tan Kin Lian Says:
May 9, 2008 at 12:04 am
Dear Blackshirt (item #16)

There are three categories of policies:

a) good value, such as term insurance, single premium (with low upfront charge), life annuity

b) moderate value – policies with low charges, such as those sold by NTUC Income and others

c) poor value – policies with excessive charges, that take away two years of premium

Ken Says:
May 9, 2008 at 1:07 am
Dear Mr Tan,
I wish to comment on your advice that public should avoid “Whole Life Plan” and we should buy term & invest the difference”. You have valid reasons for your advice but I felt that this advice coming from you as an Ex-Income CEO may not be very appropriate.

Allow me to explain why I say so:
1) During your time in NTUC Income, you had on going promotions for Whole Life Paricipating Living Policy for many years. Hundred thousand of such Living Policies were sold and now you start telling public to avoid Participating Plans. Participating Plans do have a role to play in our overall financal planning. You played a major part in placing so many of these policies in the hand of Singaporean and now you blatantly asked public to avoid it at all cost. If you are still in charge of NTUC Income, I doubt you will make such a call. It is simply contradictory.

Without all these participating policies sold during the past 29 years in NTUC Income, do you think you can achieve total assets of 16 billions at the end of 2005 from a base of 28 millions. Can you achieve the same result by getting policyholders to buy term & invest the difference in a low cost fund. Better still, since insurance fund charges are high, tell clients to buy from online brokers or invest in ETF directly, etc…
There are reasons why certain products are recommended & sold. Many insurance advisers are making a honest living as mentioned by you. If your advice is to be taken as “Gospel”, there are simply no more roles for any financial advisers in the industry.

You have made enough & are now financially independent, but many advisors are still working hard to feed their family.

In view of your past tremendous effort in promoting “Whole Life Plans”, I just can’t help but felt a sense of hypocrisy with your strong advocate that now, we all should “avoid Whole Life Policy” & just “buy Term, Invest the difference”.

With due respect.

life member Says:
May 9, 2008 at 1:43 am
I wish to add to the various topics being discussed here.

1. Almost everything that is being sold, has a marked up price from the cost price. There are so many products and services being sold that cost more than 100% of the cost price – yet insurance became the sacrificial lamb. Do you really know how much the top professionals are earning? Why not ask the bankers, whom you placed your money with, how much are they earning for the “effort” they put in? What about lawyers and property agents? Seems like earning from all other professions are justified, except that of the insurance industry.

2. Human beings are naturally selfish. Agents should be well compensated for making a selfish bloke who doesn’t care about his family to do something good, to plan for the children’s education, to plan for events like hospitalisation and the rest. Think about it, without the efforts of the agents, the poor widow/widower and the children will be out in the streets. Since the premise that agents are “unethical” because they sell whole life plans instead of term plans, why not the whole industry increase the commission of term plans by 1000% to encourage more people to sell term plans? Agents are severely underpaid when they sell term plans, that’s why they are not enthusiatic about it. Nobody would pay them extra for the good work they have done in convincing a selfish breadwinner to buy a term plan, even the family of the deceased will not share their $500,000 claims payout with the agent. So why would any logical thinking agent sacrifice their precious time to do “social” work when they have to feed their own children? Actually selling term plan is even better for agents, then they don’t have to explain why bonus cuts, because in the first place, there is no bonus to begin with. Better still, term plan got expiry. After that, no need to pay out anything!

3. Term vs Life – Any experience practitioner will tell you this is not comparing apples to apples. It is a no-brainer. Maybe you are layman, then make this kind of biased comparison. Two products meant for different purposes and people has the audacity to compare them as if they are from the same mold. Can I compare a lorry and a car? Both are for transportation right? Got 4 wheels right? Got gears right? Are they the same? No! There should not be a discussion in the first place because these two products serve different purposes.

People can believe and say what they want. Let them. Proponents of whole life insurance – let the nay-sayers (term plan only lovers) say what they want because their time is limited and has zero weight. Why bother with empty vessels with a to-be-discarded expiry date when you have eternity in your hand? Don’t waste your time.

Mr. Tan, thank you for fighting with the new management on retaining the bonuses for the existing whole life and endowment plans. I hope you bring the new management to their knees and force them to retract the decision. Show them who’s the BOSS.

qui tacet Says:
May 9, 2008 at 2:17 am
Tan Kin Lian:

Do you think that greater deregulation of the insurance market will introduce competitive pressures that will keep premiums/commissions/other fees low?

Or do you think these products are too complex for the average consumer to understand, and there ought to be simplified and transparent information (such as through a standardized form) to make it easier for consumers to decide?

CynSkep Says:
May 9, 2008 at 2:39 am
I follow with strong interest the controversy arising from NTUC Income’s move and the subsequent debate involving appropriate insurance plans for individuals. (My focus is more on financial planning though, and since insurance plays an important role in it I’m taking a general view)

I am currently in university and will start working in a few years’ time. In the past I didn’t really think much about the importance of financial planning but have since changed to become more proactive in reading up. All along our education system has neglected the significance of financial planning as a vital lifeskill that should be imparted to the younger generation. But the truth is that even for many adults financial planning remains an enigma to them and many would not bother to educate themselves.

The misunderstanding and confusion that results frequently can be partly attributed to the customers’ initial ignorance and vague understanding when buying the products. While I agree that financial advisors have the moral obligation to duly inform their customers the pros and cons and whatever info they need to know, customers can make things easier by educating themselves too (need not be an expert of course but at least know what’s an appropriate product for yourself…

To this end the ongoing discussion has been very useful…since people having different opinions are expected, and what’s more important is whether the reasoning supporting the various stands are sound.

This has certainly been an enriching discussion for me so far, and as much as I hope that this can continue I wish that any debate can be carried out in a civilized manner without degrading to name-calling etc…

Thank you!

Eveline Says:
May 9, 2008 at 2:46 am
To Life Member at 22:

1. The fees that bankers and lawyers charge are irrelevant to the discussion. If this thread were discussing legal services or banking services, then their fees would be relevant. But we are discussing insurance so let’s stick to insurance.

2. It is true that agents do not make as much if they recommend term plans. No surprise then why most agents prefer to push life plans whether or not it’s the most value for money or in the best interest of the customer.

3. You do get what you pay for but why pay $1000 for a Ferrari to make a 10 km trip when I can pay $10 for a taxi? Ferrari may be more flashy and can travel faster, but the question is are these extras worth $990? Similarly, why pay more for protection and investment when I can achieve the same objective with different products?

Insurance needs analysis should be a very objective matter. As an insurance consumer, I demand that every dollar I spend brings me some value or utility. The agent is not a social worker, but neither are customers like me charities with money to throw about. We should not be begrudged if we decide to choose low commission products; afterall, it’s our money and it’s our right.

onlooker Says:
May 9, 2008 at 3:48 am
It was reported in the chinese paper, Lianhe Wanbao, 29 Oct 2006, not too distant past, that Mr. Tan is known to some as “a smiling tiger”, 笑面虎。

What is the meaning of this term? 比喻外表善良，心地凶狠的人. (Do a google and you can find the meaning)

Is this true? Well, Mr. Tan knows himself and it is for us to find out.

Mr. Tan is a politician and a pro-PAP man. NTUC Income was the first to denounce “as-charged” plans when Aviva introduced it and also NTUC Income was the first to back-track on its denounce-ment and came up with their own version. People call it “shoot yourself in the mouth”, he says it is giving “options”. Brilliant turnaround.

Mr. Tan is setting up a new insurance company. This company has to gain publicity, has to be profitable – the livelihood of those it employs is at stake, even though Tan is a financial independent.

To succeed, one sometimes has to be ruthless and wily: what is the shortest and fastest way to jumpstart this new insurance company in a very competitive and small market like Singapore? Creating publicity, shocking headlines, pandering to populist views, airing dirty laundry in public, etc – these are the oldest tricks in the books of skilled politicians.

Politics is still the most dirtiest business.

The new CEO TSC handed TKL the opportunity on a silver platter to gain instant fame. This allows TKL to “champion the rights of policyholders”. The “disadvantaged” policyholders became his pawns. The 1000 signatures, his bullets. Excellent strategy.

I suggest the new management provide small umbrellas as door gifts for AGM in case some people get so worked up over the “big loss” due to the bonus cuts in their annual bonuses (as emphasized by Mr. Tan), that they start throwing rotten eggs around. One 蛋 (dan) is not enough, you need two 蛋 (dan)s to start a party. Although the meeting that starts at 6pm and it is expected to be long, there is no need to provide food as policyholders would expect them to be “frugal”. Ok, maybe New Water should be provided, as people will be talking, shouting and spitting, so they need to replenish lost fluids.

It’s going to be an interesting party at the AGM – Tan bs Tan.

I wonder if it would be broadcast “live” like the Malaysia or Taiwanese parliament openings.

Truth Prevails Says:
May 9, 2008 at 4:56 am
From what has been written so far in this blog, I can only discern one thing… that the insurance agents can be very bitter and vicious against someone who has the guts to spill the beans on their modus operandi.

After all that is said and done, term is term and wholelife is still wholelife. You pay 10% of the former for what you pay for wholelife insurance. I agree with another forumer in her post #34. If all you need is to travel a certain distance to your destination, why take a Ferrai when a cab will also take you the same distance? Why fork out $100 when you can pay $10 for the same ride? You can save $90 and invest directly yourself. Afterall, when the market is down, everybody is affected in their investments, whether it be you or the insurance companies and the so called big name financial instituations, as evidenced from the ongoing subprime crisis. Why pay an additional worth of 2 whole years premiums for someone to manage the finances for you when the end result is going to be the same?

Why buy whole life just to line your insurance agent’s pockets? Still, to be fair, it is still up to the consumer… if he wants to pay $100 for the premium cab instead of the $10 taxi, nobody is going to stop him… and most definitely not the insurance agents. It is like telling the fat cat to help look after the fish in the fish bowl

Raymond Says:
May 9, 2008 at 7:14 am
I think that the insurance agents and their policy holders need to work together for mutual benefit. If everybody wants to get the better of the other party, then we are in for sorry times ahead.

Tan Kin Lian Says:
May 9, 2008 at 7:48 am
Dear Ken (post #30)

Read my post #11 to find the answer to the issue that you raised.

During the early years, the term insurance rates were rather high and did not look very attractive to the policyholder. The agents were not keen to sell term insurance due to the low commission.

The option to invest in unit trust and investment funds were relatively undeveloped.

More importantly, the whole life and endowment policies sold in those years were good value to customers.

Times have now changed. Today, it is clear that the best option is:

1. Buy decreasing term insurance
2. Invest the difference in a low cost investment fund

Refer to:
http://www. tankinlian.blogspot.com/
http://www. tankinlian.com/faq

Tan Kin Lian Says:
May 9, 2008 at 7:53 am

Tan Kin Lian:
Do you think that greater deregulation of the insurance market will introduce competitive pressures that will keep premiums/commissions/other fees low?

Or do you think these products are too complex for the average consumer to understand, and there ought to be simplified and transparent information (such as through a standardized form) to make it easier for consumers to decide?

My view is:
> financial products should be regulated
> the aim is to protect consumers from being exploited
> contract wordings should be standardardised
> insurance practices should be explained clearly
> there should be reasonable caps on commission, fees, charges

The consumers have been exploited by financial services industry under a de-regulated environment. They have lost hundred mllions of dollars through the unfair terms.

New world Says:
May 9, 2008 at 9:43 am
To Poster Ken #30,

The world is always evolving, buying a life insurance policy was the way to go 100 years ago in the present day developed nations.

Times have changed and new methods of obtaining greater value for your “depleting” value of money have evolved. This idea of buying term and investing the balance in a low cost fund is the way to go in the present day, context. There is varied number of funds these days to choose from, which were not developed 20-30 yrs. ago. ( watch the Suzy Orman show on CNBC)

Mr Tan is showing the public how to obtain greater value for your money at a lower cost.
He is educating the public at large. I honestly believe that his greater motive is to educate the general public, rather than what is being touted that he is a “sour grape”.

Insurance companies have to re-invent themselves and stop being lead by greed alone.
Stop putting out “structured” products just like the banks are doing which confuse and “hoodwink” a very trusting public, which give “disgustingly”, “insultingly” low returns.

New world Says:
May 9, 2008 at 10:02 am
Sry, my post#43 is in respond to Ken of #33

life member Says:
May 9, 2008 at 10:13 am
To Eveline, 2.46am

1. Commission/Fees are the main concerns – because it is what Mr. Tan claims, as “consumers have been exploited by financial services industry under a de-regulated environment. They have lost hundred mllions of dollars through the unfair terms.”.

Did such “unfair terms” just appear after he “retired”. As he admitted, it happened all along, during his term as CEO, it is only that he collected less, as he claimed. Right. So everybody else is the bad guy, except Mr. Tan, not because he did not profit from it, but because he profited LESS. Pot calling kettle black. Instead of taking, for e.g., $500 comm, he took, $400. So now this is the good guy. So if one guy come along and say, I only take $350! Mr. Tan, you new company is overcharging! Does it make Mr. Tan part of the “bad guys”?

Strangely, after being in the industry for more than 30 years, Mr. Tan suddenly proclaimed that consumers being exploited and he is going to come up with “fair terms”. Has a lot changed in the industry since he left? If I were MAS, I would look really bad because I am suppose to be the watchdog and approve the policies of the insurer. Oh yeah, sure, every practitioner in the industry is blinded by money for many years and only until now, such “unfair” terms only discovered by Mr. Tan, because he took time and did some “study”. Com’on, Mr Tan, who are you trying to kid?

You can ask Mr. Tan: If he were still at the helm of NTUC Income today, would he be only selling only term plans and low cost investment funds? Because that’s what he is preaching now. His new company – is it going to be a non-profit organisation? No? Does he plan to make it profitable year on year? Yes.

2. If term is that good, I suggest to increase the commissions to reward and encourage agents to sell more term, make it worth their time. Were you expecting free insurance, free labour, free love?

3. Yes, a Ferrari sounds good to me. A person who buys Ferrari buys it for a different reason, not just for travelling the 10km. You can walk/cycle 10km or take public transport. If you buy the wrong product because of the wrong reason, don’t blame the product.

“As an insurance consumer, I demand that every dollar I spend brings me some value or utility. The agent is not a social worker, but neither are customers like me charities with money to throw about. We should not be begrudged if we decide to choose low commission products; afterall, it’s our money and it’s our right.” – Sure, your money is big and heavy and it is your right to demand the best service and products available to be served to you for every dollar you spent. I hope your employer knows how to justify the high pay he is paying you. Singapore is lucky to have elite people like you.

Eveline Says:
May 9, 2008 at 10:52 am
I do not think there is a need to be sarcastic in this discussion. Suffice to say, the customer does not owe the agent a living. Insurance especially plain vanilla products such as term insurance is akin to a commodity. (I’m saying akin, not exactly the same as there are other factors that come in.) Ultimately it is the value of the insurance that matters.

Wai Mun Says:
May 9, 2008 at 11:22 am
I agree that the customer does not owe the agent a living. The agent cannot expect the customer to not be alarmed when things don’t look right. The customer has every right to know the truth and to pull out their policies anytime they want if they so choose to do so.

Just as every agent cherish every dollar they make, customers cherish their money as well and should get the best value possible.

Roger Lim Says:
May 9, 2008 at 12:40 pm
Mr. Tan Kin Lian started a blog even before his retirement to educate the general public on insurance. This showed his sincerity. Those negative comments about his motives may be true if he started his blog just before or after he goes into a new business. But since his blog started way back, we can safely say that his intentions were simply to educate the public. That said, it is commendable too that he continued his blog when he could simply retire anywhere to enjoy his golden years. That he chose to remain and studied at his own time and money goes to say alot about the man. This man is rare because he does things not for money but for the general good. That is nobility.
Those who write to taint this noble man’s honour should reconsider their positions. Because nothing hurts the noble man more than accusations of the opposite.

ZhuGeLiang Says:
May 9, 2008 at 5:13 pm
To Roger Lim (#48),

知人知面不知心!
路遥知马力,日久见人心!

Kong Ming

LittleBuddha Says:
May 9, 2008 at 5:17 pm
Quoted Tan Kin Lian (#42)

“The consumers have been exploited by financial services industry under a de-regulated environment. They have lost hundred mllions of dollars through the unfair terms.”

Mr Tan, you should have told me 6 years ago when I bought my first whole life policy from your ex-company! Oh…suddenly you are enlightened like a little buddha? I find this it so difficult to believe you.

Aren’t you a qualified actuary and have decades of experience. Cannot be just these two years figure out right? And some more after you resign. So coincidence meh?

theonlinecitizen Says:
May 9, 2008 at 6:08 pm
Dear everyone,

Please keep your comments civil and respectful.

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1. Have nothing to do with the article.
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We try to be as lenient as possible and allow as many comments as possible.

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Cindy Says:
May 9, 2008 at 7:44 pm
I have nothing against Mr Tan Kin Lian but I just want to share my own observations. I am an Income policyholder and 2 years ago (if I remember correctly), Income was promoting its new educational website http://www.knowyourinsurance.com/ , I was happy that such an educational website was setup to educate ignorant customers like myself. But I must say that I was rather disappointed because much of the contents was skewed towards promoting Income’s products instead of being an objective website. I remember quite vividly that there was test questions at the end and it ask biased and leading questions like why we should choose an ILP from NTUC Income. At the end, I realise it was just a marketing tactic to want us to buy from the business centre.

Therefore, I am not sure whether there are genuine objectivity in any causes, when there are so much vested interest in it.

ZhuGeLiang Says:
May 9, 2008 at 9:11 pm
This reply goes to Cindy.

Thanks for sharing the site, but I think it sells insurance in the State of Texas ?!

Very puzzling. Aunty Lucy business do until so big???

Cindy Says:
May 9, 2008 at 9:33 pm
Oops ZhuGeLiang, I went to check after you highlighted that to me. It should be a .sg site. http:// www. knowyourinsurance.com.sg/ , which means the site is still there! Those who are interested can go in and take a look and will know what I mean. Not sure what is the truth anymore.

Cindy Says:
May 9, 2008 at 9:33 pm
Oops ZhuGeLiang, I went to check after you highlighted that to me. It should be a .sg site. http ://www.knowyourinsurance.com.sg/ , which means the site is still there! Those who are interested can go in and take a look and will know what I mean. Not sure what is the truth anymore.

ease Says:
May 9, 2008 at 10:47 pm
My concern is, i have spare cash and wish to save some money and i do not wish to commit long term. Hence, i went to ask around for a quote and finally i bought vivolife 10 yrs limited premium.

Most banks introduced me ilp, but POSB has another product to recommend me – pay as you protect.

I had a simple comparison. one i pay for 10 yrs and cover critical illness, death wholelife, the other cover 15 yrs for death and permanent total disability.

of course, i know expert will tell me buy term and invest funds, however, which company will offer me a low premium for term when i reach 65 yrs old? Do you think i still can afford the premium when i need the most coverage? should the funds which i bought goes downwards when i retire, who can i look for for my retirement?

I felt that one should have a good mix of insurance coverage. Buy according to one’s needs and not one’s advise.

Adrian Khiat Says:
May 10, 2008 at 1:59 am
I won’t say that Life Insurance is totally no good.
We have to identify our Permanent and Temporary Critical Illnesses Needs.

