Sunday, May 4, 2008
Personal attack
I have to block a comment which make reference to a "comeback kid". This is personal and unnecessary. In other respects, the comment is well written. Please avoid being personal, and present the facts fairly.
Right and just will prevail
Dear Kin Lian,
I read the articles in your blog I am sure you will get the support you need. I do not have any NTUC Income policy that is affected. Finally the right and just will prevail. Unfortunately in our society the poor and the helpless people are made to pay for the greed of others. We need champions like you to stand up from time to time to fight for their right. God Bless.
I read the articles in your blog I am sure you will get the support you need. I do not have any NTUC Income policy that is affected. Finally the right and just will prevail. Unfortunately in our society the poor and the helpless people are made to pay for the greed of others. We need champions like you to stand up from time to time to fight for their right. God Bless.
Increase in motor insurance premiums
Several people have informed me about the large increase in motor insurance premiums this year.
I advised them to shop around for the lowest rates by calling the hotlines of the insurance companies. Here are the telephone numbers:
http://www.tankinlian.com/faq/motord.html
Some motorists have told me about savings of more than 20% by shopping around.
I advised them to shop around for the lowest rates by calling the hotlines of the insurance companies. Here are the telephone numbers:
http://www.tankinlian.com/faq/motord.html
Some motorists have told me about savings of more than 20% by shopping around.
Restructuring of bonus
Someone posted in my blog that the restructuring of the bonus rates is sound actuarial practice. He (she) even suggested that this is what I would have done, if I were in charge of NTUC Income.
I have to disappoint this person. In my view, the restructuring of the bonus is unfair and is detrimental to the interest of policyholders. It contravenes their "reasonable expectation".
There is no need to restructure the bonus, unless the solvency is at threat. This is not the case, coming from a year of high investment yield. If this is the real reason (and I doubt it), then it should be stated openly and the cut in bonus should apply to all policies.
I do not like a large part of my policies' bonuses to be unvested, as it can be taken away at any time. I do not like the manner in which this restructuring has been done.
I have to disappoint this person. In my view, the restructuring of the bonus is unfair and is detrimental to the interest of policyholders. It contravenes their "reasonable expectation".
There is no need to restructure the bonus, unless the solvency is at threat. This is not the case, coming from a year of high investment yield. If this is the real reason (and I doubt it), then it should be stated openly and the cut in bonus should apply to all policies.
I do not like a large part of my policies' bonuses to be unvested, as it can be taken away at any time. I do not like the manner in which this restructuring has been done.
Give fair value to consumers
Someone from NTUC Income (probably an insurance agent) has been posting rude remarks in my blog accusing me of being "bitter" and behaving like "Dr. Mahathir" in my postings on the business practices of NTUC Income.
I wish to tell this person that I am not "bitter". I will continue to give a fair analysis of the various investment options available to the investing public.
I hope that NTUC Income will continue to uphold its principles of being a cooperative and giving fair value to the consumers. I will be happy to recommend NTUC Income in these circumstances.
He has been particularly unhappy that I do not recommend investing in the Combined Fund with an upfront charge of 3%. I find this charge to be too high, especially as many unit trusts have now reduced their upfront charge to 1.5% or less - for investors who invest directly.
I find that too many financial products have been launched in the market to take advantage of the naive, trusting consumer. They give poor value to the consumer. You can read my views here:
www.theonlinecitizen.com
http://theonlinecitizen.com/2008/04/30/high-cost-of-living-%e2%80%93-what-the-government-can-do/#comment-27523
On a separate point, I continue to receive many rude postings against insurance agents of NTUC Income. I have to block them from being posted. To the people who made these postings, please discontinue it, as it gives an unnecessary burden in moderation.
I wish to tell this person that I am not "bitter". I will continue to give a fair analysis of the various investment options available to the investing public.
I hope that NTUC Income will continue to uphold its principles of being a cooperative and giving fair value to the consumers. I will be happy to recommend NTUC Income in these circumstances.
