Monday, June 30, 2008

Developing Multiple Intelligence

I had attended a talk by Dr Khoo Kim Choo last Saturday. Dr Khoo is a pioneer in the early childhood field spanning over 25 years – as consultant, advisor, chief executive officer, adjunct Associate Professor at NUS.

She gave me a very good insight about Intelligence of which my impression in the past are only IQ and EQ. However, after attending the talk, I'd learnt the importance of indentifying our core intelligence and to develop them. It is especially important for those with young children. I like to share a bit about this Multiple Intelligence with you today.

There are 8 areas of intelligence that we can try identify among our own children. When we are able to spot our children's core intelligence, we can build it up early in their life for future excellence.

1) Linguistic Intelligence
a) Able to use language to inspire, instruct, persuade and entertain
b) Able to manipulate language structure, sounds and meaning quickly
c) Jobs like Lawyers, novelist, poets, teachers, politicians, comedians, etc are suitable

2) Logical-Mathematical Intelligence
a) Sensitive to logical pattern and relationships
b) Capacity to use numbers effectively, reason well
c) Jobs like mathematicians, statistician, programmers, Engineers, etc are suitable

3) Spatial Intelligence
a) Ability to think in pictures, in 3-dimensions
b) Sensitive to colours, shapes, lines, form, space, etc
c) Jobs like Artitects, fashion designers, interior designers, etc are suitable

4) Musical Intelligence
a) Ability to differentiate tone, pitch, rhythm
b) Capacity to perceive, appreciate, create and communicate from sounds
c) Jobs like Musicians, dancers, audio engineers, etc are suitable

5) Interpersonal Intelligence
a) Abiity to recognize and make distinctions of feelings, intentions and beliefs of others and ability to respond accordingly.
b) Able to empathize and understand others and work with different type of people
c) Jobs like social workers, Salesman, Community leaders, diplomats, etc are suitable

6) Intra-personal Intelligence
a) Understand self and to distinguish own emotions and intentions
b) Ability to develop self knowledge and be self directed
c) Jobs like Psychiatrist, psychologists, etc are suitable

7) Bodily-Kinesthetic Intelligence
a) Able to control fine and gross motor actions and to handle external objects with or without tools
b) Good coordination among neural, muscular and perceptual system
c) Jobs like Craftsman, gymnast, Dancers, surgeons, etc are suitable

8) Naturalistic Intelligence
a) Expertise in recognizing and classifying numerous species of one's environment
b) Able to distinguish items, separate and classify forms naturally using sight, sound and smell.
c) Jobs like biologist, botanist, environmentalist, ornithologist, etc are suitable

By knowing your child's core intelligence can help him/her towards their interest and subsequently bring greater probability of success in their life. Build on their strength, don't keep harnessing on their weaknesses unnecessarily. Do read more about it.

Thursday, June 26, 2008

Stagnation + Inflation = Stagflation

The Birth of the word "Stagflation"
The word stagflation was a portmanteaus introduced in Britain by a member of the Conservative party during a House of Common Speech on 17th November 1965. A portmanteaus are blended words formed by 2 words of different meaning into another unique and new word. Other examples of Portmanteaus are "Bombay + Hollywood = Bollywood", "Medical + Care = Medicare", "Web + Log = Blog", etc

What is Stagflation?
* My title has explain it. It is the state of a country where its economy faces stagnation coupled with a high inflationary situation. Stagnation = Slow or no growth. Inflation = Rises in price.
* In economics, we learn that supply and demand usually come to a point where an equilbrium price is set. But when demand is too fast or supply cannot cope with demand, the price simply cannot come down.
* Example, Short supplies of essential commodities like oil and food or an overheated economy with loose monetary supply that leads of excessive demand and increase in wages. When the economy is supposed to cool down, wages, being downwards sticky couldn't come down and it result in unemployment.
* To deal with the problem, a government have to determine if it need to curb inflation or to prevent a recession. To curb inflation, they may need to increase interest rate. to prevent recession, they may need to reduce it.
* Either way can be bad because reduce interest rate will increase inflation and to increase will deepen the recession. It can take quite a long time for the economy to self stablise back to equilibrium.
What happened in the 1970s?
* The most well known stagflation situation happens during the oil crisis period in the 1970s.
* Developed nations like US and UK experienced high growth in the late 1960s and early 1970s.
* By mid-1970s, inflation soared to 12 percent as a result of quadrupling oil prices by the Organization of Petroleum Exporting Countries (OPEC), increases in the price of raw materials, and the lifting of Vietnam-era government-imposed Price and Wage Controls.
* This high inflation stemmed growth and the Federal Reserve Bank chose to tighten money supply to curb inflation.
* As a result, consumer spending and business borrowing slowed abruptly. The economy soon fell into a deep recession and doubled its unemployment rate to nearly 9 percent.
* The then US president Jimmy Carter tried to combat this stagflation with little success until the deregulation of various industries like airlines, railroad, trucking that help to bring living cost down and prices started to destablised in the 1980s.

