tatos@irc.rizon.net said...
In the age, actually one have to actually watch out for 'Card Tricks', affectionately known at 'clauses that specifically' protect the Credit Card Companies' interests, in general.
No Joke - I mean No Joke. I have friends who incur a lot of debts just by little overdrafting and letting the mini-debt grow and grow.
This doesn't come at a surprise to anybody, but most money lenders do not have your best interests at heart. Some even send out 'misleading' marketing information as lure. Even the most reputable credit card issues bombard customers with 'benefits' that are specially designed to 'pad' fees and interest payments. Cash Advances and convenience checks don't come cheap, just read about the new Hybrid Cards in Singapore, and one can imagine a consequences of mis-using it, like overdrafting a 'debit card'.
There are some common 'ouchies' that could happen if you own a credit card.
1) Magical Appearing Annual Fee. You signed up for a card with no Annual fee. Then out of the sudden, you find one, some lenders start charging annual feel who pay their bills off every month - Its best to cancel the card AS SOON AS POSSIBLE.
2) Sliding Credit Line. Another inethical but not uncommon practice to entice a customer to use a cash advance check or skip-a-month payment offer and then lower their credit limit. The maxed-out customer is then charged an additional fee for being above it. Or just simply lower customer's credit limit once they reach it - It depends on how disciplined you are with your card, you might not have to worry as much as the other fellow if you are really concious about debt payments.
3) Mysterious Fees. You may not have to pay a charge to get a cash advance. But most banks charges hefty transaction fees, which can easily go around 2% of the total amount and no less than $10. Also watch out for calling the toll-free number to check your balance and penalty fees for ACCOUNT INACTIVITY. (Don't forget about the credit card buried at the bottom of your wallet!)
4) The Disappearing Grace Period. Watch out for lenders who pull the grace period out from under you. Remember, if your grace period is eliminated, you'll accrue interest from the day you make a purchase. And the only way to avoid this charge would be to pay your bill before you even receive it. This is the most horrible act I've heard, but it yet happened to Singapoeans, I think.
5) Credit Report Blunders - These do happen in real life. But with little diligence on your part, such inaccuracies can be looked into, updated and even removed from your account relatively quickly. If you are sure thats an Error (by keeping records of copies of your purchases, checks and past billing statements) and they still wouldn't bulge in helping you, try finding any authority to investigate your claim AS SOON AS POSSIBLE.
Not that Credit Cards are bad, its just require a little more due diligence prior getting a card and maintaining that card for your own conveniences and benefits, like actually assist in your budgeting by posting monthly statement print statements, etc. While also bolster your image in the eyes of another lender, especially if you consider using credit to establish a firm borrowing history, if you are going to apply for a large line of credit, like mortage or car loan, but overall it depends on one's disciplined to use it responsibly, and productively.
And remember, if you are going to cancel a card, it is best to contact though the Hotline AS SOON AS POSSIBLE and CLOSE THE ACCOUNT rather than going though other means (waiting for them to close the account for you), for this may help to reserve your Credit Score (if such a thing exist).
Friday, May 16, 2008
More trains for commuters
I congratulate SMRT and the Land Transport Authority for introducing more train services to meet the higher demand for public transport. This will reduce the over-crowding and waiting time, and make the journey more pleasant.
I hope that LTA will allow SMRT to introduce more feeder services to bring commuters to the train station. This allows a more integrated service. The feeder services will be easier for commuters to use. I hope that these new feeder services do not make many long loops within the area that they serve.
SBS Transit can continue to provide a competitive service to provide point-to-point journeys.
I hope that LTA officials reading this blog can pass my congratulation and suggestion to your bosses.
I hope that LTA will allow SMRT to introduce more feeder services to bring commuters to the train station. This allows a more integrated service. The feeder services will be easier for commuters to use. I hope that these new feeder services do not make many long loops within the area that they serve.
SBS Transit can continue to provide a competitive service to provide point-to-point journeys.
I hope that LTA officials reading this blog can pass my congratulation and suggestion to your bosses.
Return on Vivolife policies
Catherine Choong posted a detailed posting on Vivolife (i.e. whole life policy with premiums paid for 20 years) in The Online Citizen. She pointed out several benefits of the policy, (which I accept). The main drawback of the policy, in my view, is the somewhat low return to the policyholder at the end of 20 years.
