Hi Mr. Tan,
I read alot about your advice and would like to seek your advice as follow:
I am xx years old and my wife is xx. we have 2 children. Both my wife and I earn an average of S$xxx,000 a year. We plan to retire at xx years old and take on a less stressful job. Our financial status as follow: (details removed).
Please advise if we retire at xx years old. As I am a simple man, I don't need to have a car and can even down-grade to a smaller HDB flat. I am assuming that I can live up to age 65 years old, thereafter my kids will take on the responsibilities of looking after us. We have plenty of insurance coverage for me and hospitalisation coverage for whole family.
REPLY
I suggest that you read the following FAQs in by website, and talk to a financial adviser. Be willing to pay a fee for their advice and time.
http://www.tankinlian.com/faq/retirement.html
http://www.tankinlian.com/faq/savings.html
http://www.tankinlian.com/faq/choice.html
http://www.tankinlian.com/
Monday, February 25, 2008
Endowment policy with regular payout
Hi Mr. Tan,
Insurers in Malaysia have introduced periodical-income endowment policies, which are called anticipated endowments. Currently, most anticipated endowments in the market pay out the guaranteed income annually, after a period of 10 years or so. Some even have shorten the period to every two years. The guarantee income payable ranges from 4% to 8%. eg.PRUcash, Do we have the same kind of insurance policy in Singapore?
REPLY
Many insurance companies have anticipated endowment policies, which have been sold in Singapore over the past 30 years. The annual payout comes from your premium. After deducting the high charges, the return on the anticipated endowment policy is poor.
Here is a simple example. An endowment policy requires a monthly premium of (say) $500. An anticipated endowment policy that requires a payout of (say) $2,400 may require a monthly premium of (say) $730. An monthly saving of $200 is needed to fund the payout of $2,400. But the additional premium is more than $200 as part of it goes to pay the expenses, including the agent's commission.
An endowment policy gives a poor return due to the high expenses. An anticipated endowment policy is worse. It is better to save the additional premium in a saving account to avoid the unnecessary charges.
Insurers in Malaysia have introduced periodical-income endowment policies, which are called anticipated endowments. Currently, most anticipated endowments in the market pay out the guaranteed income annually, after a period of 10 years or so. Some even have shorten the period to every two years. The guarantee income payable ranges from 4% to 8%. eg.PRUcash, Do we have the same kind of insurance policy in Singapore?
REPLY
Many insurance companies have anticipated endowment policies, which have been sold in Singapore over the past 30 years. The annual payout comes from your premium. After deducting the high charges, the return on the anticipated endowment policy is poor.
Here is a simple example. An endowment policy requires a monthly premium of (say) $500. An anticipated endowment policy that requires a payout of (say) $2,400 may require a monthly premium of (say) $730. An monthly saving of $200 is needed to fund the payout of $2,400. But the additional premium is more than $200 as part of it goes to pay the expenses, including the agent's commission.
An endowment policy gives a poor return due to the high expenses. An anticipated endowment policy is worse. It is better to save the additional premium in a saving account to avoid the unnecessary charges.
Education Plan
Dear Mr. Tan,
I recently bought an education policy for my son. The agent said that it is the best way to save for his future education. What are the advantages of this policy, compared to your recommendation to save in an investment fund?
REPLY
The advantages of the education policy are:
a) It forces you to make regular savings over the term of the policy
b) In the event of premature death of the parent, the guaranteed sum assured plus bonus is payable (which is higher than the total savings)
The advantages of the investment fund are:
a) The maturity payout is likely to be 10% to 20% higher than the education policy
b) It gives greater flexibility
c) You can insure against premature death through a low cost decreasing term insurance.
In today's environment (comparing the cost and benefits of both options), it is better to save through a low cost investment fund, and buy term insurance to cover premature death.
If you buy an education policy, compare the return from various insurance companies and choose one that gives a higher return, due to lower expenses.
I recently bought an education policy for my son. The agent said that it is the best way to save for his future education. What are the advantages of this policy, compared to your recommendation to save in an investment fund?
REPLY
The advantages of the education policy are:
a) It forces you to make regular savings over the term of the policy
b) In the event of premature death of the parent, the guaranteed sum assured plus bonus is payable (which is higher than the total savings)
The advantages of the investment fund are:
a) The maturity payout is likely to be 10% to 20% higher than the education policy
b) It gives greater flexibility
c) You can insure against premature death through a low cost decreasing term insurance.