Permanent needs is good using Life Insurance or a Term Insurance that cover for Life. Permanent needs covers 3 areas:
1) Alternative Medicine – Tradition, detoxification programs, etc
2) Rising Medical Expenses – Things that your medical insurance may not cover
3) Misc Expenses – Extra Tspt, Maid, etc
There are no standard number in this area for everyone. Certain high networth people don’t it at all. But most of us generally needs around $50k to $100k.

For Temporary needs, its better to use term insurance. It is wise to compensate for around 3-5 yrs of your annual income. Some people uses a Temporary Disability Income Insurance for this purpose. The definition will be wider and it genuinely cover you even if its the 31st illness which is not covered under your policy.

Decreasing Term insurance normally are meant for premature death. Such decreasing term insurance will be a disadvantage to you if inflation in Singapore remain at such high level. I’m not also not sure if there is a decreasing term Critical Illnesses Cover.

My suggestion is (1)”Don’t get yourself overly insured via a Life Insurance.” If you do that, you may end up under-insured and have less money to save for other purposes.
Also (2)”don’t get Endowment plan for Coverage” and
(3)”don’t get a whole life plan without critical illnesses”.

Adrian Khiat
http:// akhiat.blogspot.com/

ZhuGeLiang Says:
May 10, 2008 at 8:39 am
This reply goes to Ease,

I would like to give the following simple layman advice to decide what products to buy.

- Have enough to retire at age 55, i.e. can choose to stop working
- Have good hobbies that you can continue. Don’t just sit around in coffee shops
- Have a peaceful sleep everyday. If you can take high risks, invest more in stocks to beat the inflation. If you cannot, sleep is more important.
- Have good friends and soul-mate.
- If you die, you loved ones got enough. Remember to count how much money you already have so that you will not over-insure.

If you can do the above, then I suppose anything that works, is fine. Of course, if you really want to have best bang for buck, need to crack more brains and do more homework.

In fact for some, this means totally don’t need to invest or buy insurance! I have an aunt who purely have all her money in fixed deposit which works out in the range of low 6 digits. Simple woman, live in 3-room flat an makes her own clothes with no handphone. Really fascinating at today’s age.

Eveline Says:
May 10, 2008 at 10:32 am
To Ease:

I buy term insurance to insure against death. To do so, I need to determine who my dependents are and whether they NEED the insurance payout. By 55 or 65, your parents are likely already very old (if still around) and your children (if any) can well support themselves.

To accumulate value, I don’t rely on insurance but investment. Neither Life nor direct investment (into stocks/UT/etc) can guarantee a return so I will choose the one with transparent and lower costs.

For expenses incurred when I’m living (and I think health is the most critical expense), I buy health insurance and riders. There are very competitive packages out there from the insurance companies. Most of them cover beyond 65 and yes the premiums increase with age. The question is how much payout do you get for every $1 of premium you pay? I leave you to do the calculations.

You don’t buy term to cover such “living expenses”.

There’s also such a thing called “self-insurance”. Meaning you have accumulated so much wealth that you can afford the projected expenses without relying on insurance. Of course, to accumulate wealth, you must have capital. That’s where term insurance comes in.

Anwar Says:
May 10, 2008 at 10:57 am
I have 3 wholelife critical illness policy with Income and my wife have 2.

It was taken in 1993. I wish then there is limited premium policy.

Most of us know that the standard of living today is high, and the next generation may struggle if they do not plan properly.

As a old froggy, I do not want to burden the next generation if I am down with a dread disease.

I wish the limited premium plan was introduced then, and I will have no worry to pay towards old age. But then when I am old froggy by then, I will use automatic premium loan or use my savings to pay for the premium. By then cash value of the wholelife plan will be quite good too.

Buy Term, I will not have coverage after 65 or it will be very high premium, maybe higher than a term premium.

So wholelife is not as bad as what it is painted to be. I took wholelife with Term to cover the productive part of my life and wholelife to cover latter part as a old froggy, not wanting to burden the next generation.

We should see the value of insurance plans and plan according to various milestomes in live.

Joe Says:
May 10, 2008 at 11:40 am
Agree with Anwar (aka old froggy).

I bought a wholelife critical illness policy with sum assured of $50,000. That serves as my base protection foundation, and long term compulsoy savings, so i very much welcome high bonus declaration too

After the initial base is covered, i buy term life and hospital & Surgery plans from then on, and invest the rest. In total i have of about $500,000 cover, of which $300,000 in critical illness. My total insurance premium cost me about $2,000 a year.

So for me, i advocate getting a basic wholelife policy to cover the base, use term plans to get higher covergage and invest the rest (and bear my own risk) for better long term returns

New world Says:
May 10, 2008 at 3:50 pm
#60 Eveline ,

Well, said, You have put it in a nutsell, hope those who are advocating life policies, will have a 2nd look at this present day approach…. more so for those who have not done any proper finacial planning….

Anwar Says:
May 10, 2008 at 9:00 pm
Tan Kin Lian is too naive to keep harping on recommending Decreasing Term Assurance. This is a myth to think the protection need decrease over the years and can be picked up by investment.

What is investment goes down the drain in a bad economic situation and values drop and the man drop dead?

The is literal bad advice and “hai see nang”.

For those who are younger, do not take this advice.

Check out Term premium against Decreasing Term Assurance over same duration and same sums assured.

DTA decrease in coverage and can be quite low coverage at the end.

Term insurance premium is not very much higher and coverage is level all the way.

It make more sense for younger people to take Term than Decreasing Term. Term will then be value for money plan than the DTA.

I just did Term for all my teenage child to their age 65 and premium is so low. Average $120 to $150 per year for $100,000 coverage.

New world Says:
May 10, 2008 at 10:03 pm
#65

One of the reason Mr.Tan is now monitoring the comments that are being posted on his blog is that there are posters who have made slandersous statments, against individuals not himself.

So please be obejective in your statement, it is immature statements like this that causes censorship to take place it the first place …. Focus on the issue at hand…….

Peace Says:
May 11, 2008 at 12:03 am
#65 Anwar

Why dont you look at DTA in this manner. When you grow older, your children would be older too. They would already know how to take care of themselves by then and so it is unnecessary to leave them a huge sum of money. So shouldn’t we choose to pay a lower premium as in a DTA? If unfortunately we do pass on earlier, the DTA still give good protection value to them as it is still early in the term? Doesn’t it give you the best of both worlds?

It is indeed true that any investment will go through its cycles of up and down, but if you were to leave it there for, say, 10 to 20 years to ride out the risks, it will probably give you a good return which is exactly what insurance is doing. If you invest on your own, you not only get better control of your own profits, you also need not worry on whether they will be returned back to you in a fair and just manner.

So, to conclude, TKL is not wrong to promote DTA.

priyadi Says:
May 11, 2008 at 12:42 am
whole life is not proper insurance: you are insuring against an event that is certain to happen (your death). in other words, it is highly likely that you will pay more in mortality charges than you (or your family) will eventually get (after accounting for time value of money).

it is better to accumulate wealth through a separate investment portfolio, and only get term/YRT to cover years where your total investment value is not sufficient to cover the risk of loss of income.

Adrian Khiat Says:
May 11, 2008 at 3:17 am
Decreasing Term Insurance have 4 disadvantages:

1) Future needs for some people might be unpredictable. Eg, Mr Lim have 1 son today. He thought he will not have another kid. Eight year later, he suddenly have a daughter. His needs changed and he might not be insurable again.
2) Future needs may remain constant for certain people. Eg, Mr Tan purchased an investment property. He have a tendency to sell old property and buy a larger one as investment. If he purchased a Mortgage reducing insurance, he will need to purchase another insurance for the new property even if the loan amount is relatively the same because the Mortgage insurance covered had significantly reduced.
3) High inflation can be a concern. Insured amount based on DTA is assumed on X% inflation. If inflation exceed X% for many years, the person may find himself underinsured very soon. Worst, some people fails to factored inflation.
4) Guaranteed re-assurability is not available for DTA. Eg, Mr Ong purchased a 25 years DTA for $500,000. End of 25yrs, if Mr Ong have a medical condition and he wish to be continued protection, he may not be able to do so. If Level Term is chosen, he may be able to continue at the same or lower assured amount say $200,000 at a premium prevailing to his attained age.

DTA is a theoretical concept which may not take many factors into consideration. It is not that simple by just buy term, invest rest by looking at some websites and books. A Financial Planner’s advice is sometimes needed to get it done correctly.

Adrian Khiat
http:// akhiat.blogspot.com/

Tan Kin Lian Says:
May 11, 2008 at 5:03 am
I welcome Anwar to send an e-mail to me for posting in my blog. He can argue the merits of critical illness and limited premium policy. This can present a different angle to the decreasing term insurance policy that is recommended by me.

I welcome Anwar to use his real name. But, if he wishes to use a pseudonym, it is all right. It is better to be upfront and use disclose the real name and occupation (e.g. like Adrian Khiat did in his postings).

I will ask Anwar to give me some actual examples of the premiums payable under the limited premium policy, so that I can compare it against the option of buying term and investing the difference. Anwar could make the argument about why the limited premium plan is better. It is important to present the relevant figures, so that the consumer can make a better choice.

I can guess that Anwar is a fictitious name of someone working in the marketing department of an well known and reputable insurance company. His postings will be more credible if he wishes his real name and designation.

Tan Kin Lian Says:
May 11, 2008 at 5:14 am

Anwar #64 said:
What is investment goes down the drain in a bad economic situation and values drop and the man drop dead?

My tips on investments are set out in this FAQ:
http://www.tankinlian.com/faq/savings.html

In the event of death during the earlier years, there is a decreasing term insurance to provide a death benefit.

If death occurs after the decreasing term has expired, there is already sufficient savings accumulated that has been invested. If death occurs at a bad time when the market is very low, the family has the option to keep the investments and sell them to realise cash when the market recovers.

If they need the money, they can sell some investments monthly to realise the cash that is needed.

In most cases, the value of the investments would have grown to be more than the death benefit, due to the higher yield on equity investments (compared to the yield on a whole life or endowment policy).

So, even in the bad situation mentined by Anwar, the value of the investments (in a depressed market) is higher than the money from the life insurance policy.

Here are some figures:

If you invest $5,000 a year for 30 years to earn 3% (say, for a life insurnce policy), you will get $245,000.

If you invest in a low cost fund to earn 5% (after fund charges), you will get $349,000. If the market drops by 30% at a bad time, you will get 0.7 X $349,000 = $244,000.

The family has the choice to take out $244,000 or keep invested for a few years and wait for it to recover to its “real value” of $349,000. A good adviser will advise the family to wait. Do not sell at a bad time.

Tan Kin Lian Says:
May 11, 2008 at 5:22 am
Dear LittleBuddha (#51)

It is all right for you to buy your whole life policy 6 years ago. As you can see, I also bought a Living policy 12 years ago, where the bonus has now been restructured.

The products offered by NTUC Income during that time has good value, compared to similar products in the market. In those years, the market for alternative investments, such as low cost funds, was hardly available. Even today, there is limited low cost funds.

As long as you buy a policy with low charges (like the old products of NTUC Income), you were getting quite good value.

Some people posting in this blog have the intention of attacking my views. I suspect that they are not the real customers, but insurance agents or marketing officers. If they are expressing the views of their companies, it is better for them to use their official name and title, so that their postings are more credible.

It is all right for some people to disagree with me. I do not intend to convince 100%. I will never be able to convince people who have a vested interest or are paid just to run me down. It is okay.

Tan Kin Lian Says:
May 11, 2008 at 5:32 am
If it makes people in NTUC Income feel better, I like to say that the old products sold by NTUC Income give good value. They are explained in my post #11.

My statement about the bad products sold by the financial services industry does not imply that all products belong to the category. There are some exceptions.

I do not wish to imply that the new products, such as revosave and vivolife of NTUC Income give poor value. I do not know the details about these products to make an analysis.

I welcome any well qualifed adviser to send me an e-mail to outline why it is good value to buy these products. I will give my objective analysis and post it in my blog. I also give the right of reply.

PolicyHolder Says:
May 12, 2008 at 12:42 pm
Yes, I agree with you Mr. Tan. Obviously those who come under different names attacking you are not likely to be policyholders. Policyholders who attack you when you are defending their rights must be mad. Real policyholders like myself are grateful to you for standing up for our rights as policyholders against the financial mavericks who are bent on manipulating our bonuses and benefits for their ends in the name of doing so for our benefits. It is a no brainer to see that NTUC Income has overspent recently on $2K a chair, expensive renovations, costly advertisements, overpriced meetings at posh hotels as well as extravagance exotic overseas management retreats and incentive trips. It is now promising the future while plundering the present. This is just one of those tricks that takes time to tell and by that time it is too late. Just like the subprime mess where those financial mavericks promised this and that and by the time it unravels, they will be long gone and enjoying their millions somewhere else. So no, forget the promise of investing for so called higher yields in the future. NTUC Income has been giving us satisfactory yields plus regular 5 year anniversary bonus all these years. So cut the crap and give us our rightful yield now instead of cutting it. Just because you have a degree in psychology you think you know our psychology and think policyholders are morons! Give us back our rightful bonuses and stop insulting our intelligence. Some of us policyholders are more intelligent than you!

zhummmeng Says:
May 12, 2008 at 12:45 pm
Since the critical years saga many years back there had been a lot of these limited premium whole life plans introduced into the market.On the surface they look good. The feeling or understanding is “i pay for limited period only and I will be covered for life and i stop paying”. I want to dispel these misconceptions.
#1. companies are quick to capitalise on the ‘trend’ and they are becoming consumers oriented companies just like other consumer goods company. They would design what the consumers ‘want’ and not what the consumers need. I am not saying Limited premium type of plan is not good . THEY ARE only GOOD FOR THE PEOPLE WHO CAN AFFORD THE PREMIUM AND TO AFFORD USING THEM TO COVER THEIR NEEDS ADEQAUTELY AND FULLY. They are good for people who are not serious about their family and dependents and also they are good for people who want to splurge on their agents.
TELL YOU, THE AGENTS ARE NOT INTERESTED IN YOU.
Tell me how many of you use them to cover your protection FULLY. Many can’t afford and the agents would tell you it is alright if you don’t have budget; buy from me again when you have money to cover the shortfall..
The same premium paid to buy this LPPL plan can pay to cover you 10times and this might be the amount that you really need. If you think you don’t need to cover your needs fully immedaitely then I advise you don’t buy it at all. Don’t waste your money. Buy when you have ENOUGH money to buy ENOUGH coverage after all if you can delay , it means you know you won’t die.
But what happens in the meantime? What if I have a CI or die. Your agent can answer that.
LIMITED PREMIUM MEANS LIMITED COVERAGE.
It should be renamed as LIMITED COVERAGE PLAN.

PS: In next post I will talk about the myth of wholelife and how everybody has been taken a rider by insurance agents. I will talk about the “bomb” waiting for you at age 65. I will talk about the dumb plan as saving plan and also talk about discipline, a concern or a myth or another selling ploy by insurance agents and their masters; about insurability another bogeyman insurance agents tell their cleints.

Hi,

I agreed with Mr Catherine Choong in that there’s no ‘one-size-fits-all’ insurance product in the market. If there’s such an insurance plan which can solves all the problems i.e hospitalisation, 30 CIs, disability income etc, the costs will be prohibitive, and the structure will be complex and not transaparent.

Decreasing term insurance is useful to get a high coverage at the cheapest cost, against untimely death and TPD of the breadwinner. Catherine is right to point out that the sum assured of decreasing term declines using a predetermined interest rate, eventually to zero at the end of the term. I also agreed with her point that for Vivolife, which is a whole-life limited payment policy, there’s cash value and the sum assured will increase as it participates in Income’s investment returns. But the usefulness of other features such as retrenchment benefits, min sum assured of 125% if death occurs in the first 15 years, and 3 times accidental death cover etc, is debatable. Income do charge for these features in the product design.

Personally I won’t recommend Vivolife if it’s just for the death cover. It would only make sense if CI rider is being added. There is no need for lifetime death cover, but lifetime CI cover, yes. But it’s also not wise to buy too much of lifetime CI cover.

Being an IFA, we get to compare various products in the market. Vivolife was introduced to replace the previos plan- ‘Limited Premium Living’. I believe the previous plan was introduced by our dearly Mr Tan. It’s a very expensive plan, if not the most if we use premium/benefiit ratio, even more expensive than Aviva’s IdealLiving, which is the only plan that provides guaranteed premium rates for CI.

Vivolife offers much more competitive rates, but it’s still some 10% more expensive compared to another insurer’s plan.

I am being objective here. I have all the numbers and facts to support my statements. I don’t state opinion, which is cheap. It really surprises me that Mr Tan can make many of his comments freely without research and support of facts. From my observations, he’s not sure of many things. He has clues what are offered in the markets. He’s not able to compare the various plans in the market. AND he made all those comments???

If total financial planning is that simple as described by Mr Tan i.e buy decreasing term, buy Basic Medishield plan, and invest in low cost ETFs etc (while there are some truths in them), then there’s no need for fact-finding , to understand that each individual’s needs are difference. No need the six steps of planning process as advocated by FPAS and MAS lor? So easy then everyone can DIY and be their own adviser lor? While I have no doubt that some people can DIY, but far too many cannot. They need advice from a professional. For those who can DIY, they are still not able to compare the various products in the market to make an informed decision. Perhaps they are better off focusing on the specialised field, and build their carrer.

I agree that many of the insurance products offered by insurers are inferior and offer poor value. These include ALL regular premium ILPs, ALL anticipated endowments, and some whole life and endowment plans.

For CI cover, generally I would recommend to have the first $100k covered by a WL limited payment plan, and anything above using term. This is because the chance of one being stuck by a CI increases with age, hence you may want to keep some for old age. For hospitalisation, I would recommend to upgrade to a private Medisave-approved plan with rider to reduce out-pay-pocket payments. Basic Medishield was designed to cover treatmenst in B2/C wards of government hospitals. AND it ends at age 85. Do you want to have your medical taken away when you are at ripe old age, weak and poor? Talking about longevity risk, with many Singaporeans expected to live to 90 and 100? Cover for Basic Medishield stops at age 85 then how? Who is going to pay the bill for you? Mr Tan? The annual limit is only $50,000, lifetime $200,000. Deplet that and you are on your own.

As of 2007, there’re 1.2 million S’poreans & SPRs covered by Basic Medishield, with some 1.66m under private schemes. Still, close to 1 million population, mostly housewife and yound children, not covered by any plan.

In ‘Medisave, Medishield… Medi-Crisis?’, Mr Tan’s former colleague Mr Stanley Jeremiah said: “There are very few people in Singapore who can, like the former NTUC Income CEO Tan Kin Lian, say they can pay the medical bills out of their personal savings.” Many of us are not Mr Tan, it’s really a big risk to be penny wise and pound foolish as far as medical cover is concerned.

Do you know that if a Basic Medishield holder seek treatment at Private or B1/A wards, the claim payout can be really pathetic? Do you really want to wait in the long long queue for treatment? etc..

For those who read Mr Tan’s blog, I would caution that you take some his advices with a pinch of salt. Many people commented that his views are biased as he’s coming out with something. Are his products really offering the best of value in Singapore? I am eagerly awaiting for more info.

