Saturday, November 29, 2008

Incomeshield - Letter of Guarantee

Letter of Guarantee is one of the unique feature of Incomeshield compared to the rest of the Medisave Approved Integrated Shield Plans in Singapore. Incomeshield is a catastrophic medical insurance plan from NTUC Income which offers additional benefits on top of that provided by MediShield.

I am not trying to sell an Incomeshield Plan based on LOG here but I can certainly vouch that the issuance of Letter of Guarantee (LOG) did helped a few of my clients who are cash-strapped and not able to pay a deposit to the hospital.

What is a Letter of Guarantee?
A Letter of Guarantee or LOG is a document issued by NTUC Income for policyholders of Incomeshield plans. A LOG will help to waive partial or full deposits required by the restructured hospitals at the point of the Policyholder’s hospitalization.

How do we get this LOG?
It is not as easy getting this LOG as what your adviser might have explained to you. A lot of information is needed and adequate time are required to get them. Ask your adviser or call the hotline to seek the necessary information needed for this LOG. The generally required information are as below:
Name of Patient:NRIC / Policy Number:
Date of Admission:Length of Stay (days):
Hospital:Ward Class:
Estimated Hospital Bill:
Estimated Medisave Amount:
Deposit Required by Hospital:
Name of Attending Doctor:
Medical Condition:
Surgery Required (Include Surgery Table #)
If day surgery: Subsidised or Private Patient?
Hospital Telephone #:
Hospital Fax #:
Next of Kin:Next of Kin Contact #:

How much will NTUC Income guarantee the hospital in the LOG?
It depends on how much they estimated that you are able to claim from the Incomeshield Plan
based on specific interim admission information.
Example, if the claimable amount after applying deductible and Co-insurance in the Incomeshield is $1,000 but the hospital demands $2,000 deposit, they will most likely only issue an LOG based on Max $1,000.

Do we still have to pay hospital when LOG is issued?
Possible. 3 scenerios I can think of
1) LOG amount is less than deposit requested
2) Deposit is over the $10,000 limits set by NTUC Income
3) Hospital do not accept this Letter of Guarantee due to their Internal Practice. (Important Point)

How long do they need to take to issue a LOG?
From their website, they say 24hrs for restructured hospitals and 1 working day for Private Hospitals. My experience with them is 2-3 working days under normal circumstances. Do note that you need time to get the necessary information for LOG. Don't request from your adviser at the very last minute for LOG.

Can NTUC Income decline to issue an LOG?
Yes. I can say that NTUC Income is not obliged to issue an LOG. There are nothing in the terms and condition to say that they must issue the LOG. Its more like a extra added service by them. We must also meet the eligibility criteria in order to get the LOG.

What are the Eligibility Criteria?
Some of the eligibility criteria for a LOG I can highlight are:
1. The policy and acoompanying riders must be in force for at least 1 year
2. The estimated LOG amount is below $10,000
3. The Medical condition is not excluded under the Incomeshield plan
4. The estimated LOG amount is above the policy deductible
5. The treatments are not at private clinics, outpatient treatments and community hospitals

I am not a staff of NTUC Income and is not an expert with LOG. I write this merely based on my knowledge and experience about it. I'll advise that you check with NTUC Income or your adviser when necessary.

Wednesday, November 26, 2008

Reasons for doing fact-finding for our clients

Over the last 6 months in my current FA firm, I had did more fact-finding than my 4 years in NTUC Income combined. Fact-finding is such a routine under the FA platform to such an extent that I find it very hard to give advice without going through it.

Fact-finding seems like a chore to me in the past. I always feel that the KYC(Know Your Client) form that I used previously was too simplified and not detail enough. I always have to use my own designed fact-find form when I meet my clients and the layout of my own form is simply not professional enough.

Anyway, I'm glad to be under this new platform where the forms and programs suit me better. Today, I just like to share with you 10 reasons why we should complete a proper fact-finding for our clients and stop ticking the "Product Advice" column in our submissions.