He has been particularly unhappy that I do not recommend investing in the Combined Fund with an upfront charge of 3%. I find this charge to be too high, especially as many unit trusts have now reduced their upfront charge to 1.5% or less - for investors who invest directly.
I find that too many financial products have been launched in the market to take advantage of the naive, trusting consumer. They give poor value to the consumer. You can read my views here:
www.theonlinecitizen.com
http://theonlinecitizen.com/2008/04/30/high-cost-of-living-%e2%80%93-what-the-government-can-do/#comment-27523
On a separate point, I continue to receive many rude postings against insurance agents of NTUC Income. I have to block them from being posted. To the people who made these postings, please discontinue it, as it gives an unnecessary burden in moderation.
Leadership - lesson from India
Former President of India APJ Abdul Kalam at Wharton India Economic forum , Philadelphia , March 22, 2008
Question: Could you give an example, from your own experience, of how leaders should manage failure?
Kalam: Let me tell you about my experience. In 1973 I became the project director of India 's satellite launch vehicle program, commonly called the SLV-3. Our goal was to put India 's 'Rohini' satellite into orbit by 1980. I was given funds and human resources -but was told clearly that by 1980 we had to launch the satellite into space. Thousands of people worked together in scientific and technical teams towards that goal.
By 1979 - I think the month was August - we thought we were ready. As the project director, I went to the control center for the launch. At four minutes before the satellite launch, the computer began to go through the checklist of items that needed to be checked. One minute
later, the computer program put the launch on hold; the display showed that some control components were not in order.
My experts - I had four or five of them with me - told me not to worry; they had done their calculations and there was enough reserve fuel. So I bypassed the computer, switched to manual mode, and launched the rocket.
In the first stage, everything worked fine. In the second stage, a problem developed. Instead of the satellite going into orbit, the whole rocket system plunged into the Bay of Bengal . It was a big failure.
That day, the chairman of the Indian Space Research Organization, Prof. Satish Dhawan, had called a press conference. The launch was at 7:00 am, and the press conference- where journalists from around the world were present - was at 7:45 am at ISRO's satellite launch range in Sriharikota [in Andhra Pradesh in southern India ]. Prof. Dhawan, the leader of the organization, conducted the press conference himself. He took responsibility for the failure - he said that the team had worked very hard, but that it needed more technological support. He assured the media that in another year, the team would definitely succeed. Now, I was the project director, and it was my failure, but instead, he took responsibility for the failure as
chairman of the organization.
The next year, in July 1980, we tried again to launch the satellite - and this time we succeeded. The whole nation was jubilant. Again, there was a press conference. Prof. Dhawan called me aside and told me, 'You conduct the press conference today.'
I learned a very important lesson that day. When failure occurred, the leader of the organization owned that failure. When success came, he gave it to his team. The best management lesson I have learned did not come to me from reading a book; it came from that experience.
Question: Could you give an example, from your own experience, of how leaders should manage failure?
Kalam: Let me tell you about my experience. In 1973 I became the project director of India 's satellite launch vehicle program, commonly called the SLV-3. Our goal was to put India 's 'Rohini' satellite into orbit by 1980. I was given funds and human resources -but was told clearly that by 1980 we had to launch the satellite into space. Thousands of people worked together in scientific and technical teams towards that goal.
By 1979 - I think the month was August - we thought we were ready. As the project director, I went to the control center for the launch. At four minutes before the satellite launch, the computer began to go through the checklist of items that needed to be checked. One minute
later, the computer program put the launch on hold; the display showed that some control components were not in order.
My experts - I had four or five of them with me - told me not to worry; they had done their calculations and there was enough reserve fuel. So I bypassed the computer, switched to manual mode, and launched the rocket.
In the first stage, everything worked fine. In the second stage, a problem developed. Instead of the satellite going into orbit, the whole rocket system plunged into the Bay of Bengal . It was a big failure.