As for Mr Tan, I really hope he can do more research before he writes because many unsuspected consumers are reading. Many people look up to him for avice, given that he’s the former CEO of Income. He does speak with a certain degree of authority. Cannot any how say without facts one lah. One question: can the consumer readers seek redress if they follow the wrong advice? Therefore, I hope he can be more responsible in his comments, especially now that the traffic to his blog is heavy.

While I do not deny that many, far too many, so-called financial planners are unscrupulous salesmen selling under the guise of ‘financial planning’, there are some who really put client’s interest first. As in all things, there are bad and there are good. Thank you.

Hi zhummmeng,

In every profession, be it tied insurance agent or financial adviser rep with IFA, there are bad product peddlers and there are professional. Unfortunately, the unethical ones make the headlines.

While tied insurance agents have product limitation and their objectiveity, I have seen many unscrupulous FARs rip off their clients by (mis) selling and misrepresenting insurance plans. Their clients and family are going to suffer as a result of their advice. They are doing a great disservice to their clients and the industry. That’s why we cannot blame anyone for the negative public perception.

It’s always my belief that being a financial advisor should be a noble, long-term and rewarding profession. I hope you can give some breathing space to ’some’ of us by not gunning all down. Thank you. :-)

Very lengthy discussions, I will like to summarize some posters’ opinions and see if this makes sense. Please correct any part that I interpreted incorrectly.

(A) Tan Kin Lian: Term is the best. Second best is a whole life, provided it is low cost only. Lastly is current whole life plans, which based on the current market are all too costly.

(B) Catherine/June: Term does not suit everyone. Whole life has its purpose. Also, whole life more for protection than savings. You just can’t propose Term for everyone; in practice it does not work.

(C) Zhummeng: Life insurers and agents just want to squeeze you and make maximum profits as their goal. Since that is so, that is why they sell you whole life plans. Period.

My thoughts:

This may seem dislocated from the discussion and focus, but I feel the following.

For most people, your greatest wealth will come from you income of your job. So choose your job wisely, love it and make sure you save enough first. Other things are secondary to this in wealth building (this applies for self-employed too).

If you’re earning alot (say > $5k), I don’t think $200-300 a month for insurance premiums will kill you. And you will have a lot more, then invest them in different asset classes: properties, equities, bonds, commodities, gold etc. Get a good FA whom you can leverage on for many other advice/services. Think win-win. If you’re adventurous and confident, then go solo. Either way is fine; I chose the latter.

If you don’t earn much, please don’t kill yourself by over-saving and investing or paying too much for insurance premiums. Ensuring you increase your human capital is most important, so that you increase your earning capability. Don’t be think investing wisely and/or buying insurance is the final and only solution.

For such group who really cannot afford a whole life and paradoxically indecisive in whether they would want to get one in future, I think a convertible term may do the trick.

While reading June’s thread again (quite lengthy), I would like to mention I agree with additional medical coverage, due to Medishield stopping at age 85.

This is one of Medishield’s weakness, and I am surprised it has not been addressed. There was a statistic from CPFLife that says more than half of those aged 65 will live beyond age 85. If so, why is Medishield not covering beyond 85?

Dr Money once come out with an article saying the claim payout ratio from Medishield is higher than private-shield plans, so that is why it is the best.

I hope readers are discerning enough to understand that is the yardstick to measure profitability. While it can be a parameter useful in decision-making, it should not be the only factor to consider. Therefore, I disagree with Dr Money’s conclusion for that article.

In this case, it is clear (from CPFLife stats) that covering to 85 is inadequate for more than half of the people aged 65.

June said:
In ‘Medisave, Medishield… Medi-Crisis?’, Mr Tan’s former colleague Mr Stanley Jeremiah said: “There are very few people in Singapore who can, like the former NTUC Income CEO Tan Kin Lian, say they can pay the medical bills out of their personal savings.” Many of us are not Mr Tan, it’s really a big risk to be penny wise and pound foolish as far as medical cover is concerned.

When Stanley Jeremiah made the above erroneous comment in that article, I did not want to make a correction as it was not really important. But, when June quoted it with the intent to discredit me, I must state the correct position.

I do personally have a private Shield plan suitable for B1 class. I do recommend people to take Medishield or if they feel like spending more, a private shield.

My advice on insurance goes beyond term insurance, and include adequate medical cover. Read my FAQ:
http://www.tankinlian.com/faq/choice.html

I wish to encourage people to ready my FAQ and be educated and empowered to make the right decision. If they see a financia or insurance adviser, they will be able to ask the right question and avoid being taken for a ride by the bad advisers. They can better appreciate the good advisers who looks after their best interest.

How did Mr Jeremiah misquoted me? I believe he read a story in my blog. There was a friend who extremely wealthy, a multi-millionaire. She was delighted to have obtained a private Shield plan. I told here that she could afford to pay the hospital bills out of her personal weath. There was no need for her to have insurance.

This does not apply to most ordinary people. They need insurance to cover their catastrophic medical expenses. I think that Medishield is adequate for most people, who have a tight budget and need money to meet their living expenses during their old age. They should not be spending the limited funds on expensive medical insurance plans.

I do agree with Mr. tan that risk management is not about transferring all your risks to the insurers. There are risks that you can “HOPE YOURSELF”. especially the rich and for them the risk represents a tiny fraction of their assets.So the penny wise pound foolish principle doesn’t apply to them. For the vast majority of people it is true that a good and proper H&S is a must.
.Of course, to the insurance agents ” all kind of skeletons” need insurance because it means money to them. Many agents, I repeat , many agents belong to this group. They masquerade under different titles, from adviser , consultant,associates to planner but they are all salesmen, product peddlers.
There are posters who kid themselves that there are only “some black sheep”. In my opinion they make up the majority and they all have a few commonalities. They love whole life or endowment. They disregard clients’ interest. Their modus operandi are these. They try to to sell and push and sometimes trafficking for cash back or rebate. They’ve learned by heart the features and benefits . They choose only the benefits that are advantageous to them, ie disclose half truth and half lies. If their product s have slight advantages they will shout very loudly. They love product comparison and picking and select the features for comparison.They will use the worse “benchmark” for comparison. Example, the bank FD rate is their favourite bashing boy when it comes to comparing return. NTUC agents are very good at this with revosave,. From the start it is the product and nothing else and you don’t hear they like to do a need analysis for you. Yes,..they do advise (probably the only advice clients receive from them) cleints to stagger buying whole life or CI if there is a budget problem. Never mind not enough coverage.They also advise cleints to meet the shortfall when they have money. Meantime pray hard that nothing untoward befalls them. Also clients to advise them (the agents) when clients have money and ready for a review.
You can see buying insurance or investment products from this group of insurance salesmen or women is a game of chance. You never have enough.
It is also a zero sum game. Only insurance salesmen win.

The language used by Zhummeng in Tan Kin Lian’s blog and the hate he has for the insurance agent is quite astounding.

I wonder what agenda he has and if he is related to Tan Kin Lian in any way.

I am still trying to figure out who is Zhummeng and what is his background. I asked him to contact me by email, and he has still not done so.

I know Anwar from his postings here. I suspect that he is someone from the office of NTUC Income. He seems to know a lot of information that comes from the office.

June on May 17th, 2008 2.01 pm said:

Personally I won’t recommend Vivolife if it’s just for the death cover. It would only make sense if CI rider is being added. There is no need for lifetime death cover, but lifetime CI cover, yes. But it’s also not wise to buy too much of lifetime CI cover.

NTUC Income Vivolife comes embedded with critical illness coverage. There is no need to add a living rider.

Wilfred Ling (an IFA)
http://www.wilfredling.com

So you think that i hate insurance agents, Anwar? Are you one from NTUC?
I don’t understand that you find my language…? you didn’t say. Yes, I have agenda. My agenda is to clean up Singapore of unethical insurance agents and to make Singapore a free and safe place for consumers. Anything wrong with this mission?
Unless your rice bowl is threatened you should not be unduly worried of what I am doing. I have no qualms at all to break it if is an unethical rice bowl.
These few words sum up my mission and my vision..
Please challenge me and debunk whatever I propound and and whatever I stand for instead of whining like crybaby. I have no axe to grind. I get turn on and not hate , when insurance agents or salesmen spew rubbish about their products.
I am not related to Mr. TanKL . I endorse him when I find what he says resonates with mine. I will also not watch idly when I disagree with him.
The truth hurts and truth prevails too.

PS. I give notice that I will debunk Catherine Choong’s argument about whole life , especially vivolife in another posting..

I am a PROUD and HAPPY policy holder of NTUC Income.

I see Catherine Choong’s comments as the light of truth.

She shared factual data, instead of peppering and act of slander, promoted by zhummeng.

Zhumeng, your indespictable act, in Tan Kin Lian blog’s shall garner artificial support, bolster by the masterman in control of the ship.

In an independent blog like this, rest assured, your master-plan will be vapourised.

We, policy holders of NTUC Income, are intelligent enough to discern, the right from the wrong.

My family have benefitted from whole life insurance, and seeing young people like you, degrading insurance agents is totally unacceptable.

Havent you think of bad karma, fighting against the good, the noble, the innocent?

In a civil community as such, I see slanders against either Mr Tan Kin Lian or against certain professions to be extremely degrading.

If the poster wants to be taken seriously, and convince readers of his points, then do so in a cool-headed and civil manner.

Focus on the facts and deliver; we look forward to Zhummeng’s point-by-point rebuttal.

In case Zhummeng is thinking of using Time Value of Money concept to calculate the alternative returns and prove your point, I humbly propose a more accurate calculation using the Actuarial Present Value instead, so as to be concise and factor in mortality / lapses / critical illness decrement considerations.

This may be helpful:
http://en.wikipedia.org/wiki/Actuarial_present_value

You see , the blog owner has censored and barred my post.

Wilfred,

Yes, same as Maxi Life II and IdealLiving. Thanks for correcting.

zhummmeng,

We, NTUC Income policyholders understand that, too well…

There are so many NTUC Income policyholders like me, who support the new management practice to restructure the bonus system, to introduce valued products like Vivolife & Revosave, and their image overhaul to suit the contemporary developments, and expectations of modern Singaporeans.

Comments edited by moderator: Please stick to the issues raised in the article. The article above is not about Tan Kin Lian’s blog and what he does there.

I hope that the person who posted as “The Truth” will give his or her real name and identity. This person should avoid making slanderous statements about me or my blog.

Zhummeng knows that I have blocked many of his strong statements against agents and against the practices of a certain insurance company and its products. I do now want to be the sued for defamation in my blog.

I also invite people like June, who wish to discredit me with her statements, to disclose her real identity and background. It is not appropoirate for “her” to pass judgement and make statements on other people, while hiding under the cloak of anonymity.

Perhaps the blog administrator needs to be more active in censoring these types of statements as well, from anonymous people.

There is an objective exchange between me and Catherine Soong about the Vivolife (premium payable for 10 years) in my blog.

Catherine gave the yield at the end of 10 years. I presented an alternative, by investing in an investment fund.

The exchange is somewhat lengthy, so I cannot post it here. You can read about it in: http://www.tankinlian.blogspot.com

I posted earlier that i would debunk Catherine Choong on vivolife. I just mention a few of the flaws.

#1.The return over 30 years is about 3% and not 4% assuming projection is guaranteed and which is not

#2. If you liken it to a zero coupon bond it is not ..Zero coupon is safer if you hold it to maturity but vivolife is not safe and you may not get even 3% if you consider the increased risk of the bonus structure.

#3.Comparing term with vivolife is like comparing an apple with a durian. The durian smells terribly, looks big and showy but hollow and useless and only potent outwardly but considering the premium you pay it is not.That is vivolife with frills on the outside to beguile the customers but actually hollow on the inside.Return is low and protection is low too and it needs the 125% to boost its appearance but savvy and streetwise cleints can see through the fakeness. Only the unwary, they may not. They are too trusting. (please compare with your old living policy)

#4. As you said, term is 10times cheaper but with same money it can buy 10times more coverage than vivo life but this is not the point here . What is needed is more important and you need just nice to cover CURRENT needs or at the point in time , no more no less. This is insurance and not some fancifool stuff insurance agents tout and like to cook up for their clients for half peace of mind.

The frills are cover up and any financial planner will not consider them when they conduct need analysis because the frills are not the primary issues. Only salesmen and women will consider them as selling points. They are actually distractions to divert the client’s attention when making the sale.

#5.annuity option is the greatest self contradiction of this vivo life plan. Which is which? to keep whole life becuase you fear illness that might come at old age or to take out the money for retirement? A paradox of insurance agents or the company? The devil and the deep blue sea?

#6. Return so low, how to live life to the fullest. Maybe misery to the fullest? if you adjust for inflation it might even lose. It is status quo in real term.

#7. Retrenchment? Is paying premium the most important when one is retrenched? Come on, probably the first to be liquidated. There are more things to think than the vivolife., right? There is a safer method to address this concern. Ask an honest and competent adviser to help you with retrenchment worry but not a salesmen or woman.

#8. Whole life coverage concern? please check the staitistics and see how many keep beyond 60 or 65. See#5…so why buy whole life and be lulled into a false sense of security.Those with NTUC policies check the claims report.

For crying loud, this whole life is ridiculous. Buy for wholelife but never keep for wholelife.
.When vivolife life is sold the clients’ needs are not the first priority because it is expensive and the agents know vivolife cannot meet cleints’ need fully.

I posted earlier that vivolife and all other limited premium plans should be renamed as MAYBE PlANS or Limited coverage plans.

THE TRUTH HURTS and many people out there do not want to know the truth.

It dawns on them only when claims come. Money is always not enough and for most cases only enough for funeral expenses. Somebody said it is happiest moment for an agent to deliver a check at funeral wake but if the check is only enough to take care of the funeral expenses. If you see the children milling around the deceased’s spouse ask yourself whether the check in your hand is enough to see them through life and retirement for the spouse. The poor spouse at age 40 or 50 may have to go back to work. What is her chance?

Sorry, Mengggzhu and the rest, I believe all of you were looking forward to a lively exchange of facts about certain products but unfortunately the moderator for his or her reason, has considered necessary to bar my comments especially on vivolife by Catherine Choong. It is a revelation of truths but , alas, the ultinately perogative lies with the moderator.
Thanks

Zhummeng,

Your post on Catherine Choong was not barred by us.

Firstly, your post was caught in the anti-spam folder.

Secondly, your words in your post were all bunched up together, which makes for very hard and tedious reading. I have spaced them into paragraphs.

My apologies for not seeing your post in the spam folder instantaneously to retrieve it.

Thanks for the rescue from the spam. It is kind of you.
Zhummmeng.

Take heed, MAS insinuated to LIA that their members’ insurance agents have to change and come out with new acceptable acts. Insurance agents must not expect to be paid hefty commission for FILLING UP FORMS. It will come to pass.
This is bad news for order taking and form filling insurance salesmen and women.
For the competent and honest and those who use the best practice , the 6 step need approach the future bodes well for all of you… For the product pushers…….well…i can’t think of an alternative considering your training, maybe free up labour for the labour hungrry industries. Foreign labours can be a headache but if MOM looks at the situation closely this is a good source of labours….also can relieve the old frail people who have to toil in the stench filled public yoilets. Give them the much needed rest and dole out to help them live their golden years.

Happened to chanced upon this posting again and I am surprised by the amount of arguments which I find it unnecessary.

* Mr Tan have his points on Buying Term, Investing Rest and the cost benefit to the consumers.
* Catherine and the rest have their points that Life Insurance have their values and it may have their purpose in forming part of one’s financial portfolio
* Zhummeng has his point as there are indeed many agents out there squeezing the consumer by only selling Life Insurances.
* My point is quite similar to Wilfred. A fair amount of Life Insurance with Critical Illnesses Coverage is good and make sense.

My added opinion is that, term insurance is still the best to ensure full coverage, but life insurance have their part in ensuring the person remains covered even after 65 yrs old. If the person is down with Critical Illnesses, his only expenses will not be just medical bills, there are many other cost that are likely incurred such as Alternative Medicine, Medical Expenses not covered under Medical Insurance, Extra Transportation, Likely use of a temporary domestic worker, etc.

If you are ready to buy term, invest rest and set aside a sinking provision for the permanent needs of Crtical Illnesses, its the best. If you are not ready to go into that hassle, its alright to get some whole life coverage.

Adrian Khiat
http://akhiat.blogspot.com

Hi Mr Tan,

No offense intended. Just my 2 cents worth.. :-)

June on May 18th, 2008 3.16 am said:

Yes, same as Maxi Life II and IdealLiving. Thanks for correcting.

MaxiLife is now version 5, not 2.

Wilfred Ling (an IFA)
http://articles.wilfredling.com

Interesting readings, seems like a comprehensive financial pan includes:

1. H&S plan like shield plans, as one has a high chance of hospitalisation events
2. Get basic dealth & critical illness cover of about $50k or $100k in a participating policy, for inflation-hedge of life-time protection and very long term savings, as the chance of early death & critical illness is low abt 5% (as mentioned by Mr Tan in his blog)
3. Buy term to substantially increase the cover to say $500k, at modest cost
4. Invest the rest in low-cost unit trust regularly to achieve dollar-averaging effect (ideally not ILP as it includes insurance cover which cost extra $$$). Low cost index funds are critical because statistically most fund managers cannot beat the index fund.

I find zhummeng’s latest post interesting and thoughtful.

1) Quote “Insurance agents must not expect to be paid hefty commission for FILLING UP FORMS.”

That only shows what is suggested by Catherine Ng “that analyzing the needs of the clients and understanding the risk profiles of his client” IS MORE RELEVANT than “peddling term insurance as a “one-size-fit -all” solution” .

2) QUOTE “For the competent and honest and those who use the best practice , the 6 step need approach the future bodes well for all of you”

My agent has been doing financial planning all way long, and through that detailed fact finding, I found out why I need to get products like Vivolife and Revosave.

She provided alternatives, and it is my personal decision to take up Vivolife and Revosave.

I am fighting for the rights of the agents only because they have been fighting for our rights,dignity and spirit as a caring human being, in their capacity to provide intelligent, financial recommendations, to us, policyholders of NTUC Income.

I am not an agent, yet I love them because they serve me with compassionate care and concern, never ending love, and do their best to render quality service, to common people like me.

Thank you guys. Policyholders like us appreciate your efforts despite the setbacks set upon you.

Thank you.

These are the rebuttals by zhumeng and my loving, tender care suggestions to him.

#1.The return over 30 years is about 3% and not 4% assuming projection is guaranteed and which is not

#2. If you liken it to a zero coupon bond it is not ..Zero coupon is safer if you hold it
to maturity but vivolife is not safe and you may not get even 3% if you consider the increased risk of the bonus structure.

#3.Comparing term with vivolife is like comparing an apple with a durian. The durian smells terribly, looks big and showy but hollow and useless and only potent outwardly but considering the premium you pay it is not.That is vivolife with frills on the outside to beguile the customers but actually hollow on the inside.Return is low and protection is low too and it needs the 125% to boost its appearance but savvy and streetwise cleints can see through the fakeness. Only the unwary, they may not. They are too trusting. (please compare with your old living policy)

My loving answer here:

My question here is.

What is the objective of having an insurance policy?

The first thing of all, that comes to your mind is coverage.