What history repeat itself?
Maybe. The oil and commodity prices are still climbing which causes the current high inflation situation. The riots worldwide is a testimony of consumers difficulties. Economies are showing decreasing GDP growth. Investors are sitting on the fence, not willing to start a new business and freeze recruitment. All these are signs towards stagflation but no one admit it because there are inadequate financial data to prove it.

A lesson learnt

I had learnt a lesson from my previous posting about the ILP charges. It generated quite a lot of comments in that posting unrelated to the topic.

I had wrote a comment about some people who die die don't want to invest and die die want to save via a traditional plan. Some who die die want a endowment plan will die die want the liquidity. i.e, They simply wants to save via an anticipated endowment plan like Prucash or Revosave. I mentioned that if I had given him the option and warned him the implication and he insisted on taking up the plan, I will still sell it to him. I rather that he do something than to do nothing and I rather that he become my client than other people's client.

I added "If I don't sell it to him, others will."

My lesson learnt is: Human tends to focus on the sentence that seems more negative and controversial (the above highlighted words) and ignore whatever I wrote before that. I am being attacked left, right, centre because of that few words. When people start writing negatively, the negativity will spread.

This topic is highly debatable but my conscience remains clear.

Tuesday, June 24, 2008

The 4 ILP charges that reduce your returns

Over the years, I had encountered many clients who had purchased regular premium ILPs. Just the last 7 days alone, I had met 3 and they had something in common during the meeting. All of them were surprised when I revealed the charges to them.

I was equally surprised when I get to know that one of them is a regular investor with Fundsupermart. 2 purchased the Prulink from Prudential and 1 purchased the Maxlink from GE. It remains a mystery to me as of how the advisers managed to sell the policy without explaining the charges involved.

I like to share with you what are the things to look out for in a regular premium ILP.

1) Premium Allocation
This is the most crucial of all!!! This section forms the largest bulk of the charges.
It will specify how much of your yearly premium will be allocated for investment in the first few years. (Other charges not deducted yet)

Every company have different allocation rate. Eg:
Prudential Prulink - 15% / 50% / 50% for 1st 3 years
GE Maxlink - 10% / 60% / 90% for 1st 3 years
NTUC Ideal - 85% / 85% / 85% for 1st 3 years

Taking Prulink as an illustration, 185% of 1 year premium are taken away as charges from the first 3 years of premium paid. If premium is $2,400/yr, it means 185% x $2,400 = $4,440 are not invested at all!!! Most of the $4,440 are used to pay the agent, manager and company.

Some big fat lies and reasons that some agents will come out with are:
* "These are used to pay your insurance charges"
* "All policies have their charges, these are what the company charges for the policy administration, overheads, office staffs, etc"
* "Unlike an Endowment policy, part of your money are already invested from day 1. In an Endowment plan, there are no cash value for the 1st 2 years. Don't you think the ILP charges are lower?"
* They will say anything except to say that its their commission. They will try to emphasize on the potential returns and rush through the charges. Some agents may not even talk about it.
2. Insurance Charges
Some people really thought that the low premium allocation are really because of insurance charges. Those innocent clients will have fell into the agent's lie.
The insurance charge found in ILP are normally in the form of a YRT(Yearly Renewable Term).
The YRT premium table can normally be found in the insurance policy itself. The premium will increase with age but significant increment will be at around 40yrs old onwards.

$0.60/yr per $1,000 sum assured at age 25
$4.98/yr per $1,000 sum assured at age 45
$15.11/yr per $1,00o sum assured at age 65

If you are 41 yrs old and desired a $100,000 sum assured, it means that you need to pay $498/yr as insurance expenses.

3. Policy Fee
Policy fee is meant for the maintenance of the policy charged by the insurance company. It can be $5/mth or $50/yr which varies for different companies.

