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The truth about life insurance

Posted by theonlinecitizen on May 7, 2008

Tan Kin Lian

Many people buy life insurance to provide financial security to their family. If premature death occurs, the policy provides a cash sum to take care of the future financial needs of the family.

Insurance agents are drilled into thinking that they play a “noble” role in safeguarding the future of many families. This is half the truth.

Here is the other half: Many families are being grossly overcharged for the modest financial protection offered by the life insurance policy. After deducting the high expenses, their net savings do not earn a sufficient yield for them to live on during their retirement.

Let me quote a real example. Take the case of a male at age 30 saving $300 a month over 30 years. He is able to secure a sum assured of $100,000 under an endowment policy.

If premature death does not occur (and this represents probability of 95%), he is likely to receive a maturity sum of say $171,000, representing a yield of 3% per annum on his savings over 30 years. The insurance agent says that this looks like a good deal, considering that his family had enjoyed financial security for 30 years.

If the policyholder had invested the same sum of money in a low-cost investment fund that mirrors the investments of the life insurance company, he is likely to earn a net yield of about 5% per annum. At the end of 30 years, this will give an accumulated amount of $239,000.

This investment fund earns $68,000, or 40% more than the proceeds of the insurance policy. This is reflected as the “effect of deduction” in the benefit illustration given to the consumer at the point of sale of the life insurance policy. Most people are not aware about the existence of this figure, let alone understand what it means.

The effect of deduction of $68,000 represents a “reduction in yield” of 2% per annum, i.e. the difference between the net yield of 3% and the gross yield of 5%.

The insurance agent will probably explain that this is the cost of the valuable benefit provided by the policy, namely, the financial security provided to the family for 30 years.

What the agent did not say, which is probably dishonest, is that the policyholder could have bought the same financial security to the family through a decreasing term insurance policy for only one-tenth of the cost, or about $7,000. The low cost term insurance, which is what the agent does not offer to the policyholder, will allow the policyholder to earn $61,000 more over the 30 years.

The remainder of the “effect of deduction” goes to pay for the agent’s commission, the overriding commission to the agency managers, the advertising expenses, the sales incentive trips, the overhead expenses of the insurance company, and the profits for their shareholders.

If the policyholder buys a whole-life policy or a critical illness policy, the “effect of deduction” is higher than that for an endowment policy. Although the coverage is higher and wider, the total cost is still about ten times of the cost of a comparable term insurance plan.

The investment-linked policy is equally bad for the policyholder. I have seen benefit illustrations for these policies where the reduction in yield is 4% or more. If a reduction in yield of 2% amounts to $68,000, a reduction in yield of 4% will more than double the cost. This is taking too much from the unsuspecting consumer. It amounts to daylight robbery.

Here is my advice:

1. Do not buy any high-cost life insurance policy. High-cost life insurance plans are those where the policy combines life insurance protection with savings. Low-cost life insurance policies – term insurance policies – cover protection only.

Examples of high-cost life insurance policies include whole life, endowment, critical illness, education and investment-linked policies, where many months of your premium are used to pay the insurance agent’s commission.

2. If a policy is recommended to you, you should ask about the “effect of deduction” and the “reduction in yield”. If the insurance agent is not able to show these figures, you should stop the discussion as the agent is incompetent or dishonest. Ask the agent to disclose the total amount of commission payable over the first three years of the policy. Remember, the commission comes entirely from your premiums.

3. Find out about the cost of decreasing term insurance to provide the same coverage. Do not ask the same agent, as he or she is likely to quote you a large premium. Call the hotline of another insurance company. If they do not provide a decreasing term policy, you can buy a level term policy for a higher premium.

4. The coverage of $100,000 is probably inadequate for your family. You need to be covered for about five years of your earnings. Most people need $200,000 or $300,000. If you buy decreasing term insurance, you can afford to have higher coverage as the cost is low.

My history in NTUC Income

Some people will point out that during my tenure as chief executive of NTUC Income, I had offered the same life insurance policies that are now being discouraged in this article.

Here is the truth. The policies that were sold during my time have a cost to the policyholder that is less than half of similar products in the market. This is achieved by reducing the agent’s commission and the administrative, marketing and other expenses. These policies give a return on maturity which is 15% to 30% higher than similar products in the market.

This statement applies to the old policies introduced during my tenure. I do not wish to comment on the new policies introduced by NTUC Income after I have left. The consumer should ask about the “effect of deduction” and the “reduction in yield” on these new policies and make their judgement.



122 Responses to “The truth about life insurance”

  1. seveneleven said

    Many thanks to Mr Tan for his advice. However, was this properly disseminate and educated to your agent when you were in NTUC income? Was it NTUC Income policy to ensure that the consumer were made to pay for the unnecessay?

    It makes me wonder why you have suddenly become a crusader for the NTUC Income policy holder?

  2. Insurance agents will almost never inform you of the most cost effective polices as these yield the most miserable commissions. I believe that nowadays agents only earn commission off your life policies for the first 5 yrs or so. Unlike previously when they took a cut of your premiums over the entire duration of the policy.

    This has lead to predatory practices where agents attempt to sell the most expensive policies to make it worth their while.

    It is ludicrous for us to continue to pay higher premiums for lower coverages and lower bonus distributions.

    “return on maturity which is 15% to 30% higher than similar products in the market”

    Mr Tan Kin Lian – might i ask what you mean by ‘similar products’? are you comparing to products offered by other insurance companies or are you referring to investment products offered by lets say the banks?

  3. Gary Teoh said

    Insurance agent gave me a bad impression,they want our commission only,after 3 years or 5,when no more commission, they disappear,I lost a lot whether in insurance or unit trust.Can’t trust them any more.

    • Kelvin Lee said

      I’m sorry to hear that you have lost a lot in insurance or unit trust and can’t trust insurance agents. Its unfortunate he/she isn’t there to hold your hand and walk you through the entire lifetime of your policy. Next time, look for someone who would promise you to be there for the next 30-40 years before you make a commitment.

  4. Currently Spared said

    From what I understand, the concept of insurance is collective protection. Meaning if 100 individuals pay for an insurance and let’s say 1 person actually claim before maturity, then the rest are basically providing the payout to this individual. As return, you get collective protection. I fail to see this being reflected and so is it significant? I think a complete picture is needed for fairness and also, I am not denying that agents have families to feed too. Just my dime worth.

  5. gorgorsitioeh said

    Hi Mr Tan, thank you for your insightful advice to many disadvantaged policyholders of NTUC Income, some of whom would probably be as disgrunted as you at present.

    However, like some people, I am intrigued as well as to why you have suddenly become a crusader for your former company’s policyholders. You are, or rather, you used to be a former NTUC Income man (since you had chosen to draw a clear line to deviate yourself from the present management by not commenting on the new policies introduced after your departure), and you didn’t leave the company for a very long time, so as to speak. It makes me wonder if you have some other motive for doing this, whether it is political or not, or whether you have substantial solid backing to make such a loud statement on a government-friendly newspaper. After all, you used to be a NTUC Income man.

    Once again, thank you very much.

  6. omongpapkosong said

    Mr Tan Kin Lian you are a very brave man and I greatly admire you.
    Singaporeans needs more men like you.
    Thanks for your advice.

  7. MadameG said

    Dear Mr Tan,

    With all due respect, your advice can be obtained from reputable financial planners, who do not earn commissions from sale of any financial products (However, a word of warning. Some “financial planners” are actually insurance agents). Such is the current state of the insurance industry – your ‘confession’ says it all.

    Your statement “These policies give a return on maturity which is 15% to 30% higher than similar products in the market.” does not support your own point that one should NOT buy those life insurance policies. I do not see how this could absolve your position.

    I am not so sure what are your motives for this article – an atonement or public penance of some sort, perhaps?. However, in the context of financial truth, this is most welcome.

    Perhaps, you could reveal more on other non-life insurance products. Of particular interest ($$$), the so called “medical” insurance in Singapore.

  8. It was disappointing to see you condemning Financial Advisers so actively barely one year you left NTUC Income.
    One year ago, people from NTUC Income respected your hardwork as you go around Singapore giving endless Seminars and promoting plans from NTUC Income. They paid tribute to you when you left and you left with full respect.

    Today, you were telling everyone don’t buy these plans anymore because new plans are not of good value. You also changed you mind that old plans that you used to promote are also of no good value now.

    We cannot stop you airing your views. Maybe you want to get the best Citizen or Singaporean award by being a noble person who are willing to give advice by not getting a single cent. You can spend all your time in your blog teaching people not to invest in Unit Trust or get any Life Insurance because you have already build up a good wealth from the company you are condemning.

    I cannot disagree that Standards of Insurance Professional need improvement or some Financial Advisers deserve their rewards by selling the inappropriate plans but I do not agree that they should be slaughtered overnight.

    The knowledge gained by Financial Advisers are through years of studies and experience. I do not want to argue that some Life Insurance is ok if supported by Term Insurances. Many Financial Advisers deserve some commission or advisory fees. It was unfortunate that the structure are not in place to pay the well deserved and really professional advisers.

    If you truly care for the industry, help to think of good ways to improve the situation unless you think the best way is to make a name for yourself by killing everyone in the industry. Or maybe you are trying to gain publicity for the new company that you just set up.

    Adrian Khiat

  9. SuperNanny said

    It is quite interesting a number of readers think Mr Tan has a personal agenda. Nonetheless, being quite a math-idiot (heavily penalized in our education system), I read Mr Tan’s article and don’t really have a hoot what he’s saying. They are really too technical for me.

    I think in life, you can’t plan too much and you shouldn’t be so picky to the point of counting pennies and cents. Everyone’s got to make a living, so why not just chill out and let your agents earn their dough. Instead, focusing your energies doing what you enjoy is more important and as a result you can earn more too.

    I have some NTUC policies (lol, I don’t even really remember the names), and I’m going to just leave it status quo. Have about half a million of insurance, yah so think that should be enough? Really don’t feel like spending time to go down to that AGM and haggle like in a market.

  10. It is disappointing to see that the person who left NTUC Income barely one year ago, condemning all Financial Advisers in Singapore. One year ago, I remembered seeing Mr Tan going round Singapore in Community Centres and in Bras Basah Centre giving Seminars after Seminars. He was actively promoting plans from NTUC Income.

    Today, all the plans he used to promote became lousy plans and the new plans introduced are also lousy plans because he feels that the adviser should not be paid too much. There was “rumours” previously that he tried to capped the commission of his mobile financial consultants. This commission issue, with other issues, prompted the then GM, Mr Stanley Jeremiah to leave. Two tigers cannot live on the same mountain.

