Friday, September 30, 2011
i bring u good tidings from a media release today with the cpf board having announced that our government has decided to further extend the 4% floor rate for interest earned on all smra monies for another year until december 31, 2012. furthermore, the first $60,000.00 of a cpf member's combined balances will continue to earn an additional 1% interest*.
*An additional 1% interest will continue to be paid on the first $60,000 of a member’s combined balances, with up to $20,000 from the Ordinary Account (OA). The additional interest received on the OA will go into the member’s SA or RA to enhance his retirement savings. If the member is above 55 years old and participates in the LIFE scheme, the additional 1% interest will also be payable on his annuity premium, less annuity payouts already made. The additional interest earned on the member’s LIFE annuity monies will be paid into his RA.
this extension is definitely good news for all cpf members in view of the current market turmoil, uncertaintiy in the global economy and low interest rate environment.
since january 01, 2008, the formula for determining the interest rate in the smra accounts has been changed to one which is pegged to the 12 month average yield of 10 year singapore government securities plus 1%.
and to help cpf members cope with the transition, our government has continued to provide the 4% floor rate for smra monies up to december 31, 2009 and has been extended twice to december 31, 2010 and december 31, 2011. and now, a further extension to december 31, 2012.
fyi, if the new peg is implemented, the average yield of the 10 year singapore government securities plus 1% from september 1, 2010 to august 31, 2011 works out to be just 3.30%, much lower than the guaranteed 4%.
however, the latest extension to december 31, 2012 may be the last because effective january 01, 2013, the smra rates will be pegged to the 12 month average yield of 10 year singapore government securities plus 1%, subject to the floor rate of 2.5% per annum.
i applaud the generousity on the part of our government to pay the higher yields on cpf monies which to me, is like insurance protection with guaranteed yields. this is especially so when it is difficult to find happy campers who have invested their monies because it is not uncommon to see global and regional markets awashed in red ink almost on a weekly basis.
in fact, the fed led by chairman ben bernanke has in the last fomc meeting in august 2011, agreed to keep the target range for the federal funds rate at 0 to 1/4 percent and to state that economic conditions are likely to warrant exceptionally low levels for the federal funds rate at least through mid-2013.
in other words, the fomc's view is to keep the ultra low interest rate environment until mid 2013 warranted by economic conditions.
therefore, do take advantage of the ultra high almost risk-free returns from the cpf smra accounts while the going is good. what's more, even the first $20,000.00 in the cpf-oa earns a return of a higher 3.5% interest (but the extra 1% interest earned will go to the cpf-sa account).
Thursday, September 29, 2011
i did not know the provider of my blog has a tracking device to keep score of amongst other stats, my readers and their country of origin.
taking last month into consideration, the numbers can be pretty revealing and my audience can be considered to be a global one. in terms of the country of origin, here's the top 5 countries where my readers come from:
1. singapore - 48%
2. united states - 16%
3. germany - 3%
4. malaysia - 3%
5. canada - 1%
if i list pageviews by browsers:
1. firefox - 32%
2. internet explorer - 30%
3. chrome - 9%
4. safari - 7%
5. opera - 2%
and pageview by operating systems:
1. windows - 60%
2. macintosh - 7%
3. linux - 5%
4. other unix - 4%
5. iphone - 3%
dear readers, whoever u are or wherever u come from or your choice of browers or operating systems, u are welcome to my blog. i was told by my fellow promiseland bloggers that a very high percentage of their readers are probably 'competitors' from the financial industry be they insurance agents, bank advisers, and so on and so forth.
be that as it may, i have absolutely no qualms on sharing my knowledge with fellow financial professionals.
one stat that i'm certainly astonished with is the fact that more than 50% of the readers of my blog are not from my home country and hail as far away as the united states and latin america as well.
however, i have to learn to be more wise as there is always a risk of being taken for a ride as have happened far too many times in my 14 years in the financial industry.
and by God's grace, i shall continue to blog as often as i can when i first started to do so since the year 2006.
Wednesday, September 28, 2011
we have just received this urgent email notificaion from aviva:
Last week, we have launched Aviva’s MyLifeChoice. We are pleased and encouraged by the positive feedback we have received from many of you on the attractive product features of MyLifeChoice, comprehensive benefits and competitive premium structure.
MyLifeChoice is the next generation and logical evolution of our Whole of Life offering to our customers. Therefore, and in line with our efforts to make our product suite simpler and easy to use, we will remove IdealLiving from our product offering with immediate effect.
We thank you for your continuous support of MyLifeChoice.
This broadcast is published for information only and does not have regard to the specific investment objectives, financial situation and needs of any particular person. The information in this broadcast shall not be reproduced or distributed to unintended parties including policyholders, prospects and/or 3rd parties. Aviva Ltd accepts no liability whatsoever with respect to the use of this broadcast or its contents. This broadcast is not a contract of insurance. The standard terms and conditions of the plan(s) are provided in the relevant policy contract(s). The information contained in this broadcast is correct as at 28 September 2011.
with the withdrawal of aviva ideal living, it mark a milestone in the insurance industry.
aviva ideal living, embedded with 30 ci benefit is the only product in the market that comes with non-reviewable and guaranteed pricing of premiums. aviva ideal living is available with 3 premium term options, namely aviva ideal living (premiums payable till age 85), aviva ideal living 12 and aviva ideal living 21 with limited premium term of 12 and 21 policy years respectively.
aviva ideal living has been replaced with aviva mylifechoice which was officially launched by aviva on september 21, 2011.
now, with all ci products being priced to be reviewable and non-guaranteed, it will be interesting to see, going forward, whether who will be the first to blink in pulling the trigger with respect to repricing of such premiums.