That day, the chairman of the Indian Space Research Organization, Prof. Satish Dhawan, had called a press conference. The launch was at 7:00 am, and the press conference- where journalists from around the world were present - was at 7:45 am at ISRO's satellite launch range in Sriharikota [in Andhra Pradesh in southern India ]. Prof. Dhawan, the leader of the organization, conducted the press conference himself. He took responsibility for the failure - he said that the team had worked very hard, but that it needed more technological support. He assured the media that in another year, the team would definitely succeed. Now, I was the project director, and it was my failure, but instead, he took responsibility for the failure as
chairman of the organization.
The next year, in July 1980, we tried again to launch the satellite - and this time we succeeded. The whole nation was jubilant. Again, there was a press conference. Prof. Dhawan called me aside and told me, 'You conduct the press conference today.'
I learned a very important lesson that day. When failure occurred, the leader of the organization owned that failure. When success came, he gave it to his team. The best management lesson I have learned did not come to me from reading a book; it came from that experience.
Apply new bonus structure to new policies
Dear Mr. Tan,
I know that you are a fair and open minded person. The new INCOME management wants to change the bonus structure to achieve greater flexibility, solvency and earn a higher yield. So far, you have written in your blog against this decision. Can you identify some positive reasons for their action?
REPLY
Every system will have its advantages and disadvantages. The new bonus structure may attract a certain group of policyholders. But it is not suitable for other policyholders.
If NTUC Income wants to introduce a new bonus structure with low annual bonus, they should launch a new product and attract customers to buy it. They may even approach the existing policyholders to switch to the new product. If the customers are convinced about the benefit, they will accept the change.
NTUC Income said that the new bonus structure allows greater flexibilty of investment to achieve a higher yield. This remains to be seen. They can set aside a separate fund for the new bonus structure and put the new policies into this fund. If it can indeed earn a higher yield, the policyholders are entitled to the benefit. But it carries greater risk.
It is not correct to impose the new bonus structure on existing policyholders who were sold earlier on the old bonus structure.
In my personal opinon, the old bonus structure is more suitable for the current policyholders. Those who prefer the new bonus structure already have the choice of investing in investment-linked products (ILPs).
I know that you are a fair and open minded person. The new INCOME management wants to change the bonus structure to achieve greater flexibility, solvency and earn a higher yield. So far, you have written in your blog against this decision. Can you identify some positive reasons for their action?
REPLY
Every system will have its advantages and disadvantages. The new bonus structure may attract a certain group of policyholders. But it is not suitable for other policyholders.
If NTUC Income wants to introduce a new bonus structure with low annual bonus, they should launch a new product and attract customers to buy it. They may even approach the existing policyholders to switch to the new product. If the customers are convinced about the benefit, they will accept the change.
NTUC Income said that the new bonus structure allows greater flexibilty of investment to achieve a higher yield. This remains to be seen. They can set aside a separate fund for the new bonus structure and put the new policies into this fund. If it can indeed earn a higher yield, the policyholders are entitled to the benefit. But it carries greater risk.
It is not correct to impose the new bonus structure on existing policyholders who were sold earlier on the old bonus structure.
In my personal opinon, the old bonus structure is more suitable for the current policyholders. Those who prefer the new bonus structure already have the choice of investing in investment-linked products (ILPs).
Prefer higher annual bonus
POSTED IN MY BLOG
Mr Tan,
My family, relatives & I bought many policies of NTUC Income. I am disppointed by the change in bonus structure too
We bought policies from NTUC Income because it is a co-operative hence it will be policyholder-focus insead of shareholder-focus. It is also a low-cost operator. All these means that it can introduce good value products, and return more benefits to policyholders.
Moreover, insurance companies are investing in the same kind of assets, largely in bonds, due to regulatory requirements. Hence I believe their investment performance should be largely the same over in the long term. Hence low-cost and policyholder-centric factors are real differentiators to higher higher bonus payouts.
