I am a sales agent of NTUC Income for many years and I know Kin Lian for umpteen years. He has been known to be a workaholic and an hard headed person but not a man without a heart. Many people in INCOME know that he is a very compassionate person always willing to help those who are in need. It is a very sad episode that after his departure from INCOME so many things had happened and also had affected so many people.
To begin with, I have nothing against the new management of INCOME but it’s the way things are being done. The first indication from the new CEO was to phase out the part time sales people because he came from a company that do not believe in part-timers. I won’t say he forgot, but he doesn’t understand the root and culture of NTUC INCOME and how it started. Under the leadership of Kin Lian, it has transformed INCOME to what it is today.
It was Dr. Goh Keng Seng’s wisdom to advise NTUC to start this co-operative Insurance as it had the built in advantage of reaching out to different strata of the workforce through the trade unionist and union members. For three decades, these part time sales force also know as INCOME Organisers had contributed tremendously to the success of this co-operative.
Kin Lian’s departure has also caused a great dislocation to the staff. I won’t say its wrong for the new CEO to bring in his own people to support his mission but too many replacements including middle management has caused fear and uncertainty among those who are not chopped yet. Many more staff are in limbo, don’t know when is their turn to go. From the number of postings in TKL’s blog from ex-employees expressing their bitterness is a testimony.
It is a sad thing, that such a thing happens to a co-operative own by the labour movement whose primary objective is to champion for workers rights. I hope the leadership of NTUC can look into this matter to instill some confidence to the existing staff.
I am also very disappointed with some agents who posted in the INCOME forum venting their anger at Kin Lian questioning his motive and calling him all sorts of names. The only reason I can think of is that those postings in Kin Lian’s blog about agents earning high commission and advocating people to buy term and invest will invariably affect their sales.
Justice Pao
Wednesday, May 7, 2008
What is my motive?
POSTED IN ONLINE CITIZEN
http://www.theonlinecitizen.com/
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.
http://www.theonlinecitizen.com/
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.
The Truth About Life Insurance
POSTED IN ONLINE CITIZEN
www.theoninecitizen.com
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 were 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.
Tan Kin Lian
www.theoninecitizen.com
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 were 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.
Tan Kin Lian
Continue with the Ideal (ID2)
Dear Kin Lian,
I will most certainly send to you me and my wife's signature to protest against the low annual bonus. The terminal bonus to me, is something which any insurance company can indicate, or 'pluck from the air'.
Currently, my wife and I both have ID2 Plan and have been contributing $X monthly to the plan since Sep 2006. Do you think we should withdraw from this plan and go on to the STI ETF that you had highly recommended in your blog?
Our wish is to grow our money for our retirement. We had always trusted NTUC and its agent to managed this for us. We both have Protection Policies and a Foundation for our son since 2000 as well. They are all affected by the low annual bonus which I am extremely concerned.
REPLY
I think that it is all right for you to continue with the Ideal (ID2). You have already incurred half of the upfront charge of 45%. Anyway this upfront charge is much lower than other ILPs in the market.
If you buy the STI ETF you will need a sum of $3,300 to buy 1,000 shares.This may be inconvenient for you.
I will most certainly send to you me and my wife's signature to protest against the low annual bonus. The terminal bonus to me, is something which any insurance company can indicate, or 'pluck from the air'.
Currently, my wife and I both have ID2 Plan and have been contributing $X monthly to the plan since Sep 2006. Do you think we should withdraw from this plan and go on to the STI ETF that you had highly recommended in your blog?
Our wish is to grow our money for our retirement. We had always trusted NTUC and its agent to managed this for us. We both have Protection Policies and a Foundation for our son since 2000 as well. They are all affected by the low annual bonus which I am extremely concerned.
REPLY
I think that it is all right for you to continue with the Ideal (ID2). You have already incurred half of the upfront charge of 45%. Anyway this upfront charge is much lower than other ILPs in the market.
If you buy the STI ETF you will need a sum of $3,300 to buy 1,000 shares.This may be inconvenient for you.
Write to sq@income.com.sg
Dear Sir,
I had a similar letter on the change in bonus structure from Income relating to growth policy. I have been rather unhappy with income of late but I wonder how likely is this protest to succeed?
I have other concerns. I feel that Income is not looking after its policy holders.
1. One of my policy was purchased using CPF. When I enquired on the possibility to use change and refund the CPF portion to my account, the agent tried to sell me other policies and disregarded my enquires. Subsequently, I wrote to income and they claimed this change is not possible. I spoke and wrote to CPF and the advised this is possible. What should I do?
2. My motor insurance was increased 53% despite me being with the company and having no claims at all (50% NCD). I enquired upon renewal which was a month back and got a call a day later for the purpose of doing a survey with Income. As i was busy, the person promised to return call but never did.
It seems that the company is passing off its costs to its good customers and refusing to explain. Could you advise on insurance companies that you engage? I feel this will be helpful for me as INCOME doesn;t try to engage my issues.
REPLY
I suggest that you write an email to sq@income.com.sg. I am sure that they will attend to your issues.
I had a similar letter on the change in bonus structure from Income relating to growth policy. I have been rather unhappy with income of late but I wonder how likely is this protest to succeed?
