To highlight the importance of financial planning and its relevance to the ordinary man-in-the-street, I want to cite a real life example of a tragic case in which a 87 years old grandmother was forced out of the HDB flat by her grandson. The related newspaper article from Straits Times Man goes to court to get grandma out of his flat. The case is summarized as follows: Mr. Chee Han Meng … [Read more...]
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Should you terminate your Investment Linked Policies?
Now that you realised you bought a lemon, the next question is whether should you terminate your investment linked policies. What is the impact of terminating the ILP? What should you do if you are faced with the decision to terminate the investment linked policy? I have many clients who bought unsuitable products and as a result have to postpone their retirement for many years. Let’s say if … [Read more...]
Economic reality of your net worth (balance sheet) i.e. ILPs increases your debt
Your networth is a balance sheet listing your assets and liabilities. The difference for both is called the net worth. However, the net worth or balance sheet contains many “off-balance sheet” items. Today, I’ll write about the most common off-balance sheet item. I will give an example: Let’s say your net worth is as below: Assets Cash $30,000 Property $400,000 Liability Mortgage … [Read more...]
Cover story on MAS’ Policy Owners’ Protection Scheme
It was just not too long ago when many consumers were wondering whether their insurers will be collapsing. The days of long queue of people wanting to surrender their insurance policies were like just yesterday. In February 2010 issue of the INVEST magazine, Wilfred Ling was interviewed on his opinion on the situation now. He also provide his comments on MAS' latest proposal on the Policy Owners’ … [Read more...]
Financial Planning Reports used by Fake Planners
Not everybody going to like this blog posting but as usual, it is only my opinion. I know of a number of financial advisers who will write financial planning reports for their prospect. I have seen some of these fake reports. Here are my observations of these fake reports: 1. The prospect did not even read it. It is quite amazing when I asked the client whether did he or she read the report. … [Read more...]
Why I dislike 3G insurance?
What is 3G insurance? A 3G insurance is one which is: (1) a 3rd party policy (2) whole life insurance and (3) limited pay premium that is (4) anticipated. It is a third party insurance because the Life assured is a juvenile and the policyholder the parent (let’s called him Client A because my next few paragraphs can become very confusing); It is a whole life insurance because it covers … [Read more...]
Non-par with non-guaranteed surrender value
I encountered a policy which is a non-par product. It is not an ILP but has cash values. By right, everything is guaranteed including the early surrender penalty. Apparently, the early surrender penalty is not guaranteed. How the cash value is determined was not disclosed. It isn't link to any interest rate or whatever. The policy document says the insurer has the right to vary the surrender … [Read more...]
Buying too many insurance policies
One of the “fun part” of doing financial planning is that I get to see how people manage their money. It is a privilege of seeing people’s common ways of managing money and as well as unusual ways of how people spent their money. For individuals themselves, they will never know what are the “common ways” and the “unusual ways” because they will never disclose their full financial details to their … [Read more...]
What happens if I am unable to pay for the hospital bill?
The following is the procedure on what happens if you are unable to pay for the hospital bill: Restructured Hospital Arrears. Hospital will send the patient a reminder Another remainder via telephone and mail Send debt collection agency (licensed ah-long) At any point in time, if the patient express problem paying the hospital bill, other options will be explore such as "restructure" … [Read more...]
Mis-selling of another insurance
Here is a real case of a person who bought a rip-off insurance policy. A bank sold the idea of providing the customer’s kid with a monthly income should the parent dies or has TPD. Actually this is what we called a Monthly Income Benefit. Here was what the person bought: Premium: $34.75 per month Coverage term: 20 years No cash value. Monthly benefit: $1000 per month during the last 36 … [Read more...]
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