    I have to agree that not all Financial Advisers are ethical or giving the right advice. But there are many, who keep upgrading, well read with industry knowledge and worked hard for the interest of the people. Its not right to say that an adviser is unethical just because he sold a Life Policy. A life policy may be appropriate if, after a proper analysis, the policyholder and adviser conclude that a Life Policy might be a better choice. I’ll not like to elaborate the advantages of a Life Policy when coupled with a Term policy.

    I hope Mr Tan is not trying to gain publicity for his new company that he set up or are being bitter with the new management for gaining market share agressively that he could not achieve during the last 2 years as CEO. His new company works best when all Financial Advisers in Singapore are slaughtered. He is willing to give free advices in his blog with all his free time because he had already accumulate sufficient wealth from the company he is not condemning. He don’t need an income, many of us still need to.

    What an interesting personality.

    Adrian Khiat

  11. Tan Kin Lian said

    A few people have asked about my motive in revealing the truth about life insurance, and how it reconcile with the products that are sold by NTUC Income during my time.

    I have always held the view the the products must be priced fairly for consumers. The premium comprise of the cost of insurance, the marketing expense and administrative expense, with the balance being invested to accumulate the cash value and bonuses payable under the policy.

    For marketing expenses, it was necessary to pay a fair remuneration to the agent to sell the life insurance. The commission rates paid to agents and agency managers in the market were far too high. The commission rates paid by NTUC Income were at a much lower level.

    Administrative expenses were kept low. There were no extravagrancy. We were frugal. I felt that this should be so, as most of our policyholders were from the ordinary people who has to work hard to earn their monthly income.

    The remaining premium were invested to accumulate the cash values and bonuses payable under the policy. The bonuses are distributed to all policyholders fairly.

    NTUC Income pays a lower level of tax as a cooperative society. This helps to offset the marketing and administrative expenses, and give an attractive return to the policyholders.

    Most insurance policies sold by NTUC Income in the earlier years enjoyed a high rate of bonus and gave an attractive return to the policyholders. A yield of more than 5% (even 6%) over the past 20 years can be considered to be quite good.

    After leaving NTUC Income, I have more time to study what is really happening in the market. I get more feedback from the general public about the insurance plans that they have bought from other insurance companies.

    I was also asked about the structured financial products sold by the banks and other distributors. These products have many of the bad characteristics of high cost life insurance products.

    It becomes quite clear to me about how the general public is being exploited by the bad products offered by the financial services industry. They took away high charges (not properly explained by the financial advisers) and gave a poor return to consumers. I decided to be more active in giving my views in my blog.

    This is my personal reply to Adrian Khiat, whom I know well. Adrian is a fair person, although he has recently written a strong criticism of me.

    I am concerned about the change in the bonus structure affecting 310,000 policies sold earlier by NTUC Income. I am also conerned about the move by NTUC Income to be more “like the industry”. They destroy the values that NTUC Income stood for, as a cooperative society, during the time that I headed it.

    I do not wish to interfere with the new management of NTUC Income in respect of the way that they manage NTUC Income now and the new products that they introduce.

    My wish is that they keep the old bonus structure for the old policies that were sold earlier, based on the benefit illustrations that were promised to the policyholders. There should not be an unilateral and arbitrary change.

    The management can make an offer to these policyholders to move to the “new bonus structure”. Let it be voluntary.

    There are some good life insurance products in the market. Some other products can be improved by reducing the marketing and other costs, and offering fair terms to consumers.

    In this way, the life insurance industry can do its “noble” role of serving the public by truly serving them with the insurance protection and a fair return on their savings.

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  13. Boboshooter said

    Dear Adrian,

    Other than him being the ex-NTUC Income CEO, I don’t know Mr Tan or what his new business is, or whether he has a vested interest in saying what he says, but one thing is for sure – I am far more inclined to agree with him than with you.

    What Mr Tan is saying, as anyone who’s studied finance 101 can tell you, is that there is nothing mysterious or wonderous about life insurance or investment-linked insurance. Deconstructed, they are simply a packaging of a term insurance together with a savings or investment into one scheme.

    As such, there is no financial or moral justification for the intrinsic insurance costs of such policies to be ten times higher than an equivalent term insurance (according to Mr Tan).

    If what Mr Tan says about the 10x higher cost is correct (and I’m quite sure from his background he knows what he’s talking about), strictly speaking from a finance angle, I am highly dubious that a life policy can ever be better choice under any circumstances.

    I think the only reason why such policies sell so well is that the so-called “Financial Advisers” push them hard as they are much more lucrative to sell; and financially less savvy purchasers continue to be “suckered” into it without being aware that they are getting less than what they should get. I agree with Mr Tan that this is downright dishonesty and smacks of conflict of interests.

    If your main justification for the “right” to sell such policies is the financial adviser’s own rice bowl, where does that leave the the policyholder, whose interest is supposed to come first?

    In parting, I’d like to draw your attention back to the meaning of term you used – “Financial Adviser”. What does that the term “Finance” and “Adviser” signify to you?


    • Kelvin Lee said

      Dear Boboshooter,
      I am sketical that the article is really written by the ex-CEO of an Insurance company, given the misguided information he is stating. His arguement is essentially a rehashed version of AL Williams “Buy term and invest the difference” philosophy. See

      That is only half the truth. The other half is that the death rate of Singaporeans below the age of 60 is low. Which means that 30 years term insurance for a 30 year old has a very low probability of payout. Insurance companies makes the most money when they DO NOT PAY. For those of us who live beyond the age of 60, a whole life policy would usually result in a claim – considering the unavoidable fact that we all will die eventually.
      What he is also not telling you is the comparison on returns of 3% or 5% are projected figures. There aren’t many guaranteed investment options available to consumers, insurance related or otherwise.

      The real problem is not the distribution costs or insurance agents commissions. If you purchase a policy of 25 years or more, the agent gets approximately 1 year’s premium over a period of 3-5 years. Agents get commissions approximately 4% of the total premiums.
      The real problem are investment managers who draws a big salary and bonuses even if your investment loses big. The problem is highly paid actuaries deciding the high mortality charges, the fat pay package of senior management (including the CEO of insurance companies.) who apparently do not understand how insurance works.

  14. Dear Mr. Tan Kin Lian,

    You have created quite a stir in the industry. Some people thinks you are wrong, some others think you have another motive while others believe what you are doing is right.

    In whatever you do, if your conscience is clear, let those who criticized you not prevent you from doing the good work.

    If your conscience is not clear, I appeal to you to listen to your own conscience.

    All the best.

  15. Tan Kin Lian said

    This is my reply to Adrian Khiat.

    I wish to acknowledge the large numbers of insurance agents who have to work hard to earn an income to feed a family.

    I hope that insurance companies can design products that are fair to consumers, give good value and offer an adequate remuneraton to the insurance agents. During the time I headed NTUC Income, I adopted this approach.

    It is possible for insurance agents to play a “noble” role of selling life insurance, without any disadvantage to the customers. If the agent works hard, it is possible to earn more than enough to feed the family, more than other jobs that they are capable to do. It can also be fulfulling to help many families.

    Under my approach, it may not be possible for the insurance agents to be super rich. At least they have the satisfaction that they are giving good value and not taking advantage of the trust of their customers. They are giving honest advice as a financial adviser.

    I hope that, in the future, more people will buy good value insurance products directly from the insurance company, without the need for agents to sell the products to them. There will be more salaried jobs for insurance advisers. This will improve productivity and reduce the cost to the consumers. It will also give more stable sales jobs.

    • Kelvin Lee said

      Dear Mr Tan,
      I am shocked by your ungrateful and irresponsible statement:
      “I hope that, in the future, more people will buy good value insurance products directly from the insurance company, without the need for agents to sell the products to them. There will be more salaried jobs for insurance advisers.”
      After all it was the thousands of NTUC Income agents that worked hard for the results you enjoyed for 30 years. Insurance companies all over the world have been trying to do away with the agency system for decades unsuccessfully. As the CEO of an insurance company, you ought to know better that life insurance does not sell by itself. Are you suggesting that salaried insurance advisers earning $2-3k per month is going to justify a handsome pay package of the CEO? Or are you just uncomfortable with the idea of insurance agents making more money than the CEO? The highest cost to the consumer is probably the management who is a fixed cost, regardless if they generate revenue or not. Consumer bears this cost regardless if management is productive or not. Insurance agents only get paid ONLY WHEN they bring in business. This variable cost is incurred only when a result is produced – hence PRODUCTIVE.
      The job of a CEO is to provide leadership and motivate the organization to be productive. Don’t you agree?

  16. Blacktshirt said

    Hi Mr Tan,

    Would that suggest that almost all the policies in the market are not to the benefit of the life to be insured?

  17. Derivative said


    Very well said. People are sometimes confused with complex names / jargons / formula with the actual value to be received (if they ever received it).

    Just look at the recent sub-prime debacle, very fanciful. And look at some of the big names which got hit. Well, they are supposed to be the experts and darlings of high finance right.

  18. Tan Kin Lian said

    Some people asked if I have a motive, that is, if I am setting up another insurance company to offer low cost products?

    My motive is to offer to the people the option to buy low cost products, i.e. term insurance and investment funds. This topic has been covered in my blog and website over the past year:

    Many people have asked me where they can buy low cost term insurance and investment funds. I have directed them to the following:

    > insurance companies, mostly NTUC Income
    > invest in the STI ETF, through a stockbroker
    > invest in unit trust, through an internet platform, e.g. Fundsupermart, Dollardex, POEMS

    I am now advising a life insurance company in Singapore to offer these low cost products. I hope that they will be avialble in 6 to 12 months time. This has been mentioned a few times in my blog during the past weeks.

    I hope that my actions in educating the public and advising a “new” life insurance company, will spur the existing life insurance companies, i.e the big boys, to offer low cost products as well. This will be to the advantage of the large numbers of people who need the “noble” service of life insurance.

    Some people have pointed out that I have earned enough money from my previous job, and I do not need to earn more money now. This is correct. I am doing what I can to offer an alternative, which I hope will benefit many people.

    I want to thank the large number of ordinary people who have expressed their views in support of my effort. It has been very difficult for me to endure the personal attacks of people with vested interests.

  19. seveneleven said

    Dear Mr Tan
    It is good to know that your intention is to teach as well as offer a low cost productive financial products to the mass, who mostly are simply unware and rely on the finanical agents for advice.
    However, it cannot be blamed that the masses to be suspicious of your intention as you have been a “govt man” until you retired. Furthermore, you have been silence on your ex-company products until you retired and becomes critical and crusading the policies holders.
    Like what you say, you cannot stop people from saying what they like but if your conscience is clear, you have nothing to be afraid.