When you talk about insurance, you think of coverage against death, disability and dread diseases at any GIVEN SITUATIONS.

- Term policies, you lapsed it, you dont have coverage.
- Insurance policies with cash value like Vivolife, you lapsed it, you still have that coverage.

What is suggested by Tan Kin Lian in his blog, “buy a whole life plan so that the cash value can prevent the policy from lapsing” as one of the alternative choices to a term insurance is a clever one, provided the agent explained on the effects of deduction.

Generally, I believe for whole life plan, or limited payment term plan, everyone generally knows that the cash value in the policy for the first few years, is low due to the charges involved.

All of us, policyholders know that the emphasis here is coverage and never on “returns” when you talk about whole life insurance.

Coverage in ANY GIVEN SITUATIONS.

#4. As you said, term is 10times cheaper but with same money it can buy 10times more coverage than vivo life but this is not the point here . What is needed is more important and you need just nice to cover CURRENT needs or at the point in time , no more no less. This is insurance and not some fancifool stuff insurance agents tout and like to cook up for their clients for half peace of mind.

The frills are cover up and any financial planner will not consider them when they conduct need analysis because the frills are not the primary issues. Only salesmen and women will consider them as selling points. They are actually distractions to divert the client’s attention when making the sale.

#6. Return so low, how to live life to the fullest. Maybe misery to the fullest? if you adjust for inflation it might even lose. It is status quo in real term.

My loving answer here:

What frills are you talking about?

Go straight to the point, and stop beating around the bush.

If there any added advantages to our insurance policy, we policyholders have the right to know.

Is there a need to cover it up?

#5.annuity option is the greatest self contradiction of this vivo life plan. Which is which? to keep whole life becuase you fear illness that might come at old age or to take out the money for retirement? A paradox of insurance agents or the company? The devil and the deep blue sea?

My loving answer here:

That is why I believe, that the new NTUC Income management is thoughtful enough to design a flexible insurance plan, where policyholders like us can choose to convert partially or fully our cash value to annuity at the age of 60.

We can set the amount of coverage that we need and at the same time, get income for life.

Isnt that smart?

#7. Retrenchment? Is paying premium the most important when one is retrenched? Come on, probably the first to be liquidated. There are more things to think than the vivolife., right? There is a safer method to address this concern. Ask an honest and competent adviser to help you with retrenchment worry but not a salesmen or woman.

My loving answer here:

When someone is in a financial turmoil, paying premium doesnt seems that important to him.

When he has term insurance, he will just lapse it.

When he has Vivolife, he can choose not to pay premiums up to 6 months, yet get the coverage that he needs most at that point of time.

Isnt that good?

Disection of #8. Whole life coverage concern? please check the staitistics and see how many keep beyond 60 or 65. See#5…so why buy whole life and be lulled into a false sense of security.Those with NTUC policies check the claims report.

My loving answer here:
That is why limited term payment for Vivolife works well for many policyholders like me.

I just need to pay for 10 years and I get lifetime coverage.

No need to think about premium anymore.

Disection of #8.For crying loud, this whole life is ridiculous. Buy for wholelife but never keep for wholelife.
.When vivolife life is sold the clients’ needs are not the first priority because it is expensive and the agents know vivolife cannot meet cleints’ need fully.

I posted earlier that vivolife and all other limited premium plans should be renamed as MAYBE PlANS or Limited coverage plans.

THE TRUTH HURTS and many people out there do not want to know the truth.

It dawns on them only when claims come. Money is always not enough and for most cases only enough for funeral expenses. Somebody said it is happiest moment for an agent to deliver a check at funeral wake but if the check is only enough to take care of the funeral expenses. If you see the children milling around the deceased’s spouse ask yourself whether the check in your hand is enough to see them through life and retirement for the spouse. The poor spouse at age 40 or 50 may have to go back to work. What is her chance?

My loving answer here:
That is why again financial planning is needed as opposed to your caring mentor’s proposition of “peddling term insurance as a “one-size-fit -all” solution”.

Thorugh financial planning, we policyholders can see clearly our needs, and how our caring agents proposed their recommendations.

Ultimately, we are the decision makers.

Well, Mr.The -truth, insurance agents must be thankfool that you are taking up the cudgels for them. It is really commendable.
After reading your point by point rebuttals I find that you are confused. I think you need to understand what financial planning is really about. It is not what your agent did for you by filling up the fact finding form and then leave your needs dangling half met .
It is amazing that your needs analysis led to revosave and vivolife as solutions. I wonder what are your needs. I also wonder whether your agent did conduct a proper need analysis or just manipulate some plucked from the air figures to satisfy compliance.
My advice is that you get a second opinion and have your insurance policies reviewed by an objective independent , qualified competent and honest financial planner and not a salesman disguised as consultant.

Well zhummeng,

I think you are the one who is confused.

If you find, my tender, loving care answers seem inaccurate, feel free to share your views here.

I will love to learn from you.

Mr Tan Kin Lian,

If your ideas run contrary to my statements above, zhemeng, may appreciate your helping hand.

With Regards,
The_truth

I challenge the-truth to collect signatures to back up his claim that many policyholders support the cut in annual bonus. Mr. Tan is collecting the signatures from real policyholders who oppose the cut. If the person behind that fanciful nick really stands for the truth then it must be backed up instead of making generalisations here.

Policyholder,
lets not deviate from the main topic.

Focus on the discussion here, okay?

“The truth about life insurance”….

Btw, I am just a humble person, contributing my views in this blog.

I hope, we can articulate our points here in a civilised manner, and for sure, I will love to learn from the more experienced contributors here.

If you disagree with my idea, contribute your views here, with the absence of slandering, absence of criticizing and absence of being personal.

Lets not trade accusations, just point to point, intelligent discussions!

Guys,

Please don’t make my life hard, lah. Just debate the issues and avoid all the egoistic bravado. :) Else I will chop chop here and everywhere. Heh heh… :P

Please carry on and share your views, opinions, expertise, knowledge and wisdom but do so with respect for each other, ok?

Thank you.

The_truth,
You made the assumption that we policyholders support…… That is why I challenge your assumption. When you assume, you not only make an ASS of U but also ME, that is why I issue the challenge. You ASSUME and you consider that intelligent while I challenge your assumption and you imply it as non-intelligent?
I am focusing on the topic here but it seems you are confusing readers with “The truth by making generalisations and assumptions with your nick!
Actually nobody cares whether you are humble or cocky, we are just interested in the truth. :)
Of course I am contributing my views here, not twisting the truth.
I thought you were trading accusations with another poster about him being confused, yet you say do not trade accusations. My, my, what is the truth now? My humble opinion is that you should change your nick and avoid confusing the readers here. Then maybe the discussion can be more civil.

PolicyHolder,

Relax…

Take a deep breath and exhale, slowly….Okay?

Yeah…I am sure you feel better now….

When emotions run high, intelligent lowers.

Ok…Back to the topic, I am here just to share what I think, just like what many bloggers here are doing.

If you find my facts incorrect, you are free to refute.

Your choice.

Your decison.

It’s all up to you!

Based purely on time value of money, the yield calculated in Catherine’s example is 3.50% p.a. at year 30. Based on the above postings, it has been compared with zero coupon bond of 4.00% p.a yield.

I would like to add my two cents worth.

a) Based on data obtained for http://www.sgs.gov.sg, the longest duration (20-years) government bond provides a yield of 3.49% p.a. It is risk-free. We should take this as a benchmark to compare (along the line of risk-return graph)

b) The 3.5% p.a. yield calculated is not accurate. To find the true yield, we need to find the equivalent annual premium (P2) of a 10-year pay, critical illness + death term that covers to age 99. This would constitute the true term component of the whole life plan. Then, deduct P2 from the whole life annual premium (P1), and use (P1 – P2) as a basis for arriving at the true yield of the cash value provided by the whole life plan.

c) Once we have the true yield, it is possible to measure the risk-return profile and see if the pay-off is worth it or not. Since we know the asset allocation of the par fund, we can derive the standard deviation and beta from there. We can then draw a more robust conclusion.

The above are the theoretical steps to a truly fair comparison. Unfortunately, there is no way of finding P2, for in practice there is no 10 year-pay CI plan that pays to age 99 (to my consumer knowledge at least, any agent please correct me)

Therefore, some arguments by previous posters are unfortunately unsound (referring mostly to those comparing numbers). They are debated mainly based on emotions and different philosophies.

how come most of the previous postings that I helped to put back were removed?

on behalf of,

I did not know what you were trying to do (spamming?). The comments can still be viewed at our original blog site at http://theonlinecitizen.wordpress.com

I will reinstate those comments you helped to re-post here.

My apologies.

June said
As for Mr Tan, I really hope he can do more research before he writes because many unsuspected consumers are reading. Many people look up to him for avice, given that he’s the former CEO of Income. He does speak with a certain degree of authority. Cannot any how say without facts one lah. One question: can the consumer readers seek redress if they follow the wrong advice? Therefore, I hope he can be more responsible in his comments, especially now that the traffic to his blog is heavy.

It is easy for “June” to discredit me, while under the cloak of anonymity. I do not know if “she” is a real person and what is her background.

I invite my visitors to read the FAQs posted here:
http://www.tankinlian.com/faq

You can take my advice, if they are relevant to you. You can ignore them, if they are not relevant or not backed by “proper research”.

You can judge if the financial adviser is making a recommendation that is backed by “proper research” and is beneficial to you. Be sure that you understand the adviser.

Ask the simple and relevant questions, including those set out in this FAQ:
http://www.tankinlian.com/faq/right.html

From zhummmeng to mengggzhu,

I didn’t use the time weighted approach for vivolife but the dollar weighted, therefore a lower return than the 3.5%. The actuarial math is beyond me but basically the same as time value concept but with a lot of assumptions that make up the variables.

Whether it is 3% or 3.5% and not 4% it is a very poor return considering the time horizon of 30 years and risk. Policyholders may end up getting lesser than 3% with the more risky new bonus structure. The old bonus structure is still better with much lower risk.

I have discounted the $93000(not guaranteed) as computed by Catherine at assumed inflation rate of 3%, it is worth only about $38000 today. I am wondering how can policyholders live life to the fullest. It is miserable and maybe have to supplement income by becoming public toilet cleaners.
$38000 at best is a return of premium. There is no real growth.

Is VIVOLIFE a good saving plan? (please don’t compare to the bank FD rate)

ANSWER: A resounding NO and NO and NO

What about protection? No need to say…. Term wins hands down.
Wait a minute, for those die hards or misled fans of wholelife and to insurance agents of ntuc if you think you cannot buy a term that covers till 100 years old, you are still living in the well. Venture out and see the world of insurance or visit blogs that provide you free info and tips.
Another tip, did you know you can buy limited term payment for term insurance also or a single premium for term?

But this isn’t the issue…. The issue is “do you NEED to have a wholelife?”.

What do you have after 65?

Hi zhummmeng,

It is incorrect use your dollar weighted approach. You can try using MS Excel. Then, discount each premium by their respective duration and sum them up. Next, discount the total cash value and discount it by 30 years (in this case). Then run a goal-seek to match the two values. Alternatively, use the IRR function.

I personally feel whole life is not a good financial instrument for savings. I agree with you that it is not a good savings plan.

For protection, it is not conclusive to debate on pure emotions or talk. The following could be done for a more robust conclusion.

For example, we can assume that person aged 30 were to be struck with a critical illness at age 65 .

Scenario A: Person buys whole life and receives Y claim payout. Pays P1 premiums annually for 10 years. Based on Y as total payout, calculate a% p.a. yield.

Scenario B: Person buys critical illness term for (65 – 30) 35 years. He pays a premium of P2. He invests (P1 – P2) into a sinking fund. Find b% p.a. such that the sinking fund grows to exactly Y in 35 years.

Next, for b% p.a. return, decide an asset allocation plan that would provide a 95% chance of being able to arrive at Y amount. Finally, compare a% and b% and conclude.

Since the above is made on the assumption of age 65, we can repeat for increments of 5 years till 90 years old. Then, this will give a plan for re-balancing the portfolio towards reaching the desired amount and an appropriate risk level.

Buy term invest the rest would require the above approach instead of buying term till age 99 in order to make the best bang for the buck. This is because mortality rates increases markedly beyond 65. This is the correct approach towards BTITR.

Anyway, the above is written as an academic discussion. I am neutral towards whole life or term, and personally am vested in BTITR.

Please feel free to correct any wrong assumptions in the above example. I would be happy to acknowledge any knowledge lapses.

Wow, what lengthy discussions. The latest by mengggzhu is indeed quite an eye-opener. mengggzhu, are you doing your Masters or pHD? Must be quite smart :P

Actually the way I view it is this.

Buying term is like going to Sim Lim Square to buy your own spare parts to assemble your computer. You need to know what to buy, and choose the parts you want. If you are savvy, you can get a really good deal with all the bells and whistles at a really good price.You have to bear the risk of spoiling the computer if you induce too much static or put wrong parts in.

On the other hand, buying whole life is like buying Dell. You may not get everything you want (like get some B-grade graphics card), the price is higher that DIY from Sim Lim, but you get a guarantee from the vendor. And overall, it works quite well too. If it spoils, you can always pick up the phone to get their repairman down. Of course, whether to buy Dell, HP or IBM…better to ask for opinions, compare features before committing.

Actually I can understand how zhummmeng feels.

I DIY my own computer, so I always tell my friends to DIY or I help them DIY too. But believe me, when their comps start having problem…its a extra problem for me too. So nowadays, I just tell them to get Dell (with 3 years warranty).

So I suppose this analogy sums up the discussion? No or yes?

Hi Clueless, advice on buy term and invest the rest is not about DIY. The adviser is still alongside you to guide you , to partner you in your protection needs and investment planning. I know there have been many postings where the impression is that the client is abandoned. No, the BTID is another alternative to buying a rigid whole life and a better alternative. So it is not about going to Sim Lim sqaure to get all the parts to construct a computer on your own or buying from DELL with some missing parts and very often needing further upgrade.,.
So you get the idea . It is better to deal with someone competent who can help put together a super computer at lowest cost and meeting all your needs
than buying one off the shelf, right? It is a bit troublesome and sometimes thankless for the adviser but then we are talking about putting your interest first.
I like your analogy…

Guys,

Let us be more practical, and not calculate, the returns to the nearest cents when the objective of Whole Life Insurance is indeed PROTECTION and not RETURNS.

The truth, delightfully, will like to introduce a well known concept called, BWBUI….

Buy Wholelifeinsurance Before U Invest.

When you invest your money, you need to ensure that you are well protected in any WORST CASE SCENARIOS.

The emphasis here is PROTECTION in any GIVEN CIRCUMSTANCES.

Example: Out of job

Economic turmoil in year 1997 had witnessed many in losing their job, and many in turn lapse their term insurance policy due to this setback.

Term insurance advocators, who in need of money at this point of time, may have to FORCE to liquidate their investments (sinking fund) at the wrong timing.

This may result in an unfortunate monetary loss for them.

In contrast, with Vivolife, BWBUI advocators need not pay premiums up to 6 months, giving them time, to coordinate their next best action, without sacrificing their insurance policy, which they NEED most at that critical point of time.

So, we see, that in this one classic situation, BWBUI is definitely the BEST OPTION.

This is just my humble thought.

Term Insurance advocators also cast a fallacy in assuming that all those who take term insurance policy, have the discipline to create and maintain that sinking fund.

For those who are not discipline to maintain it, it will spell disaster, when they are force to terminate their term insurance due to them thinking that, its OKAY to stop term insurance for a while, since they need the money.

BWBUI advocators need not worry about that, because the structure of whole life insurance has AUTOMATICALLY take care of their major concerns.

Whole life insurance policy can remain inforce, because it has cash value.

Therefore, I believe BWBUI works best for the majority.

Hi zhummmeng,

In my analogy, I should find someone to help me fix a good computer? But how do I know which computer-man to find? Some computer-man are good and some will rip-off. If I do not know computers, it will be hard to judge. Should I go buy straight from Dell?

Hope to hear an answer in my little analogy…easier to comprehend. Thanks

Hi, Clueless, I agree it is hard to get one who is COMPETENT AND HONEST out of the population of 13K and especially when the unethical and incompetent make up the 80%. It is tough and that is why those run of the mill products can sell by using this group of sellers.. Unfortunately most customers end up like Baboons With Bananas Under Insured.. But don’t despair, you maybe able get a good one from the trade association like FPAS. You can approach them for help, someone who is competent and honest and have your interest at heart.

I believe that the majority of folks who advocate buying whole life in this forum are the insurance agents. Kekekekekeke

The points I introduced goes unopposed so I assume that many are in agreement with me here, or simply believe the point that I brought up is indeed the truth….

That is a healthy sign, that term insurance advocators are indeed in the minority and many still realise the importance of having a whole life insurance plan.

Btw, I am just a policyholder of NTUC Income who owns whole life insurance plans and strongly believe in it.

I practice what I preached, I walk my talk, not like someone who do something else and recommend something else to others….u know who….

I refer to Clueless analogy of buying a computer.

You see, when you hire someone to fix a computer, he will go through a process call “fact finding”…

He will ask you, the OBJECTIVE of you having this computer….
Using it to play games? may require more RAM and a good graphic card
Using it to create videos? may use Mac instead of Vista as the operating system

He will ask questions pertaining to your budget, and will recommend according to your OBJECTIVES and your NEEDS.

He wont tell you, regardless of your objectives, just get Pentium 1 computer, because you can type, you can backspace, you can delete, and you can format the computer.

That is not the right way…

So….for as long as the person who are able to fixed that computer to meet your objectives, he or she has done a good job.

In financial planning, there is no hard and fast rule, like “peddling term insurance as a “one-size-fit -all” solution” .

Your financial planner, just like the above analogy need to plan your financials according to your OBJECTIVES and NEEDS.

If your needs is indeed PROTECTION, he will need to “install” mechanisms that can protect you in any given circumstances.

Regardless, if you are unemployed, if you are hospitalised, regardless you are critically sick…..your financial planner have to plan according to your needs and objectives.

Hope that explains….Thank you.

The_truth PREVAILS…… ( :

“It is difficult to get a man to understand something when his salary depends on his not understanding it.” –Upton Sinclair

whether the truth prevails must wait and see lah.

ntuc policyholders should wait a few years and see whether the management delivers – not only in insurance products but also in claims !!

It is not only difficult to get a man to understand something he cannot understand. It is vomiting blood . Better don’t attempt. Let nature take its course. It is not our concern to make them understand as you can see many are adamant to be baboons with bananas under insured(BWBUI). They are insurance agents whose salary depends on “not his understanding it’ like Priyadi says so they can feign ignorance and stupidity or may be they are.

Don’t wait to cancel if the AGM is a fiasco.. It may be too late. It becomes more difficult to get out. You will be in dilemma. It is very clear that the new structure is not good. It is riskier and the combined effect is the same as the old one. If you think that it is good you will be better off buying term and invest for much better return. Why settle for not guaranteed 3% for 30 years when you can get 6-8% with lower risk over 15 years? Is there anything wrong with you? Suffering from irrational kiasuism? Even any down simpledrome knows 6 is better than 3.

I understand that some insurance agents may advocate whole life insurance over term insurance, because of the different remuneration involved.

