Financial Literati

Hi Garrett, Thank you for sharing your knowledge ...

2010-01-05T17:40:32.370+08:00

Hi Garrett,

Thank you for sharing your knowledge with me. You are right that as a financial advisor I should be more educated, and I thank you for widening my perspective. :) So long as my mistake can prevent others from committing the same, I do not insist on being right all the time. Sometimes being wrong would generate a better discussion. :) I will work on you and Derek's suggestion and check out the GE Paysecure.

If you are comparing Disability Income insurance t...

2010-01-02T22:35:57.717+08:00

If you are comparing Disability Income insurance to Term Insurance with CI and thinking both serve the same purpose then you are sorely mistaken. No offence, but as a financial advisor you should be more well educated then this. Btw, I am not a financial advisor

While Term with CI and Disability Income do cover similar purposes (medical-related financial disasters) and may partially overlap, they cannot mutually replace each other.

Firstly, I consider Disability Income easier to claim than Term with CI, because it uses the definition of *OWN OCCUPATION* disability. This is difference from the definition of TPD used in most Term plans. It means that as long as you are medically certified unfit to work in your occupation you can claim. This means that as an office worker, you can claim if you meet and accident and the doctor says you cannot use your fingers (e.g. typing) for the next few years.

Also please note for Term plus CI, the insured will most likely be near death during the claim. CI survival rates is not spectacularly high as most die within 5 yrs, which is why it is called Critical Illness. This is unlike Disability Income where the insured does not need to suffer a major medical condition to claim.

My quote for GE Paysecure insurance for a period from 25-55 yrs old for a $2000/mth DI insurance is only $260 annual premium.

Hey Derek, Thanks for your feedback! You've m...

2009-12-14T13:52:08.800+08:00

Hey Derek,

Thanks for your feedback! You've mentioned an interesting point about coverage in times of illness and mental illness. I think its a valid point - what happens if you can't work when you've been diagnosed with schizophrenia or major depression? That is something to check out. (This reminds me of the case of a Canadian woman who loses her benefits over a Facebook Picture. But that is another story. :))

Another point that interest me is also the premiums that you are quoted. If the premiums are like what you've said then it's really affordable! Can you share your lobang with me? :)

Hi Jade, I don't think it is fair to compare ...

2009-12-13T16:32:48.375+08:00

Hi Jade,

I don't think it is fair to compare both plans using total disability. To me, the purpose of buying this plan is to cover myself in the event of a partial disability e.g. the lost of an arm or leg due to illness/ accident, mental illness. I don't think the general plans out there cover the lost of a limp due to an illness and mental illness is not covered. It is also to cover me in the event that I am not able to earn back the same amount before my disability.

In addition, where did you get the premiums from? My current premium for a $1,500 monthly payout is only $193 per yr. Of course there are other factors such as your job scope, pre-benefit period, whether you want the payout to adjust for inflation etc.

I was last quoted that an annual premium for $2000/mth benefit, 180days pre-benefit period till age 65 will be $294.00/yr.

Dear all, Thank you very much for hearing out my ...

2009-12-07T00:10:51.107+08:00

Dear all,

Thank you very much for hearing out my rantings, and I have gathered various valuable insights from your comments. One important advice is the ability to be there for the client. It is with much regret to acknowledge that some clients will be 'orphaned' and left to fend for themselves. However, it does not mean that the advisor has to stay on in the line to continue the servicing. Mr Tan is no longer with the company, but he continues to assist others by blogging his views.

My role is the claim process is to assist those who cannot help themselves, and for those who wish to self-service, to equip them with the necessary information to do so. A sustainable relationship is one that is symbiotic. I will help as much as I can and for as long as I can. Help me to help you.

What make one think that FA is still working as FA...

2009-12-04T14:04:03.404+08:00

What make one think that FA is still working as FA or in the same compnay when one has to make claim. More likely, when one has to make claim, it will be DIY.

Ikea charged for delivery and installation. I paid for delivery and installation to set up a double decker bunk bed.

Hi Finarati It could be a case that the client ha...

2009-12-04T08:22:32.715+08:00

Hi Finarati

It could be a case that the client had the wrong information about getting a discount by going straight to the insurer.

Instead of putting her down for being "ignorant" and of course "giving you hell" which may be unfair as you did not cause her ignorance, perhaps you may want to ask her nicely why she thought that bypassing agents would get a better rate?

Her frustration may not be against you but the "system" so unfortunately because you are her agent she took it out on you as a representative of the insurer - which you are.

Perhaps it was unfair of her to "give you hell" but you may want to dig deeper to find out why she behaved the way she did before putting her down as being ignorant.

We are all ignorant of many things outside our own knowledge. Trying to understand people's views before judging them would help you grow in maturity as well.

Be well and prosper.

Calm down, sales/service line is like that. Espec...