  20. palindrome said

    This reply goes to Mr Tan, Wilfred Ling, Adrian.

    Dear Sirs,

    This post is not on the new bonus structure, which I have no comments. I wish to discuss on the topic of Term versus Whole Life, which is the essence of the article. I would like to hear your views and opinions, both from an actuarial and financial practioners’ perspectives.

    Mr Tan has said on many occasions that everyone should buy Term, and highlighted premiums for Whole Life is many times more expensive. This is an undeniable fact, when we merely look at it at face value.

    However, I disagree everyone will definitely benefit from a Term, which is your underlying premise. This is because the assumption is that the person is prudent enough to firstly save and secondly invest.

    We are not living in an utopian society. It is a fact; past, present and future that there is a sizable number of people who do not save and invest. For these group of people, whole life insurance is one of the more feasible methods to help them accumulate wealth, as well as give protection. It provides a long-term discipline for them to save and let compounding does it trick. This is clearly better than letting them put money in the bank and hence the temptation to spend.

    Also, how many people knows how to invest? We have heard so many real cases of people losing their homes, going crazy, suicide etc during financial crisis. E.g 1997 Asian financial crisis, 2000 dot-com crisis, 2003 SARS crisis, 2007 sub-prime crisis. Are most people really better off investing on their own? And to take the argument further, investing is really both an art and science; not many people can do both of them well. The best part is people only talk about winnings and not their loss. How many really go down to calculate their real yield in investing?

    I believe Mr Tan is a very smart person, and one who is very capable. However, I don’t think Mr Tan has ever managed a clientele in which he has met people across a wide spectrum of society. He has spent most of his life managing a company. Thus, although in theory and assuming we live in a utopian society, I agree very much with Mr Tan, I think the advise of asking everyone to buy Term is not appropriate in the real world we live in.

    My concern really is that Mr Tan is a public figure, and if indeed his philosophy is too idealistic, will that harm more people than help them? How practical is the idealogy of counting pennies in reduction in yield, effects of deduction etc etc when one is in actual fact better off getting an insurance policy to save?

    To sum it up, my argument put forth is this. Consider the practicality of the world we live in, and choose the appropriate action to take. One size does not fit all.

    Please take this discussion to be one that is grounded in intellectual debate, many thanks for reading.

  21. Be open said

    Dear Mr. Tan

    We need people of your influence and intensive knowledge of the industry to speak your mind – not constrained by the need to answer to any current office / anyone. Personal agenda or not, two sides (or more sides) of the story are always better than one so that more viewpoints can be taken into consideration.

    In fact, I am more concerned that some people are questioning your motive in order to plant discouragement so that a particular set of views / belief system is maintained within this powerful insurance industry.

  22. quantifier said

    Dear Mr Palindrome,

    Your reasoning has a flaw and you seem to have vested interest in your comments. You are saying that, not all people has an appetite to invest, that’s why they should just let so-called ‘expert’ like insurance companies to do the job for them. If the people agreed to pay 2 years premium to let insurance companies do the job, then I have no say. However, most of the cases, people are not aware of commission structure, and this is exploited by ‘financial advisor’. The reason of ‘caught by stock market’ is heavily used by agents a lot as an excuse to buy whole-life and ILP. From my simple observation, there is no difference that Insurance Companies will be caught by the market movement. So whether I invest my own money or let insurance companies to invest, I am exposed to the same market. So why should I pay 2 years premium to the so-called ‘expert’ if I’m still caught by the market movement? I am better off investing the fund by myself.

    Look at Great Eastern results and how they are caught by sub-prime debacle too. To what I see, there is no differences in how I and they invest their funds.

  23. palindrome said

    Dear Mr Quantifier,

    I agree that everyone is exposed to the same market risk, i.e. the systematic risk that seeks to reward investors in the long-run. But this is not the grounding of my argument.
    I look forward to you responding to debate against my points.

    I am putting forth my point that the world we live in is such that not all people have the knowledge/discipline to save and invest. Buying term is detrimental for such people. I am not sure if you know such people, but I know a few. Thus for such people, insurance may be a good option.

    The benefit of an insurer’s life fund is that it is always invested and hence benefits from the market in the long-term. Of course, I need to add that this can be done by you too, if you can conquer your inner fear of market crash and a short-term paper loss. Some can, and some just can’t.

    On your point of commission, I have an experience on it. Some five years ago, I bought my first life insurance from a good friend. Needless to say, since we are good friends, I did not question on her commission. I think this is the real issue for most people, that they buy from people they know well (usually, I guess), and hence do not ask seeminigly sensitive questions. I supposed those more savvy ones can take a look at the cost of distribution in their quotations.

    On the other hand, I also agree that term may be good for some too. Just to set the record straight, I have no whole life plan now, and I don’t sell. If an agent is like me, writing replies in his productive hours, he will have to eat grass soon 🙂

    On a final point, I wish to say that this reply of mine is not in favour of term or whole life. What I am putting forth is on the basis that everyone is different, and some are better off with whole life. And thus, for anyone to propose everyone to buy term is not appropriate.

    I look forward to a good and gentlemanly debate.

  24. Boboshooter said

    Dear Palindrome,

    From your comments, to put in simply, what you are essentially saying is that in the real world, the layman does not know how to invest, and he were to do so, he is likely to lose his pants anyway. Since he doesn’t know better, it is justifiable for an insurance company to overcharge this person through opaquely structured products because he is already “better off”?

    Sounds like exploitation to me.

    I also disagree with your view that the layman is “better off” letting the insurance company help enforce discipline in savings.

    If nothing goes wrong for that layman for that 20-odd years the policy is in force, the policyholder gets little more than what he would have got if he had the same discipline to put his money in a bank.

    However, in the event there is sudden financial hardship like business failure or job retrenchment, you can always take out your money in the bank without loss to tide over. Not so, for the insurance-linked policy holder. For more than half of the life of the policy, your returns are likely to be negative. What’s the point of compounding when you are starting off with a big minus sign?

    As many endowment or savings policy holders found out to their great dismay (esp. during times of the financial crisis you pointed out above) when they tried to surrender their policies prematurely due to financial hardship, they suffered huge losses.

    The insurance companies will argue that we are not comparing apples to apples here because the policy holder had an element of insurance coverage whereas the bank depositer did not. However, none of those insurance companies, I bet you, will be prepared to reveal a breakdown of the embedded cost of that insurance element, which will only take their computers in the acturial department a few milleseconds to calculate.

    For sake of brevity, I will not even start discussion about the risk-return profile of insurance company’s investments versus a bank’s, versus the type of returns that they give to their clients.

    There is an old joke about insurance that you only make money when you are dead. For endowment / savings policyholders, that is sadly but probably true.

  25. Apologies if I am too harsh on my words and gone out of point in the topic. Mr Tan is a man of strong principles and he holds on to his ideals very strongly. This, I know very clearly.

    I have to agree that many advisers are not well qualified and are selling high premium plans not suitable for clients. Most of the time, these advisers are selling excessive Life Policies and not taking care of client’s interest.

    Many are taught and pressured to do that by their managers and company. They do not upgrade themselves to understand the flaws in what they are doing. I understand that Mr Tan is trying to get rid of such advisers.

    But in my opinion, we have to be gradual and sensitive as we implement things that will improve the situation. If his comments like “high commission to agents”, “High expenses due to commissions to your agents”, “your agent get a large part of your premium”, etc… The clients thought we get a high commission by selling anything. The monetary factor kept appearing in their mind. They have no idea how much our time and effort is worth. As a Singaporean, they will normally pay as little as possible.

    Adrian Khiat

  26. F2 said

    Dear quantifier,

    You seem to have misread palindrome. It is quite apparent that he is supporting CHOICE for the Consumer, who can be broadly classified in 2 groups:

    (1) The savvy investor – who knows the market and understands his own risk appetite. If you know how to invest, go ahead and invest on your own but beware of the pitfalls.

    (2) The layman investor – who may not be kept updated on market movements or have the know-hows on personal financial planning. If you are not too confident about investment, you COULD (not should) potentially engage professional help.

    Also, I think your argument is no better. How sure are you to say that MOST people are not aware of commission structure? Surely any intellectually sound person investing in insurance/unit trust/stocks know that no financial advice by a agent/broker is free of charge. These guys, like you and I, do need to earn a living.

    You seem to imply that you are the Category #1 consumer. If so, by all means invest without an adviser. No one is stopping you.

  27. Daniel said

    Singapore should disallow the deduction of life insurance premiums on income tax returns. That deduction is encouraging people to purchase more expensive policies. Insurance agents will point out that a term policy won’t maximize the tax benefit, and thus a more expensive whole life policy is a better policy. Indeed, it’s not bad advice to at least consider the tax savings in your calculation. But this tax write-off unnecessarily complicates the formula and may make some people more susceptible to purchasing a policy that is too expensive for them.

  28. Tan Kin Lian said

    I wish to respond to Adrian Khait comment at 25.

    For most life insurance companies, the total commissions paid to agents and agency managers on a whole life, endowment, critical illness, education and investment linked policy takes away about two years of premium, give or take a few months.

    For NTUC Income, the commission is about half of the market level for most regular premium policies and about one quarter for investment linked policies. So my remarks about the high commission is more properly applied to the market and not NTUC Income.

    Some people may still argue that the commission rates paid by NTUC Income is still high, compared to the actual value of the advice that is provided. This is debatable.

    As long as it is properly disclosed to the consumer and is accepted by the consumer, AND THE CONSUMER IS FAIRLY INFORMED ABOUT THE CHARGES OF SIMILAR INVESTMENTS, then the adviser has done his job ethically.

    I was responsible to approve the commission rates payable on NTUC Income products during my years at the helm, so I take responsibility if some people consider them to be excessive.

  29. Eveline said

    Whether or not people have the discipline and knowledge to save and invest is immaterial to the discussion. The real question is whether life insurance is the best tool for this.

    People buy life (whole) insurance for two purposes (so they think) – for protection (insurance) and for investment. They think that a life policy will do both.

    That is true, but is life insurance the best way to do so? I do not think so.

    You can get term insurance for 1/10 the cost (this is also my own experience as I have an ILP). Life insurance loses out.

    You can invest in a low cost fund (STI ETF comes to mind) paying less than 0.3% sales charge and 0.3% yearly expenses. Tell me which life insurance charge this kind of low fees? Life insurance loses out again.

    Lack discipline? You can arrange with a broker to invest a fixed sum every month into the fund.

    If people have the knowledge and discipline in investment and savings, I submit that life insurance would be regarded as a very lousy option indeed. It is precisely because people can’t be bothered or don’t have the discipline to read up on financial products that some companies and agents take advantage of this, and push life products.

