I have two rounds of discussion with the management of NTUC Income on the restructure (now called reshaping) of the bonus for 310,000 policies.
NTUC Income's management has assured me that the have the best interest of the policyholders in making this restructure of the bonus and will continue to observe the social purpose of NTUC Income (which they have stated previously). They are also willing to find ways to address the concerns of the policyholders. I have accepted their position on this matter.
I will provide an update within the next few days.
Monday, May 26, 2008
Investing my savings
I am now 60 years old. I have savings from my CPF (taken out at 55 years) and past savings from other sources.
At present, my total savings are invested in the following sources:
1. Foreign currency fixed deposits - 20%
2. REITS (real estate trusts) - 20%
3. Singapore and global shares - 50%
4. Life insurance policies - 10%
My investment in foreign currency fixed deposits earn an interest rate of 7% but is subject to currency risk. The REIT earns a dividend yield of about 5%. The Singapore and global shares earn a yield of about 3%.
All of these investments have risks. However, as I am investing them for 10 to 20 years, I can ride out the volatility in the markets. I hope that the good years will offset the bad years, and give me an average yield of more than 5%. In the case of the foreign currency fixed deposits, I expect the excess interest to offset a potential deprecation of the currency.
My savings in life insurance policies were made during the past 30 years. I keep these policies, if they continue to give a reasonable yield. I shall be discontinuing the policies that earn less than 3% p.a.
I will not be putting any new investments in a life insurance policy, as the return is poor. I do not like policies that have high terminal bonus, as a large part of the future yield is uncertain, non-transparent and beyond my control.
At present, my total savings are invested in the following sources:
1. Foreign currency fixed deposits - 20%
2. REITS (real estate trusts) - 20%
3. Singapore and global shares - 50%
4. Life insurance policies - 10%
My investment in foreign currency fixed deposits earn an interest rate of 7% but is subject to currency risk. The REIT earns a dividend yield of about 5%. The Singapore and global shares earn a yield of about 3%.
All of these investments have risks. However, as I am investing them for 10 to 20 years, I can ride out the volatility in the markets. I hope that the good years will offset the bad years, and give me an average yield of more than 5%. In the case of the foreign currency fixed deposits, I expect the excess interest to offset a potential deprecation of the currency.
My savings in life insurance policies were made during the past 30 years. I keep these policies, if they continue to give a reasonable yield. I shall be discontinuing the policies that earn less than 3% p.a.
I will not be putting any new investments in a life insurance policy, as the return is poor. I do not like policies that have high terminal bonus, as a large part of the future yield is uncertain, non-transparent and beyond my control.
Life insurance up to age 65
1. Is it necessary to take life insurance to cover the whole of life or up to age 65 only?
The primary purpose of life insurance is to protect against the loss of income due to premature death. You should have the protection for the period of your working life. Most people expect to stop work at 65. They need life insurance to cover the loss of income up to that age.
2. What type of life insurance plan is most suitable to provide the coverage?
I prefer a decreasing term insurance or family income insurance as they offers adequate coverage at a low cost. Here are some benchmark premium rates:
http://www.tankinlian.com/faq/benchmark.html
The premium rate is likely to be less than 10% of the cost of a whole life policy providing the same coverage.
3. How do I save for my retirement?
It is best to invest in a low cost investment fund. A low cost fund have an annual expense ratio of less than 1% per annum, with 50% or more invested in equities. The sales charge should be kept less than 2%.
4. Do I need critical illness coverage?
The expenses for treating the critical illness should be covered under a medical insurance poilcy. You can have an addtional cover of (say) one year's salary to cover the loss of income during the period of treatment. This can be covered under a critial illness policy taken up to age 65 and is optional.
5. Do I need life insurance coverage beyond 65 years?
You need an insurance policy to cover the medical expenses. In the past, some people need life insurance to provide money to pay estate duty. With the abolishment of estate duty, this is no longer needed.
6. Can I use life insurance to leave some money for my children?
If you have excess funds, you can buy a whole life policy with premiums paid through a single premium. You should avoid paying premium after your retirement. Make sure that your own needs (to pay your future living expenses) are taken care first, before you think of leaving money for your children.
You should choose an insurance company that gives you a good return on your single premium. Ask a few insurance companies to give you a quotation and compare the yield. You can get the telephone numbers of the insurance companies from this FAQ:
http://www.tankinlian.com/faq/termd.html
The primary purpose of life insurance is to protect against the loss of income due to premature death. You should have the protection for the period of your working life. Most people expect to stop work at 65. They need life insurance to cover the loss of income up to that age.
