How do you like to save for your child's education (21 votes)
19% - In an education policy (i.e. life insurance)?
57% - in a low cost investment fund (separate for the child)
23% - together with the parent's savings
Tuesday, March 4, 2008
Fair remuneation for an adviser
Dear Sir,
What is the fair remuneration for an adviser to sell a life insurance policy?
REPLY
1. It should be based on the time spent
2. It should be comparable to other occupations.
3. To sell a policy, a fair remuneration should earn $100.
At present, the advisers earn about one year or more of the savings. If you take a policy for $200 a month, the adviser earns about $2,400. His manager earns an overriding commission. There are other cost.
The total cost to the customer could add up to $4,800. This is the total amount taken away from the customer's savings. It is excessive. The customer should not be have to pay such a heavy cost, just to get a life insurance policy!
For an adviser to make a living on $100 per policy, it is necessary for the customer to visit the adviser in his office, just like you visit a doctor in his clinic. I hope that, in the future, insurance policies will be sold in this cost effective manner.
What is the fair remuneration for an adviser to sell a life insurance policy?
REPLY
1. It should be based on the time spent
2. It should be comparable to other occupations.
3. To sell a policy, a fair remuneration should earn $100.
At present, the advisers earn about one year or more of the savings. If you take a policy for $200 a month, the adviser earns about $2,400. His manager earns an overriding commission. There are other cost.
The total cost to the customer could add up to $4,800. This is the total amount taken away from the customer's savings. It is excessive. The customer should not be have to pay such a heavy cost, just to get a life insurance policy!
For an adviser to make a living on $100 per policy, it is necessary for the customer to visit the adviser in his office, just like you visit a doctor in his clinic. I hope that, in the future, insurance policies will be sold in this cost effective manner.
Charges on your Investment Linked Policy
Dear Sir,
I have an investment-linked policy that I took up about 10 years ago. Is it "too late" for me to terminate the policy and take up term insurance, with the intention to invest the savings on my own?
REPLY
For your ILP, you probably have already incurred the upfront charges. So, it is probably better to continue the policy. An ILP works like a unit trust. You can ask the insurance company about the charges in their ILP to make a decision.
Read the attached FAQs:
http://www.tankinlian.com/faq/ilp.html
http://www.tankinlian.com/faq/exist.html
I have an investment-linked policy that I took up about 10 years ago. Is it "too late" for me to terminate the policy and take up term insurance, with the intention to invest the savings on my own?
REPLY
For your ILP, you probably have already incurred the upfront charges. So, it is probably better to continue the policy. An ILP works like a unit trust. You can ask the insurance company about the charges in their ILP to make a decision.
Read the attached FAQs:
http://www.tankinlian.com/faq/ilp.html
http://www.tankinlian.com/faq/exist.html
Poor cash value for this whole life plan
Hi Mr Tan
.... you mentioned total premiums $5,600 was made and policy has existing cash value of $2,700 with a "loss" of $2,900... just curious, are you expecting free insurance?
This is a whole life policy about $430/yr or $35/mth. Even if you were to get term insurance at $80/yr, you would have "lost", $1,040 after 13 years.
Furthermore, assuming that her budget is $430/yr and that is all she can spare, where would you suggest she invest the balance of $350/yr, to get a investment gain of 4% p.a.
Even if she had invested and able to get 4% p.a., for the last 3 months, all the equity markets were down, it would be hard for her to sell as her funds would have dropped at least 20% in value.
It would be good to know what the expected surrender value is after 20 years so that we have a better picture.
REPLY
The term insurance premium for a cover of $30,000 should be less than $30 a year. The life insurance company sell high cost products that takes away more than 10 times of the real cost, and locks the customer into a product that they will suffer a big loss for the "whole life".
Many insurance agents make a living out of the losses of their customers. There are many new customers that they can take advantage of, each day.
I hope that the life insurance industry and its "professional" agents will be ethical in doing what is right for customers.I have never seen any whole life policy that offers such a poor cash value after 13 years. Matters are getting out of hand.
For my views about investing your savings, read this FAQ:
http://www.tankinlian.com/faq/savings.html
.... you mentioned total premiums $5,600 was made and policy has existing cash value of $2,700 with a "loss" of $2,900... just curious, are you expecting free insurance?
This is a whole life policy about $430/yr or $35/mth. Even if you were to get term insurance at $80/yr, you would have "lost", $1,040 after 13 years.
Furthermore, assuming that her budget is $430/yr and that is all she can spare, where would you suggest she invest the balance of $350/yr, to get a investment gain of 4% p.a.
Even if she had invested and able to get 4% p.a., for the last 3 months, all the equity markets were down, it would be hard for her to sell as her funds would have dropped at least 20% in value.
It would be good to know what the expected surrender value is after 20 years so that we have a better picture.
REPLY
The term insurance premium for a cover of $30,000 should be less than $30 a year. The life insurance company sell high cost products that takes away more than 10 times of the real cost, and locks the customer into a product that they will suffer a big loss for the "whole life".
Many insurance agents make a living out of the losses of their customers. There are many new customers that they can take advantage of, each day.