Tuesday, September 27, 2011
today, our company's managing director, mr david choo and myself went through an interview with a wannabe promiselander.
this person is certainly no newbie financial adviser, having notched up almost 20 years of experience in the financial industry. he started his career as a tied agent with one of the so-called 'big 4' insurers and progressed to joining a fellow fa company.
when david asked him why he chose promiseland independent, he admitted that he has gone on his rounds (meaning, he has already checked out a few other fa companies) but as to why he settled for promiseland independent, he said, "patrick is more reputable!".
with what was uttered, the wannabe promiselander could have meant i had a higher profile in the financial industry, or i have had lots of exposure in the media, or the fact that he has heard of collective positive feedback from many of our fellow financial professionials.
before everything else, there's stil lots of 'paperwork' to be completed and if there is nothing untoward in our due diligence process to certify him fit and proper, we should welcome him as a promiselander in due course.
and with regard to what he said regarding moi, it is good to know that i can value-add to promiseland independent by way of recruitment of wannabe promiselanders.
hopefully and prayerfully, we can continue to attract people of the highest ethical standards and integrity into our fold.
because, dear readers, no one need to be reminded that all it takes is just one rouge financial adviser to bring the whole house down.
and by God's grace, we definitely aim to be around, long into the future.
Monday, September 26, 2011
today, i was part of the crowd that thronged borders, parkway parade and i reckon there were at least 200 bodies cramped into the last remaining free space within the store, because many sections were barricaded.
because after 9pm today, u and i no longer have any chance to step inside a borders store in singapore, being the last day that borders will ever have any presence in our tiny red dot nation, ever again.
and secondly, would u believe that every item within the store was going for a song at the ridiculous low, low price of just $2.50 per item (subject to at least 10 items purchased). imagine getting a hard bound book for this price? yes, it's true but u will have to see for yourself to believe. one caveat though, don't expect to find our former mm lee kuan yew's book, hard truths to keep singapore going or any other latest bestseller lying around.
but if u are a book worm, u'll probably find something to purchase.
*bye, bye borders, u were a breadth of fresh air when u first set up shop here 13 years ago. no other store can ever emulate your pro-consumer practises with excellent service oriented staff and oh-so-comfortable sofas provided not only to browse but read our time away without the obligation or pressure to buy anything.
we will all miss u.
what has this blog got to do with insurance?
because the typical singaporean shopper is well known for sniffing out bargains, they will hunt for the best buys from groceries to just about anything under the sun.
but as far as insurance is concerned, far too many are still none the wiser as to not shelling out more of their hard earned monies for such products.
take for instance, my meeting last friday with a referred prospect in his early fifties who wanted a term plan with a sum assured of $500,000.00. earlier, he met another financial adviser who recommended a plan with an annual premium of $7,200.00.
but my recommendation came with an annual premium of just $5,700.00. furthermore, my plan came with an additional waiver of premium upon diagnosis of any of the 30 specified dreaded diseases.
he was definitely surprised because he had the impression that pricing amongst different insurers was not significant or could not deviate by a wide margin.
so in effect, if he had taken the other financial adviser's recommendation, he would have paid an additional $1,500.00 annually for as long as he kept the policy in-force till the expiry of the plan, which would have amounted to an extra of more than $30,000.00 taken in totality. and that is by no means a small sum of money, even if u are a person of substantial means.
and that my dear reader, would have meant the savings could have been translated to acquiring a whole new showcase of books to add to his existing library at home (if he loves to read and collect literary works) and hence, the use of borders as my topic for this blog.
Sunday, September 25, 2011
during the course of this week, i was reminded by one of my colleagues to submit my entry for a contest run by the friendly folks at the cpf board.
since i have the time toady, i have just submitted my 2 cents' worth because the closing date for submissions is september 25, 2011 at 2359hours.
here's my entry:
since time immemorial, the quest to discover the elixir of beauty has been recorded in the annals of history. i guess i want it too. but more than that, i want the elixir to good health as well.
because in modern times, healthcare costs can cost more than an arm and a leg. i remember this very vividly when i recall the news article on dr stanley ho who suffered a stroke iin july 2009 and was hospitalised for more than 200 days in a private hospital. when he was subsequently discharged, his bills came to more than HK$200 million.
as a financial planner, my mission is to covert skeptics to financial planning. and fundamentally,the journey to financial independence begins with wealth protection planning. an excellent start here is to plan to hedge (current and future) healthcare costs. because of rapid advancements in medical science, early diagnosis can save many lives but because healthcare costs tend to rise the fastest, gone are the days of benign medical bills.
it is said that there are 2 certainties in life being death and taxes. i would like to issue a reminder of a third and that is, there is no guarantee of continual good health and should a humongous medical bill be staring u in your face, are u ready for it?
Saturday, September 24, 2011
*with apologies to william shakespeare.
here's an interesting and what i deem to be an excellent query from a regular reader of my blog:
with the markets in turmoil, will there be another round of bonus cuts? personally, i hope not and i'm keeping my fingers crossed.
Friday, September 23, 2011
during my monthly life insurance training class yesterday, one of my advisors raised a concern on his existing client, a family who incepted a shield plan plus rider some time back, but not from him.
what is my advisor's concern?
during a very recent meeting with his client, the head of the household (in this case, the husband) disclosed that at the time of application of their shield plan plus rider, his cholesterol levels were not in the normal or healthy range and his wife had raised blood pressure or hypertension which were omitted in the application form.
without any hesitation, my advice is for my advisor to go back quickly to the family and explain that all insurance contracts are based on the principle of uberrima fides* or utmost good faith and the other on insurability.
* taken from wikipedia
Uberrima fides (sometimes seen in its genitive form uberrimae fidei) is a Latin phrase meaning "utmost good faith" (literally, "most abundant faith"). It is the name of a legal doctrine which governs insurance contracts. This means that all parties to an insurance contract must deal in good faith, making a full declaration of all material facts in the insurance proposal.
and on this, my advisor has to instruct his client, both the husband and the wife to make a declaration of their health status to the insurer without delay.
the point is, the insurance contract at that time, was underwritten without full disclosure. and what this means is that the warning prominently displayed in all insurance forms namely;
"pursuant to section 25(5) of the insurance act (cap 42), you are to disclose in this application form fully and faithfully all facts which u know or ought to know, otherwise the insurance effected may be void."
may lead to the insurance contract being void and no benefits shall be payable by the insurer.
which i why i will not and have not compromised on full disclosure when dealing with the person/s in front of me, even if it means losing the business which has happened a number of times in my 14 years in the financial industry.