4. Funds Bid-Offer Spread
This is the sales charge of the investment fund. The usual sales charge is 5% with exception from NTUC Income at 3.5% or AXA Inspired plan with as low as 1% sales charge.
Eg. $2,400 premium will have a 5% x $2,400 = $120 sales charge (Bid-Offer Spread)

There will be other charges on fund level like management fee, trustee fee, etc which I shall not emphasize here.


Now. I'm going to illustrate an example on a 45 yo female investing $2,400/yr or $200/mth with $100,000 insurance protection. How much does she really invest over the initial 3 years.

1. Premium not allocated for investment - 185% x $2,400 = $4,400
2. Insurance Charges
at 45yo - $4.98 x 100 = $498
at 46yo - $5.51 x 100 = $551
at 47yo - $5.99 x 100 = $599
Total over 3 years = $1,648
3. Policy fee - $5/mth x 36 mths = $180
4. Bid-offer spread - 5% x $2,400 = $120 x 3 = $360

Total investments = $2,400 x 3 = $7,200
Total Charges = $4,400 + $1,648 + $180 + $360 = $6,628
Actual money invested = $572


I advocate separating investment and insurance so that we can be clear on the amount we expense for protection and the amount we invest for retirement. I am not saying that ILPs should not exist but I think MAS should set a cap as of how much the insurance company can charge the consumers. Agents should be fairly compensated but it should not be excessive at the expense of the policyholders.

Saturday, June 21, 2008

Working Beyond the Adviser's Role

I wrote about Mr Chan whose Incomeshield commenced on 1st Feb but was admitted to hospital on 25th Jan in my previous postings. He had actually submitted the claims under Medishield because the policy had not commenced and he hope he can submit the claims under Incomeshield for a larger payout.

I explained that it is not likely but if he wish, we can go to the hospital and submit the claim under Incomeshield. He did not object to what I says about the claims most probable rejection and had rejected my offer to go down hospital with him. I had asked him twice about his bill on 2 occasions and he told me $20k. I had stopped there and presumed that things are ok.

Mr Chan somehow engaged the help of a GE Life Planner, Keith Ng Keng Kwang. From him, I learnt that Mr Chan's bill is actually $60+K. I was surprised because I totally don't understand why he wants to lie to me that his hospital bill. Anyway, I do not know how Keith get to know Mr Chan, but from him, I had seen a professional and a real helpful soul who work beyond his profession. This is how it goes...

* On Wednesday afternoon, Keith called me to enquire about Mr Chan's case. He requested that I arrange with NTUC Income claims officer to discuss the issue.
* Its a known fact that claims people usually do not talk to PH directly but I managed to get the Claims manager for an appt on Friday morning to discuss this issue.

* So what are the credits I like to give Keith?
1) He must have spent quite sometime listening to Mr Chan about his problem.
2) He called and request my help to appeal with the claims officer
3) He drove Mr Chan from home to Income Centre on a early Friday morning
4) He spoke professionally and stated his points for the appeal.
5) He later bring Mr Chan to Tan Tock Seng Hospital to appeal on the reduction of his hospital bill.
6) He mentioned that if everythings fail, he will help him appeal with his MP in Bedok.
7) He told me that we must do our best to help our clients no matter how slim the chance is.

He get nothing for doing all these hard work but I'm sure he had gained the trust of Mr Chan.

I only hope Mr Chan will not forget what I did for him:
* I had spent nearly 3 hours with him explaining the Incomeshield in 2006. I usually spent a lot of time with him because he asked a lot of questions.
* I had spent half hour trying to convince him not to terminate his Incomeshield that time after he freelook the policy he just took up.
* I had spent 4 hours explaining the Incomeshield again in January this year.
* I had spent 2 hours with him explaining every single clause of the policy recently.
* I had tried so hard getting a claims manager to talk to him directly and get the case up for an appeal.
* I offered him help for an appeal which he rejected.

For this Incomeshield case, I believe I had done my part as an adviser, but when I met Keith, I realised that there are people who goes beyond the adviser's role and do things with a passionate heart. In term of gaining the trust of this client and his family, I think I had lost to him flat. If Mr Chan and his family of friends need advice, he will more likely refer them to Keith than me. Its really heartening to see advisers like Keith around.