A few weeks ago, a policyholder asked my advice on three Vivolife policies that he bought for his family. I calculated the return on the policies as follows:
The total premium paid for 20 years is shown in (2). If the premium is invested to earn a net yield of 4.5%, the accumulated amount is shown in (3). The expected gain is shown in (4). The cash value of the policy (based on a gross yield of 5.25%) is shown in (5). The gain in cash value is shown in (6).
Assuming a gross yield of 5.25%, the Vivolife policies took away between 58% to 69% of the expected gain, leaving 31% to 42% of the gain to the policyholder. If the gross yield is lower, the value to the policyholder will be even lower.
If the policyholder buy the insurance cover separately, the cost of the cover is likely to be not more than 20% of the expected gain (just my guess). A good adviser will be able to calculate this alternative cost for the customer to make an informed choice.
If these examples do not reflect a true picture of the return on the Vivolife policy, I hope that Caterine Choong will send some other examples to me. I shall be happy to post them here.
Note: I believe that the Vivolife gives better values compared to similar products in the market (although I do not have concrete evidence on this point).
A few weeks ago, a policyholder asked my advice on three Vivolife policies that he bought for his family. I calculated the return on the policies as follows:
1. 2. 3. 4. 5. 6. 7. 8.
Policy Premium Accum Expected Cash Value Gain % Taken
20 yrs @4.5% gain 20 yrs in CV away
Self $29,080 $47,666 $18,586 $34,907 $5,827 31% 69%
Wife $24,340 $39,890 $15,550 $29,478 $5,138 33% 67%
Son $23,420 $38,389 $15,969 $30,234 $6,814 42% 58%
The total premium paid for 20 years is shown in (2). If the premium is invested to earn a net yield of 4.5%, the accumulated amount is shown in (3). The expected gain is shown in (4). The cash value of the policy (based on a gross yield of 5.25%) is shown in (5). The gain in cash value is shown in (6).
Assuming a gross yield of 5.25%, the Vivolife policies took away between 58% to 69% of the expected gain, leaving 31% to 42% of the gain to the policyholder. If the gross yield is lower, the value to the policyholder will be even lower.
If the policyholder buy the insurance cover separately, the cost of the cover is likely to be not more than 20% of the expected gain (just my guess). A good adviser will be able to calculate this alternative cost for the customer to make an informed choice.
If these examples do not reflect a true picture of the return on the Vivolife policy, I hope that Caterine Choong will send some other examples to me. I shall be happy to post them here.
Note: I believe that the Vivolife gives better values compared to similar products in the market (although I do not have concrete evidence on this point).
Give good value products to the people who trust us
POSTED IN ONLINE CITIZEN
http://theonlinecitizen.com/2008/05/the-truth-about-life-insurance/#comment-7789
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
http://theonlinecitizen.com/2008/05/the-truth-about-life-insurance/#comment-7789
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
Get a quote on your motor insurance
Dear Mr Tan,
1. In 2006 I bought my car insurance from company X and the premium is $4XX
And now i need to renew and the amount is $6XX, which is around $200 more. The
car is now older by two more years and the value is lower by maybe 30%, but the premium increased by 30%. I have 100% clean record for the passed 20 years. Should I still stay royal to this company?
I wonder why such a great increased just two years . Since my car value drop more than 25 to 30% why the premium increased?
REPLY
You should contact other insurance companies and ask for a quote. Read this FAQ
http://www.tankinlian.com/faq/motord.html
The premium on your car depends on the claim experience, and not on the value of the car. Last year, the claims increased significantly and most insurance companies made big losses. They have to increase the premium rate by more than 20% to catch up with the claims.
1. In 2006 I bought my car insurance from company X and the premium is $4XX
And now i need to renew and the amount is $6XX, which is around $200 more. The
car is now older by two more years and the value is lower by maybe 30%, but the premium increased by 30%. I have 100% clean record for the passed 20 years. Should I still stay royal to this company?
I wonder why such a great increased just two years . Since my car value drop more than 25 to 30% why the premium increased?
REPLY
You should contact other insurance companies and ask for a quote. Read this FAQ
http://www.tankinlian.com/faq/motord.html
The premium on your car depends on the claim experience, and not on the value of the car. Last year, the claims increased significantly and most insurance companies made big losses. They have to increase the premium rate by more than 20% to catch up with the claims.
Nominating a beneficiary
Dear Mr Tan
I am single and have no relatives. I went to an insurance company to change my beneficiary but was informed that I cannot nominate someone not related to me. Instead, I was asked to change my beneficiary to my estate and have to write a will. This brings about the following questions:
1. For people with no relatives, is it still necessary to have an insurance policy?
2. Does it mean I have no choice but to engage the services of a lawyer to draw up a will?
3. What is the cost involved to engage a lawyer to do a will.
REPLY
You can leave your policy money to your estate. If you do not have a will, it will be distributed according to the intestate law.