Thursday, September 22, 2011
the free daily tabloid, today carried a report that hundreds of singaporeans will be involved in a landmark studay to develop a simple blood test that can predict if a person is at risk of a heart attack or even stroke.
a team of scientists from the netherlands and singapore had discovered that more than 10 types of unique proteins, or biomarkers are present in the blood of people who recently had a stroke or heart attack.
professor newman sze, ntu's lead scientist, estimates that the blood test kit can be developed for use during health screenings at local polyclinics and hospitals in 4 to 5 years' time.
let me pose a rhetorical question; what happens when what professor newman sze has said that the kit has been fully developed and incorporated into health screenings on a national level through polyclinics and hospitals in 4 to 5 years' time?
well, the test kit (when freely available) can be both a boon and a hindrance to u, depending on which side of the equation u fall into?
what do i mean?
if the result is negative, fine but if it is otherwise and u wish to apply for an insurance policy?
insurance contracts operate on both the principle of utmost good faith and the other one on insurability.
and because u now fall into the category of a person with the risk of a future probability of suffering a stroke or heart attack, do u think insurers will ignore this risk in their underwriting process.
meanwhile, the clock is counting down to the day when this test kit becomes a reality.
Wednesday, September 21, 2011
today, aviva rolled-out their new product, aviva mylifechoice to her partners at the sky lounge of the iluma.
what is aviva mylifechoice?
this is a participating regular premium whole life plan covering death and terminal illness with the pricing of premiums that are level, non-reviewable and guaranteed.
there is a choice of limited premium payment term of 15/20/25 years or till age 80 years next birthday.
additional protection in the form of optional riders include:
a. enhanced total and permanent disability rider
b. enhanced critical illness accelerated benefit
c. critical illness premium waiver
d. payer premium waiver
e. payer critical illness premium waiver
aviva mylifechoice is also embedded with 4 distinct features*:
a. minimum protection value
b. advance cash withdrawal option
c. guaranteed extra protection option
d. waiver of interest benefit
* terms and conditions apply
aviva mylifechoice is the company's entry into the mpv space currently occupied by her competitors, namely, manulife, ntuc-income and tokio marine life.
for those unfamiliar with mpv or minimum protection value, the life assured (dependent on entry age) comes in with a higher protection coverage of up to a specified number of policy years or till the life assured attaining his/her 65 years of age. aviva mylifechoice has opted for the former, which is for a period of 20 policy years from inception or up to the policy anniversary when the life assured attains age 65 at next birthday, whichever is earlier.
aviva mylifechoice claims to have the highest guaranteed cash values of any participating whole life plan in the market. if this is true, it is pretty remarkable given the fact that aviva has chosen to be prudent in terms of the rb (reversionary bonus) structure which is the lowest in the industry based on just $7.00 per $1,000.00 sum assured which is on par with ntuc-income's vivolife, launched on january 08, 2008. on this, i take my hat off to ntuc-income and now, aviva to have adopted the lowest rb structures, given the fact that bonus cuts have never been well received by all participating policyholders.
with aviva mylifechoice, there are now 4 insurers with 6 products offering minimum protection value and it will be interesting to see whether other insurers will respond with the same proposition to consumers.
Tuesday, September 20, 2011
earlier this week, i received a query on aviva's saf group term life insurance scheme and therefore, today's blog is an update of this extremly saleable plan.
what is aviva's saf group term life insurance scheme?
this is a yearly renewable group insurance plan which is open to the following:
a. saf regulars and full time national servicemen
b. defence executive officers
c. public officers posted to work in mindef
d. saf operational ready national servicemen
e. dsta staff working in saf unit or mindef dept
f. military domain expert personnel and saf volunteer
and eligible dependents:
a. spouse and children (at least age 14 days old) of the above
you and your spouse must take up this cover before age 55
children from age 14 days old
term of coverage: up to age 70 for you and your spouse
: for a male child, the coverage will cease at age 20
: for a female child, the coverage will cease at age 25
or when she marries, whichever is earlier.
a. you can take up sum assured in multiples of $10,000 up to a maximum of
$600,000*. you can also increase coverage before age 55
*available from october 01, 2009 onwards
b. spouse and children can also enjoy the same coverage
c. automatic renewal of $600,000 coverage up to age 65; thereafter a $100,000
coverage from age 66 to age 70 subject to prevailing rates, terms and
d. receive advance payment benefit of 50% of the sum assured, subject to a
maximum of $100,000 if an insured person is diagnosed that is highly
probable that he/she would pass away within the next 12 months
e. receive extra death benefit of up to 100% more* if death is directly due
to saf occupational activities or training, including such incidents
during ops ready in-camp training
f. receive daily hospital cash benefit
g. enjoy partial cash rebate of premium during good years
h. your spouse can continue to be insured if you were to pass away prematurely
i. coverage includes event of war (including un peacekeeping/humanitarian
missions and acts of terrorism) subject to the prevailing group risk
j. optional supplementary major illness insurance. you, your spouse and
children if already insured with term life cover, can opt to sign up for
the for the critical or major illness insurance up to $300,000.