Wednesday, June 18, 2008

The flag that hide my face

I was one of the flag bearer during the 2008 Financial Services Practitioners Congress held in "The Rock" in Suntec City a few months back. The event was organised by FPAS (Financial Planning Association of Singapore). I was honoured to be given the task of holding and waving the FPAS flag. I held a heavy responsibility of leading the pack of 22 country flags up to the stage.

Today, one of the fellow flag bearer informed me that we are featured on magazine front page. I felt excited about it and quickly search for the magazine. I can't stop laughing after seeing the magazine. "My Face was totally hidden by that FPAS flag that I hold on to!!!" I had used a yellow arrow to point that flag.

So what is this FPAS flag about? What organisation is FPAS? Allow me to share...

FPAS was established on 1st December 1998 as a non-profit organisation for the financial planning industry in Singapore which represents qualified financial planners. One of its key role is to develop and promote the industry to provide unbiased financial advice to the Singaporean public.

FPAS is also part of a global assembly of financial planning bodies, and a licensee of the Financial Planning Standards Board Ltd., FPSB (a US-based non-profit organization) to set standards for and oversee the international CFP certification program. Together with 17 non-profit associations including the FPAS, over 45,000 individuals outside the U.S. have been certified to use the CFP, Certified Financial Planner & CFP (with flame logo) marks.

The FPAS vision is to ensure that all Singaporeans have access to responsible and appropriate financial planning advice, by raising the professional standards of the industry through education and a shared code of ethics.

FPAS also provide the certification framework for the financial planning industry in Singapore and oversees the administration of the CERTIFIED FINANCIAL PLANNER and Associate Financial Planner certification process, and grant qualified individuals the right to use the marks CFP and AFP.

Tuesday, June 17, 2008

Same apple that cost so different

When I was a tied agent, I often thought that premium of similar coverage from different insurance companies should be somehow similar. Pricing difference are expected but shouldn't be too far apart. I thought that the market is efficient enough to identify rapidly if a plan is over or underpriced. I thought the market is somehow competitive and Insurance companies should be pricing their plans approximately the same. But I was dead wrong...

I had a busy weekend making plans comparison from different insurance companies. I realised the difficulty in comparing plans because insurance companies like to attach some features unique to the plan. By doing that, they can price their plans differently as nobody will know how much the unique feature cost. Its up to the Adviser's capability to sell on the unique feature which normally come at a price. This is normally the case for Traditional Policies like Whole Life and Education Plans.

To make a more direct apple to apple comparison, I decided to illustrate a Critical Illnesses Term Insurance here. Just to quote an example of a 30 yrs old male getting a 30years $250k CI, death, PTD coverage. The lowest I get is $1,084.60/yr and the highest I get is $1,854.00. The rest are in the region of $1,300 and $1,400. Some are guaranteed renewable, some are not. There are some difference between each plans but not as complicated compared to Traditional Policies.

After making these comparisons, I am more convinced on the importance of an IFA. I am wondering if I am the Tied Agent of that particular company that quote $1,854/yr for the same $250k CI cover that everyone offers, am I really caring for my customer by selling that Term Plan? If I am the tied agent of a company who only carry a few investment funds, am I really caring for my customer when they are forced to invest into regions that they are not comfortable with? As an IFA, we are able to help the customer save nearly $800/yr x 30yrs for the above case. This money can be well invested for better returns.

Since joining the industry, I had heard of many Sales Managers trying to justify the higher cost of insurance by comparing people buying Cars. There are people buying Mercedes and people buying Toyota, etc. They will create an impression to their new agents as if their plans are Mercedes and the lower cost plans as Perdua or QQ or whatever. I feel that all these comparisons are craps. Cars are something people judge on the price because of how they feel and the thousand factors behind the cost like Engine and fuel efficient, etc. Whereas Insurance are all similarly regulated in Singapore. Die means die, PTD means PTD. Whats there to feel about it and why should they be priced so differently.

However, IFAs have our problems too. This morning, one of my prospect I knew months ago called me and wanted to take up an annuity plan. We arranged for an appt this Friday. Before I hanged up the call, I told her honestly that I am in an IFA now. I spent nearly 5 minutes explaining what an IFA is and why we are actually of insignificant difference from a tied agent. She consulted her friends and called me shortly that she decided to cancel our appointment because I am not direct with the company anymore. She claims that I will not be able to help if there are problem with the proposal and future problems of the policy. This simply shows that many consumers are still not aware that IFA exist in Singapore and the part they play in the advisory process...

