Mr. Tan,
What do you mean by policyholder's "reasonable expectation"?
REPLY
In a participating life insurance policy, the contract states that a bonus will be added each year based on the profit for the year and distributed in a manner that is approved by the board of directors, acting on the advice of the actuary.
To prevent abuses, the Monetary Authority of Singapore (MAS) has issued guidelines to require the insurance company to declare its bonuses fairly and equitably, to meet the "reasonable expectation" of the policyholder.
Take the example of a policy with a benefit illustration stating that a bonus of $X will be added yearly to the policy, subject to the investment yield at 5.25%.
If the insurance company earns much more than 5.25%, the policyholders would expect the bonuses to be increased. It would not be fair for the directors to reduce the bonus. The policyholder can object to this reduction as a breach of "reasonable expectation".
If the yield is lower, the policyholder will have to accept that the bonus will be reduced, but they can insist that the reduction has to be applied fairly across all the policies. The insurance company cannot cut the bonus for some policies and increase the bonus for other policies.
Tuesday, May 6, 2008
Transfer back to retirement account before 62
A policyholder told me that he decided to withdraw from a life annuity before payments starts at 62. He was surprised to learn the following:
> The cash value for the life annuity gave quite an attractive return from the past 6 years
> The CPF was willing to accept the cash value back into the retirement account
> The retiree was able to get a deferment bonus of $1,600 (not sure about the exact amount) a year X 3 years for deferring the withdrawal to 65 years.
This turn out to be a good deal!
> The cash value for the life annuity gave quite an attractive return from the past 6 years
> The CPF was willing to accept the cash value back into the retirement account
> The retiree was able to get a deferment bonus of $1,600 (not sure about the exact amount) a year X 3 years for deferring the withdrawal to 65 years.
This turn out to be a good deal!
Nearly 3,000 visits on Tues 6 May
The average visitors to my blog used to be 850 per day. The vistiors jumped to 2335 on Mon 5 May and to 2929 on Tues 6 May. This is three times of the average visitors. It seems that the bonus cut of NTUC Income is bringing many people to my blog.
In 3 weeks time, after the annual general meeting of NTUC Income, I expect my blog to revert to the quieter days.
In 3 weeks time, after the annual general meeting of NTUC Income, I expect my blog to revert to the quieter days.
Get several quote on your motor insurance
Dear Tan Kin Lian,
Which company insure your car? Kindly advise me. I am thinking of getting out of X. I read in your blog that a policyholder had her car insurance premium increased despite many years of accidents free. She now registered with somewhere else and the premium is cheaper.
REPLY
I suggest that you call a few insurance companies and check the premium. Their particulars are shown here:
http://www.tankinlian.com/faq/motord.html
In my case, I am now insured with Y and their service is good.
Which company insure your car? Kindly advise me. I am thinking of getting out of X. I read in your blog that a policyholder had her car insurance premium increased despite many years of accidents free. She now registered with somewhere else and the premium is cheaper.
REPLY
I suggest that you call a few insurance companies and check the premium. Their particulars are shown here:
http://www.tankinlian.com/faq/motord.html
In my case, I am now insured with Y and their service is good.
Buy a life annuity
Dear Mr. Tan,
I am 55 year old. Should I put my $100,000 saving in the FD or buy an annuity. Kindly advice me which is investment can give me a higher return.
REPLY
I suggest that you buy a life annuity. Read this FAQ:
http://www.tankinlian.com/faq/life.html
If you are interested, I will ask X to advise you.
I am 55 year old. Should I put my $100,000 saving in the FD or buy an annuity. Kindly advice me which is investment can give me a higher return.
REPLY
I suggest that you buy a life annuity. Read this FAQ:
http://www.tankinlian.com/faq/life.html
If you are interested, I will ask X to advise you.
Write to ask the CEO of NTUC Income
Dear Mr. Tan,
My husband and I just invested $X and $Y in the Growth Plan in Feb 2008. We just received a letter from NTUC telling us that Annual Bonuses will be cut. We don't really understand what this means for us. Could you please advise us if the Growth Plan is still a good investment or not?
REPLY
I suggest that you write to the CEO of NTUC Income. I think that he will give you an explanation and advice. Wish you all the best.
My husband and I just invested $X and $Y in the Growth Plan in Feb 2008. We just received a letter from NTUC telling us that Annual Bonuses will be cut. We don't really understand what this means for us. Could you please advise us if the Growth Plan is still a good investment or not?
We feel a little short-changed and puzzled by the change, especially as we have only just bought this Plan. If NTUC had plans to revise the Annual Bonus – and I use the word "revise" euphemistically – then they should not have continued to sell the Growth Plan to customers under the guise of the old Plan and rates.
We are very confused by all this and don't know if we have made a stupid choice. What should we do now? We are risk averse and usually just put our savings in bank accounts and fixed deposits.REPLY
I suggest that you write to the CEO of NTUC Income. I think that he will give you an explanation and advice. Wish you all the best.
Monday, May 5, 2008
Insurance agents of NTUC Income
There has been several attacks against insurance agents of NTUC Income. These attacks are unfair.
I know many of these agents personally. They are people who work hard to make a living. They are willing to earn lower commission rates (compared to the market) to bring good value products to the policyholders. They believe in the cooperative principles.
Some of these agents tell me that they continue to sell the good value products that were introduced in past years. They include life annuity, flexi-link, ideal (ID7), family insurance and term insurance products. These products offer good value, compared to similar, high cost products that are being sold in the market.
As the agents earn low commission on the sale of these products, the customer should make it easy for them to close the sale with minimal effort.
Some people criticised these agents to be "product pushers". It is all right to recommend specific products that give good value and are suitable for the ordinary families. These products do not need a complicated and time consuming "needs analysis".
I hope that the general public will continue to support these agents, so that it is possible for them to offer good value products for the benefit of policyholders.
I know many of these agents personally. They are people who work hard to make a living. They are willing to earn lower commission rates (compared to the market) to bring good value products to the policyholders. They believe in the cooperative principles.
Some of these agents tell me that they continue to sell the good value products that were introduced in past years. They include life annuity, flexi-link, ideal (ID7), family insurance and term insurance products. These products offer good value, compared to similar, high cost products that are being sold in the market.
As the agents earn low commission on the sale of these products, the customer should make it easy for them to close the sale with minimal effort.
Some people criticised these agents to be "product pushers". It is all right to recommend specific products that give good value and are suitable for the ordinary families. These products do not need a complicated and time consuming "needs analysis".
I hope that the general public will continue to support these agents, so that it is possible for them to offer good value products for the benefit of policyholders.
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