the saf group term life insurance scheme and major illness cover come with some of the following significant pointers:
a. it is a yearly renewable group insurance plan but does not come with
b. maximum coverage of $100,000 from age 66 to 70
c. subject to underwriting, the maximum sum assured of the supplementary major
illness insurance must not exceed the sum assured of the saf group term
d. upon diagnosis of any one of the 30 major illnesses, the insured person
must survive for 30 days before a claim can be admitted
e. the insurance cover of the dependent spouse of an insured person under this
policy will be terminated if he/she is divorced from that insured person or
f. the basic cover, i.e. saf group term life insurance has been terminated
g. there is an exclusion for death due to suicide for insurance coverage from
age 66 to age 70
h. in the event of claims arising from any number of insured persons in a single
conveyance, aviva's maximum aggregate liability shall be limited to
$10,000,000 for each land conveyance, $18,000,000 for each sea conveyance,
and $20,000,000 for each air conveyance. if the claims are a result of acts
of terrorism and/or war risk; such claims shall be further subject to the
limits of these special coverage
i. in the event of claims arising from any number of insured persons as results
of acts of terrorism, aviva's maximum liability shall be limited to 0.5% of
the aggregate insured sum of the whole group policy.
j. in the event of war (including un peacekeeping/humanitarian missions and acts
of terrorism arising thereof), resulting in claims from any number of insured
persons, aviva's maximum liability shall be limited to 0.25% of the aggregate
insured sum of the whole group policy.
one other significant caveat, The Nomination of Beneficiaries framework is not applicable for group insurance scheme. The main policyholder, that is, SAF/MINDEF, had directed Aviva to pay according to the prevailing laws of Singapore. That is to say, in the event of a Death Claim, the law provides for Aviva to pay to the immediate next-of-kin (NOK) or proper claimant up to S$150,000. The payout of the balance of the insurance compensation has to be decided by a Court.
If the deceased had written a Will before his/her death, the family has to engage a lawyer to apply to the Court for a Probate, which may take up to 6 months.
If the deceased did not have a Will before his/her death, he/she would be considered to have died intestate. In such an event the family also has to engage a lawyer to apply to the Court for a Letter of Administration, which may take up to 3 years to resolve.
and last but not least, this is the mother of all the terms and conditions which states:
future plan changes:
this scheme will be reviewed periodically and may be subject to change as
part of the SAF' policy of continuosuly reviewing the benefit for its
members. while it is the sincere intention of the SAF to continue providing
the aforementioned benefits, the SAF reserve the right to MODIFY,
AMEND, SUSPEND OR DISCONTINUE any or all of the provisions of this scheme
at its absolute discretion.
Monday, September 19, 2011
here's mr denis distant's letter which was published in the straits times last friday:
Uncomfortable with insurer's scare angle
Published on Sep 16, 2011
INSURER NTUC Income should reconsider its scare tactics behind its marketing campaign to push the VivoCare and Enhanced IncomeShield policies.
On Monday, a half-page advertisement in The Straits Times seemingly promoted a 'colon cancer sale' at $104,344 with an explanation in small print that is actually how much it could cost victims and then goes on to offer its policies at $1,868 as a solution to meet the cost. This dreaded disease should not be used as a sales gimmick.
and ntuc-income has responded:
Insurer explains rationale of ad campaign
Published on Sep 19, 2011
IT IS unfortunate that Mr Denis Distant arrived at his view relating to NTUC Income's advertisement ("Uncomfortable with insurer's scare angle"; last Friday).
In this context, we would like to highlight the rationale of this campaign. As a major group and health insurer in Singapore, NTUC Income took pains to research and better understand the major illnesses and disabilities affecting Singaporeans.
Based on publicly available data, diseases like heart attack, stroke, lung cancer, dengue fever, breast cancer and colon cancer significantly affect the quality of life of Singaporeans as well as their financial position. These occurrences result in the loss of income during rehabilitation and deplete savings.
NTUC Income thus undertook a more detailed analysis and developed this series of advertisements to inform the public. The aim was to show that these diseases could happen to anyone and that such a financial burden could be reduced through insurance plans such as Enhanced IncomeShield (Hospital & Surgical Plan) and VivoCare (a dread disease plan which covers conditions from the early to the advanced stages).
NTUC Income urges Singaporeans to understand the necessity of planning and providing for their long-term medical and financial needs.
We thank Mr Distant for giving us the opportunity to clarify our position.
Lee How Teck (Ms)
Senior Vice-President and General Manager
Group & Health Insurance Division
my opinion is that ntuc-income has embarked on a major publicity drive to pinpoint common critical illness affecting the general population and of course, the promotion of their enhanced incomeshield and vivocare products. and i sincerely believe ntuc-income's ads which i classify as infomercials were never intended to utilise what mr denis distant articulated as the 'scare angle'. a case in point is our government's drive to discourage smoking by first implementing text messages on cigarette packs. and to drive the message more explicited, graphic warnings with gory pictures were added in august 2004. in 2006, the images and warnings were revised with pictures focusing on damaged organs.
therefore, similar to the ongoing message to discourage smoking, ntuc-income's infomercials may be viewed to be a reminder and i quote ms lee how teck,
"Singaporeans to understand the necessity of planning and providing for their long-term medical and financial needs".
Sunday, September 18, 2011
after the recent experiences with some prospects whom i have highlighted in my most recent blog entries of sep 16, 2011 and sep 17, 2011, i did some serious soul-searching and as is my wont, prayed to my best friend, my Lord and Saviour, Jesus Christ for guidance and answers.
God is good because it is surely no co-incidence that the answers to my prayers came in the form of the sunday sermon by my senior pastor, joseph prince of new creation church who expounded on the wisdom of God found in the Bible.
and one such reference stuck with me taken from the book of proverbs chapter 3 verses 13 to 16:
13 Happy is the man that findeth wisdom, and the man that getteth understanding.
14 For the merchandise of it is better than the merchandise of silver, and the gain thereof than fine gold.
15 She is more precious than rubies: and all the things thou canst desire are not to be compared unto her.
16 Length of days is in her right hand; and in her left hand riches and honour.
i found pastor prince's sermon to be especially relevant and meaningful to me because it is like literally being given the keys to unlocking wisdom as and when needed. all i need do is simply to go to God as in the book of james chapter 1, verse 5 which was also quoted by pastor prince.
and more importantly going forward, i have found the answer in terms of whether to have a change of my business model.
and from a past sermon, pastor prince reminded the congregation to be as wise as a serpent and yet, harmless as a dove.