  30. Eveline said

    With reference to Mr Tan’s comments in 26, the requirement to disclose charges is meaningless to those who have no idea what the jargon is. What is supposed to be included in the “distribution charge”? LIA says it “includes cash payments in the form of commission, costs of benefits and services paid to the distribution channel”. I know what commission is, but what the hell are the rest?

    At least I can read English. What about those who can’t understand the table at all.

    Maybe as long as you print the distribution cost on the table, that’s considered disclosure. There is no requirement to explain what distribution cost actually is.

  31. chang said

    Dear Adrian,
    I follow Mr. Tan Blog’s daily while he was INcome CEO. It was after I attended a seminar talk conducted by Mr. Tan , I understand the concept of buy term and invest the balance. I fully agreed with this idea. I asked whether should I cancelled the old Income policy to buy term and was advised against it.

    To say today he advised people to buy term instead of other plans ,that is not true.
    I hope it is not because your pockets are ‘hurted’ and you write hashed comments about Mr. Tan.

  32. Tan Kin Lian said

    Dear Blackshirt (item #16)

    There are three categories of policies:

    a) good value, such as term insurance, single premium (with low upfront charge), life annuity

    b) moderate value – policies with low charges, such as those sold by NTUC Income and others

    c) poor value – policies with excessive charges, that take away two years of premium

  33. Ken said

    Dear Mr Tan,
    I wish to comment on your advice that public should avoid “Whole Life Plan” and we should buy term & invest the difference”. You have valid reasons for your advice but I felt that this advice coming from you as an Ex-Income CEO may not be very appropriate.

    Allow me to explain why I say so:
    1) During your time in NTUC Income, you had on going promotions for Whole Life Paricipating Living Policy for many years. Hundred thousand of such Living Policies were sold and now you start telling public to avoid Participating Plans. Participating Plans do have a role to play in our overall financal planning. You played a major part in placing so many of these policies in the hand of Singaporean and now you blatantly asked public to avoid it at all cost. If you are still in charge of NTUC Income, I doubt you will make such a call. It is simply contradictory.

    Without all these participating policies sold during the past 29 years in NTUC Income, do you think you can achieve total assets of 16 billions at the end of 2005 from a base of 28 millions. Can you achieve the same result by getting policyholders to buy term & invest the difference in a low cost fund. Better still, since insurance fund charges are high, tell clients to buy from online brokers or invest in ETF directly, etc…
    There are reasons why certain products are recommended & sold. Many insurance advisers are making a honest living as mentioned by you. If your advice is to be taken as “Gospel”, there are simply no more roles for any financial advisers in the industry.

    You have made enough & are now financially independent, but many advisors are still working hard to feed their family.

    In view of your past tremendous effort in promoting “Whole Life Plans”, I just can’t help but felt a sense of hypocrisy with your strong advocate that now, we all should “avoid Whole Life Policy” & just “buy Term, Invest the difference”.

    With due respect.

  34. life member said

    I wish to add to the various topics being discussed here.

    1. Almost everything that is being sold, has a marked up price from the cost price. There are so many products and services being sold that cost more than 100% of the cost price – yet insurance became the sacrificial lamb. Do you really know how much the top professionals are earning? Why not ask the bankers, whom you placed your money with, how much are they earning for the “effort” they put in? What about lawyers and property agents? Seems like earning from all other professions are justified, except that of the insurance industry.

    2. Human beings are naturally selfish. Agents should be well compensated for making a selfish bloke who doesn’t care about his family to do something good, to plan for the children’s education, to plan for events like hospitalisation and the rest. Think about it, without the efforts of the agents, the poor widow/widower and the children will be out in the streets. Since the premise that agents are “unethical” because they sell whole life plans instead of term plans, why not the whole industry increase the commission of term plans by 1000% to encourage more people to sell term plans? Agents are severely underpaid when they sell term plans, that’s why they are not enthusiatic about it. Nobody would pay them extra for the good work they have done in convincing a selfish breadwinner to buy a term plan, even the family of the deceased will not share their $500,000 claims payout with the agent. So why would any logical thinking agent sacrifice their precious time to do “social” work when they have to feed their own children? Actually selling term plan is even better for agents, then they don’t have to explain why bonus cuts, because in the first place, there is no bonus to begin with. Better still, term plan got expiry. After that, no need to pay out anything!

    3. Term vs Life – Any experience practitioner will tell you this is not comparing apples to apples. It is a no-brainer. Maybe you are layman, then make this kind of biased comparison. Two products meant for different purposes and people has the audacity to compare them as if they are from the same mold. Can I compare a lorry and a car? Both are for transportation right? Got 4 wheels right? Got gears right? Are they the same? No! There should not be a discussion in the first place because these two products serve different purposes.

    People can believe and say what they want. Let them. Proponents of whole life insurance – let the nay-sayers (term plan only lovers) say what they want because their time is limited and has zero weight. Why bother with empty vessels with a to-be-discarded expiry date when you have eternity in your hand? Don’t waste your time.

    Mr. Tan, thank you for fighting with the new management on retaining the bonuses for the existing whole life and endowment plans. I hope you bring the new management to their knees and force them to retract the decision. Show them who’s the BOSS.

  35. qui tacet said

    Tan Kin Lian:

    Do you think that greater deregulation of the insurance market will introduce competitive pressures that will keep premiums/commissions/other fees low?

    Or do you think these products are too complex for the average consumer to understand, and there ought to be simplified and transparent information (such as through a standardized form) to make it easier for consumers to decide?

  36. CynSkep said

    I follow with strong interest the controversy arising from NTUC Income’s move and the subsequent debate involving appropriate insurance plans for individuals. (My focus is more on financial planning though, and since insurance plays an important role in it I’m taking a general view)

    I am currently in university and will start working in a few years’ time. In the past I didn’t really think much about the importance of financial planning but have since changed to become more proactive in reading up. All along our education system has neglected the significance of financial planning as a vital lifeskill that should be imparted to the younger generation. But the truth is that even for many adults financial planning remains an enigma to them and many would not bother to educate themselves.

    The misunderstanding and confusion that results frequently can be partly attributed to the customers’ initial ignorance and vague understanding when buying the products. While I agree that financial advisors have the moral obligation to duly inform their customers the pros and cons and whatever info they need to know, customers can make things easier by educating themselves too (need not be an expert of course but at least know what’s an appropriate product for yourself…)

    To this end the ongoing discussion has been very useful…since people having different opinions are expected, and what’s more important is whether the reasoning supporting the various stands are sound.

    This has certainly been an enriching discussion for me so far, and as much as I hope that this can continue I wish that any debate can be carried out in a civilized manner without degrading to name-calling etc…

    Thank you!

  37. Eveline said

    To Life Member at 22:

    1. The fees that bankers and lawyers charge are irrelevant to the discussion. If this thread were discussing legal services or banking services, then their fees would be relevant. But we are discussing insurance so let’s stick to insurance.

    2. It is true that agents do not make as much if they recommend term plans. No surprise then why most agents prefer to push life plans whether or not it’s the most value for money or in the best interest of the customer.

    3. You do get what you pay for but why pay $1000 for a Ferrari to make a 10 km trip when I can pay $10 for a taxi? Ferrari may be more flashy and can travel faster, but the question is are these extras worth $990? Similarly, why pay more for protection and investment when I can achieve the same objective with different products?

    Insurance needs analysis should be a very objective matter. As an insurance consumer, I demand that every dollar I spend brings me some value or utility. The agent is not a social worker, but neither are customers like me charities with money to throw about. We should not be begrudged if we decide to choose low commission products; afterall, it’s our money and it’s our right.

  38. onlooker said

    It was reported in the chinese paper, Lianhe Wanbao, 29 Oct 2006, not too distant past, that Mr. Tan is known to some as “a smiling tiger”, 笑面虎。

    What is the meaning of this term? 比喻外表善良,心地凶狠的人. (Do a google and you can find the meaning)

    Is this true? Well, Mr. Tan knows himself and it is for us to find out.

    Mr. Tan is a politician and a pro-PAP man. NTUC Income was the first to denounce “as-charged” plans when Aviva introduced it and also NTUC Income was the first to back-track on its denounce-ment and came up with their own version. People call it “shoot yourself in the mouth”, he says it is giving “options”. Brilliant turnaround.

    Mr. Tan is setting up a new insurance company. This company has to gain publicity, has to be profitable – the livelihood of those it employs is at stake, even though Tan is a financial independent.

    To succeed, one sometimes has to be ruthless and wily: what is the shortest and fastest way to jumpstart this new insurance company in a very competitive and small market like Singapore? Creating publicity, shocking headlines, pandering to populist views, airing dirty laundry in public, etc – these are the oldest tricks in the books of skilled politicians.

    Politics is still the most dirtiest business.

    The new CEO TSC handed TKL the opportunity on a silver platter to gain instant fame. This allows TKL to “champion the rights of policyholders”. The “disadvantaged” policyholders became his pawns. The 1000 signatures, his bullets. Excellent strategy.

    I suggest the new management provide small umbrellas as door gifts for AGM in case some people get so worked up over the “big loss” due to the bonus cuts in their annual bonuses (as emphasized by Mr. Tan), that they start throwing rotten eggs around. One 蛋 (dan) is not enough, you need two 蛋 (dan)s to start a party. Although the meeting that starts at 6pm and it is expected to be long, there is no need to provide food as policyholders would expect them to be “frugal”. Ok, maybe New Water should be provided, as people will be talking, shouting and spitting, so they need to replenish lost fluids.

    It’s going to be an interesting party at the AGM – Tan bs Tan.

    I wonder if it would be broadcast “live” like the Malaysia or Taiwanese parliament openings.

  39. Truth Prevails said

    From what has been written so far in this blog, I can only discern one thing… that the insurance agents can be very bitter and vicious against someone who has the guts to spill the beans on their modus operandi.

    After all that is said and done, term is term and wholelife is still wholelife. You pay 10% of the former for what you pay for wholelife insurance. I agree with another forumer in her post #34. If all you need is to travel a certain distance to your destination, why take a Ferrai when a cab will also take you the same distance? Why fork out $100 when you can pay $10 for the same ride? You can save $90 and invest directly yourself. Afterall, when the market is down, everybody is affected in their investments, whether it be you or the insurance companies and the so called big name financial instituations, as evidenced from the ongoing subprime crisis. Why pay an additional worth of 2 whole years premiums for someone to manage the finances for you when the end result is going to be the same?

    Why buy whole life just to line your insurance agent’s pockets? Still, to be fair, it is still up to the consumer… if he wants to pay $100 for the premium cab instead of the $10 taxi, nobody is going to stop him… and most definitely not the insurance agents. It is like telling the fat cat to help look after the fish in the fish bowl 😀

  40. Raymond said

    I think that the insurance agents and their policy holders need to work together for mutual benefit. If everybody wants to get the better of the other party, then we are in for sorry times ahead.