1. It helps us identify the client’s actual needs and objectives.
2. It provides a more efficient and orderly way to gather information.
3. It gives us a chance to record what our clients tell us.
4. It can identify multiple needs and can help generate more business for us.
5. It is able to help identify areas of priorities for the clients and recommend what is more important first.
6. It provides us with a good way of explaining our recommendations and shortens our time needed for closing.
7. It forms the basis for future reviews.
8. It helps us project a more professional image.
9. It will help defend ourselves if the client turn around and say we mis-sell.
10. It helps us comply with your “Know Your Client” obligations and don't need to worry about MAS audits anymore.

This method suits me better because I'm simply not the type who can use my mouth and a piece of paper to sell a concept to close a case.

However, this method is very tedious and be ready to work very very hard if you going for such financial planning route. Fact-finding is just the first step. More time will be taken for preparing the financial plan, formulating recommendations, making product comparisons, making adjustments to clients budgets and the tons of paperwork that follows, etc...

Saturday, November 22, 2008

Let’s Live In Balance

This MSIG commercial was aired over TV since Jun this year. I enjoy this commercial very much and find it meaningful. The commercial “Balancing Balls” features people maintaining their balance as they go about with their daily lives.

The message MSIG wants to bring across is that they develop insurance solutions to protect us and to maintain stability in our life. When I saw this commercial, my view is that life is uncertain as if we are balancing on a ball daily. Its easy to fall and we must protect ourselves adequately.

I find this commercial innovative. Hope you find it too.

Friday, November 21, 2008

My 300th Posting

I was in NTUC Income 2 years ago when I started this blog. Tan Kin Lian was our boss then and I visited his blog "" regularly. He made use of his blog to promote NTUC Income and shared his view about Current Affairs and Financial Planning. I found his blog to be educational and was able to reach out to the public fairly effectively.

I'm certainly not as influential or knowledgeable as him but I decided to start my blog in a small way to reach out to my policyholders. I wanted to make it part of my service to them, giving them insurance updates and health knowledge to keep them Healthy and Wealthy.

Its not easy maintaining a blog given my standard of English and limited financial knowledge. Even today, I still need to spend a lot of time vetting through every posting to reduce my language error and to research on what to write next. I nearly gave up within a year because nobody reads my blog and readership can be as low as 1-2 visitors per day. I pondered if I should focus on my work instead. However, whenever I decided to start focusing on my work, I find it hard to stop writing and let this blog dies off. I reckoned that it has become a habit to log in daily and write whenever something strike my mind.

Through some perseverance, this blog started to benefit me in some ways.
1) My Financial knowledge improved because I had unknowingly forced myself to read more and to learn from others. I get to know many other local financial bloggers and gained a lot of insights from them.
2) My English improved slightly. I really regretted not learning my English properly during my secondary school days. Taking up a Grammar or Writing course cost so much and I don't have the money to sign up.
3) Some of my policyholders like my service and starts reading my blog though no referrals from them yet.
4) This blog had generated a few leads for me and help improve my income slightly.

This is my 300th posting. I had changed the theme of my blog and I look forward my 600th posting from today onwards. I'll continue to learn and give my readers practical tips to improve Health and Wealth. I also like to thank all those who had contributed with their comments, whether positive or negative in these 300 postings. Each comment helps to mound me into a better adviser.

Wednesday, November 19, 2008

Medishield Changes wef 1st Dec 2008

From 1 December 2008, MediShield will be enhanced to increase payouts of up to 80% of large class B2 and C bills, up from 60% previously. This will be achieved through raising the MediShield claim limits.

The main changes are as follows:
1) Daily Room and Board charges raised from $250/day to $450/day and ICU from $500 to $900/day.
2) Surgical Procedure limits increased for Table 2, 3 and 4 Operations
3) Implants and Medical Consumables increased from $2k per treatment to $7k
4) Chemotheraphy limits increased from $700 to $1,240 for a 21/28 days cycle treatment
5) Stereotactic Radiotherapy for Cancer increased from $1k to $1.8k per treatment
6) Deductible increased for those above 80 yrs old from $1k to $2k for Class C wards and from $1.5k to $3k for Class B2 wards.
7) Premium increased by as low as just $3/yr for those 30yrs and below to $418/yr for the highest age band of 84-85yrs old.
8) For those 81 years old and above, withdrawal limit for premiums will be increased to $1,150 per insured person


My comments:
Its great news especially for those with existing health problems. The most significant improvements are the increased limits for Daily R&B, Medical Consumable and Chemotheraphy treatments. I've been helping my clients with medical claims over the years and I know these are the areas that the current Medishield are seriously lacking.

