Talk at Junior College
Mr Tan Kin Lian qualified as an actuary in 1975. He was the chief executive of NTUC Income for 30 years from 1977 until his retirement in 2007.
In his talk, he will touch on the following topics:
* Economic functions of insurance
* Careers in insurance
* Role of an actuary
* Special skills requied to be an actuary
Insurance plays two important economic functions. It is a way of managing risks of individuals and businesses. Each person contributes a small sum of money (called a premium) into a pool to pay the claims of the people who suffered the insured losses. By reducing risks for all the parties, it helps people to carry out their economic activities and daily lives, without being financially destroyed by an unfortunate event.
Life insurance is also a way for ordinary people to make regular savings for their future needs. The funds that are mobilised can be invested for the long term to build the infrastructure and the productive capacity of the economy. It also earns a return on the funds to be shared by the investors.
The insurance industry provide careers for the following categories of people:
* marketing and sales
* customer service
* technical (underwriting risk and managing claims)
* investments
* administrative, support, technology and management functions
The actuary plays a special role in the insurance industry. He evaluates the risks and calculates the premium rates to be charged for the risks. His skill is applied in all fields of insurance, namely in life, general and health insurance.
He has to use two special knowledge:
* statistics showing the chance of occurrence of certain losses
* time value of money, as the losses may occur at various times in the future
Some actuary also play an important role in marketing and communication. He can explain the insurance and financial products in simple terms for the ordinary people to understand.
You can read more about Mr Tan and his special area of knowledge from the following:
Blog
Website
Wednesday, June 27, 2007
Express differing views
The visitor to my blog include:
* ordinary people who are interested in financial education
* insurance and investment professionals
My blog is intended mainly for the ordinary people. Most of them find my views to be educational and useful.
I also welcome the contribution of the professionals, as they add to my limited knowledge. They can tell me more about certain products in the market, to allow me to make an analysis.
Some of them express views that differ from my views. This is all right. They should avoid making judgement. After all, it is just a view.
* ordinary people who are interested in financial education
* insurance and investment professionals
My blog is intended mainly for the ordinary people. Most of them find my views to be educational and useful.
I also welcome the contribution of the professionals, as they add to my limited knowledge. They can tell me more about certain products in the market, to allow me to make an analysis.
Some of them express views that differ from my views. This is all right. They should avoid making judgement. After all, it is just a view.
Trading in Endowment Policies
There is a website service (in the UK) that allows a policyholder to find someone who is willing to buy his endowment policy for a better price than the cash value offered by his insurance company.
The advertisement says:
* We offer an exclusive 'execution-only' service for people wishing to sell their unwanted endowment policies.
* Shop around the endowment marketplace in order to try and find you the best offer for selling your endowment policy.
* We will usually get you a number of offers for your endowment policy.
This is how the "trading" works. The insurance company has a monopoly of your endowment policy, and will offer you a poor value. This allows them to make a profit when you surrender your policy.
By approaching the market place, you may be able to find another buyer who can give you a higher value. They will keep the policy till maturity and still make a profit over their funding cost.
I believe that someone tried to introduce this service in Singapore. But I am not aware if it has been successful.
The advertisement says:
* We offer an exclusive 'execution-only' service for people wishing to sell their unwanted endowment policies.
* Shop around the endowment marketplace in order to try and find you the best offer for selling your endowment policy.
* We will usually get you a number of offers for your endowment policy.
This is how the "trading" works. The insurance company has a monopoly of your endowment policy, and will offer you a poor value. This allows them to make a profit when you surrender your policy.
By approaching the market place, you may be able to find another buyer who can give you a higher value. They will keep the policy till maturity and still make a profit over their funding cost.
I believe that someone tried to introduce this service in Singapore. But I am not aware if it has been successful.
Structured products and life annuity
COMMENT POSTED IN MY BLOG:
Mr. Tan,I agree with most of your write-ups except for your view on structured products and annuity.
First, I think you are not conversant with structured products.They are very low risk if you understand them and you can say they offer free lunch.(good return at almost no risk)
Secondly, CPF offers the best annuity . It has good payout and has options to let you choose the duration and amount of payout. If you want to recieve until 100 years old it can be designed as such.
Today Insurers'annuities are not comparable except maybe variable annuity.
As a whole it is commendable of you to educate the public.You are indeed providing a social service. Thank you , Mr. Tan.
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MY REPLY:
Most of the structured products which are capital guaranteed give a poor return. For example, the Swing Fund that recently matured gave a return of 2% in total for 5 years. During this period, the stockmarket went up by more than 50%.
If you want no risk, invest in a government bond. You can get nearly 15% for 5 years. This is much better than the structured products which give less than 5% (after deducting the charges).
Leaving your money in CPF to earn 4% per annum is a good idea. It is also a good idea to invest in a participating annuity plan from NTUC Income. You should see an insurance adviser to learn about the difference. You can make a better decision.
Read the FAQ.
Mr. Tan,I agree with most of your write-ups except for your view on structured products and annuity.
First, I think you are not conversant with structured products.They are very low risk if you understand them and you can say they offer free lunch.(good return at almost no risk)
Secondly, CPF offers the best annuity . It has good payout and has options to let you choose the duration and amount of payout. If you want to recieve until 100 years old it can be designed as such.
Today Insurers'annuities are not comparable except maybe variable annuity.
As a whole it is commendable of you to educate the public.You are indeed providing a social service. Thank you , Mr. Tan.
---------------------
MY REPLY:
Most of the structured products which are capital guaranteed give a poor return. For example, the Swing Fund that recently matured gave a return of 2% in total for 5 years. During this period, the stockmarket went up by more than 50%.
If you want no risk, invest in a government bond. You can get nearly 15% for 5 years. This is much better than the structured products which give less than 5% (after deducting the charges).
Leaving your money in CPF to earn 4% per annum is a good idea. It is also a good idea to invest in a participating annuity plan from NTUC Income. You should see an insurance adviser to learn about the difference. You can make a better decision.
Read the FAQ.
Financial Planning Tips and Products
If you wish to have my financial planning tips and an explanation of the common products, you can read the FAQs here.
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