  41. Tan Kin Lian said

    Dear Ken (post #30)

    Read my post #11 to find the answer to the issue that you raised.

    During the early years, the term insurance rates were rather high and did not look very attractive to the policyholder. The agents were not keen to sell term insurance due to the low commission.

    The option to invest in unit trust and investment funds were relatively undeveloped.

    More importantly, the whole life and endowment policies sold in those years were good value to customers.

    Times have now changed. Today, it is clear that the best option is:

    1. Buy decreasing term insurance
    2. Invest the difference in a low cost investment fund

    Refer to:

  42. Tan Kin Lian said

    Tan Kin Lian:
    Do you think that greater deregulation of the insurance market will introduce competitive pressures that will keep premiums/commissions/other fees low?

    Or do you think these products are too complex for the average consumer to understand, and there ought to be simplified and transparent information (such as through a standardized form) to make it easier for consumers to decide?

    My view is:
    > financial products should be regulated
    > the aim is to protect consumers from being exploited
    > contract wordings should be standardardised
    > insurance practices should be explained clearly
    > there should be reasonable caps on commission, fees, charges

    The consumers have been exploited by financial services industry under a de-regulated environment. They have lost hundred mllions of dollars through the unfair terms.

  43. New world said

    To Poster Ken #30,

    The world is always evolving, buying a life insurance policy was the way to go 100 years ago in the present day developed nations.

    Times have changed and new methods of obtaining greater value for your “depleting” value of money have evolved. This idea of buying term and investing the balance in a low cost fund is the way to go in the present day, context. There is varied number of funds these days to choose from, which were not developed 20-30 yrs. ago. ( watch the Suzy Orman show on CNBC)

    Mr Tan is showing the public how to obtain greater value for your money at a lower cost.
    He is educating the public at large. I honestly believe that his greater motive is to educate the general public, rather than what is being touted that he is a “sour grape”.

    Insurance companies have to re-invent themselves and stop being lead by greed alone.
    Stop putting out “structured” products just like the banks are doing which confuse and “hoodwink” a very trusting public, which give “disgustingly”, “insultingly” low returns.

  44. New world said

    Sry, my post#43 is in respond to Ken of #33

  45. life member said

    To Eveline, 2.46am

    1. Commission/Fees are the main concerns – because it is what Mr. Tan claims, as “consumers have been exploited by financial services industry under a de-regulated environment. They have lost hundred mllions of dollars through the unfair terms.”.

    Did such “unfair terms” just appear after he “retired”. As he admitted, it happened all along, during his term as CEO, it is only that he collected less, as he claimed. Right. So everybody else is the bad guy, except Mr. Tan, not because he did not profit from it, but because he profited LESS. Pot calling kettle black. Instead of taking, for e.g., $500 comm, he took, $400. So now this is the good guy. So if one guy come along and say, I only take $350! Mr. Tan, you new company is overcharging! Does it make Mr. Tan part of the “bad guys”?

    Strangely, after being in the industry for more than 30 years, Mr. Tan suddenly proclaimed that consumers being exploited and he is going to come up with “fair terms”. Has a lot changed in the industry since he left? If I were MAS, I would look really bad because I am suppose to be the watchdog and approve the policies of the insurer. Oh yeah, sure, every practitioner in the industry is blinded by money for many years and only until now, such “unfair” terms only discovered by Mr. Tan, because he took time and did some “study”. Com’on, Mr Tan, who are you trying to kid?

    You can ask Mr. Tan: If he were still at the helm of NTUC Income today, would he be only selling only term plans and low cost investment funds? Because that’s what he is preaching now. His new company – is it going to be a non-profit organisation? No? Does he plan to make it profitable year on year? Yes.

    2. If term is that good, I suggest to increase the commissions to reward and encourage agents to sell more term, make it worth their time. Were you expecting free insurance, free labour, free love?

    3. Yes, a Ferrari sounds good to me. A person who buys Ferrari buys it for a different reason, not just for travelling the 10km. You can walk/cycle 10km or take public transport. If you buy the wrong product because of the wrong reason, don’t blame the product.

    “As an insurance consumer, I demand that every dollar I spend brings me some value or utility. The agent is not a social worker, but neither are customers like me charities with money to throw about. We should not be begrudged if we decide to choose low commission products; afterall, it’s our money and it’s our right.” – Sure, your money is big and heavy and it is your right to demand the best service and products available to be served to you for every dollar you spent. I hope your employer knows how to justify the high pay he is paying you. Singapore is lucky to have elite people like you.

  46. Eveline said

    I do not think there is a need to be sarcastic in this discussion. Suffice to say, the customer does not owe the agent a living. Insurance especially plain vanilla products such as term insurance is akin to a commodity. (I’m saying akin, not exactly the same as there are other factors that come in.) Ultimately it is the value of the insurance that matters.

  47. Wai Mun said

    I agree that the customer does not owe the agent a living. The agent cannot expect the customer to not be alarmed when things don’t look right. The customer has every right to know the truth and to pull out their policies anytime they want if they so choose to do so.

    Just as every agent cherish every dollar they make, customers cherish their money as well and should get the best value possible.

  48. Roger Lim said

    Mr. Tan Kin Lian started a blog even before his retirement to educate the general public on insurance. This showed his sincerity. Those negative comments about his motives may be true if he started his blog just before or after he goes into a new business. But since his blog started way back, we can safely say that his intentions were simply to educate the public. That said, it is commendable too that he continued his blog when he could simply retire anywhere to enjoy his golden years. That he chose to remain and studied at his own time and money goes to say alot about the man. This man is rare because he does things not for money but for the general good. That is nobility.
    Those who write to taint this noble man’s honour should reconsider their positions. Because nothing hurts the noble man more than accusations of the opposite.

  49. Terminator said

    Moderator, please remove post #49 and #51. They are out of context and add nothing fruitful to the discussion.

  50. ZhuGeLiang said

    To Roger Lim (#48),


    Kong Ming

  51. LittleBuddha said

    Quoted Tan Kin Lian (#42)

    “The consumers have been exploited by financial services industry under a de-regulated environment. They have lost hundred mllions of dollars through the unfair terms.”

    Mr Tan, you should have told me 6 years ago when I bought my first whole life policy from your ex-company! Oh…suddenly you are enlightened like a little buddha? I find this it so difficult to believe you.

    Aren’t you a qualified actuary and have decades of experience. Cannot be just these two years figure out right? And some more after you resign. So coincidence meh?

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  53. Cindy said

    I have nothing against Mr Tan Kin Lian but I just want to share my own observations. I am an Income policyholder and 2 years ago (if I remember correctly), Income was promoting its new educational website , I was happy that such an educational website was setup to educate ignorant customers like myself. But I must say that I was rather disappointed because much of the contents was skewed towards promoting Income’s products instead of being an objective website. I remember quite vividly that there was test questions at the end and it ask biased and leading questions like why we should choose an ILP from NTUC Income. At the end, I realise it was just a marketing tactic to want us to buy from the business centre.

    Therefore, I am not sure whether there are genuine objectivity in any causes, when there are so much vested interest in it.

  54. ZhuGeLiang said

    This reply goes to Cindy.

    Thanks for sharing the site, but I think it sells insurance in the State of Texas ?!

    Very puzzling. Aunty Lucy business do until so big???

  55. Cindy said

    ooopss…you are right. I went to check after you point that out and realise that it should be an sg site, which means the website is still there! Those interested can take a look and you will know what I mean.

  56. Cindy said

    Oops ZhuGeLiang, I went to check after you highlighted that to me. It should be a .sg site. , which means the site is still there! Those who are interested can go in and take a look and will know what I mean. Not sure what is the truth anymore.

  57. ease said

    My concern is, i have spare cash and wish to save some money and i do not wish to commit long term. Hence, i went to ask around for a quote and finally i bought vivolife 10 yrs limited premium.

    Most banks introduced me ilp, but POSB has another product to recommend me – pay as you protect.

    I had a simple comparison. one i pay for 10 yrs and cover critical illness, death wholelife, the other cover 15 yrs for death and permanent total disability.

    of course, i know expert will tell me buy term and invest funds, however, which company will offer me a low premium for term when i reach 65 yrs old? Do you think i still can afford the premium when i need the most coverage? should the funds which i bought goes downwards when i retire, who can i look for for my retirement?

    I felt that one should have a good mix of insurance coverage. Buy according to one’s needs and not one’s advise.

  58. I won’t say that Life Insurance is totally no good.
    We have to identify our Permanent and Temporary Critical Illnesses Needs.

    Permanent needs is good using Life Insurance or a Term Insurance that cover for Life. Permanent needs covers 3 areas:
    1) Alternative Medicine – Tradition, detoxification programs, etc
    2) Rising Medical Expenses – Things that your medical insurance may not cover
    3) Misc Expenses – Extra Tspt, Maid, etc
    There are no standard number in this area for everyone. Certain high networth people don’t it at all. But most of us generally needs around $50k to $100k.

    For Temporary needs, its better to use term insurance. It is wise to compensate for around 3-5 yrs of your annual income. Some people uses a Temporary Disability Income Insurance for this purpose. The definition will be wider and it genuinely cover you even if its the 31st illness which is not covered under your policy.

    Decreasing Term insurance normally are meant for premature death. Such decreasing term insurance will be a disadvantage to you if inflation in Singapore remain at such high level. I’m not also not sure if there is a decreasing term Critical Illnesses Cover.

    My suggestion is (1)”Don’t get yourself overly insured via a Life Insurance.” If you do that, you may end up under-insured and have less money to save for other purposes.
    Also (2)”don’t get Endowment plan for Coverage” and
    (3)”don’t get a whole life plan without critical illnesses”.

    Adrian Khiat

  59. ZhuGeLiang said

    This reply goes to Ease,

    I would like to give the following simple layman advice to decide what products to buy.

    – Have enough to retire at age 55, i.e. can choose to stop working
    – Have good hobbies that you can continue. Don’t just sit around in coffee shops
    – Have a peaceful sleep everyday. If you can take high risks, invest more in stocks to beat the inflation. If you cannot, sleep is more important.
    – Have good friends and soul-mate.
    – If you die, you loved ones got enough. Remember to count how much money you already have so that you will not over-insure.

    If you can do the above, then I suppose anything that works, is fine. Of course, if you really want to have best bang for buck, need to crack more brains and do more homework.