Saturday, September 17, 2011
i was referred by an existing client to a large multi-national company in singapore who wanted a comprehensive review and recommendation of a worldwide health cover for one of her senior management staff and family.
after doing my 'homework' which took the better half of a week, i tabulated my comprehensive recommendations (in an excel spread sheet) to the senior hr staff of the multi-national company. prior to this, the latter shared with me what an international broker has quoted to them and i assured her i can still value-add on top of what has been proposed.
today, i was told that they have decided to go with the recommendation of the international broker, period and i was clearly upset that no reason was given as to why the business did not go my way.
why was i upset?
on the pricing and benefits of the worldwide health coverage, there can be no valid reason why the multi-national company can ignore what i have recommended over the competitor. let me illustrate with some examples why one of my recommendations is compelling in terms of both pricing, value and benefits:
my recommendation: US$12,511.85 annual premium
the competition: US$15,738.00 annual premium
annual policy limit of my recommendation: US$3.4 Million
annual policy limit of the competitor: US$2 Million
oupatient benefits (mine): Paid in full
outpatient benefits (competitor): Limited to US$10,000.00
and suffice to say, there are also many other benefits in my recommendation which were vastly superior to the competition. in short, i fulfilled my promise to value-add to what has already been proposed to the senior hr person of the multi-national company.
and to think i have expanded so much time and effort over the better part of this week, giving my whole-hearted attention and focus to my referred prospect.
what is even more rediculous is that i can also offer the same plan which the competitor has proposed.
perhaps this is the proverbial final straw (that broke the camel's back) on the rethink of my businees model, going forward.
simply because i did my darnest, i shared the knowledge of what was available in the market place, i demonstrated unbiasness and independence, and most significantly, i brought value to the company, etc and the response, i was swatted away like a troublesome mosquito!!!
Friday, September 16, 2011
yesterday, i blogged on an apprently wealthy prospect whom i agreed to meet in his 'palace', a luxurious bungalow with all the trappings of his affluence for all to see and admire.
yes, a good prospect, one might be led to believe with the potential of 'big' business within sight.
yet why did i mention that i have to beat a hasty retreat?
u may recall that he wished to dispense with the mandatory financial needs analysis and sought my advise on a comprehensive h&s plan (from his basic medishield coverage).
everything went rather well after more than 3 hours on my recommendation of an integrated shield plan.
but from here, there was never the proverbial sweet ending to our meeting.
because he was hesitant in declaring that he has a medical history and once this was disclosed, i said that it was highly unlikely that none of the shield providers will take his business, although his spouse and children should be fine.
and that was where i brought up the aviva moratorium underwriting route guaranteeing acceptance* for him. (*terms and conditions apply).
instantly his face lighted up and we duly completed the 'paperwork'.
but when we were about to call it a night that he told me he remembered some years ago, his one and only insurance application was declined. to which, i reminded him of the primary qualification for the aviva moratorium underwriting earlier in our meeting which is never having a history of any life application or reinstatement either declined or postphoned.
he responded by saying that nobody need ever know about this if he and i kept silent on this. and since it is only one application to only one insurer (which was not aviva anyway) and happened some years ago, nobody will be the wiser.
i did not hesitate in talling him firmly: "sir, with all due respect to u and your family, there can be no compromise in demonstrating utmost good faith in disclosing all the material information to aviva (or any other insurer)".
he laughed and said, "surely u can close your eyes once". but to his surprise, i stood my ground and that's when things turned ugly and the best course of action for me was to beat a hasty retreat.
i know this blog entry is definitely not positive and i've been 'advised' against posting it but i will still record this episode with 2 clear objectives:
a. that i am sending out a strong message there can be no compromise in upholding
the principle of utmost good faith* in all of our dealings with any or all
b. that readers of my blog can save their time and mine if there is any
expectation on their part for me to side with them in terms of disclosure.
i am already in my 14th year in the financial industry and i have no plans to retire and by the grace of God, i shall continue to uphold my raison d'etre in professionalism, and more importantly, with ethics and integrity.
* from wikipedia:
Uberrima fides (sometimes seen in its genitive form uberrimae fidei) is a Latin phrase meaning "utmost good faith" (literally, "most abundant faith"). It is the name of a legal doctrine which governs insurance contracts. This means that all parties to an insurance contract must deal in good faith, making a full declaration of all material facts in the insurance proposal.
Thursday, September 15, 2011
i agreed to meet-up with a prospect at his lovely castle (a luxurious bungalow) in an excellent location not that near nor far from our bustling shopping paradise aka orchard road. it was indeed a well renovated and beautifully furnished abode and i guess the owner must have been pretty proud of his attention to details and the comforts of what his home afforded to him and his family.
on financial planning, he had no time for the works (financial needs analysis) and just wanted my advice on upgrading his family's medishield to a more comprehensive h&s coverage to hedge healthcare costs. in other words, something that has to be cheap and good (in hokkien parlance, ai chi ai pi).
and to cut a long story short (after more than 3 hours with him), i ended up beating a hasty retreat and wished i had stuck to my recently adopted business model of not meeting prospects outside of my office and after office hours.
for the rest of my experience with a prospect to avoid, please read my blog entry tomorrow.
Wednesday, September 14, 2011
just a couple of days ago, our minister for trade and industry and deputy chairman of the monetary authority of singapore was the guest of honour at the 25th pacific insurance conference held at the marina bay sands convention centre.
amongst other significant pointers, mr lim, in his keynote address reminded insurers and reinsurers to play a bigger role in the development of the microinsurance industry, because despite the growing wealth in asia, it has been estimated that up to 70% of the world's low-income population resides in the asia-pacific region.
which led me to being queried by my company's advisers and readers alike on what exactly is this thingy known as microinsurance?
on microinsurance, please allow me to borrow the answer according to wikipedia:
Microinsurance is a term increasingly used to refer to insurance characterized by low premium and low caps or low coverage limits, sold as part of atypical risk-pooling and marketing arrangements, and designed to service low-income people and businesses not served by typical social or commercial insurance schemes.
i must admit i have never heard of microinsurance before mr lim's keynote speech and it should be interesting to see what our insurers and reinsurers's response will be with regard to mr lim's call to focus on the lower-income group, the aged and the poor.