2009-12-04T00:19:46.641+08:00

Calm down, sales/service line is like that.

Especially in sunny Singapore where the culture in general is "Ai Pi Ai Qi, even better if its free!"

Unlike in other developed countries where there is a "tipping culture". The delivery person, waiters, hotel staff, etc, it is perfectly normal to remunerate them for their service. There is mutual respect and understanding that the service is appreciated.

Whereas here it is more common to ask for discounts, cash back, undercutting, free gift, instead of the quality service one might offer.

Differentiate yourself. Spare yourself the agony, move on. Let them suffer from their own attitude.

In our line, it is a long term relationship, so we also have to be selective of clients some times. No point forcing your view on them and have a terrible time thereafter.

Good post, I'm quite agreeable with you that i...

2009-12-03T23:34:30.149+08:00

Good post, I'm quite agreeable with you that it would be very weird to DIY your own insurance plan. In case of anything, there is no one that can help you to fill up the claim.

I am the type who like to pay services that have values to me which will certainly save me time and effort. Especially on thing that I am not professionally good at.

One of the things I will DIY is my investment plan.

Think it is not entirely true in practice that the...

2009-12-03T21:35:49.094+08:00

Think it is not entirely true in practice that the original adviser will be there in times of claim. Death and retirement would mean the adviser will not be there to help the claim. Also if the adviser resigns, he cannot service the policy unless his firm permit absolute vesting like what some IFA firms are doing.

The agony you face is because you rely on commissions to earn a living. If you get out of this reliance on commissions, you will be a happy person.

From an IFA.

While I can understand where you are coming from (...

2009-12-01T19:08:18.627+08:00

While I can understand where you are coming from (I also work in the service line and sometimes have to face crap from unreasonable people), I'm not entirely sure that the tone you have chosen to adopt in this post will necessarily make you look good in the process of explaining your stand.

I personally fall into the camp where I have no issues paying reasonable sums of money for good and useful service. Nonetheless it would not be a surprise to me that there are others who are the opposite, esp in a society as materialistic as ours.

But this is something I foresee you will encounter not uncommonly in a line of work such as yours, and it would definitely be good to learn how to handle such thorny cases with ease - eg. by not taking up their case and sparing yourself the agony. :)

Dear Patrick, Thank you for your kind compliments...

2009-11-28T13:37:05.854+08:00

Dear Patrick,

Thank you for your kind compliments and for sharing your insights. I concur with your views, and think that the limited-whole life does have more pros than cons. :)

Dear Anon, The rate of return is 8000%, not 2000%...

2009-11-28T13:06:52.485+08:00

Dear Anon,

The rate of return is 8000%, not 2000%. Sorry for the typo.

Dear Anonymous, I agree with you that if you know...

2009-11-28T13:02:26.683+08:00

Dear Anonymous,

I agree with you that if you know how to invest your money at that various rates of return, then you'll be getting more than $100K. However, the point you miss out is that insurance and investment are not the same thing. If you need to claim in the second year, it means that by paying $1,242 you get a 'returns' of $100K. Maybe you can let me know what is the rate of returns here? 2000%? :)

The most common misconception that people have, is that they treat insurance and investment as the same thing. However, this is a fallacy. Insurance covers risk. In times of need it provides you with the money that you do not have. Or even if you do, you'll rather use it for your investment or retirement. ;)

dear ms jade, please accept my compliments for an...

2009-11-23T11:36:25.806+08:00

dear ms jade,

please accept my compliments for an excellent article!

to me, i consider a limited premium whole of life plan, the best life insurance product available to consumers.

one of the greatest advantages that come with a limited premium whole of life plan, and what i term as the risk of future affordability being greatly marginalised with the specified shorter or shortest time horizon on the liability of paying future premiums.

the other long-term benefit is the whole of life plan effectively addresses longevity risks (provided there is no expiry or maturity date on the coverage of stated benefits (excluding tpd which usually expires at age 65/66).

in other words, the whole of life plan is a 'pow chiak' product whether u survive and live to a ripe old age (100 years and beyond) or die prematurely. what a whole of life plan translates to is a 'sure-can-claim' plan unlike term or even regular premium ilp products where there is greater uncertainty with staying insured (future affordability of paying premiums) or even surviving beyond the term of the plan.

just my 2 cents' worth.

with my best wishes.

That being said, if you know to invest your money ...

2009-11-20T07:36:10.562+08:00

That being said, if you know to invest your money ($103.5) and get an annual yield of at least 12%, you will be getting more than $100k after 12 years!

To get more than $100k for $120, all you need is an annual yield of at least 11%.

to get more than $100k for $234.50, all you need is an annyal yield of at least 6%

Moreover, the $100k still has the potential to go up.

Purely from a monetary and health perspective, it ...