I read that the new bonus structure is more in line with industry practice. It is also industry practice to cut terminal bonus drastically during major financial crisis in the past such as SARS, 911, Asia Financial Crisis, to remain their financial solvency. I have been investing directly in the equity market for the past 10 years, so I am quite certain major financial crisis will occur again in future. Hence I favour higher annual bonus declaration than a significantly higher but uncertain terminal bonus.
I applaud and support your effort to advocate NTUC Income to reverse their position on this matter.
Mr Tan,
My family, relatives & I bought many policies of NTUC Income. I am disppointed by the change in bonus structure too
We bought policies from NTUC Income because it is a co-operative hence it will be policyholder-focus insead of shareholder-focus. It is also a low-cost operator. All these means that it can introduce good value products, and return more benefits to policyholders.
Moreover, insurance companies are investing in the same kind of assets, largely in bonds, due to regulatory requirements. Hence I believe their investment performance should be largely the same over in the long term. Hence low-cost and policyholder-centric factors are real differentiators to higher higher bonus payouts.
I read that the new bonus structure is more in line with industry practice. It is also industry practice to cut terminal bonus drastically during major financial crisis in the past such as SARS, 911, Asia Financial Crisis, to remain their financial solvency. I have been investing directly in the equity market for the past 10 years, so I am quite certain major financial crisis will occur again in future. Hence I favour higher annual bonus declaration than a significantly higher but uncertain terminal bonus.
I applaud and support your effort to advocate NTUC Income to reverse their position on this matter.
Terminal bonus is not guaranteed
Dear Mr. Tan
I always thought that Terminal Bonus is like Annual Bonus which is guaranteed once declared. Hence if my policy year crosses the year that terminal bonus is payable and is declared as per projected, such terminal bonus will be locked in to my policy.
REPLY
The terminal bonus is not guaranteed. The terminal bonus is payable based the rate that applies at the time of maturity, or surrender or death claim. It is possible for the terminal bonus to be withdrawn at the last minute, just before it becomes payable. I do not like a high rate of terminal bonus, due to its uncertainty.
Life insurance company use this "gimmick" to entice customers to buy their products. Many policyholders have been disappointed with the reduction in the terminal bonus after waiting for many, many years. By that time, it was too late for them to change their mind.
I always thought that Terminal Bonus is like Annual Bonus which is guaranteed once declared. Hence if my policy year crosses the year that terminal bonus is payable and is declared as per projected, such terminal bonus will be locked in to my policy.
REPLY
The terminal bonus is not guaranteed. The terminal bonus is payable based the rate that applies at the time of maturity, or surrender or death claim. It is possible for the terminal bonus to be withdrawn at the last minute, just before it becomes payable. I do not like a high rate of terminal bonus, due to its uncertainty.
Life insurance company use this "gimmick" to entice customers to buy their products. Many policyholders have been disappointed with the reduction in the terminal bonus after waiting for many, many years. By that time, it was too late for them to change their mind.
Bonuses reduced by a significant amount
Hi Mr. Tan,
I have been reading your blog with focus on the bonus reduction issue by NTUC recently. I wrote to NTUC based on the template provided by you - thanks!
It seems that my two policies were affected by the bonus cut. The 2007 bonus sums have been reduced by a fair amount. There seems to be a significant cash value reduction over the next 5 years as well. Would you review my policies and provide your brief comments please?
I'd think it's not advisable for me to surrender these 2 policies now - I'll just keep these as my 'bond' portion of my investment portfolio.
REPLY
NTUC Income has reduced the annual bonus. But they claim that the terminal bonus, payable on surrender, has been increased to compensate for the reduction.
Personally, I do not like the terminal bonus as it is not guaranteed, and may be taken away. The annual bonus is vested and guaranteed each year as it is declared.
I will be organising a collective protest. You can read about it in my blog. I hope that you will join this effort.
I have been reading your blog with focus on the bonus reduction issue by NTUC recently. I wrote to NTUC based on the template provided by you - thanks!
It seems that my two policies were affected by the bonus cut. The 2007 bonus sums have been reduced by a fair amount. There seems to be a significant cash value reduction over the next 5 years as well. Would you review my policies and provide your brief comments please?
