Author Archive

Posted on August 19, 2010 - by Ee Min

Whole Life vs Term (critical illness)

I read a post by fellow IFA (Martin Lee of Promiseland, aka the Lion Investor). Being a personal friend, I respect him in well regard of his views on investment and personal finances.

He recently wrote a piece on Whole Life (insurance) vs Term.

Other than pointing out the opportunity cost of whole life insurance vs term insurance, I wholeheartedly agree with him that whole life insurance is, in my opinion, solely for the purpose of lifetime critical illness protection. Beyond the lifetime protection, whole life insurance offers an inflation hedge to maintain real dollar value protection. Of course, this hedge is only effective as the bonuses (reversionary & terminal) get accrued over time and provided the insurer delivers what has been projected.

Certainly, there will those who disagree and stand convinced that ‘buy term (insurance), invest the (premium) difference’ works to their advantage. Caveat being the ability to invest at a consistent compounded rate of return over many years.

My point here is not to take sides. Read more…

Posted on June 7, 2010 - by Ee Min

Money Market Fund

Investors typically allocate their monies to a portfolio of equities, bond and even real estate exposure (e.g. through REITs). Spare monies are usually parked in the savings account and/or fixed deposits. Noticeably, more people are looking to better the returns of these monies sitting in the bank earning miserable rates from as low as 0.10%pa (DBS Savings).

Hence, money market funds are typically a safe option for this need. Some examples are LionGlobal SGD Money Market fund & Philips Money Market fund. The SGD denominated money market unit trusts invest in assets generating returns similar to short term SGD interest bearing deposits. Credit risk is minimised as underlying assets are predominantly SGS T-bills and investment grade commercial papers. The short duration (on average <1yr maturity) reduces interest rate re-investment risk and keeps the NAV stable. Currency risk is also not an issue since returns from assets are in SGD. Read more…

Posted on November 8, 2009 - by Ee Min

Top-up of SRS Account

November rings the bell spelling end of the year soon.

For those of us with the regular habit of topping-up our Supplementary Retirement Scheme accounts (or intending to open a new account), please remember the deadline is by 31^st December.

The Supplementary Retirement Scheme (SRS) is basically a voluntary savings cum deferred tax scheme, which provides dollar-for-dollar tax relief for the chargeable income subject to following year of tax assessment. The objective is to assist Singaporeans to save more on their own for retirement. One can withdraw the accumulated monies after the statutory retirement age (set at point of account opening, currently at age 62), where 50% of the monies will be taxed. Staggered withdrawal is allowed over 10 years to reduce tax. Read more…

Posted on October 2, 2009 - by Ee Min

OffShore ILPs: What You Need to Know

Investment-Linked Plans (or ILPs as commonly known) are not new in Singapore. What’s relatively new is that offshore providers have been entering the local market to pedal their goods alongside familiar names such as Prulink, Manulink etc (usually ILP has a ‘-link’ as suffix in the product).

Who are some of these offshore life insurance firms? They include the following:

* Zurich International Life
* Friends Provident International
* Royal Skandia

Coincidentally, they are all incorporated in the Isle of Man which has an attractive tax structure.

As highlighted in an earlier post on ILPs (premium allocation) do note the fees and charges associated with ILPs. In the following table is a snapshot of the fees and charges of some popular offshore regular premium ILPs side-by-side with Aviva Global Savings Account (being a similar investment offering). Read more…

Posted on August 8, 2009 - by Ee Min

Expect More USD Weakness

USD strength or USD weakness? Where is the USD heading?

My recent attendance at a SCCCI morning breakfast seminar on foreign exchange reflected a view that the USD is likely to head further southwards over the next 12 months. The seminar was delivered by speakers from Credit Suisse (private bank); Mr Joseph Tan, Asian Chief Economist and Mr Emmanuel Lim, Head of Advisory & Sales on FX and Commodities.

Their 6 reasons for supporting the (Credit Suisse) in-house bearish view on the US Dollar:

1. USD is Overvalued, according to Credit Suisse in-house valuation model;

2. External force: Current Account deficit (though narrowing, but still a sizeable significant deficit); Read more…

Posted on July 12, 2009 - by Ee Min

Early Payout for Critical Illness (let the battle begin!)

Early Payout for critical illness has been becoming more popular since the roll-out of Great Eastern’s plan on this.

The background to this was with the onset of critical illness, policyowners found it difficult to claim given the onerous claim definition and required acceptance of medical evidence by insurer panel of doctors. TODAY ran an article (1 April 09)on this where doctors spoke out on the issue.

A closer look at GE’s Early Payout for CI reveals that it covers different levels of payout according to different severity levels for a list of 20 CIs and one severity level for remaining 10 CIs (therefore a total of 60 medical conditions based on its brochure). However, one must bear in mind that the zero waiting period between claims apply only to claims made across different illnesses or across severity levels of the same illness. For e.g. 1st payout is made for Level 1 (severity level 25) lung cancer, 2nd payout is made for Level 1 heart attack and 2nd payout for cancer will only occur provided it’s for a different organ or a higher severity level for lung cancer. Death benefit is capped at 10,000. Read more…