On my hand, as a policyholder of NTUC Income, I just upholds that we, policyholders of a cooperative deserves to receive BEST VALUED financial instruments of its kind in the market.

…and we are continuing to receive it.

So….what is there to complain?

I am an ardent supporter of whole life insurance because my family has benefitted from it.

I believe what Tan Kin Lian should propose, is whole life insurance with the lowest “effects on deductions”, instead wholefully, depending on term insurance, where the protection needs of the person is not adequately fulfilled as in the above example.

We, policyholders understand that there may be cost involved to pay for the expenses.

In fact, there is cost to everything.

We accept that.

What policyholders like us NEED is the assurance that the plan that we are taking, will help us to fulfil our objective when we took an insurance plan, which is PROTECTION against Death, Disability and Dread Diseases in ANY GIVEN CIRCUMSTANCES.

Again, Zhummeng, dont be confused…. People like me get whole life insurance for PROTECTION and never, ever on returns.

Protection in ANY GIVEN CIRCUMSTANCES!

The_truth PREVAILS…… again…. ( :

And Peace prevails again in this blog :)

Yes… I agree with you, Raymond.

Peace will prevails when people think rationally, instead of emotionally. ( :

I find Priyadi words of wisdom “It is difficult to get a man to understand something when his salary depends on his not understanding it.” –Upton Sinclair, interesting.

It ring bells to the mass.

I heard Tan Kin Lian is setting up a new insurance company, selling only term insurance and low cost investment products. Is it true?

After advocating life insurance for over 30 years, this sudden change of stand is indeed surprising though.

Therefore, Priyadi words of wisdom, may be applicable in this sutuation.

Just my point of view… ( :

The_truth

When a dumb and numb customer meets an incompetent and dishonest insurance agent, guess what? It is whole life or endowment . What then? It is a baboon with bananas under insured. What Priyadi says is true. An agent’s commission depends on his or hers not understanding it.

zhummeng…

Relax….dont be soooo…. emotional…

I am just articulating the truth…

There is no need to label NTUC Income policyholders as “dumb and numb” and our agents as “incompetent and dishonest”.

That is a very incorrect ASSUMPTION on your part.

What Priyadi says is true. The performance of Tan Kin Lian’s new company depends on his or hers not understanding it.

The truth prevails once again…. ( :

I am wondering whether you are an agent from uNTUc or you are related to Catherine choong..You have been defending since after she shared the fallacious and dubious benefits of vivolife. Whatever you have been doing since then tells of a typical behaviour Mr. Nicholas Davadas observed “that insurance agents know that to be successfool they have to tell what the customers like to hear and not what is the truth.” I can observe one here too that it is not easy trying to make someone understand what they don’t understand.

Zhummmeng,

Just ignore this self called The-truth calling himself policyholder and generalising that all policyholders think like him. Nothing is further from the truth. He lingers on in this forum because of his vested interest and it does not take a rocket scientist to see through that. Real policyholders like us know when our pocket has been hurt so let us just ignor his warped logic and his constant huff and puff exercises. So lame.

Zhummmeng, save your energy for the AGM where you will meet the real policyholders.

Comments edited by moderator. Realpolicyholder, please do not resort to name calling or personal attacks. Thank you.

I am not an agent nor am I related to Catherine Choong.

I am part of a group that holds more authority than the agents,more authority than its shareholders, and have benefitted from NTUC Income whole life insurance.

I am a policyholder of NTUC Income.

I endorse anyone when I find what they say resonates with mine. I will also not watch idly when I disagree with anyone.

hope Zhummeng understands what he tries not to understand.

The truth prevails again….
Whole Life Insurance for everyone ( :

Thank you, Real policyholder, you are right that we should not waste our energy on
some self proclaimed ………………..(fill in the blank) . Whole life or no life or half life
whatever why try to convince a comatose that whole life insurance is insurance for whole life brain dead life. Any way we have better things to do.

The_truth, pardon me, you may be a policyholder, but are you also an employee of NTUC Income?

Oh come on Zhummeng – give The Truth more credit than that – i think the tell tales signs points to “The_ Truth” as a senior person in an insurance organisation. tell The_Truth and shame the devil ! : )

Corporate wise, doesnt the shareholders hold the supreme power of the company – unless there is something unique in ntuc’s set-up which givs power to the poicyholders.

Let’s all gear up for the AGM! I think this AGM will really be an eye opener for both the management and policy holders! :D

Yes Zhummmeng,
Sometimes it is wiser to just cut loss instead of dragging on, especially when it is obvious that the truth is actually less than the truth. We are living in a time of three quarter sin and one quarter virtue. Let us retain our virtues, conserve our energy and support our virtuous Mr. Tan KL this coming AGM with the real truth, nothing but the TRUTH.

The AGM is next week, anyone got a copy of the annual report already?

The softcopy at http://www.income.com.sg/aboutus/annreport/ is still for year 2006

The truth prevails despite the “unrelated” criticicm brought forward by some, in a clear, evident effort to cloud the minds of the innocent blog readers, from the main topic, “The truth about whole life insurance”.

We, NTUC Income policyholders, are a group of people who thinks rationally and never let our emotions take over us.

When emotions take over, this is the outcome….

“People who follow a leadership with a self centred agenda, beneficial to only one person….you know who….”

Well….this is the_truth message to all term insurance advocators.

Term insurance can only be use to ENHANCE a person’s coverage and not use as a base, or as a “one-size-fit -all” solution.

BWBUI (Buy Wholelifeinsurance Before U Invest) concept requires everyone to buy whole life insurance before he invest any of his money.

This is because, he will never want to be force to liquidate his investments at the wrong timing, to provide cashflow when he needs the money urgently.

In the event of unemployment, whole life insurance policy like NTUC Income Vivolife allows waiver of premiums up to 6 months, which came rather handy.

So, where does term insurance comes in?

Term insurance can then be used to enhance the person coverage, to ensure he has sufficient insurance protection.

So, you see, there is no way, policyholders who adhere to BWBUI concept can go wrong, or be critically underinsured.

Therefore, it is a clear predication that Zhummeng’s claim, BWBUI will be “baboons with bananas under insured” is rather UNINTELLIGENT and simply UNFOUNDED.

hope Zhummeng understands what he tries not to understand.

Hello thetruth, you are an insurance agent from NTUC or another company? You seem very knowledgeable, far more than an ordinary man in the street.

But my take is that both term and wholelife insurance of useful to have, although the former is much better for insurance coverage and wholelife would only be useful for ill disciplined people who do not know how to save. The returns are a mere pittance compared to what you can invest and reap in a low cost fund.

I too have all wholelife polices, but that is because I didn’t realise any better then. And of course, my friendly, nice guy but vested interest insurance agent never told me all these years. :D

There are a lot of things agents never told you.
#1. They never told you that you needed a lot of of coverage; they only told that you needed insurance.
#2.They never told that term was cheap and was the best means to adeqautely cover your needs.
#3.They never told you they earned a lot more from selling you whole life
#4. They never told you that whole life plans were useful for rich people who had estate duty concern(repealed) or people who were rich to leave a legacy.

#5.They told you that you needed whole life when you were old. For what?
#6. They told you that you needed a CI when you a were old and frail when you actually needed an H&S.

#7. They never told you that whole life was a good source of revenue to the company as long as you keep your policy in force.
#8. They never told that that a ‘BOMB” was awaiting you when you were old.
#9. They never told you that your whole life coverage never increased over time
but they told you the opposite.

#10. They lied to you that your your policy protection increased over time to take care of inflation.
#11. They lied to you that the return projection was guaranteed.
#12.. They lied to you that you could rely on the cash value for your retirement.
#13. They lied to you that whole life would take care of your needs for ever.
#.14. They lied to you that term might lapse and never told you you could earn a lot more from investing directly yourself.

#15. They lied to you that you stop paying when you completely paid up your limited premium term.
#.16 THEY NEVER TOLD YOU THEY WERE INCOMPETENT TO HELP YOU WITH
BTITD and they were salesmen like any other salesman

Friends, your agents may be hiding a lot of things from you .There are also people who have vested interest helping the agents to perpetrate whole life products. I can think of many lies that your insurance agents would use to make you buy this product and the above are some only.

Unfortunately , Zhummeng has made a few unintelligent assumptions and here again, is my tender, loving care suggestions.

#1. They never told you that you needed a lot of of coverage; they only told that you needed insurance.

My tender, loving care answer: That is why I have been strongly advocating the need for financial planning instead of recommending term insurance as a “one-size-fit -all” solution.

Through financial planning, all these protection needs will be uncovered, instead of closing your eyes, and recite, “term insurance, term insurance, term insurance…”

#2.They never told that term was cheap and was the best means to adeqautely cover your needs.

My tender, loving care answer: That is why I say the purpose of term insurance is to enhance your coverage and to ensure that you are adequately covered.

….and term should never be use as a base.

#3.They never told you they earned a lot more from selling you whole life

My tender, loving care answer: Agent’s concern and focus is only on the client and he will recommend his BEST SOLUTIONS for his clients.

His or her own commission will be irrelevant and not a crucial decision factor in financial planning unlike “someone you know who”, who has been recommending whole life insurance for over 30 years, and suddenly change his stand and say term insurance is the best.

Anyway, it is no secret, that agents earn higher commission on whole life. Our concern as policyholders of NTUC Income is just, we want agents to do financial planning for us and recommend solutions to fulfil our needs truthfully.

#4. They never told you that whole life plans were useful for rich people who had estate duty concern(repealed) or people who were rich to leave a legacy.
#5.They told you that you needed whole life when you were old. For what?
#6. They told you that you needed a CI when you a were old and frail when you actually needed an H&S.
#7. They never told you that whole life was a good source of revenue to the company as long as you keep your policy in force.
#8. They never told that that a ‘BOMB” was awaiting you when you were old.

My tender, loving care answer: Whole life insurance is useful for EVERYONE.

What are you talking about?

#9. They never told you that your whole life coverage never increased over time
but they told you the opposite.
#10. They lied to you that your your policy protection increased over time to take care of inflation.
#11. They lied to you that the return projection was guaranteed.

My tender, loving care answer: Is Zhummeng lying? or the agents? Which is which?

#12.. They lied to you that you could rely on the cash value for your retirement.

My tender, loving care answer: That is why again, financial planning is needed to determine the amount of cash needed by the policyholder upon retirement, instead of recommending term insurance as a “one-size-fit -all” solution.

Whole life insurance cannot be used exhaustively, yet can be included as part of the retirement plan of a person.

#13. They lied to you that whole life would take care of your needs for ever.
#.14. They lied to you that term might lapse and never told you you could earn a lot more from investing directly yourself.
#15. They lied to you that you stop paying when you completely paid up your limited premium term.

My tender, loving care answer: Clearly for now, Zhummeng is still confuse of the objective of whole life insurance.

The objective of whole life insurance is coverage upon Death, Disability and Dread Diseases in ANY GIVEN CIRCUMSTANCES.

Returns, length of premium payment, is all, out of the equation.

#.16 THEY NEVER TOLD YOU THEY WERE INCOMPETENT TO HELP YOU WITH BTITD

Zhummeng…dont be emotional, okay?

Most of these advisers whom I met are well trained and equipped with pertinent knowledge needed to give quality advise to their clients.

Anyway, you are free to choose your advisors right?

To declare the majority as INCOMPETENT is rather fluffy.

We, policyholders of NTUC Income can see your unrelenting effort, yet we appreciate if you could articulate your assumptions intellectually instead putting a label to a group of dedicated, hardworking and noble individuals.

You need to do soul searching.

JustMe, thank you for your commendations.

Btw, just to reiterate that I am not an agent or an employee of NTUC Income and I dont belong to the finance/insurance industry either.

JustMe, you have made a correct decision to have whole life policies.

Treat that as a base and use term insurance to ENHANCE your coverage.

Just remember, what The_truth mentioned.

Anything you do, go by objectives.

Best Regards,
The_truth

The truth prevails again….
Whole Life Insurance for everyone ( :

From the view of a humble, typical policyholder of an insurance policy like me, the objective of whole life insurance is coverage upon Death, Disability and Dread Diseases in ANY GIVEN CIRCUMSTANCES. (I copy and paste from my earlier post to prove that Zhummeng is not attentive enough or simply ignorant)

Returns, length of premium payment, is all, out of the equation.

Policyholder like us, want an insurance policy that satisfy our needs.

Why will you still be adamant to deny the needs of us, policyholders of NTUC Income?

You are doing an injustice to many, by subscribing and bolstering an idea, where it will only benefit one person, uhum….you know who….

Comments edited by moderator.
Note: Please stick to the issues raised in the article. Personal attacks will not be allowed. Thanks.

The truth prevails again….
Whole Life Insurance is for EVERYONE ( :

Insurance roadshows seem to have an ubiquitous presence. You can hardly escape them .I have made an observation and I am really amused by the difference in the roadshows by the different companies.
Either the booths are bare with one poster to indicate their presence or with a lot of posters resembling an exhibitions. The approach by the insurance agents is also different. Some merely interview or pretext of survey or merely collecting leads or hard pushing and touting of products. Another difference is the agents of other companies are young and pretty and handsome and the agents of ntuc are usually middle aged , of course occasionally you find a young man or woman
The most lavishly decorated booths are the ntuc roadshows with a lot of posters like an exhibition. I guess they have to make up the age of the agents by more colourfool posters.They can afford the lavishness because, I heard, they are sponsored by the company whereas the others are out of the pocket of agents.
It is quite an interesting experience to be touted by ntuc agents . Unlike the others the first thing the ntuc agents would do , for sure , is to introduce you a product and she or he would rattle off the beneffits and features hopefully that one of the benefits might spot on your needs. If it fails to whet your attention , a tour will be conducted around the posters like what you would experience in a time share sales presentation, again hoping that one of the posters might hit your soft spot.
If the tour is unsuccessfool then comes the trump card, the electronic presentation of their flagship products revosave and vivolife.. This is torturing. It is long and boring and you hardly understand what is going on.and I believe it is intended to wear down your resistance until you get “tolong” and give in. This is way the agents hard push the products and i notice that it is a trade mark.No wonder they are well known for product pushing and known in the market as the kings and queens of product peddling .
One caution to consumers is NEVER, NEVER buy your financial products at roadshows. Your needs are never at the heart of the process. The agents’ commission is. Simply, there is not enough time to conduct an need analysis for you.They never do. It is hit and run. But if you need a product try arrange another time to talk over it and remember to ask a lot of questions so that you would not be cheated by glib tongue salesmen or women. Some of these product traffickers are so good that they can even lure a bird down from the tree.

zhummeng,

Again, the readers of this blog can see through your fluff, deviating from the main topic, “The truth about life insurance”, in a desperate attempt to thwart the attention of the innocent readers of this blog, from the main topic.

Financial advisors doing roadshow are like angels to the public.

There are some who are ignorant on the importance of insurance, some who are ignorant of the needs to save money for their child’s education or retirement, and who is the one who enlighten and save them all?

Agents from roadshows, of course.

Some of us, the public, are very busy with our jobs, with our lifes, that we neglect our financials till the point, it become very critical in our lifes.

When these agents meet us, it comes like a blessing from God.

They are the one, who fact find us, till the point we realise that, we NEED whole life insurance, and we get em….

When we see, that there is a NEED for us to get life insurance, and when the agents explain to us so clearly, on what we are getting, isnt that GOOD for both sides?

Good for the agents.
…and good for the policyholders like us.
Good for both sides!

P.S.: Hope Zhummeng wont deviate far away from the topic again.

theonlinecitizen.com, please moderate my comments on May 25th, 2008 8.59 pm asap. Will love the public to hear the truth :)

A reminder to everyone:

Please do not engage in personal attacks and name calling.

We have disallowed or edited some of your comments as they were engaging in these.

Thanks.

Another interesting experience I had at the roadshow was the agent proposed a very ingenious insurance package of ” buy one and get one free”. It was too good to be true . On the face of it , it looked good but i had a hunch that it was a trap. The agent proposed that i buy revosave and use the cash backs to fund vivolife . Well, i wonder how many fell for this ploy and lived happily ever after.
Perhaps, instead of condemning the scheme it would be fairer to let the agents of these products to defend or to show us how this arrangement of ” buy revosave to fund vivolife” would result in greater benefit to the customer. I haven’t gotten any figures so I can’t mathematically come to any conclusion. I will get to the bottom of it and if it does result in greater benefit i will certainly promote the idea but if it is another ‘bluff’ by insurance agents I will not hesitate to expose the ’scam’
Anyone with this experience can share with us.

Is NTUC Income Board so blinded to early “retire” Mr Tan Kin Lian, if he is so superb in bringing up all such issues to champion for the public and in educating the public about insurance?

Should not the Board retain him as a CEO than taking a drastic action to retire him while still searching for a CEO then as was reported in the media then?

I am really quite puzzled?

I will like to recall a ‘allegation’ I posted on 25th May and which has yet to receive response from perpetrators of whole life. My allegation is that insurance agents lie or misrepresent that whole life protection value increases with time and therefore a hedge against inflation. I contend that the protection value doesn’t increase and in some cases decreases and yet you pay the same premium. A lot of customers have been taken a ride .What about it?

zhummeng & Simple Minded is deviating from the point of contention.

“The truth about whole life insurance”

Anyway, no insurance agents have mentioned whole life protection value increase with time, and no insurance agents can contend that whole life insurance is a good vehicle to hedge against inflation when the main OBJECTIVE of whole life insurance is indeed PROTECTION against Death, Disability and Dread Diseases in ANY GIVEN CIRCUMSTANCES.

If any agents says that, Zhummeng is free to report them to MAS or LIA, or best, bring them to public. If Zhummeng cannot find them, then no use to create assumptions that is baseless and simply doesnt exist.

I quote Zhummeng’s saying “protection value doesn’t increase and in some cases decreases and yet you pay the same premium”….

Doesnt that sounds like decreasing term insurance as propose by your mentor?

Anyway, I applaud Tan Kin Lian’s willingness to listen to the new NTUC Income management stand, in restructuring the bonus for the benefit of us, the policyholders of NTUC Income.

His action shows that he is a good leader, who is willing to listen and who will fight for the rights of the many.

Congrats Mr Tan Kin Lian! Even us, whole life insurance advocators respect you as a leader.

I am not getting any response to the ” buy one get one free” schame posted on May 26th.I wonder how many more have fallen victims by now.
Meantime while waiting for more info from my agent I hope some noble insurance agents will come forward to enlighten us of latest schame . I hope this is not churning or replacement taking new shape or being reshaped. It seems old products can be reshaped to look new. We all must be careful lest we bring home to discover a retro product reshaped or restructrured.Nowadays it is matter of word usage and they may appear very different although the difference is nano nuances.

I am also not getting any response from zhummeng on his allegation he reiterate on May 26th, 2008 4.29 pm. I wonder how many more have fallen victims to his baseless assumptions by now.

Meantime while waiting for more info from zhummeng I hope some noble insurance agents will come forward to enlighten us on how life insurance has helped their clients when in need.

My family has benefitted from whole life insurance, and I am very sure, many out there can attest to that fact, whole life insurance is a must-have for everyone.

You mean you have made some claims ? Congrats. The ‘benefits’ must been a great help to someone. Sure, many found that their families they left
behind are languishing in poverty and some are on the dole. They are waiting for these unscrupulous agents to join them so that they can track them down at the 18 levels of hell and report and testify against them to the ????. Sure, it is a great attestation of detestation of insurance agents.