2. What type of life insurance plan is most suitable to provide the coverage?
I prefer a decreasing term insurance or family income insurance as they offers adequate coverage at a low cost. Here are some benchmark premium rates:
http://www.tankinlian.com/faq/benchmark.html
The premium rate is likely to be less than 10% of the cost of a whole life policy providing the same coverage.
3. How do I save for my retirement?
It is best to invest in a low cost investment fund. A low cost fund have an annual expense ratio of less than 1% per annum, with 50% or more invested in equities. The sales charge should be kept less than 2%.
4. Do I need critical illness coverage?
The expenses for treating the critical illness should be covered under a medical insurance poilcy. You can have an addtional cover of (say) one year's salary to cover the loss of income during the period of treatment. This can be covered under a critial illness policy taken up to age 65 and is optional.
5. Do I need life insurance coverage beyond 65 years?
You need an insurance policy to cover the medical expenses. In the past, some people need life insurance to provide money to pay estate duty. With the abolishment of estate duty, this is no longer needed.
6. Can I use life insurance to leave some money for my children?
If you have excess funds, you can buy a whole life policy with premiums paid through a single premium. You should avoid paying premium after your retirement. Make sure that your own needs (to pay your future living expenses) are taken care first, before you think of leaving money for your children.
You should choose an insurance company that gives you a good return on your single premium. Ask a few insurance companies to give you a quotation and compare the yield. You can get the telephone numbers of the insurance companies from this FAQ:
http://www.tankinlian.com/faq/termd.html
Reversionary Bonus
Dear Mr. Tan
I had abstracted out the policy contract for you to vet through hope you can help us.
Bonus (All life and endowment policy from Income)
If the policy is with profit policy, a reversionary Bonus will be added to the policy each year out of the surplus arising from the actuarial valuation of the life assurance fund. The amount of bonus will be determined by our actuary. The Bonus will not vest until two years from the entry date and is paid at the same time as the sum assured.
Bonus (vivolife- New life policy from Income)
This is a participating policy. Bonus when declared will be added to the policy out of the surplus arising from the actuarial valuation of the life assurance fund. The amount of bonus will be recommended by our appointed actuary and approved by our Board of Directors. Bonus will not vest two year from the policy entry date.
Most of the policyholders policy contract are mention in paragraph
1 . A reversionary Bonus will be added to the policy each year out of the surplus arising from the actuarial valuation of the life assurance fund. That mean they should declare the annual bonus in full sum once declared.
Those who brought vivolife policy under paragraph 2 stated that Bonus when declared will be added to the policy out of the surplus arising from the actuarial valuation of the life assurance fund. Reversionary word is missing. It does not mention the bonus will added to the policy each year so it can be reversionary or terminal bonus once declare will be added to the policy.
Hope this piece of information will help you to prepare our case cheers.
JL
I had abstracted out the policy contract for you to vet through hope you can help us.
Bonus (All life and endowment policy from Income)
If the policy is with profit policy, a reversionary Bonus will be added to the policy each year out of the surplus arising from the actuarial valuation of the life assurance fund. The amount of bonus will be determined by our actuary. The Bonus will not vest until two years from the entry date and is paid at the same time as the sum assured.
Bonus (vivolife- New life policy from Income)
This is a participating policy. Bonus when declared will be added to the policy out of the surplus arising from the actuarial valuation of the life assurance fund. The amount of bonus will be recommended by our appointed actuary and approved by our Board of Directors. Bonus will not vest two year from the policy entry date.
Most of the policyholders policy contract are mention in paragraph
1 . A reversionary Bonus will be added to the policy each year out of the surplus arising from the actuarial valuation of the life assurance fund. That mean they should declare the annual bonus in full sum once declared.
Those who brought vivolife policy under paragraph 2 stated that Bonus when declared will be added to the policy out of the surplus arising from the actuarial valuation of the life assurance fund. Reversionary word is missing. It does not mention the bonus will added to the policy each year so it can be reversionary or terminal bonus once declare will be added to the policy.
Hope this piece of information will help you to prepare our case cheers.
JL
Save for a child's education
Hi Mr tan,
I stomped onto your website and I found it really enlightening. I have 2 children aged 2 and 4 years old.. What is your advice on the right investment tool , considering the need to save up for high cost of education in the future and that children do not have any medical insurance? could you advice please. Thanks.