However, I'm quite disappointed that they had doubled the deductible for those 80 years and above. This is the most vulnerable group of people but logically forms the lowest group of Medishield Policyholders. This increase is very drastic as they are very likely not having sufficient savings to pay that $2k or $3k treatments. I find it unnecessary to double the deductible for them at this stage.

It seems to me that the government is all out to make sure Medishield generate profits for all age groups. I'm not sure if they had taken the effort by passing part of the profits from the younger groups to cover part of the loss in the older groups.

Monday, November 17, 2008

A Grateful Email

I received an email with the heading "Very grateful to your advice" recently.
I'm glad that I managed to help a stranger away from such Regular Premium ILP.



I am a structural engineer, 27 yrs old, and earn a salary of S$4700 per month. Last week, I was determined to have an investment plan as I realize the importance of money management. so, I just went to a well-known bank, HSBC. A senior wealth manager persuaded me to join a ILP, life manager plus. I did not fully understand this plan as she did not tell me how to calculate the projected cash value, total deduction effect and distribution cost. When I asked, she said it's too technical and she did not know as well. and then, I just trusted the expertise of the professional and signed the proposal with a premium of S$2000/month.

After coming back, I read the proposal carefully, as a engineer, I have some mathematic knowledge, so I tried to figure out how to calculate the cash values by myself. Finally I made it and after doing some case studies, I realized how lousy this plan is! I will lose quite a lot investment if I follows this ILP with S$2000/month. The agent will get a very big fat from the low allocation rate of the first three(3) years.

Before I read your blog article 30 minutes ago, I still thought it was not a willful 'mistake' of the wealth manager. I dropped her an email this morning and told her my findings as attached. now, I know those agents know exactly what they are doing. My God! I am too naive and too easy to trust the reputation of the bank.

Now I understood why she emphasized the one-month waiver at the 1st year. It looks like the more premium I pay at the 1st year, the more promotion benefit I can get. Acutally, the big fat 87% of my premium goes to the agent. (allocation rate 1-3yrs: 13%,40%,45%,100%).

Thanks, Adrian, your invaluable advice saves me from a huge loss.


$2,000/mth is a lot of money. 202% of 1 years premium will not be invested and hence amount to $48,480. This is precisely what is happening on the ground and I feel that such allocation rate is simply unfair to the consumers and too good for the banker.

Friday, November 14, 2008

Is Financial Advisory a Lucrative Job?

I like to ask those young Pru or AIA agents during roadshows on why they joined the industry when they tried to get me to complete their survey forms. I also asked the same question to some of our new advisers in my company.

The common answers are time flexibility, the skies the limit, can earn lots of money, its like our own business. We fail, we can still go back. Financial Independence like my manager, etc... Generally, the largest pull is the money and the time flexibility.

I'd seen advisers top the company by doing roadshow alone, I'd seen advisers specialising in only 1-2 products and memorised all the ways to handle rejections. I'd seen advisers with their "Introducers" bringing in load of policies for them. There are some who did well adopted different business model by targetting only a specific market and some who got promoted to managerial level and just keep training the 50-60 advisers under their belt.

They are capable of earning a lot of money and its proven to be lucrative. Their annual income probably range between $300k to $1million. Don't be surprised that by doing roadshows alone, some agents can earn as much as $30k/month. They are generally specialised in 1 or 2 products during the roadshow.

Just a guide for you. An MDRT earns around $100k in 1st year earned commission alone. We have not considered 2nd, 3rd yr, etc and all the renewal commissions. All these renewal may comes to around 40% of their 1st year commission. This means, they should be getting around $140k/yr or rather $11.5k/month. A COT earns 3 times more, which equates to $420k/yr and TOT is 3 times of COT which means $1.26million.

From a sale point of view, they surely deserve such pay because they are really good in convincing their prospective clients and have the capability to build up a profitable business model. From a professional point of view, I feel that most of them don't deserve a pay cheque of $30k/month for the type of advice they gave. Most of the time, they did not even identify their client's actual needs. For a minority, maybe yes. They probably are able to tap into the high networth market correctly who willingly pay them the money for the premium advice and service.