In today's environment (comparing the cost and benefits of both options), it is better to save through a low cost investment fund, and buy term insurance to cover premature death.
If you buy an education policy, compare the return from various insurance companies and choose one that gives a higher return, due to lower expenses.
Logic9 (Sudoku)
I have updated the puzzles in my Logic9 website, i.e.
http://www.tankinlian.com
The new website has the following featues:
1. More puzzles at each of 4 levels
2. All the puzzles have a unique solution and can be solved logically
3. You can work at "very easy" level and move up to "difficult" level
4. You can select the same puzzle to practice and build up your capability
5. You can choose other symbols, such as "flowers" to train your right brain.
Try it
http://www.tankinlian.com/logic9/
http://www.tankinlian.com/logic9/playLogic9.asp
http://www.tankinlian.com
The new website has the following featues:
1. More puzzles at each of 4 levels
2. All the puzzles have a unique solution and can be solved logically
3. You can work at "very easy" level and move up to "difficult" level
4. You can select the same puzzle to practice and build up your capability
5. You can choose other symbols, such as "flowers" to train your right brain.
Try it
http://www.tankinlian.com/logic9/
http://www.tankinlian.com/logic9/playLogic9.asp
Intelligent Lifts
I saw intelligent lifts in a new office building in Bahrain. The user keys in the number of the floor and the display on the panel shows the specific lift that is being despatched to you.
The computer system for the lifts is able to group several people visiting the same floor and direct them to a specific lift. This reduces the number of floors that the lift has to stop.
It is the first time that I have seen a lift operated in this manner.
The computer system for the lifts is able to group several people visiting the same floor and direct them to a specific lift. This reduces the number of floors that the lift has to stop.
It is the first time that I have seen a lift operated in this manner.
Hedge against inflation
Hi Mr. Tan,
Inflation in Singapore is building up to 4.5 % to 5.5%. What financial products should I invest in to earn a return over inflation?
I am interested to invest in the stock market. Which stocks should i invest in to have a good and steady dividend yield?
REPLY
If you are investing for the long term (i.e. 10 years or longer), it is best to invest in a low cost, diversified investment fund. Equities provide the a good hedge against inflation. The return from equities should be more than the rate of inflation.
I suggest that you invest in the STI ETF. Read this FAQ: http://www.tankinlian.com/faq/savings.html
Inflation in Singapore is building up to 4.5 % to 5.5%. What financial products should I invest in to earn a return over inflation?
I am interested to invest in the stock market. Which stocks should i invest in to have a good and steady dividend yield?
REPLY
If you are investing for the long term (i.e. 10 years or longer), it is best to invest in a low cost, diversified investment fund. Equities provide the a good hedge against inflation. The return from equities should be more than the rate of inflation.
I suggest that you invest in the STI ETF. Read this FAQ: http://www.tankinlian.com/faq/savings.html
Insurance for a baby
Dear Mr. Tan,
I am planing to buy insurance for my baby. There are so many plans in themarket and I am so confused.
My baby is 16 month old. I want to buy insurance to cover critical illness and provide investment return and saving, to be withdrawn at the age of 19. If I return to China earlier, can we withdraw all of the money with interest?
REPLY
I suggest that you buy MediShield plan to cover medical expenses for your baby. It covers the cost of treatment for critical illness as well.
You should save for the baby in a low cost diversified investment fund. You can withdraw your savings at any time, based on the market value of the investments, without suffering any penalty. Read this FAQ:
http://www.tankinlian.com/faq/savings.html
I am planing to buy insurance for my baby. There are so many plans in themarket and I am so confused.
My baby is 16 month old. I want to buy insurance to cover critical illness and provide investment return and saving, to be withdrawn at the age of 19. If I return to China earlier, can we withdraw all of the money with interest?
REPLY
I suggest that you buy MediShield plan to cover medical expenses for your baby. It covers the cost of treatment for critical illness as well.
You should save for the baby in a low cost diversified investment fund. You can withdraw your savings at any time, based on the market value of the investments, without suffering any penalty. Read this FAQ:
http://www.tankinlian.com/faq/savings.html
Ask for quotes from a few insurance companies
Hi Mr. Tan,
I recently asked a insurance company to quote me for term insurance for critical illness. I was given the following quotation. My profile : 39 years old, non-smoker, perfect health. Term insurance for critical illness : $300,000 for 30 years. The insurer quote me $274 per month. It seems very high after referring to your table. Is this the market rate for term assurrance for critical illness?