Tuesday, September 13, 2011
the ministry for information, communications and the arts (mica) is seeking the first public consultation on the proposed consumer data protection law or national do-not-call registry.
this proposal was announced early this year and will be tabled for consideration by parliament in early 2012.
what is the proposed consumer data protection law?
under the proposed framework, telemarketers must check against names in registry before making cold call or sending sms. Individuals in registry who receives unsolicited call may make complaint to new data protection commission.
data protection commission has the power to investigate complaints and fine offending parties. the minimum fine for telemarketers breaching do-not-call registry, for example, would be a hefty $1 million.
currently, there is no consumer privacy law but only specific regulations requiring protection of customer information in 3 areas: banking, telecommunications and health care.
i give my two thumbs up for the proposed "do-not-call" registry because i have had my fair share of daily unsolicited calls (which will probably be on-going) from the following companies:
b. banks - marketing of charge/credit cards, and funds' transfers
c. housing agents
d. time share
g. overseas calls probably from call centres located in asia
to make the new proposed law more comprehensive, it should be widened to include or cover unsolicited emails and private and public sectors.
despite the passing of the spam control act in 2007 (so long ago already?), i suspect many consumers (myself included) continue to receive unsolicited emails on a daily basis.
Monday, September 12, 2011
in his keynote address at the 25th pacific insurance conference held at the marina bay sands convention centre on september 12, 2011, our minister for trade and industry and deputy chairman of the monetary authority of singapore, mr lim hng kiang said that more can be done to further strengthen, broaden and deepen the insurance industry in Asia in 3 key areas and they are:
a. enhancing the penetration and availability of insurance;
b. raising financial literacy and consumer education levels; and
c. improving insurance distribution and safeguarding retail customers’
a. Enhancing the Penetration and Availability of Insurance
mr lim noted that insurance penetration in many parts of asia continue to be low with the focus of the insurers on the middle class and high net worth individuals. he added that closer attention should be given to meeting the specific needs of other segments of the population like low-income households and the aged.
and because of longer life expectancy, mr lim said it becomes more important to enhance the availability of annuity and long-term care products. and mr lim pointed out that insurance products catering to longevity risks need not be purchased only when one approaches old age.
b. Raising Financial Literacy Levels
mr lim said that the relatively low insurance coverage in asia is due in part to inadequate levels of financial literacy. given the use of the internet and the proliferation of technology, he encourage insurers to develop innovative methods for enhancing financial literacy standards among the public.
c. Improving Insurance Distribution and Safeguarding Retail Customers’ Interests
on this, mr lim said and i quote:
"In Singapore, like many other Asian countries, insurance agents remain a major distribution channel for insurance products. Consumers rely on agents to provide them with sound, quality advice. It is important that agents carefully consider their customers’ financial needs and risk appetites before recommending suitable products. Agents should not engage in product pushing to maximise commissions. Agents must remember the important social role in helping customers get adequately insured for their future."
mr lim further pointed out that:
"Insurance companies must also be customer-centric in their approach. They should not encourage the creation of a large agency force simply to compete for market share, or to push sales. Incentive structures must take into account how well the needs of customers are met, not merely sales volume. A strong fair dealing organisational culture will inculcate the right values for representatives to deal fairly with customers at all times."
mr lim concluded his keynote speech by further reminding insurers to not forget that their core proposition is to protect. and while recognising the growth potential of the insurance industry in asia, they should embark on initiatives to develop the industry, and keep in mind that the underlying aim of all their efforts is really to help ensure that people are adequately protected financially amidst the vagaries of life.
ditto from me on the keynote message to all insurers from our minister for trade and industry and deputy chairman of the monetary authority of singapore, mr lim hng kiang. but the key sticking point for me from mr lim's speech is the need for insurers to do more for the low-income households and the aged.
and worthy of mention again is the underlying core proposition of our insurers is to protect and we should never lose the focus that the underlying aim of our combined synergies (for all of us working in the financial industry) is to help ensure the masses of people are adequately protected financially amidst the vagaries of life.
Sunday, September 11, 2011
if u go to the lia website's home page (http://www.lia.org.sg), u can't help but notice a quiz staring in your face which goes like this:
quiz: What is the Policy Owners’ Protection Scheme ('PPF Scheme')?
answer: True / False: The PPF Scheme protects existing and future policyowners should a life insurer, which is a Member of the PPF Scheme, fail. Policyowners receive 100% protection for the guaranteed benefits of their life insurance policies, subject to maximum caps where applicable.
(The PPF Scheme also provides 100% coverage for general insurance policies that are covered under the Scheme; no caps are applicable.)
my answer was yes.
but would u be surprised that out of 45 answers (at this point in time), there were 8 incorrect responses or 18% who got it wrong.
even for a relatively simple question like the ppf, i was surprised that the number of responses who did not click on the correct answer was quite large.
similarly, for life insurance, there will be many who will probably end up buying policies not fully conversant with what they have bought. for example, how many are fully aware of the terms and conditions or exclusions of their policies?
that's why it is incumbent upon the consumer to be prudent in the choice of their financial adviser.
because the consequences of making the wrong choice means there is no turning the clock back.