Financial advisory falls under a very grey area of professionalism and sales. The smart ones will earn all the money they can. They didn't do anything wrong. The financial system is built for them to excel towards sales and the higher cost plans they sell, the more they earns. They did not mis-sell anything because they are licensed to sell them.
The insurance companies love them because they are the geese that lay golden eggs and make the CEO rich. They will honour them and make them role models for all the new agents.

Please don't mistaken me for saying all insurance agents earn lots of money or don't deserved to be paid. There are still many good advisers out there who will look after your best interest and recommend things that are of good value to you. They may not be the one driving big cars or wearing expensive watches. Also, please don't give them too hard a time by making them running round Singapore 5-6 times for a plan that gives you good value or trying to ask for gifts and rebates for the low cost plan they recommended, etc...

Well. I did not answer the above question. The answer will depends if you are able to make it lucrative or to convince yourself that it should be lucrative.

Tuesday, November 11, 2008

What you may and may not hear about Regular Premium ILP.

I get into debates occasionally with my fellow colleagues or friends in the industry about Regular Premium ILP. It irritates me whenever I saw such plans being recommended. I'll always ask them why was this plan recommended and under what circumstances will the client buy the idea of getting such plan of substantially higher cost.

They will always give their views and I'll present mine but never into a heated argument. They offered valid views but I cannot accept it. Perhaps I can share with you how some people are being convinced into buying a regular premium ILP.

1) Spending more time on the concept of buy term, invest the difference and dollar-cost averaging
* They will focus on this point and the potential returns. A lot of time will be spent in this area.
* As the clients get so focused on the concept and returns, agent is likely able put little emphasis into the charges in the later part.
* The client may not realise how these charges will eat into their so called "Potential Returns"
* However, when client start asking about charges, agent will start justifying by.....

2) Comparing a Life policy with an ILP
* Life policy has no cash value in the 1st 3 years. ILP have cash value from year 1. So ILP better. * Life policy have their charges, ILP also have their charges. The charges are more transparent for ILP and you have the option on how you want to invest your monies. So ILP better
* With Life policy, you can only get $50k with $100/mth, with ILP, you can get $200k coverage. So ILP better
* With Life policy, you have to keep paying premium, ILP, you can take premium holiday and stop as and when you need to. So ILP better.
* With Life policy or Endowment, you need to take a policy loan if in need of money, with ILP, you don't need to as you can sell your units to get the money. So much flexibility. So ILP better.
* They can offer so many reason that it seem foolish not to get an ILP.
* However, if client is slightly smarter and asked about Term policy, agent will justify by saying......

3) Policy will not lapse compared to a Term policy
* If you buy term policy and you forgot to pay premium, Term policy will lapse, ILP will not because there are units in .
* Client also scared after listening that they may really forget to pay premium for whatsoever reason and cover totally lapse.
* As the term plan used in ILP is Yearly Renewable Term riders, the premium will be slightly lower compared to a Level Term plan.
* If client ask why charges seems high, agent will say......

4) Bonus Units after X years
* They focus on the bonus unit after, say 105% of value 7 years. Sounds like they are giving you $105/mth when you give them $100/mth. But after taking so much from you...
* Client always feel good when they feel that they are getting something free in return.
* When client still want to consider, agent can say......

5) We are having some promotion here.
* If charges is not a issue to the client, there may not seems to be a reason to reject the agent.
* The agent can offer them some freebies such as vouchers, MP3, even LCD TVs, etc. We often seen these in roadshows
* This promotion is only for this roadshow. Since you are already planning to save, why not start today?


Some of the things the adviser will try not to reveal too much...
1) Charges can be as high as 2 times your annual premium over the 1st 3 years. If you put $6,000 over 3 years, as much as $4,000 are paid to the company and agent.
2) Bid-offer spread are normally 5% compared to 2-3% for Unit Trust. For a $100/mth savings, it equates to 2-3% immediate loss to your savings from day 1.
3) Your insurance charges get so much higher, especially when you reach 40 yrs old. They will never tell you how much the same insurance cost at the age of 60.
4) Your monthly policy fees can be as much as $6/mth. If you are savings $100/mth, $6 are taken out and equate to 6% immediate loss to your savings.
5) They will try not to tell you how long your money will take to breakeven.