If you wish to write a will, you can use the will writing service provided by NTUC Income. You can get more details from Big Trumpet, www.bigtrumpet.com.sg
I am single and have no relatives. I went to an insurance company to change my beneficiary but was informed that I cannot nominate someone not related to me. Instead, I was asked to change my beneficiary to my estate and have to write a will. This brings about the following questions:
1. For people with no relatives, is it still necessary to have an insurance policy?
2. Does it mean I have no choice but to engage the services of a lawyer to draw up a will?
3. What is the cost involved to engage a lawyer to do a will.
REPLY
You can leave your policy money to your estate. If you do not have a will, it will be distributed according to the intestate law.
If you wish to write a will, you can use the will writing service provided by NTUC Income. You can get more details from Big Trumpet, www.bigtrumpet.com.sg
Collective Protest - Update 16 May
I received 54 signatures today, giving the cumulative total of 270 signatures. I am heartened that the forms contained more signatures. One policyholder collected 7 signatures on the same form, from several families.
Someone sent an e-mail to me yesterday, volunteering to collect signatures at MRT stations over the next two weekends. I advised him that this is not necessary. He should not collect signatures from strangers. I do not want to be accused of creating public disorder.
He was quite worried that I may fail to collect 1,000 signatures, as Singaporeans tend to be self centered. I asked him not to worry.
I have asked many policyholders, including those who submitted the signatures earlier, to get more signatures from their friends and colleagues. If we work together, we can achieve this target. You can also scan the signature form and send to me at kinlian@gmail.com.
Someone sent an e-mail to me yesterday, volunteering to collect signatures at MRT stations over the next two weekends. I advised him that this is not necessary. He should not collect signatures from strangers. I do not want to be accused of creating public disorder.
He was quite worried that I may fail to collect 1,000 signatures, as Singaporeans tend to be self centered. I asked him not to worry.
I have asked many policyholders, including those who submitted the signatures earlier, to get more signatures from their friends and colleagues. If we work together, we can achieve this target. You can also scan the signature form and send to me at kinlian@gmail.com.
ERP Charges
I try to avoid driving to work. I prefer to take the MRT. Sometimes I have to drive, due to the need to visit a few places.
There are some many gantries on many roads. Each time, I pass a gantry, there is a sum deducted from my cash card. I do not know what is the ERP charge. I only need how much cash remains on my cash card.
I suggest that the Land Transport Authority should display the charges on the gantry, next to the sign "ERP in Operation". At least the motorist will know what is the fee.
I understand that separate charges apply to different types of vehicles. Perhaps LTA only needs to display the charges for motor cars and motor cycles, as they are the most frequent road users. The charges for other types of vehicles can be set at a certain ratio to the charge for motor cars.
As the charges vary by time of day, it is only fair that the actual charges should be displayed. I hope that officials of the LTA are reading this blog.
There are some many gantries on many roads. Each time, I pass a gantry, there is a sum deducted from my cash card. I do not know what is the ERP charge. I only need how much cash remains on my cash card.
I suggest that the Land Transport Authority should display the charges on the gantry, next to the sign "ERP in Operation". At least the motorist will know what is the fee.
I understand that separate charges apply to different types of vehicles. Perhaps LTA only needs to display the charges for motor cars and motor cycles, as they are the most frequent road users. The charges for other types of vehicles can be set at a certain ratio to the charge for motor cars.
As the charges vary by time of day, it is only fair that the actual charges should be displayed. I hope that officials of the LTA are reading this blog.
I cancelled my credit card
Some banks and service providers seem to feel that it is their commercial right to impose hefty charges for late payment or other administrative oversight.
A few months ago, I received a letter from a credit card company informing me that the charge for late payment and for insufficient funds is in the order of $30 to $50. This is in addition to their interest of 2% per month. I was so angry that I called the hotline to cancel the credit card. The customer service officer was surprised at my action. He did not seem to understand why I reacted in that manner.
A few months ago, I received a letter from a credit card company informing me that the charge for late payment and for insufficient funds is in the order of $30 to $50. This is in addition to their interest of 2% per month. I was so angry that I called the hotline to cancel the credit card. The customer service officer was surprised at my action. He did not seem to understand why I reacted in that manner.
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