    In fact for some, this means totally don’t need to invest or buy insurance! I have an aunt who purely have all her money in fixed deposit which works out in the range of low 6 digits. Simple woman, live in 3-room flat an makes her own clothes with no handphone. Really fascinating at today’s age.

  60. Eveline said

    To Ease:

    I buy term insurance to insure against death. To do so, I need to determine who my dependents are and whether they NEED the insurance payout. By 55 or 65, your parents are likely already very old (if still around) and your children (if any) can well support themselves.

    To accumulate value, I don’t rely on insurance but investment. Neither Life nor direct investment (into stocks/UT/etc) can guarantee a return so I will choose the one with transparent and lower costs.

    For expenses incurred when I’m living (and I think health is the most critical expense), I buy health insurance and riders. There are very competitive packages out there from the insurance companies. Most of them cover beyond 65 and yes the premiums increase with age. The question is how much payout do you get for every $1 of premium you pay? I leave you to do the calculations.

    You don’t buy term to cover such “living expenses”.

    There’s also such a thing called “self-insurance”. Meaning you have accumulated so much wealth that you can afford the projected expenses without relying on insurance. Of course, to accumulate wealth, you must have capital. That’s where term insurance comes in.

  61. Anwar said

    I have 3 wholelife critical illness policy with Income and my wife have 2.

    It was taken in 1993. I wish then there is limited premium policy.

    Most of us know that the standard of living today is high, and the next generation may struggle if they do not plan properly.

    As a old froggy, I do not want to burden the next generation if I am down with a dread disease.

    I wish the limited premium plan was introduced then, and I will have no worry to pay towards old age. But then when I am old froggy by then, I will use automatic premium loan or use my savings to pay for the premium. By then cash value of the wholelife plan will be quite good too.

    Buy Term, I will not have coverage after 65 or it will be very high premium, maybe higher than a term premium.

    So wholelife is not as bad as what it is painted to be. I took wholelife with Term to cover the productive part of my life and wholelife to cover latter part as a old froggy, not wanting to burden the next generation.

    We should see the value of insurance plans and plan according to various milestomes in live.

  62. Joe said

    Agree with Anwar (aka old froggy).

    I bought a wholelife critical illness policy with sum assured of $50,000. That serves as my base protection foundation, and long term compulsoy savings, so i very much welcome high bonus declaration too 😉

    After the initial base is covered, i buy term life and hospital & Surgery plans from then on, and invest the rest. In total i have of about $500,000 cover, of which $300,000 in critical illness. My total insurance premium cost me about $2,000 a year.

    So for me, i advocate getting a basic wholelife policy to cover the base, use term plans to get higher covergage and invest the rest (and bear my own risk) for better long term returns

  63. New world said

    #60 Eveline ,

    Well, said, You have put it in a nutsell, hope those who are advocating life policies, will have a 2nd look at this present day approach…. more so for those who have not done any proper finacial planning….

  64. Anwar said

    Tan Kin Lian is too naive to keep harping on recommending Decreasing Term Assurance. This is a myth to think the protection need decrease over the years and can be picked up by investment.

    What is investment goes down the drain in a bad economic situation and values drop and the man drop dead?

    The is literal bad advice and “hai see nang”.

    For those who are younger, do not take this advice.

    Check out Term premium against Decreasing Term Assurance over same duration and same sums assured.

    DTA decrease in coverage and can be quite low coverage at the end.

    Term insurance premium is not very much higher and coverage is level all the way.

    It make more sense for younger people to take Term than Decreasing Term. Term will then be value for money plan than the DTA.

    I just did Term for all my teenage child to their age 65 and premium is so low. Average $120 to $150 per year for $100,000 coverage.

  65. New world said


    One of the reason Mr.Tan is now monitoring the comments that are being posted on his blog is that there are posters who have made slandersous statments, against individuals not himself.

    So please be obejective in your statement, it is immature statements like this that causes censorship to take place it the first place …. Focus on the issue at hand…….

  66. Peace said

    #65 Anwar

    Why dont you look at DTA in this manner. When you grow older, your children would be older too. They would already know how to take care of themselves by then and so it is unnecessary to leave them a huge sum of money. So shouldn’t we choose to pay a lower premium as in a DTA? If unfortunately we do pass on earlier, the DTA still give good protection value to them as it is still early in the term? Doesn’t it give you the best of both worlds?

    It is indeed true that any investment will go through its cycles of up and down, but if you were to leave it there for, say, 10 to 20 years to ride out the risks, it will probably give you a good return which is exactly what insurance is doing. If you invest on your own, you not only get better control of your own profits, you also need not worry on whether they will be returned back to you in a fair and just manner.

    So, to conclude, TKL is not wrong to promote DTA.

  67. priyadi said

    whole life is not proper insurance: you are insuring against an event that is certain to happen (your death). in other words, it is highly likely that you will pay more in mortality charges than you (or your family) will eventually get (after accounting for time value of money).

    it is better to accumulate wealth through a separate investment portfolio, and only get term/YRT to cover years where your total investment value is not sufficient to cover the risk of loss of income.

  68. Decreasing Term Insurance have 4 disadvantages:

    1) Future needs for some people might be unpredictable. Eg, Mr Lim have 1 son today. He thought he will not have another kid. Eight year later, he suddenly have a daughter. His needs changed and he might not be insurable again.
    2) Future needs may remain constant for certain people. Eg, Mr Tan purchased an investment property. He have a tendency to sell old property and buy a larger one as investment. If he purchased a Mortgage reducing insurance, he will need to purchase another insurance for the new property even if the loan amount is relatively the same because the Mortgage insurance covered had significantly reduced.
    3) High inflation can be a concern. Insured amount based on DTA is assumed on X% inflation. If inflation exceed X% for many years, the person may find himself underinsured very soon. Worst, some people fails to factored inflation.
    4) Guaranteed re-assurability is not available for DTA. Eg, Mr Ong purchased a 25 years DTA for $500,000. End of 25yrs, if Mr Ong have a medical condition and he wish to be continued protection, he may not be able to do so. If Level Term is chosen, he may be able to continue at the same or lower assured amount say $200,000 at a premium prevailing to his attained age.

    DTA is a theoretical concept which may not take many factors into consideration. It is not that simple by just buy term, invest rest by looking at some websites and books. A Financial Planner’s advice is sometimes needed to get it done correctly.

    Adrian Khiat

  69. I welcome Anwar to send an e-mail to me for posting in my blog. He can argue the merits of critical illness and limited premium policy. This can present a different angle to the decreasing term insurance policy that is recommended by me.

    I welcome Anwar to use his real name. But, if he wishes to use a pseudonym, it is all right. It is better to be upfront and use disclose the real name and occupation (e.g. like Adrian Khiat did in his postings).

    I will ask Anwar to give me some actual examples of the premiums payable under the limited premium policy, so that I can compare it against the option of buying term and investing the difference. Anwar could make the argument about why the limited premium plan is better. It is important to present the relevant figures, so that the consumer can make a better choice.

    I can guess that Anwar is a fictitious name of someone working in the marketing department of an well known and reputable insurance company. His postings will be more credible if he wishes his real name and designation.

  70. Anwar #64 said:
    What is investment goes down the drain in a bad economic situation and values drop and the man drop dead?

    My tips on investments are set out in this FAQ:

    In the event of death during the earlier years, there is a decreasing term insurance to provide a death benefit.

    If death occurs after the decreasing term has expired, there is already sufficient savings accumulated that has been invested. If death occurs at a bad time when the market is very low, the family has the option to keep the investments and sell them to realise cash when the market recovers.

    If they need the money, they can sell some investments monthly to realise the cash that is needed.

    In most cases, the value of the investments would have grown to be more than the death benefit, due to the higher yield on equity investments (compared to the yield on a whole life or endowment policy).

    So, even in the bad situation mentined by Anwar, the value of the investments (in a depressed market) is higher than the money from the life insurance policy.

    Here are some figures:

    If you invest $5,000 a year for 30 years to earn 3% (say, for a life insurnce policy), you will get $245,000.

    If you invest in a low cost fund to earn 5% (after fund charges), you will get $349,000. If the market drops by 30% at a bad time, you will get 0.7 X $349,000 = $244,000.

    The family has the choice to take out $244,000 or keep invested for a few years and wait for it to recover to its “real value” of $349,000. A good adviser will advise the family to wait. Do not sell at a bad time.

  71. Dear LittleBuddha (#51)

    It is all right for you to buy your whole life policy 6 years ago. As you can see, I also bought a Living policy 12 years ago, where the bonus has now been restructured.

    The products offered by NTUC Income during that time has good value, compared to similar products in the market. In those years, the market for alternative investments, such as low cost funds, was hardly available. Even today, there is limited low cost funds.

    As long as you buy a policy with low charges (like the old products of NTUC Income), you were getting quite good value.

    Some people posting in this blog have the intention of attacking my views. I suspect that they are not the real customers, but insurance agents or marketing officers. If they are expressing the views of their companies, it is better for them to use their official name and title, so that their postings are more credible.

    It is all right for some people to disagree with me. I do not intend to convince 100%. I will never be able to convince people who have a vested interest or are paid just to run me down. It is okay.

  72. If it makes people in NTUC Income feel better, I like to say that the old products sold by NTUC Income give good value. They are explained in my post #11.

    My statement about the bad products sold by the financial services industry does not imply that all products belong to the category. There are some exceptions.

    I do not wish to imply that the new products, such as revosave and vivolife of NTUC Income give poor value. I do not know the details about these products to make an analysis.

    I welcome any well qualifed adviser to send me an e-mail to outline why it is good value to buy these products. I will give my objective analysis and post it in my blog. I also give the right of reply.

  73. PolicyHolder said

    Yes, I agree with you Mr. Tan. Obviously those who come under different names attacking you are not likely to be policyholders. Policyholders who attack you when you are defending their rights must be mad. Real policyholders like myself are grateful to you for standing up for our rights as policyholders against the financial mavericks who are bent on manipulating our bonuses and benefits for their ends in the name of doing so for our benefits. It is a no brainer to see that NTUC Income has overspent recently on $2K a chair, expensive renovations, costly advertisements, overpriced meetings at posh hotels as well as extravagance exotic overseas management retreats and incentive trips. It is now promising the future while plundering the present. This is just one of those tricks that takes time to tell and by that time it is too late. Just like the subprime mess where those financial mavericks promised this and that and by the time it unravels, they will be long gone and enjoying their millions somewhere else. So no, forget the promise of investing for so called higher yields in the future. NTUC Income has been giving us satisfactory yields plus regular 5 year anniversary bonus all these years. So cut the crap and give us our rightful yield now instead of cutting it. Just because you have a degree in psychology you think you know our psychology and think policyholders are morons! Give us back our rightful bonuses and stop insulting our intelligence. Some of us policyholders are more intelligent than you!