My views on the charges issue:
* Ideally, zero charge with all the advices is the best for client. But it will also mean advisers like us can start eating grass. If client pay peanuts advisory fees or not even willing to pay a single cent for all the work and research the adviser did, then its not fair to the adviser as well.
* My colleagues said that I'm guilty of earning money which we rightfully deserve. There are actually nothing wrong with this plan. However, I still find the charges for a regular Premium ILP to be excessive and to be unacceptable. In my opinion, there must be a balance.
* Some company charge a more modest advisory fee like the Ideal Policy from NTUC Income and the achiever plan from AIA. Some are excessive like the Prulink from Prudential or Manulink from Manulife, etc
* IFA platform normally allow 100% allocation from day 1 for RSP(Regular Savings Plan). Lower Bid-Offer spread of 2.5% to 3% and but a wrap fee of 0.5% to 1%p.a. Its a very modest charge and allow most of clients money to tap into the investment from Day 1. Adviser will have a vested interest towards their clients money as well.

Well. I just like to refer to my previous posting. You decide if this is a lemon yourself.

Sunday, November 9, 2008

A lemon will always be a lemon

I read the "Weekend Today" and came across an article by Richard Hartung "Behind the Rosy Forecast". He talked about those analysts who need not be held accountable for all the wrong predictions and analyzes made. They can upgrade a company today and downgrade them tomorrow without fear of losing their job.

He has given 2 advices which I really enjoyed reading.

1) Look beyond the sales pitch. Rather than just listening to a rosy story or reading the headlines, ask about the analyst's record with forecast in the past...
No matter how shiny a lemon may looks and regardless of what anyone says about how bioengineering has made it sweet, a lemon is still a lemon, so too it is better to taste the lemon, so too it is better to check out the investment and verify that the story is credible.

2) Do some homework. The basics are to review the overall economic outlook, evaluate the company's industry and assess its financial statements. In considering a unit trust, look at how it held up in the bad times like 5 to 8 years, see how the fund managers have been running it and look at the components of its core investments holding.

Well the conclusion is "Do your homework and invest with your eyes open. If you lose money, its nobody but you to blame."

Thursday, November 6, 2008

When news are no longer news

There was market rallies around the world over the past 2 weeks as the world view the end of the credit crisis and in anticipation of Barack Obama’s victory in US General Election. The rallies are pretty impressive and it demonstrated how fast the market can go up just like how fast it can drop. Histories of financial market had proven that bouts of panic selling have often been followed by bout of panic buying.

News in the newspaper or TV are no longer news. When market rallies, they will say "Market anticipate the market is recovering and investors are picking up bargains". When market drops, they will say "Fears of economic downturn prompted selling". These news project very short term view which only make an investor more uncertain of the future.

Markets and investors have become highly risk averse and highly short term. Hedge fund managers are forced to liquidate their positions and fund managers are too eager to outperform the indexes. Regular investors like you and me seems hard to win in this financial market when it looks so volatile.

However, what I’m very sure is that regular investors like you and me do have one advantage over all these hedge fund managers. It is called "TIME". Short sellers and other players who rely on leverage and borrowing cannot sell a company short for years on end -- the nature of such trading is necessarily short-term. We are able to invest through the cycles and wait.

Having said all these, caution remains the order of the day. In my opinion, the downside risk is higher than the upside. Market are expected to trade sideways with higher risk of going down. There are much challenges ahead but we cannot fall into the trap of trying to predict the market too much. I urge everyone to stay invested, stay diversified and focus on the long term. Not necessarily putting 100% of your money in but adopt a strategy that allow you to switch into the equity market if it drop further.

Obama wins the heart of the world

I had followed closely on this US General Election because of Obama’s Charisma. I read the newspaper and watched the debate between him and Mccain. Markets around the world rallied in anticipation of Obama’s victory. There was cheers and celebration, not only in US but round the world. He seems to me like a celebrity than a president. His victory seems like a world-cup victory in USA.

This 44th US President is crucial in bringing fledging US economies back into shape. He is crucial in mending US ties with other countries. He is crucial in fixing the Iran and North Korea nuclear problems. He is also crucial in bringing their troops back from Iraq and Afghanistan. The task is amazingly tough which no US president ever faced.

