Misconceptions about insurance

Published in Straits Times Online Forum
I REFER to the ongoing discussion on insurance products (Mr Gideon Lee, "Buyers, not agents, decide the products they want..."; Nov 5), and would like to highlight some misconceptions.

Whole-life policies that "give back" the premium come with higher price tags. For a young healthy male who is just starting his career, a coverage of $500,000 for term insurance costs around $2,000 a year, whereas a whole-life policy with the same coverage could cost around $10,000 a year.

The difference in the premiums between the term and whole-life policy is invested by the insurance company and a significant portion is pocketed by the company before the remainder is returned to the customer.

Whole-life insurance policies provide only the illusion of "giving back" some of the premium paid. It is akin to pulling money from your right pocket, taking some of that for myself, and putting the remaining amount back in your left pocket.

I simply do not see how this is a good deal when consumers can pocket the difference, save and invest the money by themselves. The claim that many customers prefer a policy that "gives them" something at the end shows their lack of understanding of the purpose of insurance - that it is meant for protection against catastrophic effects and not for savings. So one should not expect anything back if the catastrophic event does not occur.

Garrett Goh
http://www.straitstimes.com/STForum/OnlineStory/STIStory_603220.html

Noisy carnival at Bishan

Posted at request of Huang HW


I live in front of Bishan Active Park. Carnivals and other activities are very often held on week-ends on this field. Every-time this happens, the noise is unbearable. I take my family out to avoid the noise.

My limit was really reached on Sunday(15 Nov 2010). The duration and magnitude of the noise was not particularly bad but I have two children, one having an 'O' level paper on Monday (15 Nov) and another in the midst of taking the 'A' levels.

How can my children prepare for their examinations. Many of you may be suggesting complaining to the police or my MP. But the event is LivEnabled@the Park officiated by a Minister Lim!

To add insult to injury, I can hear load knocking noises as they are clearing the site as I am writing this. Its now 40 minutes past mid-night!

Can somebody help!
Huang HW


CNA report

Gold investment scam?

http://thestar.com.my/news/story.asp?file=/2010/10/15/courts/7229157&sec=courts

 

Interesting articles in SGEP

There are a few interesting articles in SGEP. One is an explanation about Quantitative Easing and why it will not work and the day of reckoning will come. This is important for investors to study.

There are also some postings about election platform entitled "Its about You" and the quality candidates that will be contesting the election from the Singapore Democratic Party.

General Election Portal.

Sound policies, impressive candidate for General Election

Read this article.

Get a Fair Deal

Here are some tips on how to get a fair deal on your insurance - what to look out for, and what to avoid.

www.tankinlian.com/latest.aspx

Direct link.

Vitamin Account (6 year SGD equity linked structured deposit)

A customer invested $40,000 in the vitamin account in 2005. She received a payout of 4% in the first year and no subsequent payout. Five years have passed. The deposit will mature in one year's time. if there is no further payout (which is likely), the total return is 4% for 6 years or 0.66% per year. This is a poor yield for an investor who locked up the money for 6 years.

In the past, many investors have received a poor yield on various tranches of capital guaranteed structured products.  I usually advice investors to avoid structured products. The can get a better yield on government bonds or a low cost investment fund.

Learn bow to get a better yield. Attend the talk on financial planning held on 4 December. Register here.