CPF MediShield is being revised. It will cover a wider range of treatment and cover an average of 80% of hospital bills (increased from the current 60%). The premium will be increased by an average of $10 a month.
For most people, CPF Medishield (after the revision) is better than the Shield plans offered by private insurers for the following reasons:
1. Saving of about 15% of premium in marketing expenses (incurred by private insurers).
2. Saving of about 15% to 25% in the profit margin of private insurers
The potential saving in insuring with CPF Medishield could be 30% to 40% for the same type of coverage.
As most of the medical expenses will be incurred when one gets old, and the cost is likely to escalate due to age and inflation, it is important to choose a cost effective medical insurance plan, such as Medishield.
Tuesday, January 29, 2008
Global warming
China is having its most severe winter in many years. The climate in many parts of the world is going through severe changes. I believe that this is caused by global warming.
Actuary joke - Definition of an actuary?
Someone asked for a joke about the actuary. Here it is:
... An actuary is a person who passes as an expert on the basis of his prolific ability to produce an infinite variety of incomprehensible figures calculated with micrometric precision from the vaguest of assumptions based on debatable evidence from inconclusive data derived by persons of doubtful reliability, for the sole purpose of confusing an already hopelessly befuddled group of persons who never read the statistics anyway.
Explanation: Some actuaries are highly thereotical and get carried away with numbers. I hope that most actuaries are practical, and are able to explain difficult concepts in simple terms.
... An actuary is a person who passes as an expert on the basis of his prolific ability to produce an infinite variety of incomprehensible figures calculated with micrometric precision from the vaguest of assumptions based on debatable evidence from inconclusive data derived by persons of doubtful reliability, for the sole purpose of confusing an already hopelessly befuddled group of persons who never read the statistics anyway.
Explanation: Some actuaries are highly thereotical and get carried away with numbers. I hope that most actuaries are practical, and are able to explain difficult concepts in simple terms.
Exchange Traded Funds
Mr. Tan,
I enjoy reading your blog as it gives me a very rational and unbiased view of the investment products available . You mentioned indexed funds and ETF's as low cost funds.
I know of examples of ETF e.g. the STI ETF and Lyxxor ETF's. What are the examples of indexed funds available and how do I purchase them.
REPLY
You can buy the ETFs from the Singapore Exchange, through a stockbroker.
Visit this website:
http://esite.sgx.com/live/st/STETF.asp
I enjoy reading your blog as it gives me a very rational and unbiased view of the investment products available . You mentioned indexed funds and ETF's as low cost funds.
I know of examples of ETF e.g. the STI ETF and Lyxxor ETF's. What are the examples of indexed funds available and how do I purchase them.
REPLY
You can buy the ETFs from the Singapore Exchange, through a stockbroker.
Visit this website:
http://esite.sgx.com/live/st/STETF.asp
Quotation for Term Insurance
My friend carried out a survey to get a quotation for a Term insurance plan by calling the hotline of the life insurance companies. Here are his findings:
1. Prompt response:
Within same day: TM Asia, AXA, Great Eastern
Within two working days: UOB, Income, Prudential, Aviva
2. Ease of getting a quotation:
Verbal, Email (with printed quote): UOB, TM Asia, Great Eastern
Email (no printed quote): Aviva
Verbal: AXA, Income, Prudential
3. Most competitive rates:
Top 4 (ranked): UOB/Aviva (tie), TM Asia, Income
Here are the telephone numbers to call:
http://www.tankinlian.com/faq/termd.html
1. Prompt response:
Within same day: TM Asia, AXA, Great Eastern
Within two working days: UOB, Income, Prudential, Aviva
2. Ease of getting a quotation:
Verbal, Email (with printed quote): UOB, TM Asia, Great Eastern
Email (no printed quote): Aviva
Verbal: AXA, Income, Prudential
3. Most competitive rates:
Top 4 (ranked): UOB/Aviva (tie), TM Asia, Income
Here are the telephone numbers to call:
http://www.tankinlian.com/faq/termd.html
Inflation and investment
Dear Mr. Tan,
Inflation is expected to increase to 5% in 2008. Interest rate remains very low, less than 2%. The stockmarket is volatile. How should we invest our money to be protected against inflation?