Zhummeng, may i know your age group? you sound so emotion.. the way you reply is like kids. Using words that not a mature person using.

zhummeng has again made assumptions, assuming “many found that their families they left behind are languishing in poverty and some are on the dole”….which simply is NOT TRUE.

BWBUI (Buy Wholelifeinsurance Before U Invest) concept requires everyone to buy a whole life insurance plan and use term insurance to ENHANCE his coverage.

So, you see, there is no way, policyholders who adhere to BWBUI concept can go wrong, or be critically underinsured.

It is a clear predication that Zhummeng’s claim, “many found that their families they left behind are languishing in poverty and some are on the dole” is rather UNINTELLIGENT and simply UNFOUNDED.

hope Zhummeng understands what he tries not to understand.

Source: (copy and paste from my previous postings, May 25th, 2008 12.49 am)

So surprised to see the debate btw Zhummeng & the_truth. i’m a policyholder of a whole life policy and i strongly agree with the_truth’s posting. Term are an enhancement in a whole life policy, i added a term rider to it. I had a very trustworth agent which gives me the transparency of what Insurance is about and what’s the different between each of them.

What’s Zhummeng was trying to tell us that term offer better coverage and premium and invest the rest. But for policyholder who have low income might feel that protection is more important to the family than seeing whether the policy gives good return or not. One of their worries are also whether can they substain their policy if they were jobless.

Whole life policy are much much more higher in premium but it carry some value to it.These values are like deposit in the banks which they can exercise some loans or use to pay for the premium in case of retrenchment.

After some much explaination from my agent, i also get to know that Insurance claims are collected from a pool of premiums by many policyholders contribution. In directly i’m paying claims for someone else, which makes me feel good about it is,i help out with people and so does others help me too.(cos we will die one day)

So the_truth,your concept of BWBUI i agree with you. I would encourage every singaporean to have a whole life policy first before any insurance policy.

Lastly i see there is no need to waste our time debating which is which better, if Zhummeng thinks term is always the best, then go AHEAD! cause it’s your choice in your decision but don’t “kill” the insurance agents because of a few black sheeps.

Mr. L, you missed the point and you contradicted about whole life products. Of course, there will always be a debate between the “ethical and unethical” on which is best for the cleint or for themselves. There is always this struggle. Whole life eventually gets the better of the agents. I don’t know where you have learned about having whole life as the first and then followed by the term.
You talked about the poor , the coverage and then the cash value available and you got yourself into a knot that you don’t even know which is the priority.

Let me give a scenerio.
There is this man, aged 30 the bread winner who earns $3000 per month. He stays in a 3room HDB flat. which is still under mortgage.He has 3 daughters, aged 2 to 8, His wife is a full time house wife.His take home pay is $2400, and home monthly expenditure is $2300. He can spare $100 for saving.
His concern is what if he is not a round and what if he is afflicted with a dread disease and he has other concerns like his children’s tertiary education, his retirement, loss of job and ect.
On analysis his need for dependents’ income is $500K to raise his 3 kids till financially independent; Their tertiary education is $200K by the time they go to university; the wife’s retirement after the kids left the home is $720K; the man’s CI coverage for 5 years of his salary is $150K. His other needs have to wait until he earns more money.These are his priorities. Assume the figures are in future dollars.
Mr. L, and the _ truth, what would you recommend to this man. Let ’s see how you can help and advise this man. I am sure this scenerio is common, right.? Don’t worry, I would not fault you. I am assuming both of you as layman, as policyholders with little knowledge of insurance.. Just use commonsense. The figures are already crunched for you so it should be easy for you. Maybe ,consider this man your good friend so you can give him your best BEST recommendation and counseling.

Why not we let, Zhummeng post his BEST recommendation to his own scenario.

I am sure this scenerio is common, right.?

We will LOVE to hear from you.

Don’t worry, I would not fault you. I am assuming you as layman too, as someone with little knowledge of insurance..

Just use commonsense. The figures are already crunched for you so it should be easy for you. Maybe ,consider this man your good friend so you can give him your best BEST recommendation and counseling.

Hey Zhums

Dont you love the Tag Team ? And it looks like using office time and resources too ! Haha.

Hope to see all of you at the ntuc agm commencing in 22 hours time – to hear all spout the truth about Bonuses and Life policies.

Game on ! Not for the faint hearted !

: )

Okay…The truth is out….

Zhummeng, himself do not have an answer to the scenario he post.

That is simply brilliant!

So, the time have come, for us, both term and whole life insurance advocators to stand side by side, arm to arm and ACCLAIM the motion that, indeed whole life insurance is IMPORTANT & NEEDED by everyone.

Everyone need to have a whole life insurance protection for themselves.

Thank you! ( :

Zhummmeng,
If I were you I will not waste time on these ghost writers. They have plenty of time and vested interest to try to pull a fast one. Just ignore them. The real policyholders do not have so much time to quibble with juveniles. Let them talk to themselves. Their conscience will prick them during the last two years.

Cannon is a typical ghostwriter who try to discredit innocent whole life insurance policyholders like us.

We feel sad and sorry for him. ) :

We introduce facts and figures, unlike the opposing side who create unfair labels, remarks and carved baseless assumptions on our beloved agents, who have worked so hard to explain to others on the NEED to have whole life insurance plan.

Our proposition remains clear.

Term insurance can only be use to ENHANCE a person’s coverage and not use as a base, or as a “one-size-fit -all” solution.

BWBUI (Buy Wholelifeinsurance Before U Invest) concept requires everyone to buy whole life insurance before he invest any of his money.

This is because, he will never want to be force to liquidate his investments at the wrong timing, to provide cashflow when he needs the money urgently.

So, where does term insurance comes in?

Term insurance can then be used to enhance the person coverage, to ensure he has sufficient insurance protection.

So, you see, there is no way, policyholders who adhere to BWBUI concept can go wrong, or be critically underinsured.

Therefore, it is a clear, that Whole Life Insurance is important to everyone. ( :

To Zhummeng, How to advise this particular person as i’m not train to do so. I will ask my agent about this example.

Meanwhile from my point of view, if i’m the person who earn $3000 per month and left with $100 after the deduction. I would want to do some reflection on where did my money gone to?there’s no savings left and i just pass day by day.If i do spend so much on my expenses, do you think i would want to spend on insurance? this sound not practical in real life ba.earn $3000 should have excess saving if he would properly plan. I believe an agent who do planning can look into his problem.

Ya he might need high coverage but then is term substainable if he was to out of job?he will have problem finding money to pay for his expenses but with a whole life policy i know we can use the value in the policy to pay up for the time being, at least he will still have the coverage.term can’t do so…so what if term cover high coverage but lapse the next month?

High commission for agent for whole life then term…I believe there is no free lunch in this world. Charges are meant to pay for the service for those agents and if we felt that the charges are high, how about those charges we are paying everyday?for example,a bowl of noodles value to be around less than $1 of it cost but we paying $3.50 ~ even $5 per bowl!!! how much percent more????If we keep having this mindset of not letting the agents to earn high commission, i believe they will extinct together with the DINOSAURS~!

I’m here not to debate but to share my point of view in doing business…

To the_truth, i strongly agree that term insurance may be an enhancement to the whole life policy if the coverage is not enough.

To Mr. L
I will wait for your agent to come with a best recommendations . Please let us know.
I will also answer some of the points raised by you.
Indeed, insurance agents WILL become dinosaurs.

To zhummeng,
Since you acclaim, majority of the agents out there are downright unethical, we, policyholders of NTUC Income will be patient enough to wait for you to come with your best recommendations .

A long wait is worthwhile since, it comes from the ethical ones. ( :

The_truth

It seems that Zhummeng needs DAYS to propose recommendations to HIS OWN scenario.

We, policyholders of NTUC Income are waiting, patiently…. ( :

The below is reproduced for your readers to see how a so called independent
consultant can sometimes fall into the trap of conflict of interest. This was posted in Mr. Tan’s Blog.I thought it quite relevant to share it here.

I recently read an article by Nick Dumbreck (an independent actuarial consultant engaged by NTUC Income) about terminal bonus. I wish to send the following comments for posting in your blog.

Yew Ming

Nick Dumbreck (ND): “Limiting the build-up of guarantees enables with-profits assets to be invested more freely, with a significant proportion generally being allocated to equities – and in some cases property. These are expected to generate better returns than bonds in the long run. So a higher guarantee may result in a lower payout as compared to a policy with a lower guarantee and greater investment flexibility.”

Yew Ming (YM): Let’s look at the facts in the public domain :
AIA’s parfund (2006 : equity allocation 15%, capital adequacy ratio 420%)
Aviva’s parfund (2006 : equity allocation 20%, capital adequacy ratio 320%)
GE’s parfund (2006 : equity allocation 26%, capital adequacy ratio 190%)
Prudential’s parfund (2006 : equity allocation 40%, capital adequacy ratio 280%)
Income’s parfund (2006 : equity allocation 31%, captital adequacy ratio 170%).

Note that MAS requires 120% minimum capital ratio. At best, this gives significant amounts of sleep for senior management and their actuarial consultants.

Also, renowned economist Robert Shiller (Irrational Exuberance) has this to say : “The evidence that stocks will always outperform bonds over long time intervals simply does not exist. Moreover, even if history supported this view, we should recognise that the future will not necessarily be like the past”

And lower payouts from reversionary bonus payers (i.e. Income) compared to terminal bonus payers (i.e every other company)? I really doubt this. Income policyholders who have collected his/her policy payouts will know better.

ND: “My experience is that given the choice between a higher expected payout and a lower guaranteed minimum sum on the one hand, and a lower expected payout but a higher guaranteed minimum on the other, most policyholders would opt for the former. Indeed the basic idea behind the with-profits proposition is that guarantees are limited but policyholders participate in any profits which arise.”

YM: This is an assumption made by ND about what the customers prefer. I think companies should never assume what customers want.. Simply ask, and you will know the answer.

ND: “Unfortunately it is not practical to accommodate the different aims of individual policyholders. It is for the board to decide, in the interests of policyholders collectively.”

YM: How impractical is it to send a letter to the policyholder to ask him/her which bonus structure he/she prefers?

ND: “As yields on long-dated government bonds fell from over 10 per cent per annum at the beginning of the decade to less than 4.5 per cent at the end of 1998, many companies were slow to cut annual bonus rates despite having high exposure to equities in their participating funds. This led to reduced free assets, and several mutual firms were forced to demutualise to restore a satisfactory solvency position.”

YM: There is NOTHING wrong with annual/reversionary bonus. The root cause of insolvencies was “companies were SLOW TO CUT annual bonus rates”. Maybe because the industry wanted to illustrate high bonuses to compete for new business and targets high growth rates to impress shareholders.

ND: “Onerous benefit guarantees were a big factor behind the closure of Equitable Life, Europe’s oldest mutual life company in December 2000. These examples show the importance of addressing the balance between guarantees and providing attractive returns in the long term.”

YM: The real reasons for Equitable’s failure are found in http://news.bbc.co.uk/2/hi/business/3547441.stm

Quoting the report – “Dubious practices, used by ALL life insurers to varying degrees was to STOP ALLOCATING BONUSES in the form of REVERSIONARY bonuses. These were guaranteed and had to be counted on the life insurer’s accounts as a liability. Instead, an increasing LARGE CHUNK of the bonuses allocated to policyholders took the shaper of TERMINAL bonuses. These could be added or cut with impunity and without affecting the company’s solvency – even if they did affect the value the customer EXPECTED”. Unquote.

I think, the British Courts finally ruled that these terminal bonuses have to be paid, thus critically damaging the Equitable.

Reversionary bonus (after declaration) are guaranteed and thus needs to be actuarially reserved. This imposes discipline on the financial management of the insurance funds. Terminal bonus on the other hand, is an “actuarial sleight of hand”. It breeds complacency and gives the senior management a false sense of security.

ND: “Switching to a lower annual bonus and higher final bonus will align to industry best practice, improve investment freedom and make it easier for the insurer to deliver yields to customers. It will also improve the resilience of the participating fund.”

YM: The funny thing about “industry best practices” is the industry is often behaving like lemmings.

Quoting Warren Buffet – “the behaviour of peer companies, whether they are expanding, acquiring, setting executive compensation or whatever, will be mindlessly imitated”.

And, we don’t need to look far for evidence of lemming-like industry “best practices” e.g. subprime mortgage debacle, tech bubble, the recent global property bubbles, LTCM/Enron blow-up.

I used to view Income’s management as standing independent from the sheeples (hybrid of sheeps and people).

Take for example Warren Buffet’s description about one of his senior managers at Geico, Louis Simpson : “He derives no pleasure from operating with or against the crowd. He is comfortable following his own reason.”.

ND: “In short, both policyholders and the insurer stand to gain from this new bonus structure. The lessons learnt from the UK market serve as a painful reminder of the potential consequences of resisting change in favour of the status quo.”

YM: In short, Nick Dumbreck’s misleads the uninformed public with THEORY. And we all know, theorectically the recent credit crisis is a 25-sigma event ie happening once every GOOGOLIAN years (1 with 100 zeros behind).

Lastly i wonder what percentage of Singaporean life actuaries invest/save in With-profits-Terminal bonus life insurance? I suggest that the local actuarial institute conduct a survey of this very telling stat

zhummmeng simply avoids, providing his own personal recomendations to the scenario he post on May 29th, 2008 1.45 pm, simply because he recognises that, by now, term insurance cannot be used as a “one-size-fit -all” solution.

We need to integrate whole life insurance plan, to make the solution more exhaustive, more complete.

We understand that ( :

but then Zhummeng,where goes your credibility?

….after denouncing life insurance as irrelevant,repeating your baseless stand that majority of insurance agents as unethical, you just simply copy and paste, “irrelevant” materials to confuse the readers?

That is not gentleman, you know ( :

Dont worry Zhummeng…Just post your “new found” stand that you support whole life insurance and the deeds and goodness, whole life insurance agents have done.

We will accept you, graciously as one of the most humble, intelligent, whole life insurance advocators in the whole of Singapore.

Whole life insurance is for EVERYONE ( :

The_truth

I am very irritated by The-Truth who kept saying “we policyholders of NTUC Income”. You do not represent all policyholders of NTUC Income. I have more than 10 policiies from NTUC Income, and I am sure the over 500 policy holders of NTUC Income do not concur with you. Stop using our names to justify your cause! Speak for yourself if you must, but stop pretending to be others when you are not. Speak the truth or otherwise remain silent.

“RealPolicyHolder”…

Dont be too emotional…. Relax ( :

Out of 310,000 policyholder affected, about 600 is challenging the bonus restructuring exercise which tantamount to only a small minority of 0.193%.

I am part of the silent majority, who supports NTUC Income management directions to act in the best interest of us, policyholders of NTUC Income.

Btw, lets go back to the topic, “The truth about life insurance”.

Never deviate from the point of contention again ya..

Whole life insurance is for EVERYONE ( :

I’m Back with some recommendation from my agent. Probably the person need to do a financial planning and from the finding he can do some adjust in his spend and start off with a whole life policy package together with a term and Shield plan.

If the person could not find anymore budget in his savings,Shield plan is the priority and start off a lower coverage of whole life together with a term. In the future, agent will need to do review with him yearly.

YA the_truth, who are you representing?Although you strongly support whole life policy as you see the importance, not everyone would see the same views with you.

Whole life don’t suit people like Zhummeng.

Scenario given my zhummmeng:
- Man aged 30, bread winner,who earns $3000 per month.
- He stays in a 3room HDB flat. which is still under mortgage.
- He has 3 daughters, aged 2 to 8,
- His wife is a full time house wife.
- His take home pay is $2400, and home monthly expenditure is $2300.
- He can spare $100 for saving.

My view (not agent, just layman):
- Tertiary education is lowest priority. If the children can get into local university, they can apply for bursary and take loan. The children must be informed that they have to work hard for their future. They can teach tuition to earn allowance while studying in uni. On a personal level, I have taken this path. For a fresh grad, one can pay off the full loan after scrimping and saving for 2 years. This should be seen in positive light that it builds the character of children strongly. No point saving $200K if they are lazy, want to take easy way of going overseas to study and do not appreciate hard work ethics.
- He should next cut down on expenses. If there is car, cut it off asap. Learn to live minimally. If expenses remain as they are, he is in a bad financial shape. I assume he should be able to cut and save $500 per month. Forget the exotic holiday trips till he can save $500 per month.
- Now, he has $500 per month savings (assumption).
- Do not buy H&S plans with cash. Instead use Medisave to buy Medishield for himself, his wife and all his children. With his limitations, the government Medishield is the best.
- Do not buy whole life. It will kill him financially. Buy a decreasing term for himself and his wife. I think $100K coverage should be ok
- With the remaining, build up the 6 months reserve.
- After the 6 months reserve is built, invest 80% in low cost ETF or index fund. 20% invest in himself for self-improvement and enhance his career prospects. Do not buy exotic financial instruments. Rule of thumb is do not buy complicated products. In fact, his wife can try to find ways to earn an income while at home.

zhummmeng, glad to see u have moved from TKL’s blog to here. were you at AGM? I was there. did u ask any questions? I was passive watcher.

Can I invite more to contribute to this scenario contributed by zhummmeng? Instead of immature squabbling. I walked the talk and have contributed as above.

Any qualified agents can contribute your idea?

Policyholders like us, LOVE choices.

We love alternatives ( :

What about Zhummeng?

Yes, blackbox, do invite more people to engage on this healthy discussion. You kind effort is deeply appreciated. ( :

Hi Blackbox…

Why the person cannot afford for a private medical plan? cos his CPF contribution is $900 and interests for medisave is 5%. i would feel that he shall upgrade to better shield plan. current medisave cover up to $450, but fyi if i happen to stay in a B2 Ward for 20 days and i shifted to A ward due to some circumstances. the whole hospital bill will be charge A ward.

Why decreasing term not whole life? what if this person jobless?or can’t pay the premium?

I agree with blackbox that he might not need that high coverage!

Hi L,

You may be right. He may be able to pay for a private Shield plan. I am considering more of he has to pay for 5 people, so need to be careful not to deplete his Medisave. It may depend on how much he has in his account.

If the man is jobless, the 6 months reserve he built up will come into play. If he bought a whole life, I believe he may just surrender instead incurring a greater loss. Decreasing term is extremely low in premium, so it is sustainable.

A decreasing term works because he saves. The savings compensates for the decreasing coverage. Of course, the argument is that it is not inflation proof. This is just personally how I would do it.

Honestly, if he dies, the brutal truth is that the remaining members will just have to strive and work harder, with whatever estate he passes to them. This estate is not to over-compensate his death and thus, they don’t have to work. I personally feel it will be tough but manageable for his wife and kids. Some may disagree with this point.

For his income and savings level, I think he has to think hard and prioritize to squeeze the most from what he has. Of course, if he earns $6,000 a month with $3,000 monthly savings, I think he may choose to buy a whole life (though I personally will not), as it will not be detrimental to his wealth building.

Thanks, Blackbox and others for your contribution to the case study.
My is as below.