Is he up to the task? In my view, he is not a superman who is able to turn things round within a year or two. The world is over-estimating his capabilities and set too high an expectation on him. We heard nothing new or fresh on how he wants to lead the country. His economic policies seems to favor the general Americans but not for businesses.. His ideas lean towards a socialist and nothing that will stimulate the country.

The interesting part about him is that the world simply likes him and he becomes a symbol of hope. I also hope he is able to attract capable advisers to help him in bringing America back to shape. His speeches are inspirational and bring a lot of confidence. Hope he is equally able to convince leaders around the world with his capabilities. Well lets see if he is able to perform miracles for the world.

Monday, November 3, 2008

Keeping my salt lamp

I just dug out my Utility Bills over the past 2 years and below are my findings.

May06 to Aug06 - $0.2049/kWh
Sep06 to Oct06 - $0.2115/kWh
Nov06 to Feb07 - $0.2164/kWh
Mar07 to Apr07 - $0.2002/kWh
May07 to Aug07 - $0.1888/kWh
Sep07 to Oct07 - $0.2052/kWh
Nov07 to Jan08 - $0.2138/kWh
Feb08 to Mar08 - $0.2262/kWh
Apr08 to Jun08 - $0.2388/kWh
Jun08 to Sep08 - $0.2507/kWh
Oct08 to ????? - $0.3045/kWh

From $0.1888/kWh in Aug07 to $0.3045/kWh in Oct08 is a 61% increase over 14 months. From the trend, I think the price should come back to $0.23/kWh in Dec08.


Because of the increase in Electricity Rate, I had decided to give up my salt lamp which brought my house brightness and my family health over the past 2 years.

Salt Lamp is made of natural salt crystal, it works as a natural air ionizer that effectively boosts the number of negative ions in the room. It is scientifically proven to be able to kill bacteria and other harmful organisms thus increasing overall air quality and well being.

As the lamp was on 24 hours over the past 2 years, my Finance Cum Home Affairs Minister insisted that I should keep this lamp temporarily till the eleciticity rate comes down. I reluntantly keep my salt lamp last week because Finance Minister very powerful. She told me to throw away this lamp but I secretly keep it in the store room... (Oops. Hope she is not reading)

Well. Of course we had taken many other measures to reduce electricity recently, like switching off all main switches at home when we left for work in the morning and switching on only our florescent or energy saving lights when we are home.

Hope my salt lamp will start glowing again when electricity rate comes down and my salary stablises.

Saturday, November 1, 2008

The Bear The Bull and The Bumble Bees

Anyone who invest or read regularly should know what a Bull or Bear Market means in Financial Term. But have you ever wonder why they are given such names? Why don't we call them a Cat or Dog Market, or Tiger or Lion Market?
They becomes metaphors for the movement of a market. If the trend is up, it's a bull market. If the trend is down, it's a bear market.

Let understand what is a Bull and Bear market.
* A bull market tends to be associated with increasing investor confidence, motivating investors to buy in anticipation of future price increases.
* A bear market is described as being accompanied by widespread pessimism. Investors anticipating further losses are often motivated to sell, with negative sentiment feeding on itself.

How does the terms come about?
* Firstly, the use of "bull" and "bear" to describe markets comes from the way the animals attack their opponents. A bull thrusts its horns up into the air while a bear swipes its paws down. * In short, a bull attack upwards and a bear attack downwards.
* Secondly, bulls and bears are very strong animals. They are very agressive and will fight with all their strength and might. This explains why the stock market rises or falls that furiously during a bull or bear run.
* Thirdly, a bull normally charge at a very high speed whereas a bear is normally lazy and sleep most of the time. This explain why people don't invest during bear market.

How Bumble Bees come into the picture then?
* Bumble Bees are investors like you and me who diligently buzz around the financial market regardless its a bull or bear market. This explains why financial market will not die because there will always be people investing. This also explains why it never fails to recover from a bear market.
* Bumble Bees like to follow each other, do the same thing and don't bother to think. It explains the herd behavior of investors. When you buy, I buy. When you sell, I sell. Don't need to think so much.
* When the bee hive or colonies are disturbed, they get panic easily and buzz around to sting people. It explains why investors always get panicky and causes the financial market to fall below rationale level.

Now, you know about Bull and Bear markets. So do you want to be a Bumble Bee???