  74. zhummmeng said

    Since the critical years saga many years back there had been a lot of these limited premium whole life plans introduced into the market.On the surface they look good. The feeling or understanding is “i pay for limited period only and I will be covered for life and i stop paying”. I want to dispel these misconceptions.
    #1. companies are quick to capitalise on the ‘trend’ and they are becoming consumers oriented companies just like other consumer goods company. They would design what the consumers ‘want’ and not what the consumers need. I am not saying Limited premium type of plan is not good . THEY ARE only GOOD FOR THE PEOPLE WHO CAN AFFORD THE PREMIUM AND TO AFFORD USING THEM TO COVER THEIR NEEDS ADEQAUTELY AND FULLY. They are good for people who are not serious about their family and dependents and also they are good for people who want to splurge on their agents.
    Tell me how many of you use them to cover your protection FULLY. Many can’t afford and the agents would tell you it is alright if you don’t have budget; buy from me again when you have money to cover the shortfall..
    The same premium paid to buy this LPPL plan can pay to cover you 10times and this might be the amount that you really need. If you think you don’t need to cover your needs fully immedaitely then I advise you don’t buy it at all. Don’t waste your money. Buy when you have ENOUGH money to buy ENOUGH coverage after all if you can delay , it means you know you won’t die.
    But what happens in the meantime? What if I have a CI or die. Your agent can answer that.
    It should be renamed as LIMITED COVERAGE PLAN.

    PS: In next post I will talk about the myth of wholelife and how everybody has been taken a rider by insurance agents. I will talk about the “bomb” waiting for you at age 65. I will talk about the dumb plan as saving plan and also talk about discipline, a concern or a myth or another selling ploy by insurance agents and their masters; about insurability another bogeyman insurance agents tell their cleints.

  75. MadameG said

    Dear Mr Tan,

    Let me throw in the following observations on the life insurance industry for discussions.

    COST STRUCTURE:- Why are costs so high in the life insurance industry as to adversely affect returns to policyholders? Has this to do with the MLM structure being so embedded and intertwined into the local insurance system? Is there an obsession with MLM in Singapore that we are unable to see that such a structure is costly for consumers and unsustainable in the long term? In the current age of internet buying and selling, why are we not seeing more insurance policies sold directly to consumers at much lower costs, dispensing with expensive agency commissions and their related costs? Why are salaried insurance salespersons not encouraged or promoted vs commission-based insurance agents?

    PRODUCT STRUCTURE:- The days of bundling together of products together should be long gone. Why complicate life insurance with critical illness cover (partial medical insurance)? Why mix insurance objectives together with savings and investments objectives? The only rationale for such bundling is a costs vs convenience compromise. However, if the costs far outweigh the convenience, then such bundling is questionable. The industry must be prepared to provide transparent pricing for each product component that goes into the bundled products. By bundling together of products, the MLM high cost structure is incorporated into all the components.

    SERVICE STRUCTURE:- I think this is found only in Singapore. Insurance agents selling insurance products moving into selling investment-linked insurance products and then pure investment products. With the recent development and push into more financial planning services, I see insurance agents now calling themselves “financial planners” or “financial advisers” offering financial planning services. Such mixing of services invariably introduces conflicts of interests that the uninformed consumers would end up holding the short end of the stick. Again, by offering such services, the MLM high cost delivery structure is incorporated.

    I strongly believe the life insurance industry in Singapore is seriously in need of reforms. Such reforms should focus on providing value for money products and services to consumers and would necessarily see cuts in revenues and commissions for the insurance fraternity. I also question the rationale for insurance industry being so intricately involved in providing insurance services, investment services and financial planning. The latter two can today be provided independently by other institutions with lower cost structures.

    Please take the above observations and views as that from a consumer.

  76. Dr.Huang said

    Hi Mr. Tan,
    I thank you most sincerely for coming out with the ugly truth!
    Whatever it is that caused you to come clean about the insurance industry- be it a guilty conscience or just that you were always a crusader who lived under organisational constraints, the whole blogosphere hail your new found freedom to tell the truth.
    I look forward to reading more from you and hope that you can contribute more to Singapore in Public Office.

  77. zhummmeng said

    MadameG of post 75,
    you have hit the nails right on its heads and I do concur with all of them. I wonder you will be interested to contribute your feedbacks to MAS.
    In the MAS website there is a consultation paper on “MAS Guideline on Fair dealing”. I have already contributed. The deadline is 21th May .
    If you are concerned about the malpractices that are rampant in this industry this is an opportunity to help make the changes, to level the playing field and to make the CEOs and the senior management responsible for all the activities from the top to the bottom , especially the insurance agents.
    Your feedback will be considered a valuable feed back from a consumer standpoint. Please help to get rid of unethical selling and other malpractices and to clean up the industry of rogue insurance agents and malpractitioners.

  78. Raymond said

    What is the difference between an insurance agent and a financial advisor? Don’t they have ethical and moral obligations according to their industry’s code of practise? 🙂

  79. John Denver said

    He is doing the right thing. Salute him….for being able to make his conscience clear which is lacking in Singapore.

    Singaporean are mould toward capitalism…which create a nation of ‘human calculator’ that lack of social grace.

  80. Irene said

    First, I have to agree with some of the commentators that some agents pushed certain products for their own commission and not for the clients’ benefits. There are indeed some black sheep in the industry but which industry dun? So why let the good ones take the blame as well? If the policyholder is able to manage their investment better, by all means go ahead. Under the regulation, we are to disclose our commission in the first place so if the client has already been informed of what they have to pay, whats the issue? Secondly, taking a 2 years premium as commission (as quoted by 1 of the commentator but I dun think its that much) to serve the client for a lifetime, is that really a lot?

    A term policy only covers the insured till the age of 75, in the event if the client pass on after age 75, does that mean that the dependents of the insured can only get back what the insured has invested? Can anyone then guaranteed that the investment will be able to generate the amount that the dependents might need or in the very first place, can anyone guaranteed that the investment is a sure-win? The spirit of insurance is to protect ourselves and our loved ones from catastrophic events which I dun see in any ways how the agent has unethically sold a whole life policy instead of a term since the term only covers till age of 75?

    Can anyone also guaranteed that the insured will not pass on within the next 10 years after he/she purchased the policy? There are risks that the insurance companies has to take as well.

    By the way Mr Tan, I wonder what kind of policies will your new company will be selling? All term and no whole life plans? I hope you wun play with your words again and come up with phrases like “giving the public more options” in the future.

    In my own opinion, NTUC has indeed got better reputation ever since the new management took over, keep it up and all the best!

    Lastly, I am indeed an agent, nothing to hide.

  81. zhummmeng said

    Irene of post 80, from what you posted I can see you are confused about your role and about life insurance. You are mixed up between the two.
    I can see that you are a salesperson and not an adviser.Let me tell you,if you really care for your clients your role should be that of an adviser and you are to see that your client is ADEQUATELY insured so that in the event of a catastrophe the proceed is ENOUGH to take care of himself or herself and to prevent his or her assets from being devastated by the event or the proceed is able to take care of his or her dependents for their needs FULLY as planned.
    The products , whether whole life or terms are solutions and they are not ends in themselves.You are to choose which addresses their needs better , adeqautely, efficiently and at the lowest cost.
    As posted earlier I have argued that whole life plan has lost its usefulness for most clients and of course,never for the insurance agents for the reason you know better.
    I have stated that whole life is only good for people who can AFFORD because they have enough money to use whole life to cover themselves ADEQUATELY and without compromising other needs.
    But for the majority buying whole life deprives them of ENOUGH coverage and compromise their other needs.
    You said that after age 75 years a person still needs insurance. I cannot think of the needs that are still around other than H&S medical.. Maybe you like to tell us what are these needs.In my opinion after 65 almost all people don’t have NEEDS that need insurance to take care.At this age self insurance is much needed otherwise they need to while away their time strolling the void deck
    Agents’ all time favourites are wholelife or products that carry high commission. By all means recommend them if your clients are risk averse and can afford or splurge on them without sacrificing other needs or coverage. The problem is they are SOLD as an end in itself and are sold to Tom Dick and Harry without considering their needs and are often compromised. That is why these agents are known as product pushers,peddlers or traffickers.
    Since new management took over the helm ntuc agents are reputed
    as super pushers and peddlers.
    Another bad point about Whole life. It is a rotten saving plan.

    No investment is guaranteed but over long term there is good possibility to do better than what whole life and endowment can give. This is exactly the stand NTUC is taking and telling their policyholders to allow them to reduce the annual bonus to free up more money for investing in equities for bigger special bonus.You may want to ask your new management how it is to be achieved without increasing the risk.
    Special bonus is NOT GUARANTEED.It is dependent on a few factors and it is risky. Policyholders are risk averse and need to be compensated a lot for taking higher risk but they are told they get no more than the old bonus structure.That is what the letter says. Who wants? I don’t want. I prefer the bird in my hand than the ONLY ONE bird in the bush.

  82. Anwar said

    I am happy with my wholelife policy.

    I intend to continue on wholelife as it is a Living Policy and if the critical illness does not happen when I am young, it will come when I am an old froggy.

    I do not want to burden my next generation, and the claim payout will be helpful.

    Even if I do not claim on critical illness, I will leave behind a legacy to benefit the next generation.

    Those who do not believe in wholelife because they keep thinking insurance agent make high commission on that, then buy term, stop at the terminating year and be happy about it.

    Zhummeng wrote “No investment is guaranteed but over long term there is good possibility ”

    Tan Kin Lian has always mentioned “Risk is to your advantage”.

    In his talks, he always shared that equities in long term will give better yield than bond.

    Even if market turns bad, wait 3 to 5 years, it should turn around, “risk is to your advantage”, this was what he spoke on several times in his investment talk held in Income when he was CEO.

    So isn’t it in the correct direction is the new management decide to heed this wisdom to be more flexible in investing the life fund for better yield long term, than be tied to bonds for the guarantee or the vested annual bonus?

    Restructuring the bonus to offer flexibility to invest for better yield, shouldn’t this be correct as “risk is to your advantage”?

    One bird in the hand and the other in the bush, let them go and they will bear you more birds when they fly freely. In captivity, they will not produce more birds for you. Let is soar and fly and produce more birds….

  83. My reply to Zhumeng

    Whether a person need to be covered at age 75 onwards is not decided by us. There are people with different needs and it is the adviser’s role to guide them. You will only know until they tell you specifically so.

    Life Insurance or Term Insurance have their role to play in the advisory process. From my observation, I have to say that there are indeed many advisers not recommending enough of Term Insurance which resulted in many Singaporeans grossly underinsured.