I have other concerns. I feel that Income is not looking after its policy holders.
1. One of my policy was purchased using CPF. When I enquired on the possibility to use change and refund the CPF portion to my account, the agent tried to sell me other policies and disregarded my enquires. Subsequently, I wrote to income and they claimed this change is not possible. I spoke and wrote to CPF and the advised this is possible. What should I do?
2. My motor insurance was increased 53% despite me being with the company and having no claims at all (50% NCD). I enquired upon renewal which was a month back and got a call a day later for the purpose of doing a survey with Income. As i was busy, the person promised to return call but never did.
It seems that the company is passing off its costs to its good customers and refusing to explain. Could you advise on insurance companies that you engage? I feel this will be helpful for me as INCOME doesn;t try to engage my issues.
REPLY
I suggest that you write an email to sq@income.com.sg. I am sure that they will attend to your issues.
My life insurance policies
Someone asked me why I only had two life policies with NTUC Income, after working for 30 years.
Actually, I had a total of about 20 life insurance policies. They include 5 current life policies in my name (of which two are affected by the bonus cut), 9 policies that have been transferred to my children, and 5 investment linked policies.
Some other policies have since matured or expired (i.e. term insurance policies) or were consolidated (i.e investment-linked polices).
Actually, I had a total of about 20 life insurance policies. They include 5 current life policies in my name (of which two are affected by the bonus cut), 9 policies that have been transferred to my children, and 5 investment linked policies.
Some other policies have since matured or expired (i.e. term insurance policies) or were consolidated (i.e investment-linked polices).
Effect of deduction
Dear Mr. Tan,
You have written about the "effect of deduction". I am still not clear about this concept. Where can I find this figure? What does it mean?
REPLY
When an insurance agent sell you a life insurance policy, the agent is required to give you a Benefit Illustration. It shows the projected cash value and protection value (i.e the amount payable on death) at various durations of the policy.
There is a column called the "effect of deduction". It shows the amount that is taken away from you at the various durations. This amount is used to pay the marketing expenses, management expenses and life insurance cover.
For example, if your total savings over a period of 30 years is $150,000 and your gain is $100,000 (say), you should get $250,000. If the "effect of deduction" is $60,000, you will only get $190,000. Int his case, the deduction takes away 60% of the gain.
If you invest through other products, the expenses and fees usually take away about 15% and leaves you with 85% of the actual gains. The deduction under a life insurance policy is much higher and usually leaves you with less than 50% of the actual gain.
If you are being sold a life insurance product, ask the agent to show you the "effect of deduction". If the deduction is less than 20%. the policy gives good value. If it is higher, you should look for other investments.
You have written about the "effect of deduction". I am still not clear about this concept. Where can I find this figure? What does it mean?
REPLY
When an insurance agent sell you a life insurance policy, the agent is required to give you a Benefit Illustration. It shows the projected cash value and protection value (i.e the amount payable on death) at various durations of the policy.
There is a column called the "effect of deduction". It shows the amount that is taken away from you at the various durations. This amount is used to pay the marketing expenses, management expenses and life insurance cover.
For example, if your total savings over a period of 30 years is $150,000 and your gain is $100,000 (say), you should get $250,000. If the "effect of deduction" is $60,000, you will only get $190,000. Int his case, the deduction takes away 60% of the gain.
If you invest through other products, the expenses and fees usually take away about 15% and leaves you with 85% of the actual gains. The deduction under a life insurance policy is much higher and usually leaves you with less than 50% of the actual gain.
If you are being sold a life insurance product, ask the agent to show you the "effect of deduction". If the deduction is less than 20%. the policy gives good value. If it is higher, you should look for other investments.
Exotic Terminal Bonuses
During the past 20 years, many life insurance companies have introduced products with exotic terminal bonuses. These bonus rates do not follow any rational pattern. They are jacked up at certain durations, usually 20 years and later, to make the return look attractive. The insurance agents are trained to sell the attractive returns to the consumers by "explaining" these figures.
Many consumers ended up with poor returns. If they terminate the policies before the "magic" durations, they lose out on the terminal bonuses and get a poor cash value. Those who waited for the "magic" durations may also be disappointed. If the investment markets fell, the terminal bonus rates were also taken away. After all, they were not guaranteed.
In an environment where the terminal bonus rates could be changed so easily, and could be made different for different groups of policyholders, it is difficult for policyholders to "trust" the terminal bonus rates. It is better to avoid these types of policies.
It is better to invest your money in low cost investment funds, which are more transparent. You are likely to get a higher return. Read this FAQ:
http://www.tankinlian.com/faq/savings.html
Many consumers ended up with poor returns. If they terminate the policies before the "magic" durations, they lose out on the terminal bonuses and get a poor cash value. Those who waited for the "magic" durations may also be disappointed. If the investment markets fell, the terminal bonus rates were also taken away. After all, they were not guaranteed.
In an environment where the terminal bonus rates could be changed so easily, and could be made different for different groups of policyholders, it is difficult for policyholders to "trust" the terminal bonus rates. It is better to avoid these types of policies.
It is better to invest your money in low cost investment funds, which are more transparent. You are likely to get a higher return. Read this FAQ:
http://www.tankinlian.com/faq/savings.html
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