REPLY
The high rate of inflation is caused by temporary factors, i.e. the large increase in oil price and the increase in GST. I hope that it will return to a low level from next year.
If you are investing for the long term, it is better to invest in an investment fund with at least 50% in equities. It is likely to give a return that is higher than inflation in the future. (My estimate is 6% over the long term.)
The global stockmarket has corrected from its high level. While it may remain volatile in the short term, the current level represents fair value, as it is a discount of 20% from the recent peak.
Read this FAQ:
http://www.tankinlian.com/faq/savings.html
Inflation is expected to increase to 5% in 2008. Interest rate remains very low, less than 2%. The stockmarket is volatile. How should we invest our money to be protected against inflation?
REPLY
The high rate of inflation is caused by temporary factors, i.e. the large increase in oil price and the increase in GST. I hope that it will return to a low level from next year.
If you are investing for the long term, it is better to invest in an investment fund with at least 50% in equities. It is likely to give a return that is higher than inflation in the future. (My estimate is 6% over the long term.)
The global stockmarket has corrected from its high level. While it may remain volatile in the short term, the current level represents fair value, as it is a discount of 20% from the recent peak.
Read this FAQ:
http://www.tankinlian.com/faq/savings.html
Avoid High Charges on your ILP
Dear Mr. Tan,
I've been approached to invest in an AIA ILP recently. I understand that I may need to pay for mortality charges should I decide to buy it. Are the rates are the same for all insurers? Any website that I can go to compare them? Pls advise.
REPLY
You can compare the mortality charges with the Term insurance rates set out in this FAQ: http://www.tankinlian.com/faq/term.html
More importantly, you have to make sure that you are not paying a large upfront charge on your investment?
Read this FAQ:
http://www.tankinlian.com/faq/ilp.html
I've been approached to invest in an AIA ILP recently. I understand that I may need to pay for mortality charges should I decide to buy it. Are the rates are the same for all insurers? Any website that I can go to compare them? Pls advise.
REPLY
You can compare the mortality charges with the Term insurance rates set out in this FAQ: http://www.tankinlian.com/faq/term.html
More importantly, you have to make sure that you are not paying a large upfront charge on your investment?
Read this FAQ:
http://www.tankinlian.com/faq/ilp.html
Vitamin Account
Dear Mr. Tan,
I have invested $X in the Vitamin account from a large local bank for the past 2 over years. I received a total payout of 4.1% to date, and the value of my investment is now 89.5% only. This means that I will lose more than 6% if I withdraw my investment now. Instead of getting a positive return for the past two over years, I get a negative return.
I made this investment because it is principal protected, but I did not realize that I will have to suffer a loss if I withdraw early. Looks like I will have to be stuck with this bad investment until the maturity date.
REPLY
Many people have invested in this product, and they are now stuck. Some have decided to withdraw their money and take a loss.
I understand that the return is quite low. If the return is more than 3%, the bank has the right to redeem the investment. If the return is negative (as is the case now), the customer is stuck for 5 or 6 years.
This does not appear to be fair. Perhaps you can complain to the Monetary Authority of Singapore.
I have invested $X in the Vitamin account from a large local bank for the past 2 over years. I received a total payout of 4.1% to date, and the value of my investment is now 89.5% only. This means that I will lose more than 6% if I withdraw my investment now. Instead of getting a positive return for the past two over years, I get a negative return.
I made this investment because it is principal protected, but I did not realize that I will have to suffer a loss if I withdraw early. Looks like I will have to be stuck with this bad investment until the maturity date.
REPLY
Many people have invested in this product, and they are now stuck. Some have decided to withdraw their money and take a loss.
I understand that the return is quite low. If the return is more than 3%, the bank has the right to redeem the investment. If the return is negative (as is the case now), the customer is stuck for 5 or 6 years.
This does not appear to be fair. Perhaps you can complain to the Monetary Authority of Singapore.
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