I hope that the life insurance industry and its "professional" agents will be ethical in doing what is right for customers.I have never seen any whole life policy that offers such a poor cash value after 13 years. Matters are getting out of hand.
For my views about investing your savings, read this FAQ:
http://www.tankinlian.com/faq/savings.html
Poor products and unethical sales techniques
An insurance agent presented an insurance policy for a young person. The agent gave him a standard "policy illustration" comprising of about 10 pages with several hundred figures. The young person was confused. He asked for my advice.
Here is my analysis of the plan:
1. It is an investment-linked plan involving a monthly saving of $100
2. About $2,400 of the insurance premium (about two years of savings) will be taken away to pay commisison and expenses.
3. After 10 years, even if the fund earned 9% (which is unlikely), the cash value is still less than the premiums paid
4. The agent recommended that the premium be invested in the India and Vietnam funds.
I am angry that a respectable insurance company could offer a poor value product to its customers. The insurance agent is unethical in pushing such a product to an unsavvy customer, without disclosing the relevant facts.
The strategy is to confuse the customer with a lot of confusing figures and to train the agent in the "sales technique" to sell this product.
How many customers are being taken for a ride each day, with this type of products? I hope that the Monetary Authority of Singapore will realise the weakness of this type of "product disclosure".
Here is my analysis of the plan:
1. It is an investment-linked plan involving a monthly saving of $100
2. About $2,400 of the insurance premium (about two years of savings) will be taken away to pay commisison and expenses.
3. After 10 years, even if the fund earned 9% (which is unlikely), the cash value is still less than the premiums paid
4. The agent recommended that the premium be invested in the India and Vietnam funds.
I am angry that a respectable insurance company could offer a poor value product to its customers. The insurance agent is unethical in pushing such a product to an unsavvy customer, without disclosing the relevant facts.
The strategy is to confuse the customer with a lot of confusing figures and to train the agent in the "sales technique" to sell this product.
How many customers are being taken for a ride each day, with this type of products? I hope that the Monetary Authority of Singapore will realise the weakness of this type of "product disclosure".
A very poor deal
A mother bought a life insurance policy for her son. After 13 years, the cash value was only $2,700. The total premiums paid was $5,600. The policyholder suffered a loss of $2,900 plus the investment gain for 13 years.
For the next five years, the additional premium is $2,160. The increase in cash value is only $1,480. The policyholder will suffer a further loss of $580. The policyholder decided to give up the policy.
I consider that the policyholder has been given a very poor deal. It seems that, after the policy was taken, the policyholder is at the mercy of the life insurance company.
I advised the policyholder to seek an explanation from the insurance company, and later to lodge a complaint with the Monetary Authority of Singapore. The insurance company is a large company which has many hundred of thousand of policyholders.
For the next five years, the additional premium is $2,160. The increase in cash value is only $1,480. The policyholder will suffer a further loss of $580. The policyholder decided to give up the policy.
I consider that the policyholder has been given a very poor deal. It seems that, after the policy was taken, the policyholder is at the mercy of the life insurance company.
I advised the policyholder to seek an explanation from the insurance company, and later to lodge a complaint with the Monetary Authority of Singapore. The insurance company is a large company which has many hundred of thousand of policyholders.
Poll: Attitude towards savings
If you earn a modest salary, do you prefer to: (30 replies)
90% - set aside some savings for the future
6% - spend all the earnings now
3% - spend some of the future earnings now, by taking credit or a loan.
90% - set aside some savings for the future
6% - spend all the earnings now
3% - spend some of the future earnings now, by taking credit or a loan.
Article: Don't expect another bull market
Dear Mr. Tan,
Please give your comment on this article:
Don't expect another bull market
Stock returns may never be the same - at least for this generation of investors.
http://money.cnn.com/2008/02/29/magazines/fortune/bull_market.fortune/index.htm?postversion=2008030303
REPLY
The author said that for the past 20 years of the bull market, the stock market produced a return of 19% per year. He does not expect this kind of return in the future.
Over a longer period of 56 years, the stock market return was 9% per year.
For the future, the author said that he is reasonably confident that "stocks are likely to outperform high-quality bonds in the long term" 30-year Treasuries now yield about 4.5%.
I agree with the author. I expect stocks to yield about 6% in the future. I have indicated this as the likely return for the future. This is better than bonds, and is more suitable for a long term investor.
Please give your comment on this article:
Don't expect another bull market
Stock returns may never be the same - at least for this generation of investors.
http://money.cnn.com/2008/02/29/magazines/fortune/bull_market.fortune/index.htm?postversion=2008030303
REPLY
The author said that for the past 20 years of the bull market, the stock market produced a return of 19% per year. He does not expect this kind of return in the future.
Over a longer period of 56 years, the stock market return was 9% per year.
For the future, the author said that he is reasonably confident that "stocks are likely to outperform high-quality bonds in the long term" 30-year Treasuries now yield about 4.5%.
I agree with the author. I expect stocks to yield about 6% in the future. I have indicated this as the likely return for the future. This is better than bonds, and is more suitable for a long term investor.
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