Sunday, June 15, 2008

Happy Father's Day

I have not write about Customs and Festivals for quite a long time and today, I shall spend half an hour to research and write something about "Father's Day".
Father's Day is a day of commemoration and celebration of our Daddies. It is a day not only for our father, but all men who have acted as a father figure - whether as Stepfathers, Uncles, Grandfathers, or "Big Brothers."

* Father's Day is a celebration inaugurated in the early twentieth century to complement Mother's Day in celebrating fatherhood and male parenting.
* It is celebrated on a variety of dates worldwide but generally on the 3rd Sunday of June for most countries.

* Mrs. John B. Dodd from Washington, first proposed the idea of a "father's day" in 1909. She wanted a special day to honor her father, William Smart.
* William Smart, a Civil War veteran, was widowed when his wife (Mrs. Dodd's mother) died in childbirth with their sixth child. Mr. Smart was left to raise the newborn and his other five children by himself on a rural farm in eastern Washington state.
* It was after Mrs. Dodd became an adult that she realized the strength and selflessness her father had shown in raising his children as a single parent.
* The first Father's Day was observed on June 19, 1910 in Spokane Washington.
* In 1924, US President Calvin Coolidge supported the idea of a national Father's Day and its only in 1966 that President Lyndon Johnson signed a presidential proclamation declaring the 3rd Sunday of June as Father's Day.


2007 Father's Day Celebration. Cutting the Delicious Mango Cake.

* Some people may argue against the idea of a Father's Day or Valentines Day, etc. They always feel that everyday should be a Father's Day or Valentines Day and they believe that such occasions only serve to help gifts and greeting card manufacturers to make more money.

* As for me, I think its always good to have that another special day to remember our loved ones. Just that we celebrate our birthdays, wedding anniversaries, etc

* My Dad is a great man. I don't talk a lot to him but deep in my heart, I truly respect him.

Saturday, June 14, 2008

My recent claims experience

As promised from my previous posting, I shall share about my 3 claims experience which happened over the last 1 month. Seriously, I'm doing so many claims that I'm so convinced on the importance of a medical insurance.

1st Claim - Cancer Chemotheraphy
Mr Ng was diagnosed with Lung Cancer since April 07. He underwent 6 cycles of Chemotherapy. His Cancer relapsed recently and was given a new dosage of Chemotherapy. He is a subsidized patient.

The above is a portion of a bill from Tan Tock Seng Hospital. He is required to go through another 6 cycles of Chemotheraphy. Because the medication this time round are Non Standard Drugs, they are not eligble for any Subsidies! Each cycle this time cost around $3,600. He only has a subsidies of $225. Therefore $3,600 - $225 = $3,375 x 6 cycles = $20,250

My Message
There is a well-known personality that keep telling us that Medishield alone is sufficient. He probably are not aware that non standard drugs are not subsidized. For above case, Medishield only covers $700/28 days. Good luck to those who wants to save that few dollars in Medisave and don't upgrade to an "As Charged" plan.

2nd Claim - Intestine Bleeding
I had known Mr Chan since 2006 when I met him several times for an Incomeshield plan. He signed up the plan and free-look it within 2 weeks then. He insisted that his company covers him and he don't need to take up the Incomeshield. He retired in December 07 and called me to his house to sign up for the plan on 11th Jan 08. His policy commencement is 1st Feb 08. He was warded to SGH for Intestine bleeding on 25th Jan, 1 week before policy commencement date.

It was a serious condition. He went to ICU for 2 weeks and B1 ward for nearly 6 weeks. He was discharged in late March. He submit the claims only recently and was rejected by NTUC Income because hospitalisation happened before commencement date. His bill chalked up to around $25,000. Half of his Medisave was sucked dry by this hospitalisation.

My Message
If you want to delay taking up a medical insurance, its at your own risk. A few days exposure from no insurance can drain off your finance if you are unlucky.

3rd Claim - High Fever. Suspect Kidney problem
Ryan's mother called me at 5:35am in the morning. I thought someone accidentally pressed on the hp and called me, I hanged up the call twice. She sms me and asked me to call her back urgently. Ryan (6 months old baby) was having a high fever and was warded in hospital for 3 days. She was seeking my advice on the claims procedure. Hospital bill chalked up to around $1,200.

Ryan's father called me this afternoon and informed me that he was warded again for more test on his kidney. The bill are likely to be more this time round.