REPLY
My advice is contained in this FAQ:
http://www.tankinlian.com/faq/education.html
It is better to:
1. Save in a low cost investment fund
2. Buy Medishield or other medical insurance to cover your child
3. Have a decreasing term insurance on the parent's life
You can also have a more integrated saving plan, as suggested in this FAQ:
http://www.tankinlian.com/faq/savings.html
I stomped onto your website and I found it really enlightening. I have 2 children aged 2 and 4 years old.. What is your advice on the right investment tool , considering the need to save up for high cost of education in the future and that children do not have any medical insurance? could you advice please. Thanks.
REPLY
My advice is contained in this FAQ:
http://www.tankinlian.com/faq/education.html
It is better to:
1. Save in a low cost investment fund
2. Buy Medishield or other medical insurance to cover your child
3. Have a decreasing term insurance on the parent's life
You can also have a more integrated saving plan, as suggested in this FAQ:
http://www.tankinlian.com/faq/savings.html
Investing retirement savings
Dear Mr Tan,
I wish to invest S$ 200,000 for my retirement savings for 10 to 15 years time. I have studied a few products and found that NTUC Growth policy is the best, giving lowest risk and reasonable return. Could plse give me you expertise advice.
REPLY
Read these FAQs:
http://www.tankinlian.com/faq/returns.html
http://www.tankinlian.com/faq/savings.html
http://www.tankinlian.com/faq/expense.html
I hope that they will help you to make your decision.
I wish to invest S$ 200,000 for my retirement savings for 10 to 15 years time. I have studied a few products and found that NTUC Growth policy is the best, giving lowest risk and reasonable return. Could plse give me you expertise advice.
REPLY
Read these FAQs:
http://www.tankinlian.com/faq/returns.html
http://www.tankinlian.com/faq/savings.html
http://www.tankinlian.com/faq/expense.html
I hope that they will help you to make your decision.
Investing your savings - for the young
Hi Mr Tan,
I've just graduated recently. To start planning for my future, I've decided to buy an investment product from a local bank. My projected investment horizon is around 15 years. My risk appetite is low to moderate, and I wish to earn around 5 to 8 % returns on my investment.
I am also looking into foreign currency fixed deposits (FCFD)and in a savings account. I plan to save up to 20% of my income. Some doubts in mind are:
1) Is the rate of returns of 5 to 8% achieveable? Or am I paying too much fees for these funds?
2) Is such spreading of my savings sufficient? I am contributing S$100 per month into this investment product, another S$100 in a savings plan and some money in FCFD.
REPLY
I suggest that you avoid a regular premium ILP as it has high charges.
Read this FAQ:
http://www.tankinlian.com/faq/ilp.html
I hope that this FAQ will give you a better idea on how to invest your savings.
http://www.tankinlian.com/faq/savings.html
I've just graduated recently. To start planning for my future, I've decided to buy an investment product from a local bank. My projected investment horizon is around 15 years. My risk appetite is low to moderate, and I wish to earn around 5 to 8 % returns on my investment.
I am also looking into foreign currency fixed deposits (FCFD)and in a savings account. I plan to save up to 20% of my income. Some doubts in mind are:
1) Is the rate of returns of 5 to 8% achieveable? Or am I paying too much fees for these funds?
2) Is such spreading of my savings sufficient? I am contributing S$100 per month into this investment product, another S$100 in a savings plan and some money in FCFD.
REPLY
I suggest that you avoid a regular premium ILP as it has high charges.
Read this FAQ:
http://www.tankinlian.com/faq/ilp.html
I hope that this FAQ will give you a better idea on how to invest your savings.
http://www.tankinlian.com/faq/savings.html
Life insurance for a Malaysian
Hi,
I am a Malaysian working in singapore right now. Its is better for me to buy insurance in Malaysia or Singapore. Based on transparency, I believe Singapore give better value instead. Pls advice.
REPLY
It is better for you buy a Term insurance and invest the difference. Read these FAQs:
http://www.tankinlian.com/faq/savings.html
http://www.tankinlian.com/faq/choice.html
You can call these insurance companies to get a quotation on the cost of the term insurance:
http://www.tankinlian.com/faq/termd.html
By separating your insurance protection from your savings, you have the greatest flexibility in the future, in case you decide to work outside of Singapore.
I am a Malaysian working in singapore right now. Its is better for me to buy insurance in Malaysia or Singapore. Based on transparency, I believe Singapore give better value instead. Pls advice.
REPLY
It is better for you buy a Term insurance and invest the difference. Read these FAQs:
http://www.tankinlian.com/faq/savings.html
http://www.tankinlian.com/faq/choice.html
You can call these insurance companies to get a quotation on the cost of the term insurance:
http://www.tankinlian.com/faq/termd.html
By separating your insurance protection from your savings, you have the greatest flexibility in the future, in case you decide to work outside of Singapore.
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