Saturday, September 10, 2011
i have just renewed another year of my subscription for the new paper primarily because i am a big fan of the english premier league. this can be categorised as one of my so-called hobbies.
the new paper carries extensive coverage of the english premier league and my favourite team, manchester united whom i have stuck through thick and thin since the 60s, going back to the time when they became the first english team to win the coveted european cup.
but the new paper may also be the english language equivalent of the chinese language lian he wan bao carrying filling many pages with stories of human relationships like today's article on 'the mistress from hell'.
ms ki chun yim, 38, a former hongkong pub manager was reported to have turned her former lover, known as mr x and his wife into mental wrecks. i won't go into the details but suffice to say, the district court judge kevin browne described ms ki as evil, calculative, manipulative, ruthless and dangerous.
what is your point with regard to the article on the mistress from hell?
very simply this, i have many encounters with mostly prospects/referrals whom i categorise as 'clients from hell' in my 14 years in the financial industry. and even servicing orphan policies* have unearthed the odd person belonging to the same category as well.
these folks share some of the attributes that district judge kevin browne described ms ki as being calculative and manipulative but of course, they are by no means, evil, ruthless or even dangerous.
because i work on the business model that i have not charged for my services in my role as a financial adviser, i found that they have absolutely no qualms in getting the most bang for the buck, except that there was nothing to pay for what i have done for them.
and that's why, going forward, i shall exercise more wisdom and operate on a different business proposition and hopefully, i shall avoid meeting what i categorise as 'clients from hell'.
*the adviser who sold these policies either dies, or leaves the industry and entrusts the servicing of the policies to another adviser within the same company.
Friday, September 9, 2011
if u are casually scanning through the straits times today, perhaps u can't fail but notice this headlined news that private bankers earn more here than in HK.
evidently, looking after the affluent's needs here in our tiny red dot nation really pays. excluding bonuses, senior private bankers can take home between US$164,000 and US$410,500 annually. their counterparts in HK earn US$195,000 and US$218,000 while those in switzerland only US$153,000 to US$209,000 a year.
and these big pay packets may be the direct result of a tug-of-war amongst banks to recruit experienced private bankers to serve those with loads of moola.
according to a report by merrill lynch global wealth management and capgemini that asia-pacific's population of high-net-worth individuals grew 9.7% to 3.3 million in 2010 with their wealth growing 12.1% in value to US$10.8 trillion.
after doing 'national service' for the past 14 years in promiseland independent, what have i got to show for myself and my family? well, honestly speaking, i don't even earn a fraction of what these private bankers take home annually.
even if i take into consideration, the total of my 13 years' income, it still falls short of what a private banker can earn in the short and sweet period of twelve months.
and that's why any wannabe fa who has gone through my interview will be sold on the hard truth that our business is not about making big bucks (not that i have anything against other people taking home super salaries and bonuses) and the client's interests always come first.
Thursday, September 8, 2011
i have received many queries from readers and especially from my own company's advisors on eldershield or in insurance parlance, long term care insurance.
in response, this is my primer on eldershield part 1 and does not include the eldershield reform of 2007 which will be covered by eldershield part 2.
what is eldershield?
eldershield is a long term care or severe disability insurance scheme and was rolled out by our government in september 2002. eldershield is priced to be affordable and singapore citizens and permanent residents with medisave accounts are automatically covered when they attain the age of 40 years,
how much premiums do i need to pay?
the pricing of the premiums is determined primarily at the age of entry. although the premiums are level (meaning, does not increase with higher attained age), it remains reviewable and non-guaranteed. as eldershield is a yearly renewable scheme, premiums are payable until you reach the age of 65 years. Medisave can be used to pay for the elderShield premiums. should there be insufficient funds in the medisave account, the life insured can also use the medisave accounts of his/her spouse, parents, children or grandchildren. eldershield premiums can also be paid by cash, cheque or giro.
how does eldershield work?
after the certification of severe disability by an appointed assessor which is the inability to perform 3 out of 6 ADLs, elderShield payouts will start but there will be a deferment period of 90 days. the 6 ADLs are listed here but in random order;
The ability to wash in the bath or shower (including getting into and out of the bath or shower) or wash by other means.
The ability to put on, take off, secure and unfasten all garments and, as appropriate, any braces, artificial limbs or other surgical or medical appliances.
The ability to feed oneself food after it has been prepared and made available.
The ability to use the lavatory or manage bowel and bladder function through the use of protective undergarments or surgical appliances if appropriate.
The ability to move indoors from room to room on level surfaces.
The ability to move from a bed to an upright chair or wheelchair, and vice versa.
does the life insured need to bear the cost of certification of severe disability by an appointed assessor?
if the life insured's claim is successful, the insurer will reimburse the assessment fee in full. it costs $25 for each assessment (subject to future revisions) if the life insured visit the appointed assessor. the other option is to have the assessment done at the life insured's home and for this, there will be an additional fee of $75 for making the house call.
however, do take note that if the claim is unsuccessful, the life insured will have to bear the cost of the assessment.
why is there a need to impose a 90 days deferment period?
the primary reason is to keep the pricing of the premiums to be low and affordable. secondly, to ensure that eldershield pays out in the event of severe disability for which the life insured will require long term nursing care and suppot.
Does the life insured have to continue paying premiums if the life insured become severely disabled?
if the life insured become severely disabled, the elderShield payouts will start (after the deferment period of 90 days) and any subsequent premiums will be waived.
but should the life insured recover from the severe disability, the eldershield payouts will stop and the life insured will have to continue paying the premiums until the end of the premium term to continue to be covered for the remaining eldershield payouts.
however, if the life insured have received the maximum payouts of 60 months, the plan will discontinue and no further payment of premiums are necessary.
who are the appointed insurers for the basic eldershield scheme?
there are only 2 appointed insurers and they are:
a. great eastern life
for further queriesand or clarifications, u may wish to call up the insurers directly or your financial adviser.
since the basic eldershield scheme was launched in 2002, our health minister, mr khaw boon wan (at that point in time), introduced the eldershield reform in 2007 which will be covered in eldershield part 2.
Sunday, September 4, 2011
if have an interest in financial planning, do mark 2 dates down in your calender, septermber 24, 2011 and september 30, 2011.
because the Financial Planning Association of Singapore, "FPAS" and 3 associations have joined their hands and hearts together, The Association of Financial Advisers (Singapore) “AFA(s)”, The Insurance and Financial Practitioners Association of Singapore “IFPAS” and Society of Financial Service Professionals “SFSP”; to play a united role together with all industry players in moving the industry and the distinct profession of financial planning forward.