My Message
Ryan's mother took up this insurance when Ryan is only 2 months old. She did not procrastinate and lucky for her. I don't know if Ryan will have any problem with his kidney, but no matter what, I'm glad that he is already covered under a medical insurance as such tender age.


I had 13 Incomeshield Claims from 8th April 08 till today. I feel that I am helping people see the importance of Medical Insurance. I do not earn a lot and I really hate those who show me their poker face without any respect for me when I help them take up the plan. "I'm helping them, not the other way round. They look at me like a salesman as if I depend on them for a living!"

Wednesday, June 11, 2008

They forgetful or I misrepresent?

As mentioned in my previous post, I have a lot to share about Shield Plans. I considered myself one of the top producer in term of Shield plans in my previous company. Small premium, big cover and I feel that its so important to be covered under a good medical insurance. "Top Producer"? How come I still so poor? Because Medical Insurance small premium. Haiz...

As I have a lot of shield plans policyholders, I encountered a lot of claims too. I also get a lot of calls whenever my policyholders are in the prospect of being hospitalised.
Today, I like to share 2 recent calls I received from my Shield Plan policyholders .

First Enquiry: (Happened less than 1 week ago when I was studying for my exam in the CC)
* Mr Raja(not real name) called me and told me that he went to the hospital a few days ago.
* I asked him what happened.
* He told me that he got a toothache and went to the Dental Clinic in that hospital. He wants to claim from his Shield plan because the Dentist told him that he need to go for X'ray for his teeth and need an extraction which cost around $1,000.
* I asked him if it was caused by an accident and if he need to be warded in the hospital.
* He told me "No"
* I told him. "Cannot claim"
* He argued with me. "I went to the Dental Clinic in the hospital, because I know I have a hospital plan. Now I'm going for an operation, you tell me cannot claim. X'ray and extraction cost me over $1,000" "Can you call the hospital to check?"
* I told him, "Cannot Claim because........."
* "Last time, you tell me hospital can claim. Now you tell me cannot" "You din even bother to call the hospital to check....."
* I repeated "Really cannot claim"
* He hang up my phone...

2nd Enquiry (Happened around 2 months ago)
* Mr Rahim (not real name) called and told me that he got some Eye Problem
* I asked him what happened
* He told me, the optometrist diagnosed him to be short-sighted
* I asked again, "Okay. So whats the problem then?"
* I need to buy a spectacle. Can I claim from the insurance?
* I nearly fainted.....Lucky this one no arguments. (haha)

I am very confident that I explain every terms and condition very clearly to my policyholders. I suspect if I had talked too fast or too much that they cannot absorb anything into their heads. The misunderstanding are so obvious. Okay. Till here, I'll share about my recent claims in my next posting...

(Hope these 2 policyholders are not looking in my blog now)

Tuesday, June 10, 2008

Medishield Reforming again

On 11th April, our Health Minister, Khaw Boon Wan announced to unionist during a dialogue session about a proposed Medishield reform. The cover will be enhanced but with an increased of premium. The last reform was in July 2005 where Medishield was improved and all private plans are being integrated with Medishield.

What are the plus points of this proposed reform?
1) Normal wards daily limits
* Increase from $250/day to $450/day
2) ICU wards daily limits
* Increase from $500/day to $900/day
3) Surgical procedures
* Increase from Max $720 to $800 per hospitalisation
4) Implants and Medical Consumables
* Increase from $2,500 to $8,000
5) Chemotheraphy
* 7 days max from $150 to $270
* 28 days max from $700 to $1,280
6) Radiotheraphy
* Per Treatment from Max $1,000 to $1,800

What are the Minus points of this reform?
1) Premium increase
* less than $120/yr for below 80 yo
* less than $60/yr for below 60 yo
* less than $36/yr for below 50 yo
2) Deductible for above 80 yrs old are increased
* Class B2 wards - Increased from $1,500 to $3,000
* Class C wards - Increased from $1,000 to $2,000

Okay. Now what are my views...
1) A reform should do more good to Singaporeans than anything else.
Most Singaporeans should be able to afford a modest increase in premium. Its a government scheme, unless you terminate it, then you got no say. But if they don't enforce it, most of them don't care to cover themselves anyway.