    Why was Singaporeans still underinsured when we are so advance in financial literacy compared to other countries? Its because there was inadequate needs analysis done for them. If thats the case, why again? 2 reason I can think of. 1) Analysis take time and advisers fear not getting their time worth the money when they client don’t buy anything. 2) Clients do not know the benefit of proper analysis and they had put financial planning as one of the last thing to do in their daily life.

    However, to be fair, there are good agents around. Most comments do not talk about the other side. Many advisers quietly do the dirty job behind, running high and low for their clients, timestakingly consolidating all their insurance, compile and analyse for them. It is not fair if these people after doing all these work, end up client buying from internet and direct channel because these avenues offer discounts. Belive me… Many Singaporeans are really cheap skates. They will want us to match these discounts…

    Zhumeng may not know the type of dirty work an adviser does and the hard work they had put in. It is unfair to group “All agents” for the black sheeps around.

    I also know certain things must improve but it must not be to the extent that the Good and Bad advisers are forced out of the market altogether at the same time. We must identify the good ones and weep out the bad ones. There must be regulations against product paddlers. There must be a guide on how much money a professional advice is worth. There must also be a guide on what we mean by a proper advice.

    Adrian Khiat

  84. My reply to Zhumeng again

    Why don’t you attend the AGM on 30th May to understand the bonus issue of NTUC Income. There might be things you don’t know and its good to comment after understanding both side of the issue.

    Adrian Khiat

  85. Irene said

    To Zhummeng,

    It is definitely not you or me to decide what should be the needs of the insured after the age of 65 or 75, be it they like to stroll at the void deck, they want to use the money for their retirement or they want to leave it to their loved ones. As an agent, we should listen to what they want and the amount they are comfortable with at that point of time and subsequently planned accordingly. What rights do anyone have to dictate what should be their needs other than the insured themselves? If you like to collect cans as a living after your retirement, thats your goal/plan but that is not what everybody wants. Of course, if the budget cun meet to the required sum assured, the best plan will be term policies which again, ethnical agents will have no reservation to propose those plans, of course I dun deny the fact that some will still push for higher comm plans thats why I have said in my comments earlier, there are black sheeps but dun condemn all because of these few.

    “Since new management took over the helm ntuc agents are reputed as super pushers and peddlers.”
    This is just your opinion, just like what I have stated in my own opinion, NTUC’s reputation has got better with the new management thus this issue is very subjective.

    By the way, I am not from NTUC, thus it is not my new management.

  86. zhummmeng said

    It is not unexpected that I have received so many flaks. I must have hit your sore points.I will respond but because of the time I will do it tomorrow. So you guys be ready for my next salvo on you agents.
    Good Night

  87. Irene said

    no worries, i know you need some time to think of what to reply. I understand it is always more difficult to win truth. Take your time 🙂

  88. Raymond said

    Surely there is a difference between how a cooperative and other insurance companies see their bottomline? isnt the former supposed to be more compassionate and premiums cheaper? if it is run like prudential or aia wouldnt the costs and fee structure escalate? hasnt this been the case as history has shown for the past two decades?

  89. starfish said

    Yes being a cooperative is different from other commercial companies. But then again, being a Cooperative does not mean that they must declare high annual bonuses and a fixed special bonus.

    it is known to many that ntuc income being a cooperative, 98% of the surplus is returned to our policyholders. Commercial insurance companies have to maximize their returns to shareholders..

    ntuc’s bonus re-structuring surely must have planned to benefit its policyholders in the long run..

    Best for us to attend the AGM, and understand the matter better…

  90. Anwar said

    This is a neutral site and not Tan Kin Lian blog where one can be discourteous.

    The editor has already posted.

    “Please keep your comments civil and respectful.

    Some of your comments are disallowed to be posted as they:

    1. Have nothing to do with the article.
    2. Contain personal disparagement.
    3. Contain words which we find offensive.”

    My advice to Zhummmeng is don’t try to jump here and Zhum there, there is no reason to fire salvo on agents, just bring out your points and the public knows how to discern.

    This is not Tan Kin Lian’s blog where you can use your language the way you use in Tan Kin Lian’s blog.

  91. Estabelle said

    Dear Raymond:

    I am glad you brought up these questions
    Surely you will be comforted and delighted to know that if you compare across all life insurance companies, you will find that Income still provides the best value in terms of cost structure, premiums and yields, regardless of whether its new or old products. Bringing best value does not necessarily mean it has to be the cheapest, it has to be looked at in totality.

    I see being compassionate as a topic which has to be brought into the correct context. How is it able to do good unless it does well? How is it able to do good impactfully and meaningfully unless it has a good reach? How is it able to do good unless it is financially strong itself?

    For a cooperative like NTUC Income who wants to continue to bring good value for its customers, I think the basic thing it has to do is to make sure that it is operated on a sound and efficient basis, be strong financially and fundamentally. They have to be as good or even better than their competitors in terms of product offerings and service delivery.

    A cooperative can make a difference in many ways. A cooperative is not a charity. A charity relies on the donations and genorisity of the public to sustain its operations. A cooperative has to be self sufficient, self sustainable, operated viably, competitively in order to be able to make a difference.

  92. Raymond said

    Hi Estabelle, I am wondering why NTUC sees the need to charge higher premiums and lower annual bonuses when it is doing fine all along. There is a saying if it ain’t broken, don’t fix it? 🙂


  93. MadameG said

    Dear Zhummmeng (post #77),

    Thank you for highlighting the Consultation Paper on the Proposed Guidelines on Fair Dealing Outcomes.

    This is a very technical paper and covers financial institutions (including insurance companies) providing investment products. One can hope optimistically that the guidelines when introduced would address many of the issues of concern to consumers. Nevertheless, I would be providing comments to MAS.

    Just a comment. As a dignified consumer, commenting on relevant issues, one can rely on facts and figures, offer good suggestions/ideas, provide fair arguments/opinions with proper decorum.

    One important point. After nearly 100 posted comments to Mr Tan’s original post, we have yet to see anyone challenging Mr Tan’s extensive facts and figures used in supporting his advice of not buying ANY high-cost life insurance policy. Perhaps these facts and figures are just the painful truth…….for some…. of us???

    • Kelvin Lee said

      Dear MadameG,
      In case you missed my post, here are my comments to Mr Tan’s “facts”
      1. “Buy term and invest the Difference” was a concept first introduced by AL Williams in the 70s. See
      It is a somewhat misguided half-truth. The death rate of Singaporeans below the age of 60 is miniscule. Which means that 30 years term insurance for a 30 year old has a very low probability of a claim. Insurance companies makes the most money when they DO NOT PAY CLAIMS. For those of us who live beyond the age of 60, a whole life policy would usually result in a claim – considering the unavoidable fact that we all will die eventually.
      2. The assumption of a 3% or 5% return on investment is based on projections. There aren’t many guaranteed investment options available to consumers, insurance related or otherwise.
      3. The real problem is not the distribution costs or insurance agents commissions. If you purchase a policy of 25 years or more, the agent gets approximately 1 year’s premium over a period of 3-5 years. Agents get commissions approximately 4% of the total premiums.
      4. The real problem are fund managers, who draws a big salary and bonuses even if your investment loses big. The Global Equity Fund has a Bid/Offer spread of approximately 4.5% and a annual management charge of 1.25% subjected to change (increase). For a single premium investment over 25 years, you could end up paying 31.25%. (correct me if I am wrong).

      5. Highly paid top management and actuaries deciding the high mortality charges, that amounts to a fixed cost regardless of their productivity or ability to do their job.

      • Kiasusi said

        FSA fines Standard Life £2.45m over Pension Sterling Fund failings

        By Maryrose Fison | 10:43:42 | 20 January 2010

        Standard Life has been fined £2.45 million by the Financial Services Authority (FSA) for ‘serious systems and controls failings’ that resulted in the production of misleading marketing material for its Sterling Pension Funds.

        The regulator said the Sterling Pension Fund’s customers, of which there were 98,000 as of 23 December 2008, had been misled about underlying investment risks

        It found that between 10 July 2006 and 28 February 2009, Standard Life Assurance Limited (SLAL) failed to ensure there were proper systems and controls over the fund, specifically in relation to the marketing material produced. This resulted in a risk of unexpected capital losses being incurred for customers invested in the fund.

        The regulator also found there had been an absence of a ‘prompt and full investigation’ of the concerns that arose about the marketing material.


        * The FSA investigation concluded that despite the majority of the fund being invested in floating rate notes by July 2007, marketing material issued by SLAL referred to the fund as being wholly invested in cash;
        * It found there were no adequate systems or controls in place to ensure that marketing material issued accurately reflected the investment strategy for the fund;
        * It concluded that customers had been misled as to the true nature of the investments held by the fund and had been given misleading information on the risk of capital losses.

        The risk of unexpected consumer losses was demonstrated by the reduction in value of the fund by 4.8%, approximately £100 million, on 14 January 2009.

        SLAL paid a total of £102.7 million into the fund at the beginning of 2009 to restore the value the investors’ holdings to the position they would have been in prior to the fall in the unit price.

        In addition to this capital injection, SLAL also contacted existing customers identified as having received poorer quality marketing material in order to determine whether any further compensation could be required in their individual cases.

        The insurer commissioned a report by an independent third party into the systems and controls relating to the marketing material issued in respect of the fund, and improving these systems and controls in relation to the fund. SLAL outsourced its marketing material to a third party.

        Margaret Cole, director of enforcement and financial crime at the FSA, said:.

        ‘The fine announced today demonstrates our commitment to the principle of credible deterrence. It is critical that consumers are given an accurate understanding of the nature of investment products and the risks involved. Without this information, consumers are unable to make informed decisions about whether investments are suitable for their individual investment strategy.’

        ‘Throughout 2010 and beyond, the FSA will continue to take strong action when a firm’s financial promotions fall short of the requirement to be ‘clear, fair and not misleading’ and customers have not been treated fairly.’

        She added: ‘The failures at SLAL arose because there were inadequate systems or controls in place to ensure that marketing material issued accurately reflected the investment strategy for the fund. There were also inadequate processes in place to enable effective communication between business areas and committees resulting in a lack of awareness of any divergence between the marketing material and investments held by the fund.’

        Because SLAL co-operated with the FSA and agreed to settle at an early stage of the investigation, it qualified for a 30% reduction in penalty. Were it not for this discount, the FSA would have imposed a financial penalty of £3.5m.
        Was this of interest?

  94. obamaosama said

    I want to email this to my Insurance Adviser. How can I do it ?


  95. Kiasee123 said

    See my investigation into NTUC income expenses:


  96. Ramadhona said

    thx for information

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