REPLY
Some insurance agents quote high premium rates for term insurance, as they wish to get you to buy whole life policies.
I suggest that you ask a few insurance companies to quote the short term critical illness insuance for you. You can get their contact number from this FAQ: http://www.tankinlian.com/faq/termd.html.
Perhaps you should ask for 20 or 25 years and reduce the coverage to $50,000 for the critical illness plan and insure $250,000 under a decreasing term insurance. Read this FAQ:
http://www.tankinlian.com/faq/choice.html
You can ask NTUC Income to quote you the Living benefit under the Family Insurance policy.
I recently asked a insurance company to quote me for term insurance for critical illness. I was given the following quotation. My profile : 39 years old, non-smoker, perfect health. Term insurance for critical illness : $300,000 for 30 years. The insurer quote me $274 per month. It seems very high after referring to your table. Is this the market rate for term assurrance for critical illness?
REPLY
Some insurance agents quote high premium rates for term insurance, as they wish to get you to buy whole life policies.
I suggest that you ask a few insurance companies to quote the short term critical illness insuance for you. You can get their contact number from this FAQ: http://www.tankinlian.com/faq/termd.html.
Perhaps you should ask for 20 or 25 years and reduce the coverage to $50,000 for the critical illness plan and insure $250,000 under a decreasing term insurance. Read this FAQ:
http://www.tankinlian.com/faq/choice.html
You can ask NTUC Income to quote you the Living benefit under the Family Insurance policy.
Income Benefit
When you buy life insurance to protect your family, do you prefer that the benefit be paid to your family in a lump sum or in monthly installments?
I think that most people will answer is "both". It is useful to have a lump sum of say $50,000 and a monthly income benefit of $2,000 for 20 years. It may be useful if both of these sums are adjusted by say 2% each year, so that can offset inflation.
I think that most people will answer is "both". It is useful to have a lump sum of say $50,000 and a monthly income benefit of $2,000 for 20 years. It may be useful if both of these sums are adjusted by say 2% each year, so that can offset inflation.
Insurance and 4-D
What is the difference between buying insurance and buying 4-D?
In both cases, you pay a small amount and have the chance to win a large amount if certain events happen.
When you buy insurance, you hope that the insured event does not happen. You are happy to pay the premium as a "cost". When you buy 4-D, you hope that your number appears, and you can win the prize.
In both cases, you pay a small amount and have the chance to win a large amount if certain events happen.
When you buy insurance, you hope that the insured event does not happen. You are happy to pay the premium as a "cost". When you buy 4-D, you hope that your number appears, and you can win the prize.
Liability insurance
1. There are several types of liability insurance policies:
a) Public liability
b) Worker's compensation
c) Product liabilty
d) Professional liability
2. The motor insurance policy provides third party liabilty cover. If the owner drives carelessly and caused an accident, the third party can claim for compensation for the repair of the vehicle or for injuries.
3. The home insurance policy provides third party liability cover. If an accident occurs in your home due to a unsafe cnditon, the injured person can claim for compensation. This will be paid under the policy.
4. An employer is required to buy worker's compensation insurance to cover injuries to their employees that occurs in the course of work. This insurance will pay the employee for medical expenses and loss of wages.
5. A product manufacturer has to product liability insurance to cover claims from customers who are injured by defects in your product.
6. A lawyer, doctor, accountant or other professional may be sued for compensation for losses to the client caused by neglect of duty or wrong advice. This will be covered under a professional indemnity insurance.
a) Public liability
b) Worker's compensation
c) Product liabilty
d) Professional liability
2. The motor insurance policy provides third party liabilty cover. If the owner drives carelessly and caused an accident, the third party can claim for compensation for the repair of the vehicle or for injuries.
3. The home insurance policy provides third party liability cover. If an accident occurs in your home due to a unsafe cnditon, the injured person can claim for compensation. This will be paid under the policy.
4. An employer is required to buy worker's compensation insurance to cover injuries to their employees that occurs in the course of work. This insurance will pay the employee for medical expenses and loss of wages.
5. A product manufacturer has to product liability insurance to cover claims from customers who are injured by defects in your product.
6. A lawyer, doctor, accountant or other professional may be sued for compensation for losses to the client caused by neglect of duty or wrong advice. This will be covered under a professional indemnity insurance.
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