The man has 3 immediate concerns.
1.He is worried how his family would live if he should die unexpectedly.
2.He wonders if he will ever be retrenched.
3.What if he is afflicted with a dread disease.
Analysis of his financial circumstances and needs shows that he needs the following.
1.His family needs $500k to see them through another 20 years when his youngest daughter is financially independent.
2.If he should contract a dread disease he needs $150K to replace his income for 5 years.
3.If he is retrenched he needs 3 months at least, to take care of his family expenses($9K) before he finds another job.
However, his cashflow analysis reveals that he has $100 a month to spare and expenditure analysis shows no further amount can be freed up. His $100 has to be stretched.
My recommendations are in the following.
1.. Buy an I-Term of $500K on a 5 year renewal term for $30 a month to take care of his family upon death
2.Buy a $150K Living Benefit on a 5 year renewal term to address his CI need for $14 a month.
If he dies first his family will receive $650K (500K +150K)
3. Save the $50 in a saving account to take care of emergency needs like primary medical care need and other cash needs as they arise. Over long term he should build up his emergency fund.
4.To address retrenchment there might be a severance benefit from retrenchment if employment contract provides for it. Otherwise pray hard that it will not happen until he has set up the emergency fund.
5.To build up the emergency fund which includes his housing mortgage and insurance and to provide for other needs he might want to take up a part time job by moonlighting as insurance agent, property agent or any job that will bring in additional income.
6. to take care of his family’s medical H&S needs and his own , CPF medishield will be sufficient in the meantime. The premiums are to be paid out of his medisave. If his wife had worked before becoming a full time housewife she should have a medishield plan. Review them at later time.
7. His housing mortgage and insurance are to be paid out of his CPF contribution.
8. The children’s tertiary education and his wife retirement needs to be postponed for the time being.They and other needs are to be reviewed after a year.
Conclusion:
Before this, the man had no idea there were so much to be done. He didn’t know that he had so many needs. Now his major concerns are taken care of and there is real peace of mind. He can now focus on his moonlighting job knowing that if he should drop death his family will be adequately provided.

After analyzing the ideas proposed by Blackbox and Zhummeng, I find the ideas that they bring forward, “very good”.

The proposal proposed by both Blackbox & Zhummeng is “very good” because they suggest:

1) “Do not buy whole life. It will kill him financially. Buy a decreasing term for himself and his wife.” (Note:Both recommend term insurance.)

THEIR ASSUMPTION: Decreasing term insurance is cheap. The excess money, can then be used for savings.

If they buy whole life insurance, there will be opportunity cost in the money that can be used to earn higher return fulfiling their other objectives.

2) Do not buy H&S plans with cash. Instead use Medisave to buy Medishield for himself, his wife and all his children. With his limitations, the government Medishield is the best. (Both contends that Medishield is enough)

THEIR ASSUMPTION: Again, same rationale. Save more money, invest, earn higher return to fulfil other objectives.

My view: I agree with both blackbox and Zhummeng, of the need to analyze the person spending habit.

Categorise his expenses into 2.
1) Fixed Expenses
2) Variable Expenses

Give him ideas on how he can reduce his variable expenses, so that he can do more savings for himself.

Get his whole family involved, when doing the categorisation of expenses, so all can appreciate, the need for savings, to fulfil pertinent objectives that they faced, as a family.

I agree that Zhummeng and Blackbox ideas are “really good”, but we, whole life insurance advocators have a much, much BETTER plan for this guy and the public.

Let us analyse the proposal above again:
1) “Do not buy whole life. It will kill him financially. Buy a decreasing term for himself and his wife.” (Note:Both recommend term insurance.)

My loud speaking RATIONALE says :Many term insurance advocators subscribed to the school of thought, that everyone who buy term insurance, have the discipline to save money.

Save money for contingencies, save money for child’s education, save money +++

First of all, we have to understand that not everyone have the DISCIPLINE to save.

Secondly, we have to understand that not everyone have the DISCIPLINE to MAINTAIN their savings account.

So again, the first fallacy, term insurance advocators have made is ASSUMING, everyone have the discipline to save, and everyone have the discipline to maintain their savings account.

So, that’s the first fallacy.

Second fallacy, is that, term insurance advocators seems confused of why they get insurance.

They mixed protection and returns.

To reiterate my earlier post, all of us have to understand on why we get insurance.

We get insurance not because it give good returns.

We get insurance to ensure that we want to ensure that we are well PROTECTED against death, disability, dread diseases in any WORST CASE SCENARIOS.

The emphasis here is PROTECTION in any GIVEN CIRCUMSTANCES.

Term insurance can only be use to ENHANCE a person’s coverage and not use as a base, or as a “one-size-fit -all” solution.

Let me give you a scenario here.

Example: Out of job

Economic turmoil in year 1997 had witnessed many in losing their job, and many in turn lapse their term insurance policy due to this setback.

Term insurance advocators, who in need of money at this point of time, may have to FORCE to liquidate their investments (sinking fund) at the wrong timing.

This may result in an unfortunate monetary loss for them.

So, what should he get then?

NTUC Income Vivolife policy.

In contrast, with Vivolife, BWBUI advocators need not pay premiums up to 6 months, giving them time, to coordinate his next best action, without sacrificing their insurance policy, which they NEED most at that critical point of time.

He do not need to, as what Zhummeng mentioned “Otherwise PRAY HARD that it will not happen until he has set up the emergency fund.”

He dont have to worry about that because the structure of whole life insurance have already taken care of all his worries.

Now, for the second focal point of discussion.

2) Do not buy H&S plans with cash. Instead use Medisave to buy Medishield for himself, his wife and all his children. With his limitations, the government Medishield is the best. (Both contends that Medishield is enough)

My loud speaking RATIONALE : Again, in financial planning, we should never be confuse of the objective, when we are taking a particular plan.

A simple analogy.

You eat because you are hungry.
You drink because you are thirsty.
You sleep because you are sleepy.

You get medical insurance plan, not because you want to save money now, but because you WANT TO GET THE BEST MEDICAL INSURANCE COVERAGE, when in need.

Okay…SO guys, stick by objective.

I recommend, him and his family to get a private medical insurance plan, complete with a rider.

His medisave is earning 5%, every single year.

This earnings can help to subsidise his premiums year by year, and even enough to pay for his basic plan, when his medisave have grown, and the 5% return he is enjoying, is more than the premium required.

He just need to apportion part of his money, for the rider which is generally payable in cash, also on a yearly basis.

So, Zhummeng and blackbox.

Remember ya, when you get insurance, it is the PROTECTION that we are looking at, and never, ever on returns.

PROTECTION against Death, Disability, Dread Diseases in ANY GIVEN CIRCUMSTANCES!

Whole life insurance is for EVERYONE! ( :

You whole life blare and blare about wholelife without knowing what you are blaring for whole life. You win, lah!!! Blackbox, let him win,ok ?. Everybody, let him win Ok?
onlinecitizen, let him win,Ok? you see, u like to win, we let u win. happy?

zhummeng,

We, policyholders of NTUC Income are just articulating our stand.

If you find the facts I introduced is incorrect, you are free to refute it with your own justifications.

My family have benefitted from whole life insurance, and it is my sincere empathy, care and concern to see people like you, blackbox and the rest of the term insurance advocators, begin insuring with whole life insurance.

Whole life insurance is for everyone ( :

Zhummmeng,
Just ignore that burger who try to talk logic in an illogical way. He mentioned that 600 out of 310,000 is just so little. Of course we know the intricacies of opting in and opting out. I am sure if he tries to organize a poll to indicate how many would like to opt into the new bonus cut by NTUC Income, he probably will not even get 10 votes. So just let him be. There are always funny people like him around. I pity him and those who have to see him everyday.

Whatever had happened and the outcomes point to the need to have people of real integrity to run businesses for the general population.
Unlike the United States, there is scant chance of popular legal recourse here; business decisions are the privilege of the directors, and do not expect too much. The slightly more than 50% target signatures achieved in the intended protest speaks much. Singaporeans are also practical people; after a while, they do not waste much time too.
Thank you Mr Tan Kin Lian. Please take a good rest too.

Zhummeng & “RealPolicyHolder”,

The truth cant be ignored, as bluff cant be concealed.

We, NTUC Income policyholders will fight for what is right, and segregate away from what is wrong.

You cant IGNORE, hide, shield or run away from the truth….

Never….

Because the_truth will prevail!

Whole life insurance is for EVERYONE! ( :

Have you ever wondered what would happen if my hypothetical case study man has met an NTUc agent? Well, the below transcript would have been.

Agent: Mr. Prospect, we have a 5 star limited premium wholelife that would take care of all your critical illnesses(CI).
Prospect.: but i don’t have CI
Agent: You will get, you know…every body will get… sooner or later
Prospect: How do you know/
Agent: You see here , it says 1 in 3 will get cancer
Prospect: but I am in the 2.
Agent: you can be the 1.because next time it is 1 in 2, ..and then 1 in 1…you cannot escape
Prospect: sure or not…… so ‘choon’
Agent: aiya, you don’t believe, eh? what is your budget?
Prospect: $100 may be can.
Agent: hmm, let me see….. how old are you?… ok, i rekommend this popular plan vivolife for 10 years. ..you want quickly pay off, right? and then insured for whole life until you have grand children, right?
Prospect: ya, right.
Agent: ok, here it is……for $100 you are covered for $25K…….but, but, you got triple coverage if you kena acccident and die…your wife gets $75K plus bonus and now with new bonus structure….hmmm it is better. also you get retrenched , no need to worry about the premeium for 6 months…good or not? ..you see one and
only one in Singapore and batam……and if you don’t like to give to your grand children you can convert to annuity at age 60 years old…..this $32K. see…
Prospect: ok, lah, I take this plan…ya , lah so many good things.
So the prospect signed the proposal forms …….What happens next…….to be continued in next episode.

The truth is you would not even get 10 votes if you go around soliciting votes in favour of that lousy scheme.

I am still waiting for point to point rebutal if you find the recommendations that I provide on June 2nd, 2008 11.02 pm as inaccurate.

Let us articulate as intelligent adults and not deviate from the point of contention.

I rest my case, with whole life insurance is for EVERYONE! ( :

A joke about whole life insurance.

‘A common joke among insurance agents is: “We deserve high distribution costs as a reward for the difficult job of selling policies with high distribution costs.”‘

Source: Ask Dr Money

The truth is an agent of ntuc income. He kept emphasising that he is a policyholder of ntuc income.

You talk about buying vivolife. If I put $300 a month on this policy for 14 months and I get retrench so I don’t have to pay premiums for the next 6 months. If I still can’t get a job after 6 months and I can’t afford to continue the payment what will happen to my policy.

(1) “Second fallacy, is that, term insurance advocators seems confused of why they get insurance. They mixed protection and returns.”

Fact: Whole life mixes protection and returns. Term separates them.

(2) “First of all, we have to understand that not everyone have the DISCIPLINE to save.”

Fact: If you have no discipline to save, you will cancel your whole life. We all know how pathetic the returns is when you surrender. Bottom-line is people with no discipline will be financially poor, no matter what instrument they use.

(3) “In contrast, with Vivolife, BWBUI advocators need not pay premiums up to 6 months”

Fact: You can only claim once. So technically, it is a peanuts amount. Better to focus on becoming the best in your job and industry. Truth is amongst those retrenched, there are those who are unlucky and some who are poor performers. Better yourself to reduce the chance. 6 months reserve is there to help you when you are in that unlucky group.

(4) “You get medical insurance plan, not because you want to save money now, but because you WANT TO GET THE BEST MEDICAL INSURANCE COVERAGE, when in need.”

Opinion: In view of the case study, I have justified why he should Medisave instead of cash, because he is poor.

I do not understand why the_truth misinterpreted me and attempted to slander and discredit me. I am not against people buying whole life. I quote my earlier posting.

“Of course, if he earns $6,000 a month with $3,000 monthly savings, I think he may choose to buy a whole life”

Likewise, the_truth should respect the rights of others to buy Term. In fact the more the_truth promotes whole life, the more repulsive people feel towards whole life. Thus, I do look forward to further promotions of whole life.

After failing repeatedly to prove beyond reasonable doubt the effectiveness of term insurance as a a “one-size-fit -all” solution, term advocators came out with a nice name, “What Truth”.

Impressive. ( :

Just to reiterate, I am not an agent of NTUC Income.

I am just innocent individuals like Zhummeng and Blackbox.

Do not challenge our credibility.

We are noble, kind individuals who share the same spirit of proposing quality information to public yet advocate different views. ( :

Btw, let me rephrase the above question for you.

If I buy term insurance, and then, I get retrenched, only to realise that instead of SAVING money, I have squandered it all away.

Then how? ( :

Zhummmeng,

May I correct you? Maybe don’t say NTUC agent? I have encountered that conversation at MRTs with AIA, Prudential, GE, IFAs etc. Some are even worse, speculate and say GST will be 10% in the future.

Better to make it more generic to be fair. This would put you on a higher moral standing when putting across your points, don’t mind my honesty.

Anyway, the fact is nothing is free in this world. I am not familiar with this Vivo plan, but if you are trained in business/accountancy, you would know that everything is priced in a product. Nothing is free.

If you hear this ‘free whatever’ from a salesman (generic, any industry), you have to correct him with this understanding.

Hi the_truth,

From an insurance perspective,

(a) What is the incidence rate of retrenchment on a yearly basis?
(b) What is the financial impact/severity of being retrenched?
(c) What is the expected time needed at the 90th percentile to find a job?
(d) During the retrenchment period, is it expected you will change your lifestyle to cut expenses as low as possible?

For me, I do not have an answer. Thus, I aspire to be the best in my job and industry. I think being strong in your expertise is the best insurance against retrenchment. Also, savings of 6 months is a practical solution.

My guess is that
(a) 1 in a 1000
(b) Around $6,000
(c) 3 months
(d) Yes. I will cut all frills as much as possible and apply for jobs, search jobsdb, call my friends, any desperate move.

This is not a debate of term vs wholelife, just a personal opinion.

(1) “Second fallacy, is that, term insurance advocators seems confused of why they get insurance. They mixed protection and returns.”

Blackbox Idea: Whole life mixes protection and returns. Term separates them.

The_truth Facts: When I say mixed protection and returns, I mean term advocators mixed the objective of having a protection plan, and mixed with the objective of having an investment plan.

Term insurance advocators often use “returns” as a benchmark, “idealistic” yardstick to claim that whole life insurance is no good.

Term insurance advocators, then compare whole life insurance with an investment plan, and say, “See…I told you. The returns from whole life insurance is no good.”

This only happen because term insurance advocators is confuse on the reason why they get whole life insurance.

As I have reiterated earlier, we get insurance not because it give good returns.

We get insurance to ensure that we want to ensure that we are well PROTECTED against death, disability, dread diseases in any WORST CASE SCENARIOS.

The emphasis here is PROTECTION in any GIVEN CIRCUMSTANCES.

Term insurance can only be use to ENHANCE a person’s coverage and not use as a base, or as a “one-size-fit -all” solution.

(2) “First of all, we have to understand that not everyone have the DISCIPLINE to save.”

Blackbox Idea: If you have no discipline to save, you will cancel your whole life. We all know how pathetic the returns is when you surrender. Bottom-line is people with no discipline will be financially poor, no matter what instrument they use.

The_truth Fact: That is why they have to get a whole life insurance policy.

Term insurance, if he do not have a habit of savings, means he has no contigency fund. Which also means come unemployment, he will simply lapse his term insurance policy.

The first benefit of whole life insurance is that, whole life insurance forces them to save, if they dont have the habit of savings.

The second benefit, if he indeed do not have a habit of savings, come unemployment, assuming he have a Vivolife policy, he needs not pay premium for 6 months.

If his policy have been inforce for some time, and he happened not to pay the premium, the policy can still be inforce due to the cash buffer integrated in the whole life policy.

Isnt that wonderful? ( :

(3) “In contrast, with Vivolife, BWBUI advocators need not pay premiums up to 6 months”

Blackbox Idea: You can only claim once. So technically, it is a peanuts amount. Better to focus on becoming the best in your job and industry. Truth is amongst those retrenched, there are those who are unlucky and some who are poor performers. Better yourself to reduce the chance. 6 months reserve is there to help you when you are in that unlucky group.

The_truth Facts: Yes.
This unemployment waiver feature just as a contingency, back up plan.

You dont expect to be retrenched all the time, and if should that uneventful thing happen again….

Dont worry…You still got the buffer.

Whole life insurance have cash value to ensure sustainability of the policy, giving you the peace of mind, that in ANY GIVEN CIRCUMSTANCES, you will be covered on Death, Disability and Dread Diseases.

Isnt that GREAT?

(4) “You get medical insurance plan, not because you want to save money now, but because you WANT TO GET THE BEST MEDICAL INSURANCE COVERAGE, when in need.”

Blackbox Idea: In view of the case study, I have justified why he should Medisave instead of cash, because he is poor.

The_truth Facts: The very fact he is poor, is the very reason why he needs the coverage so much.

Hospital bill is spiralling upwards and not downwards. Everyone needs the best medical plan, giving the BEST COVERAGE when in need.

When he is critically sick, bedridden, he will never has the choice to think which type of ward, service, bills+++

The emphasis is on the recovery, with the best medical facilities at his disposal.

In addition,the hospital cash benefit which comes with the plan, will come in handy for him.

He will get cash everyday, while he is in hospital. Even when he is in hospital, his fixed expenses continue.

The hospital cash benefit can help him pay for the fixed expenses, relieving him from the need to think too hard about finances, instead just focus on his recovery.

Isnt that noble? ( :

Blackbox Idea: “Of course, if he earns $6,000 a month with $3,000 monthly savings, I think he may choose to buy a whole life”

The_truth Facts: Everyone needs whole life insurance.

Be it you are young or old, rich or poor, Indian, Malay, Chinese, Eurasian….

All of us, needs whole life insurance.

All of us, needs COVERAGE against Death, Disability and Dread Diseases in ANY GIVEN CIRCUMSTANCES.

Blackbox Idea:I do not understand why the_truth misinterpreted me and attempted to slander and discredit me. I am not against people buying whole life. I quote my earlier posting.

The_truth Facts: I never intend to slander or discredit you personally.

I just offer opinions, opposed to yours.

I am sincerely sorry if what I have written, have offended you in any way.

You are the only term insurance advocators here who share your views in an intelligent and respectable manner.

Whole Life Insurance is for EVERYONE! ( :

The_truth lied on 31st May:-
Out of 310,000 policyholder affected, about 600 is challenging the bonus restructuring exercise which tantamount to only a small minority of 0.193%.

I am part of the silent majority, who supports NTUC Income management directions to act in the best interest of us, policyholders of NTUC Income.

The truth can be found in the link below:-

http://forum.channelnewsasia.com/viewtopic.php?t=152631&highlight=ntuc

More than 76% are against the withdrawal of the collective protest. Needless to say, they are all 100% against the annual bonus cut. If we include those who still insist on going ahead with the protest themselves, the percentage is even higher. Also, those who agree to the decision by Tan KL to withdraw the collective protest may still be disagreeable to the annual bonus cut. So the percentage is definitely higher than 76% which by itself is already the majority.
The Truth hurts isn’t it? So the-truth should stop huffing and puffing smoke around to fool others and self proclaiming himself to be the voice for the majority of NTUC Income policyholders. I pity those who are physically around you.

Hi Blackbox,

I muchly agree with your statement of the need to aspire to be the best in your job and industry.