I'd think it's not advisable for me to surrender these 2 policies now - I'll just keep these as my 'bond' portion of my investment portfolio.
REPLY
NTUC Income has reduced the annual bonus. But they claim that the terminal bonus, payable on surrender, has been increased to compensate for the reduction.
Personally, I do not like the terminal bonus as it is not guaranteed, and may be taken away. The annual bonus is vested and guaranteed each year as it is declared.
I will be organising a collective protest. You can read about it in my blog. I hope that you will join this effort.
Does the Growth policy still give good value?
Dear Mr. Tan,
I was always told that NTUC Income was the only one can give the policyholder the best and protect our interest and thus, for more than 10 years I have "invested" my hard-earn extra cash or CPF into "one basket", i.e. NTUC INCOME. I now feel uncomfortatble with INCOME when receiving their notice to reduce the annual bonus as below.
(details deleted)
Dear
> You invested $50,000 more than 10 years ago. At that time, the projected maturity benefit was $136,403 representing a yield of 5.7% p.a.
> During the difficult years when investment yields were low, the bonus rate was reduced. The projected amount on maturity was revised to $114,047.
> With the latest round of bonus revision, the projected amount at maturity has increased marginally to $116,467. It represents a yield of 4.8% on your invested sum of $50,000 over 18 years.
I think that this revised yield is quite satisfactory. It give a better return than CPF. The Growth policy still represents a good investment because you took it earlier. I am not sure that a Growth policy today will give the same good value.
Tan Kin Lian
Dear Mr Tan,
Thanks a lot for taking time to give me the advice on my policy. I really appreciate it.
I wrote to INCOME before for advice on my cash value if I cancel some policies and the reply was a typical "stereotype" answer of my cash value. I also went to NTUC Income of Jurong East and Ubi before for advice. The customer service seems not well trained for providing advices and instead asking me whether I am interested in their new policy - Vivolife.
Once again, I would like to thanks for your kindness for taking time to reply me. You place the policyholder first before shareholder's point of view.
(I think you are hurt and upset of handing over to some new management team that does not follow the service commitment of the cooperative insurance society formed in 1970, " Income has always placed the interests of our policyholders foremost" stated in NTUC INCOME website - it will no longer valid after you leave the organisation.......)
I was always told that NTUC Income was the only one can give the policyholder the best and protect our interest and thus, for more than 10 years I have "invested" my hard-earn extra cash or CPF into "one basket", i.e. NTUC INCOME. I now feel uncomfortatble with INCOME when receiving their notice to reduce the annual bonus as below.
(details deleted)
Dear
> You invested $50,000 more than 10 years ago. At that time, the projected maturity benefit was $136,403 representing a yield of 5.7% p.a.
> During the difficult years when investment yields were low, the bonus rate was reduced. The projected amount on maturity was revised to $114,047.
> With the latest round of bonus revision, the projected amount at maturity has increased marginally to $116,467. It represents a yield of 4.8% on your invested sum of $50,000 over 18 years.
I think that this revised yield is quite satisfactory. It give a better return than CPF. The Growth policy still represents a good investment because you took it earlier. I am not sure that a Growth policy today will give the same good value.
Tan Kin Lian
Dear Mr Tan,
Thanks a lot for taking time to give me the advice on my policy. I really appreciate it.
I wrote to INCOME before for advice on my cash value if I cancel some policies and the reply was a typical "stereotype" answer of my cash value. I also went to NTUC Income of Jurong East and Ubi before for advice. The customer service seems not well trained for providing advices and instead asking me whether I am interested in their new policy - Vivolife.
Once again, I would like to thanks for your kindness for taking time to reply me. You place the policyholder first before shareholder's point of view.
(I think you are hurt and upset of handing over to some new management team that does not follow the service commitment of the cooperative insurance society formed in 1970, " Income has always placed the interests of our policyholders foremost" stated in NTUC INCOME website - it will no longer valid after you leave the organisation.......)
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