FISCA Talk - Consumer Guide to Insurance

The talk was held on 18 December 2010. It was well received. Here are some feedbacks:


Dear Mr Tan
I attended your  talk today ( and also the previous talk on investing for the long term). I believe Fisca and what you are doing is invaluable and it is very tragic re how poorly regulated financial services are in Singapore. Is there any way more people can get to know about financial literacy? I feel more people especially the old and less literate  should be protected against these scams. Like holding more talks  on a much larger scale? But I suppose it is a behemoth of an industry you might be up against.

Dear Mr Tan

Thanks for the illuminating talk on financial planning and insurance today, I've learned how to derived the costs of insurance as a result of your talk.  Thanks for your work in helping to educate and inform ordinary consumers like us.

More talks

I will be holding more talks on this topic. You can register at www.fisca.sg/events

Attendees of the talk can click here to download the zip file of the relevant FAQs from the TKL website. Here is the outline of the talk, but it is better to attend to talk.

Tan Kin Lian

BEST Business Game

Practice and develop the skill of pricing, marketing and stocking - the essential skills to run a profitable business by trying this game. Click on Video to see a demo of how the game is played and the strategy to follow. There are several games every hour, covering several industries. Each game should take 1 hour to complete.

Use Excel to calculate yield

I gave a talk on "Insuring your Financial Security" under FISCA. If you invest in a life insurance policy, you should aim for a yield of at least 3.5% per annum over a period of 25 years. You can calculate the yield using Excel. It is explained in this FAQ.

Invest in an indexed fund

In the past, the lay person does not know how to invest in shares or which shares to choose. A good choice is to invest in a life insurance policy and let the insurance company manage the investments.

The option of investing in a life insurance policy is no longer attractive for consumers, due to the high deduction may by the insurance company to cover its expenses and profit. Many life insurance companies take away 50% of the accumulated savings from the consumer, leaving a poor yield. For example, the insurance company can earn a yield of 5% but they give only 2% to the consumer. The difference of 3% is a lot of money.

Consumers now have the choice of investing in an indexed fund that takes away 0.3% per annum. If the indexed fund earns 5%, the net yield to the consumer is 4.7%. The consumer can buy the insurance protection through a 25 year term insurance policy and pay a small premium, which is less than 10% of the premium for a whole life or investment linked policy.

After factoring all the cost for the term insurance, the fee of the indexed fund and other expenses, the consumer is able to keep 85% of the accumulated savings, instead of 50% provided by a life insurance policy.

If the accumulated saving is $500,000, the consumer can keep $425,000 (after deducting 15%) instead of $250,000 (after deducting 50%). the difference is more than $150,000.

This concept is explained in several FAQs stored in my website, www.tankinlian.com/ask.aspx. Read this FAQs and learn how to invest in the indexed fund. You can also attend the educational talks organised by FISCA (see www.fisca.sg/events) or buy my book, Practical Guide on Financial Planning.

My message is very important for young people, especially the graduates who are starting work for the first time. Many insurance agents will be seeing you to tell you about investing in a life insurance policy. If you take their advice, you will likely be losing $150,000 or more, during your lifetime. Act now, before it is too late.

Tan Kin Lian

Role of social insurance

Most countries have a universal health insurance system that is provided by the state or through the private sector on conditions that are regulated by the state. It allows the population to have the basic level of health care at an affordable cost. Most developed countries, with the exception of America, have this kind of arrangement.

America has a private health care system. It produced high cost and leaves a significant portion of the population to be uninsured.

Singapore used to have a good and affordable health care system. In recent years, we are adopting some of the bad practices of America. There are now complaints that parents cannot buy insurance through Medisheld or the private alternatives for children with some congenital conditions.

Our problem is caused by the misconception that the private sector is more efficient in the use of resources. This is only partly true, but it has to be balanced with the negative aspects  of the pursuit of profit at the expense of other consideration, and the high cost of marketing and administration.

Some services, such as health care and education, are better handled under a social insurance scheme, rather than by the private sector. See the explanation in this article.

Tan Kin Lian

GPS Navigation System

I wish to look for a GPS navigation system in my car. I have a Packard Bell system, but it has been giving trouble lately. So, I am looking for a different system. Any recommendation of a good system that is easy to use and give good directions?

Tourist attractions

I have added some tourist attractions in Learning Tips. It can be viewed through the internet or on a Windows Phone. http://easyapps.sg/learn/