2) I am particularly unhappy with the increase of deductible for the elderly. Why?
* They are the people who will most likely go to the hospital
* They are the people who are most likely have no money in CPF
* Government raise the deductible to $3,000 for B2 wards and $2,000 to C wards. Not forgetting there are co-insurance of upto 20%
* Its as good as telling them to pay for their own hospital bill because the chance of a bill above such deductible is low for C and B2 wards.
* I'm disappointed that the government is being so calculative towards our senior citizens

3) The 2005 reform should have make CPF Board richer.
* Did they tell us their surplus? Are surpluses distributed back into the system to reduce premium or increase cover? I strongly believe there are fat surpluses. Why?
* The 2005 reform had integrate all private plans back into Medishield. This means the pool of policyholders are suddenly increased where all Singaporeans are back into the pool. All the healthy ones are back into the Medishield system and Cherry picking problem of the past was solved by this forced integration.
* The integration had pushed the administrative work to the hospital and insurance companies when all claims are done through them. CPF board just collect premium and do minimum administrative work compared to the past when they have to manage their claims with hospital and policyholders directly.

Well. I have a lot to share about Medical Insurances and my personal experiences with claims. Will share more in future postings.

Monday, June 9, 2008

Relief for a while

Took my CFA exam Level 1 yesterday. Studied so hard especially over the last 2 months. In my opinion, Level 1 should not be that difficult if you have Finance or Accounting background. Whereas for me, its very very difficult because everything seems new to me and I do not have a foundation to back me up. There are so many things I cannot understand and I took longer than others to grab basic theories.

I heard that there are over 5000 people taking the exam this June. It really puzzled me why so many people taking this exam? Is there so many Analyst in Singapore or is the demand so huge for people with this qualification? 3 Expo Halls were filled up just for the exam but it was well organised and very professionally conducted. Each exam cost around $1,500 Singapore Dollars, including membership fees and basic study material. So CFA institute must be really rich. 5000 x $1,500 = $7.5 million in just 1 exam... Many like me, went for Class in Kaplan and it cost me additional $2,500. Really don't know if I had made the right choice in this investment...

I managed to create some space in my bookshelf to put my books aside, hopefully forever. I have only 20% confidence of passing this exam. It was so tough and I never did so much guesswork in any exam before. I don't think I'll be lucky enough to get the approximate 68% score which is the passing grade. I must get 164 questions correct out of the 240 questions.

Sigh of relief but its a new start from today onwards. Time to focus on my career... 2 months later, the books may be out of the shelf again.

Tuesday, June 3, 2008

An inspiring Story...

I just read a posting from onlinecitizen and it really inspired me.

I encourage you to read it and never give up on what you really want to achieve...

I failed to keep my promise to stay away from my computer and limit to only 30 minute a day. I start my usual internet surfing routine again once I reached home. Only 5 days away from my exam and I still have the feeling that I will not pass the exam. Suddenly remembered fortune teller tell me its my lousy year...

Very stressed. Went to walk my rabbit in the afternoon. Really cannot focus on my books. Simply not the type who can sit properly for even an hour.

Just sent around 350 letter to my policyholders informing them on my change of company this morning. Expecting some calls in the next few days. Will surely disrupt my study schedule. Eat more vitamins.....

Monday, June 2, 2008

Preparing for Exam

I'll stop blogging for a week to prepare for my CFA Level 1 examination.
Going to buy essense of chicken and bury myself under the books for 1 week.
I will give myself only half hour of internet access per day and hence may not reply to your emails that promptly.

Will be back 1 week later with better stuffs... Wish myself good luck...

Low Risk Securities doesn't mean Low Risk

This is something I found from an old training file and I find it pretty relevant under such high inflationary environment. Low risk securities such as Fixed Deposits and Money Market Funds are proven to be no longer low risk.
Time Horizon is the Crucial Factor
* I always like to divide our funds into 3 baskets namely short, Mid and Long Term
* Short probably means 1-3 years, Mid = 4-7 years and Long = 7 years and above
* Fixed Deposit is good for short term due to its liquidity, but bad for long term investment due to high inflation.
* Equity Investment is bad for short term due to its volatility, but good for long term due to higher potential real returns after considering inflation
* The one is between is Bonds and probably some Endowment plans found in the market.
* Risk cannot be completely diversified but there are many studies and analysis that prove that a proper diversified portfolio over long term gives good returns and over 90% can be explained via asset allocation.

I think this chart is self explanatory and I don't think I need to elaborate so much. What I want to quote is "What you preceive as risky may not be as risky as you think. What you preceive as safe may not be as safe as you wish."