I share the same sentiment as you, that being strong in your expertise is the best insurance against retrenchment.

I believe be it, you are a term insurance advocator or whole life insurance advocators, this should be the primary aim for all of us.

Whole life insurance is for everyone ( :

The_truth lied on 31st May:-
Out of 310,000 policyholder affected, about 600 is challenging the bonus restructuring exercise which tantamount to only a small minority of 0.193%.

I am part of the silent majority, who supports NTUC Income management directions to act in the best interest of us, policyholders of NTUC Income.

The truth can be found in the link below:-

http://forum.channelnewsasia.com/viewtopic.php?t=152631&highlight=ntuc

More than 76% are against the withdrawal of the collective protest. Therefore, they are all 100% against the annual bonus cut. If we include those who still insist on going ahead with the protest themselves, the percentage is even higher. Also, those who agree to the decision by Tan KL to withdraw the collective protest may still be disagreeable to the annual bonus cut. So the percentage is definitely higher than 76% which by itself is already the majority.
The Truth hurts isn’t it? So the-truth should stop huffing and puffing smoke around to fool others and,self proclaiming himself to be the voice for the majority of NTUC Income policyholders. I really pity those who are physically around you.

Yeah, The-truth really hurts this time round. :)

continue from 4th June, 12.01am.
let’s give the former prospect a name, let’s now call him policyholder Mr.Thruthfool.
The result of that transaction is both are happy. The agent is happy because he has earned 40% of annual premium $1200. Not bad,eh. for filling some forms and and for product “counseling” ( lawyer got to slot for it). Mr. Truthfool is happy because that is the first and only insurance policy he has ever owned, and $25,000, wow!!! that is a lot of money if he were to die, his family will get so much money and if he were to contract a critical illness he will get another 125% of the sum assured, and if he were to kena “langar” or fall into an on coming mrt train he will get 3 times plus legal compensation from smrt. Wow !!!, that is real piece of mind!!!! Never had it so good.
While Mr. truthfool is fantasizing , mr. agent is laughing all the way to the bank..
Time passes quickly and mr. truthfool has already faithfully paid for 10 months and another 14 more months he will see the cash value, he thought to himself. There is some saving and money which he can live life to the fullest and with the freedom thrown into it to enjoy what money can buy. Isn’t that is what the ad touts. I can’t wait for that day……..

to be continued….in next episode

“RealPolicyHolder” tried to create numbers here by posting his assumptions as 2 names,
1) the questionable, “RealPolicyHolder”,
2) Pegasus

Impressive. ( :

Statistics created by Tan Kin Lian himself, using his own blog itself cannot be used, as an evidence to say that majority do not support NTUC Income Bonus restructuring.

Tan Kin Lian’s blog is not independent.

I, myself, can create an online poll and produce a result favorable to me, and proclaimed, oh yes…See, result speaks.

The truth will never be hurt. The truth will prevail!

“RealPolicyholder”, lets not deviate from the topic again, okay?
“The Truth About Whole Life Insurance”.

Whole Life Insurance is For Everyone! ( :

zhummeng,
Dont beat around the bush.

We, policyholders of NTUC Income, wants you to be transparent, direct, ethical like most of the agents in the industry.

You are downright unethical, denying the needs of Singaporeans from proper coverage and blabbering in an uneducated manner.

If you find the points, I introduced incorrect, do forward your points.

Whole Life Insurance is for EVERYONE! ( :

The truth, come clean. If you are courageous enough admit that you are an agent of NTUC INCOME. You are trying to protect your rice bowl that is why you are harping so much on whole life protection and vivolife.

You have been advocating on viovlife and even highting on the benefit of 6 months premium holiday upon retrenchment. In my earlier posting, I put up the following case and ask you what will happen to my policy and you choose to ignore.

” If I put $300 a month on this policy for 14 months and I get retrench so I don’t have to pay premiums for the next 6 months. If I still can’t get a job after 6 months and I can’t afford to continue the payment what will happen to my policy.”

If you are just a policyholder then you should express your views objectively. Why do you keep saying

“We, NTUC Income policyholders will fight for what is right, and segregate away from what is wrong.

You cant IGNORE, hide, shield or run away from the truth….”

May I ask you who you are representing?

You also said that “Whole Life Insurance is For Everyone! ( :”
If you are just an ordinary policyholder what make you so sure that whole life is for everybody. Are you an expert in insurance?

You keep challenging Zhummeng and blackbox and I know both of them had been staunch supporters of Kin Lian’s protest over the the restructured bonus and they also supported Kin Lian’s suggestion to buy term and rest the rest.

Relax lah. If you are really telling the truth, no need to get so worked up. Remember to huff and puff. Breathe in, hold your breath, count 123, then breathe out. Repeat until your heart rate slows. Okay, feeling better now.

I posted not twice but over 5 times because when I posted under my real nick of RealPolicyHolder, my message did not appear. After having to rewrite 3 times, I suspect that my message has been blocked by the moderator. So I tried various options, including changing my nick, then my message appeared. So I was convinced that messages under my REAL nick was blocked. However, the message appear now. Not sure what is happening. Maybe the moderator can shed more light on this puzzling episode. Certainly the intention is not to create numbers.

But the point now is you are casting a slur on Mr. Tan Kin Lian’s integrity. I have no doubt you will manipulate statistics, but how can you accuse Mr. Tan KL of doing such despicable things? Psychology shows that those who think what other people will do is highly likely such a person himself. Shame on you if you are like that. Anyway, like what What Truth has said, your character is dubious. You are probably posting as Singasoft in the Channelnewsasia forum as well, huffing and puffing smoke to ask people to continue to buy and that you are the majority. Like What Truth believes, you are with NTUC Income, but my take is that you are not the agent but probably one of the management, probably the funky one.

the Truth lies when he claims to speak as “We, the Policyholders”

I am a policyholder of Ntuc and absolutely disagree that the Truth has the right to speak on my behalf

For all the huffing and puffing – the total truth about WHole life insurance is that We, the Policyholders of Ntuc were NOT given the choice to opt out from the restructuring of bonus !!!! I am sure that if given a real choice the majority of the 300,000 odd policyholders will opt out.

Isnt APATHY a nice thing for some ? Purrr ..

What the_truth was saying sound good but i believe decision is in a person’s mind. There is no right or wrong from getting from wholelife or term but it’s is wrong if we are telling people that wholelife is bad, term is good.

What truth is sort of p***s off with what the_truth is been trying to share his view. I don’t know where he coming from but i’m sure he has insurance for himself. He believe so much in wholelife and wanted to share the goodness of it, i see there’s no wrong about it. you could also share why term insurance is good too!

PS.Remember well the words of the late Nobel Prize winning economist Milton Friedman:”There’s no such thing as a free lunch.”

Dear everyone,

Again I would like to remind everyone to stick to the issues. If the mutual personal attacks continue, comments on this thread will no longer be allowed and the thread closed for comments.

Thanks.

Hi the_truth,

(1) “This only happen because term insurance advocators is confuse on the reason why they get whole life insurance.”

Price is what you pay and value is what you get. Whole life has good value, as it covers one for life. The question is, are you getting good value at good price? The next question is whether you can get a similar value proposition (not product) for a lower price. The proposition of ‘Buy term invest the rest’ offers this.

I agree with you not everyone is suited. But viewed in isolation on a purely financial/economic basis, it is better. Therefore, I also disagree whole life is for everyone.

(2) “The first benefit of whole life insurance is that, whole life insurance forces them to save, if they dont have the habit of savings.”

It forces them to save, I agree. But the key issue is that they will most likely still surrender due to low savings + low discipline. One step forward, and two steps back. So in view of the inevitability that they will most likely surrender, might was well put in bank or invest. As the surrender value is much higher.

So whole life to a spendthrift is like a good strategy doomed to a bad outcome. The key here is the distinguishing of strategy vs outcome.

So going one round, it again boils down to the person. I stand by my view that people who are financially ill-disciplined will remain financially poor no matter what instruments (whole life or term/self-invest) they use.

In such a case, neither whole life nor term will save the man. In fact, putting money in bank with low interest may surprising turn out the best outcome, though bad strategy.

(3) No comments

(4) “Hospital bill is spiralling upwards and not downwards. Everyone needs the best medical plan, giving the BEST COVERAGE when in need.”

Given that Class B and C are highly subsidised, I don’t think anyone in the lower middle should over-tax themselves paying overly comprehensive health plans to go Class A (which is not subsidised) or private wards.

Medishield is well crafted, with strong emphasis ownership in the co-insurance/deductible component. Too many health plans contain alot of fluff (TCM treatment, pre-hospitalization, parent accomodation for child, get well benefit etc).

Of course, I would strongly urge the person to upgrade to the best private Shield when his finances allow, for his whole family. And get one with life-time cover, since people are growing older.

Again, think along value-price proposition.

Hi What_Truth,

I am not supportive or against TKL’s protest. From the days of TKL blog, I have stood out as a ‘Buy Term’ man.

My personal view is that the bonus restructure is a logical strategy but also one that is emotionally hard to accept. And it is one that hinges heavily on trust on management. Given that management is a variable component, the outcome is uncertain.

I do however think there will be a political price to pay if indeed the management does not deliver. This is because TKL openly mentioned that Mr Lim and Mr Yao are supportive of the move.

If I approach it from game theory, I would place my bet that NTUC Income can deliver. The stakes are too high for the two men, and consequently their affiliated political party. A heads-tail game that has skewed probability.

Caveat: I am just looking at it purely from a gambler’s perspective. I do not mean to suggest you continue your whole life policy.

So anyway, given that in general, the outcomes of life insurance is uncertain (depends on bonus issues, investment climate, quality of management etc), it i best to invest on your own.

But this takes great responsibility and ownership, though a rewarding one.

I realised that BlackBox offers GOOD POINTS for discussion, so I CHOOSE to respond to him, instead of others who post things that are irrelevant to the topic above, “The Truth About Whole Life Insurance”.

Blackbox,

(1) Price is what you pay and value is what you get. Whole life has good value, as it covers one for life. The question is, are you getting good value at good price? The next question is whether you can get a similar value proposition (not product) for a lower price. The proposition of ‘Buy term invest the rest’ offers this.

My RATIONALE: That is why I have been recommending that what Tan Kin Lian should propose is whole life insurance with the lowest effects of deductions instead of term insurance as a “one-size-fit -all” solution.

…and I believe NTUC Income gives the best valued whole life insurance due to their cooperative policy.

I get the BEST valued Whole Life Insurance policy in Singapore, that covers me Death, Disability, Dread Diseases in ANY GIVEN CIRCUMSTANCES.

Isnt that GOOD? ( :

(2)It forces them to save, I agree. But the key issue is that they will most likely still surrender due to low savings + low discipline. One step forward, and two steps back. So in view of the inevitability that they will most likely surrender, might was well put in bank or invest. As the surrender value is much higher.

My RATIONALE: For the less discipline individuals, when they get a savings plan, they may stop and enjoy the money, because in their mind, these money I have saved, is meant to be used.

If they get an insurance plan, they will think differently.

This is a protection plan, that I must have.

They will look at their wife, their son, their daughter and do whatever it takes to sustain the policy.

This policy is geared for PROTECTION and not for spending.

Anyway, lets not talk about “surrender value” here, since the emphasis or true OBJECTIVE of whole life insurance is indeed PROTECTION against Death, Disability, Dread Diseases in ANY GIVEN CIRCUMSTANCES.

We are not talking about returns or how much money we can get back.

We are only concern on PROTECTION against Death, Disability, Dread Diseases in ANY GIVEN CIRCUMSTANCES.

(2)So whole life to a spendthrift is like a good strategy doomed to a bad outcome. The key here is the distinguishing of strategy vs outcome.

My RATIONALE:Whole Life Insurance is for everyone and it lead to a GOOD outcome.

You get the peace of mind, that you have PROTECTION against Death, Disability, Dread Diseases in ANY GIVEN CIRCUMSTANCES.

Your family will be well taken care of, should anything were to happen to you, of course, only if you have Wholw Life insurance.

(2)So going one round, it again boils down to the person. I stand by my view that people who are financially ill-disciplined will remain financially poor no matter what instruments (whole life or term/self-invest) they use.

My RATIONALE: I agree with you on this. ( :

(2)In such a case, neither whole life nor term will save the man. In fact, putting money in bank with low interest may surprising turn out the best outcome, though bad strategy.

My RATIONALE: No matter what his strategies are, he still need PROTECTION against Death, Disability, Dread Diseases in ANY GIVEN CIRCUMSTANCES.

……and WHOLE Life Insurance is absolutely THE WAY!! ( :

The_truth

Hi the_truth,

Whilst insurance should be seen as a protection more than savings, whole life plans are unique in that there is a built-up cash value. Comparisons that I know of are usually made against no-risk financial instruments like savings interest. So to totally ignore comparing the returns on whole life does not seem to be fair, more so when a savings component has been priced in the product.

On the other hand, Term which has absolutely no cash value can never be compared to a savings/investment product. Term + Investment together is the closest comparison to a whole life, beyond which I cannot think of any.

Can you show us an example of a good value whole life policy (in your opinion) with effect of deduction?

NTUC Income is a cooperative, and does not have to pay corporate tax (to my best understanding). I believe this is a reason why they can price products cheaper than its competitors. The question here is does the lowest price product necessarily mean good value for its price? I feel it is not a matter of comparison, take the best in class, and case close.

Price should be seen on an absolute and not relative manner. My view is that whole life at its current cost offers good value with not so good price, even for the cheapest product. Distinguishing between value and price here is important.

My question to you is this.

If you find a person has excellent money management skills, frugal, and earn a good income, has personally beaten/equal the market return for the past 10 years. He buys term and invest the rest. Do you think he should buy whole life?

My answer to this is, he shouldn’t. For he will be in a financially better position than if he buys whole life. He buys a term, builds up his reserve, and when the term expires his reserve is much larger than what the whole life could be built up to. Best of all, true freedom as he can claim from himself from not just 30 critical illness, but any major illness. This can also provide the protection.

Thus, with this one group of people proven, I don’t think it can be said that whole life is for everyone (everyone is too big a word).

continue from 5th June 12.17am

Mr. Thruthfool is holding his vivo insurance for more than a year now.One evening his phone rings and over the other side is a familair voice , the voice of his insurance agent.
Mr. Agent: How are you, mr. truthfool?
Mr. Truthfool: Fine, who is that?

Mr. A; I am your agent who sold you the vivo insurance.I happen to see your name and decide to call you and say hello.
Mr. truthfool: Oh Yes, i remember . What is up?
Mr. A.: Call you to find out if you are ready for your insurance review. By the way,
you must have recieved a fat bonus, eh? this year, did you? Did you also recieve a pay rise?
Mr. truthfool: is that the reason you call me? to ask me about this?
Mr. A: No ,no. I call to see if I can review your insurance.
Mr. truthfool: What is there to review? I have a 25K vivo and you said it could cover me for wholelife against critical illness, total disability and death….and I am still alive!! ….!everything ok..
Mr. A: No, what i meant is to find out whether you wish to top up.
Mr. Truthfool: to up for what?
mr. A: to top another $25K so that you will have $50K
Mr. Truthfool: who don’t know?
Mr.A: you top up whenever you have money and that is how we review for people
Mr. truthfool: Oh, I see . But I have enough…..$25k is already a lot of money.I don’t think I want more.. I am not greedy
mr. A: but Mr. Truthfool, $25K is too little. You remember, I asked you to let me know when you have money so that i can help you to review and top up your insurance?
Mr. Truthfool: Yes but i just bought a computer for my daughter for her school work. I don’t have any more money. Maybe another time. Why hurry.? I will be still around.and alive. don’t worry..
Mr. A: ok, ok . what about your CPF? ( no fish prawns also good)
Mr. A: Only some in my special account, about $5000../
Mr. A: good, good. I can invest for you in our single premium endowment
and it got double indemnity if you die from accident. good right? Are you free?
Mr. truthfool : no, not sure. I call you, ok?
The call ends. .. and phew!!! sighs Mr. truthfool… what a nuisance.

to be continued in next episode

Another truth revealed in Tan KL Bolg that is very troubling:

Restructure of Bonus not applied fairly
Dear Mr. Tan,
I have three policies belonging taken by my family, which are subject to the bonus cut. I do not like the cut, as I am not guaranteed to get the special bonus at a future date.

My friend told me that he has bought a Vivolife policy that is not subject to the bonus cut. The bonus rate is higher than my policy, before the cut. Why does NTUC cut the bonus for some policies and give higher bonus for other policies. Is it because the higher bonus will help to sell the Vivolife? I find this to be very unfair. Should I lodge a complaint to MAS?
TBL

It is revealed in this latest posting that NTUC Income is practicing a double standard treatment of its old and new policyholders. Bonus cut for old and existing policyholders while giving higher bonus for its new policies. This puts the integrity of NTUC Income into question. Meanwhile, every month that we wait, Income is merrily deducting through GIRO our hard earned money. I say NTUC Income should suspend all deductions until this is sorted out.

Seem like Black box is pin pointing the_truth. Waiting for the_truth to provide us, the policyholder an answer toward blackbox’s question.

Hi L,

Btw, I am not against the_truth. I do not even care if he is an agent or not. I am just against the proposition that whole life is for everyone (keyword is everyone). I am an advocate of greater financial literacy, so more will buy term, and be empowered to reap the most from it.

But I also like to say that the_truth brought some interesting points to discussion.

I quote the_truth

“If they get an insurance plan, they will think differently. This is a protection plan, that I must have. They will look at their wife, their son, their daughter and do whatever it takes to sustain the policy.”

This could be a valid point for people who cannot save. There is a psychological aspect and emotional guilt to surrendering. This may be helpful to them. Not sure if there are reader who can attest to the viability of this?

zhummeng’s points are quite interesting too. He has experience with bad agents.

I am fortunate not to have that many dealings with agents. I had only one agent, from Prudential. We parted our professional dealings some two years ago when I decide to go solo. She did well to craft a 70% term, 30% whole life. Nonetheless, I surrendered the policy (as I am a term convert). We are still good friends. And she had recently shifted to become IFA.

I wonder if readers could share their relationship with their agents?

Oic, i more fortunate to have a very nice agent who could really plan for my benefit more than his money in his pocket. For my self i strongly belief an agent who sold policies to me to be just agent. Now he and me became good friends, he had done a very good rapport in this area and when i need assist he would really attend to it rain or shine. That’s a successful adviser should be and also we as the policyholder should do our part too. We should not look them as “Agent”(sales person from a company selling you his products) but as a professional in Insurance industry.

But i belief there are agents who work like salesman due to the high quota to hit for their comapny. From my information that NTUC Income’s professional advisers mostly give me the impression of stablity and honesty differ from those younger adviser from other company.

Thurs evening i was approached by a young lady from P company to help her in a survey. it talk about our priority in life,i done finish for her the survey, after that she invited me to her campagin and she does some sales talk with me. After that, she took paper and pen out and share with me some savings plan. In my mind i was wondering, why she’s showing me a saving plan but my priority that i done in the survey is on medical aspect?obviously she’s just wanted to sell me something that’s it!!! I don’t believe so much that roadshow could really understand my needs and weakness but should be a place where i can get to know my “professional Adviser” first before we talk further in the future.

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