This year they will be reaching out to 2 very important constituents i.e. Consumers and the Practitioners by planning 2 events:-
Consumer’s Event: - You and Financial Planning
The “You and Financial Planning” event is to remind our general public members in Singapore to have their regular financial health checks with their preferred Financial Planner and to be reminded of the importance of being financially secure.
Planning for the Third Age.
Investing? Questions Investors should ask.
General Insurance? What you need to know.
CPF LIFE? What is it and what you need to know.
Practitioner’s Event: - Financial Planning Day
The “Financial Planning day” event is to call on all financial planning professionals and practitioners’ attention to and reaffirm their duties to help their clients achieve their financial and their life goals, where appropriate.
Market Place - What is the Game Plan?
Planning for the Third Age
Serving the Customer in The New Asia today
Customer Centricity - A Practical Approach
Key Note speaker, Dr Andrew Goh, an international platform speaker well known for being insightful yet simple, witty yet packing a punch.
Dr Andrew Goh will be speaking on the topic “In The End It Will Be OK!...So, that’s Financial Planning in 7 Words!”
i will support these initiatives because i believe they will go a long way towards enriching the knowledge and lives of both consumers and financial practitioners.
Saturday, September 3, 2011
friends provident international has soft launched their latest product, a standalone critical illness cover (cic).
standalone critical illness cover is a non-participating regular premium term plan covering 30 critical illnesses.
minimum term is 5 years or age plus term until age under 80 years.
it is open to both single life or 2 lives and available in 5 major currencies.
maximum critical illness cover is:
a. USD$1 million
list of critical illness covered:
1. alzheimer's disease/severe dementia
2. angioplasty and other invasive treatment for coronary artery (part
3. aplastic anaemia
4. bacteria meningitis
5. benign brain tumour
6. blindness (loss of sight)
8. coronary artery by-pass surgery
9. deafness (loss of hearing)
11. end stage liver failure
12. end stage lung disease
13. fulminant hepatisis
14. heart attack
15. heart valve surgery
16. hiv due to blood transfusion and occupationally acquired hiv*
17. kidney failure
18. loss of speech
19. major burns
20. major cancers
21. major head trauma
22. major organ/bone marrow transplantation
23. motor neurone disease
24. multiple sclerosis
25. muscular dystrophy
26. paralysis (loss of use of limbs)
27. parkinson's disease
28. primary pulmonary hypertension
30. surgery to aorta
*the eligible occupations for occupationally acquired hiv are:
a. medical practitioner/medical student/state registered nurse
b. medical lab technician/housemen/dentist (surgeon and nurse)
c. paramedical worker working in a medical centre or clinic (in singapore)
Friday, September 2, 2011
the us federal housing finance agency on friday sued 17 top US and foreign banks over "billions of dollars" in losses on mortgage-backed securities that plunged in value in the 2008 financial crisis.
in court filings, the us federal housing finance agency alleged that in some cases, the lenders committed fraud in selling nearly $190 billion in securities to mortgage giants fannie mae and freddie mac, which had to tbe bailed out by the government.
the list of major banks include:
a. bank of america
b. goldman sachs
d. jpmorgan chase
e. morgan stanley
f. general electric
g. ally financial
h. first horizon
i. deutsche bank
k. credit suisse
n. the royal bank of scotland
o. societe generale
the us federal housing finance agency also sued two former mortgage giants -- Countrywide Financial and Merrill Lynch -- which are now part of Bank of America; together the face value of the mortgage backed-securities the three sold to Freddie and Fannie which were cited in the suits amounted to more than $57.5 billion.
these law suits brings to me mind, the 'minibonds' saga here in our own backyard. i remember also clearly that promiseland independent, when we were propositioned, did not agree and did not sign an agreement to be introducers.
and that's why we are clearly mindful of our role as financial advisers or in football parlance, goal keepers if u like, entrusted with the collective wealth of our clientele which nobody can afford to lose.
and that's a promise which we intend to updold and deliver long into the future.
Thursday, September 1, 2011
just caught up with a prospect who wrote to me requesting for a meeting. but before agreeing to meet-up, he emphasised that he is unable to pay a fee for my services.
on this, i shared with him that in my 14 years in the financial industry, i have never charged anyone for my services.
at our meeting, i found out that like me, he was already in his 60s. his future became a slippery slope after receiving the dreaded pink-slip. the months flew by and after sending out numerous resumes and attending 'so-called' interviews, he came to the conclusion that he was not 'employable', not because of a lack of qualifications but primarily because of his age.
in the end, he had to settle for any job and ended up being a security guard working 12 hour shifts and finding it hard to make ends meet with what he says is a meagre income.
when he was younger, he was a firm believer in the btitr (buy term, invest the rest) thingy. and so it was no surprise to find out that his insurance portfolio comprised mainly term policies with a solo regular premium ilp.
and since he is not now so young (in his 60s), he is no longer in the pink of health but carries a medical history. but the most surprising aspect in terms of his financial plan is the lack of a comprehensive h&s plan as well as low protection coverage. the double whammy is that some of his term plans have matured, meaning the term of coverage has expired when he attained his 60th birthday.
because he is on medishield only, my most obvious top concern for him is the lack of a comprehensive h&s coverage.
and he also does not have adequated death and critical illness protection. worst, the critical illness coverage is through his regular premium ilp. and because he is already in his 60s, the assurance charges will continue to increase exponentially and it is anybody's guess whether the policy can be kept in force, going forward. and with regard to his retirement planning, this is via his investment portfolio which is not substantial (current value is in not even reaching 6 figures) and grossly underperformed probably due to inconsistent regular savings invested and lack of periodic reviews and portfolio rebalancing. to top if off, when he turned 55 years some time back, he did not even meet the cpf minimum sum requirement as well.
all-in-all, is this financial planning or the lack of it?