Disability income and family income

There is a difference between disability income benefit and family income benefit.

A disability income benefit pays a monthly benefit during the period of disabilty and ceases on death or for a specified benefit period, e.g. 60 months. The extent of the disability is defined in the policy. The payment starts after a waiting period, e.g. 90 days.

A family income benefit pays a monthly benefit to the family following the death of the policyholder, and is payable for the remainder of the insurance period. If the insurance is for 30 years and death occurs at the end of 20 years, the monthly benefit is payable for 10 years.

Submit income tax return by e-filing

I submitted my income tax return by e-filing. This is the first time that I filed my income tax return way ahead of the deadline.

My previous employer made a mistake with my income statement. The e-filing does not allow me to correct the figure. It was quite troublesome for me. I hope that people who design website think about the customer, and not about their own convenience.

Term insurance with income benefit

If you have young children, you can provide low cost, adequate financial security to your family by buying a term insurance policy combined with a monthly income benefit.

Here are some examples:

Entry age 30
Period of insurance: 25 years
Lump sum benefit: $50,000
Monthly income benefit: $2,000 payable for remainder of term
Initial coverage = $50,000 + $2,000 X 12 X 25 = $650,000
Annual premium: $303 X 2 = $606 (male).
Annual premium: $184 X 2 = $368 (female).

Entry age 35
Period of insurance: 20 years
Lump sum benefit: $50,000
Monthly income benefit: $2,000 payable for remainder of term
Initial coverage: $50,000 + $2,000 X 12 X 20 = $530,000
Annual premium: $331 X 2 = $662 (male).
Annual premium: $187 X 2 = $374 (female).

If your children are older, you need insurance for a shorter period.

These benchmark rates are calculated based on the current mortality rates, and a fair loading for expense and profit margin. It may not be the actual rates now charged in the market.

See this FAQ:
http://www.tankinlian.com/faq/termassurance.html

Estate duty in Singapore

Hi,
I missed out the news on Estate Duty of Death Tax. Can someone fill me up with more information?

REPLY
Estate duty has been abolished on 15 Feb 2008. This was announced by the M of Finance in the recent budget speech.

Here are the announcements:
http://www.simplywills.com.sg/node/25
http://www.prlog.org/10051481-singapore-abolished-estate-duty-tax-with-immediate-effects.html

Low cost insurance

Dear Sir,
I would like to register my interest for insurance planning. Over time, I have bought some policies mainly from insurers. I have also obtained assessment from independent advisor such as Provident.

However, I still would like to look around some cheap term insurance to further strengthen my coverage. If I have understood your message correctly, you are in the middle of setting an insurance operation. How could I proceed to learn more about your products?

REPLY

If you want low cost insurance, you can contact the companies listed below:
http://www.tankinlian.com/faq/termd.html

Some future products, which I hope will be available in Singapore soon, are shown in:
http://www.tankinlian.com/faq/btid.html
http://www.tankinlian.com/faq/termassurance.html

Keep your money in CPF

Hi, Mr. Tan
I need your advice. I have just signed up for a $30,000 Growth policy using my OA. The insurance agent told me that I must sign up before 1 April to beat the deadline. It offers a projected return slightly more than 4%.

My friend told me that this policy locks me up for the period of 20 years. If I need the money to buy a property or to contribute towards the monthly payment (in case I lose my job), I will have to suffer a loss. Is this correct? Can I withdraw from my policy now?

REPLY
Most people uses the ordinary account to pay the down payment for a property and to service the monthly repayments.

If you invest in the Growth policy, it is locked up for the period of 20 years. If you decide to terminate the policy (e.g. to use the funds for a property), you will have to suffer a loss, as part of your investment is used to pay commission to the insurance agent.

If you keep the money in the ordinary account, you will earn 3.5% (i2. 2.5% plus 1% bonus on $20,000). If you invest in the Growth policy, you will get a return between 2% to 4% (plus) depending on the future rate of bonus. If interest rate remains at a low level (as it has been during the recent years), the return on the Growth policy is likely to be lower than projected.

In my view, it is better to keep your money liquid, rather than be locked up in a long term contract that offers only a marginal increase in yield. If you decide to cancel the policy, you can do it within the 14 day cooling off period, and get a full refund.

More options for low cost funds

Hi Mr. Tan,
I refer to your earlier post on no load financial products. In addition to such products, I think local investors also have an extremely poor choice when it comes to low-cost index funds or ETFs in mid and small cap companies, or in growth and value companies, unlike in the US.

Currently, we only have the STI-ETF which includes big-cap companies and where 40% of the index is already made up by the big 3 local banks.

As you're aware, a good and effective asset allocation plan, involving various asset sub-classes such as big, medium and small companies will help greatly in reducing volatility and increasing an investor's returns. And traditionally, of course, value and growth companies also offer higher returns than big-cap companies, albeit with higher risks.

I hope these products, including also a REIT-index-based product, will be introduced in the market soon, maybe by you? Thanks.

REPLY
Thank you. I hope that there will be more options for low-cost funds for the public in the near future.-