2009-11-19T23:11:55.838+08:00

Purely from a monetary and health perspective, it is true.

However, there is one main difference:
The one paying the premiums, hence, affordability.

This has also to be seriously considered as a factor. if budget was a concern, it is more important for the parents to insure themselves first than their child.

many parents often neglect to review their own coverage first before purchasing for their child.

Hi NOOB! Thanks for your comment! If you have any...

2009-09-18T12:00:26.666+08:00

Hi NOOB!

Thanks for your comment! If you have any questions about the ILPs do let me know and I'll be glad to help you with them. :)

WHAO!!! Thanks for the insights of ILP didn't ...

2009-09-17T20:12:05.715+08:00

WHAO!!! Thanks for the insights of ILP didn't know its so bad that required 10yrs(best scenario) and 15yrs(worst scenario) to break even not to mentioned its not guarantee...

Hi, Thank you for sharing your insights with me! ...

2009-08-18T22:49:24.322+08:00

Hi,

Thank you for sharing your insights with me! :) Indeed I feel that a lot of people are interested in ILPs simply because they just want to 'do investment' and ILPs are touted as a possible alternative. Unfortunately I feel that this is the least attractive of all possible 'investment' tools (if it can be considered as one in the first place!) but many of my clients, especially those without any experience in investment, are actually interested in it. I find this worrying and that is why I am sharing my concerns in my blog. I am glad you did you due diligence and it is only prudent that people should find out what they are buying into. If one DOES NOT understand the details, please don't 'invest'.

hi, I found your blog while searching on ILPs. I ...

2009-08-17T01:53:32.626+08:00

hi,

I found your blog while searching on ILPs. I did my due research and asked my Financial planner many questions on ILP and he cant answer it.

Plus, I did a check on 'Pru*' company ILP, and guess what ? More than half of the ILP-linked UTs have negative returns since they were formed...

Seems like too many youngsters have jumped on the bandwagon...

Hi ThinkNotLeft, Thank you for following my posts...

2009-07-16T00:25:07.135+08:00

Hi ThinkNotLeft,

Thank you for following my posts. Can you kindly clarify your statement so that I can offer you an appropriate reply. I do not understand what analysis of mine you are talking about.

By the way, thank you for your agreement on the need for discipline. If by paying some fees one can ensure that he/she will have some savings eventually, its better than by saving the fees and end up having no savings at all. :)

Hi Finarati Presumably you may already have the a...

2009-07-15T00:45:17.575+08:00

Hi Finarati

Presumably you may already have the answer to your question.

Your follow-up post is a halfway there. Extend your analysis there from year 31 to 52 (or age 57 - 78), and using your provided term cost of $3481, you will get the $212,000.

Wrt your second para: Yes, it may turn out buy term and spend the rest. It's up to the person to decide whether he has the discipline to buy term and invest the rest. If not, he may be paying expensive fees to instill the nec discipline.

Hi la papilion, Thank you so much for your feedba...

2009-07-08T00:23:05.955+08:00

Hi la papilion,

Thank you so much for your feedback. You have pointed out some valuable insights that enriched this discussion. :)

Hi Anon July 5, Thank you for your feedback. I ag...

2009-07-08T00:14:27.857+08:00

Hi Anon July 5,

Thank you for your feedback. I agree with you that we have to compare apple for apple so here we goes:

For the Whole Life:
A)Returns: 0%, Guaranteed: $55,300
B)Returns: 3.25%, Guaranteed: $78,997
For the BTITR:
A)Returns: 0%, Guaranteed: $41,629
B)Returns: 3.25%, Guaranteed: $76,540

So to compare apple with apple we compare A with A and B with B. That is exactly what I did and I did not twist my words. However, you insisted to compare A (Returns: 0%, Guaranteed: $55,300) with B (Returns: 3.25%, Guaranteed: $76,540), so you are not comparing the same thing. The important assumption that I infer from you is that you assume that BTITR can make returns at 3.25% while insurers cannot make ANY returns at 0%. I beg to differ. The market is impartial - the bull run benefits individual investors as well as the insurers, and the bear run can affect both as well. If you can hit 3.25%, it would be unfair to insist that the insurer cannot.

By the way I do not know how you judge me to be an insurance agent, and I have no way to prove otherwise to you unless you can meet me. I am very happy to know that you are concerned about my integrity and character, and I will do my best to fulfil your expectations. I take care of my clients, and in case you don't know I put my signature on every page that my client signs. If anything should go wrong, they can complain to FIDReC and hold me accountable . However if they should listen to you, and if anything goes wrong, then who can they seek redress from? Call the police or CASE and say that YOU - Anon July 5 - misled them? You mis-represented the fact? Please be responsible for your remarks when you know that people cannot hold you responsible when you are protected by your anonymity. Thank you for your consideration and kindness.