[Newsletter]Which estate cannot be distributed by Will?

Which estate cannot be distributed by Will?
The answer is CPF-OA (Ordinary Account)

Dependants’ Protection Scheme (DPS) looks expensive after 40

On The Sunday Times, well-known Invest Editor, Lorna Tan, wrote an article on DPS with the title "What you need to know about DPS coverage".

Link here: http://www.straitstimes.com/business/invest/what-you-need-to-know-about-dps-coverage

Similar to the article we wrote previously below (23Feb2017), it also shows that DPS is more expensive:

If DPS is kept throughout your working years from age 25 till 60, the total premiums work out to be $4,180, significantly higher than those for iTerm which would be about $1,717 for a woman and $2,268 for a man.

Providend says that DPS policyholders in good health may wish to review alternative plans as they reach 40 to take advantage of the lower premiums.

There's also a table of comparison:

So now you know. Time to take action.

[Published on 23 February 2017]

What is Dependants’ Protection Scheme (DPS)?
DPS is an opt-out term insurance scheme which is automatically extended to eligible CPF members. It provides:
1) a Sum Assured of: $46,000 + $5,000,
2) a Coverage Term up to 60 years old &
3) coverage for Death, Terminal Illness (TI) or Total Permanent Disability (TPD)

DPS Premium Rates:

Age (Last Birthday)	Yearly Premium
34 years and below	$36
35 – 39 years	$48
40 – 44 years	$84
45 – 49 years	$144
50 – 54 years	$228
55 – 59 years	$260

From 40 to 59 years, the total premium you will need to pay is $3,580
($84x5 + $144x5 + $228x5 + $260x5).

Now, let's do a simple comparison. Go to CompareFirst website and search for similar products as DPS:
Look under "Term Life Products" with the following options:
- Date of Birth: 1 Jan 1977 (for 20yrs calculation)
- Smoker: No
- Premium Type: Annual
- Coverage Term: 20 years
- Sum Assured: $50,000
- Critical Illness Benefit: No
- Sort Results by: Premium (Lowest - Highest)

You will find that AXA Insurance & NTUC Income are among the cheapest for female at $72/year and Great Eastern Life is the cheapest at for male at $91/year (as of 23Feb2017).
Note: Reducing Sum Assured is different from DPS as the sum assured reduces over time.

So for a coverage term of 20 years, you will only need to pay $1,440 & $1,820 for female & male rates respectively, to provide for:
1) a Sum Assured of $50,000,
2) a Coverage Term up to 60 years old &
3) a coverage for Death, Terminal Illness (TI) or Total Permanent Disability (TPD)

The above comparison would result into a total savings of $2,140 (60%) for female and $1,760 (49%) for male, relative to DPS rates!

The only caveat is that you need to utilise Cash instead of CPF monies to purchase the Term Insurance. I would think that so long as $72/year or $6/month does not make significant (if any) impact to your monthly discretionary income, this is a potential form of absolute savings. To add, accumulating your monies with CPF, currently gives you a minimum of 2.5% interest.

From the findings above, DPS does look more expensive after 40 years old.

Earn 71x your Savings Account Interest Rates

On The Sunday Times, well-known Invest Editor, Lorna Tan, wrote an article on "Higher interest on enhanced savings plan".

Link here: http://www.straitstimes.com/business/invest/higher-interest-on-enhanced-savings-plan-investroundup

Similar to the article we wrote previously below (12May2017), it highlights the Maybank SaveUp savings programme:

The Sunday Times highlights a savings programme, two insurance products and a new personal finance mobile app.

The Save Up programme was enhanced on June 1. Maybank customers now have nine options to choose from, to help them achieve the maximum interest rate of 3 per cent a year.

The deposit cap for the bonus interest has also been raised, so customers can enjoy higher interest on the first $60,000 in their SaveUp Account, up from $50,000.

[Published on 12 May 2017]
[Updated with Maybank SaveUp account. Thanks reader for the updates]
Previously we shared how you can easily earned 20x your Savings Account Rates without even leaving your home... simply by just opening an online account and transfer your funds in.

If you have not read how you can easily earn 20x, click on the link below:
Easily earn 20x your Savings Account Interest Rates

To earn 71x, you need to work a bit. Don't worry, it's achievable and mostly automated :) If you don't know yet, nowadays banks are giving higher interest rates on your deposit if you use their services. These are the 3 common things you need to do:

1) Spend on their Credit Card

2) Pay Giro bills using their account

3) Deposit your salary to their bank

Checkout the interest rate (last column) below:

Take example of the last highlighted row, to enjoy 3.55% interest rate (that is 71x your Savings Account of 0.05%), you need to open an account from Bank Of China (BoC) called SmartSaver and do the following:

1) Spend $1,500 on their credit card

2) Set-up a Giro or pay your bills to 3 different account numbers with minimally $30 each bill (can be your credit card bills, utilities, mobile, tax, etc.)

3) Inform your HR to transfer your salary here with net salary (after CPF, etc.) of more than $6,000

Note: Actually there's additional bonus that is not indicated here where any incremental value compared to last month balance, you will get additional 0.6% making it a total of 4.15% (3.55% + 0.6%). And that comes to 83x your savings account rates. But the amount is based on only the incremental value and not your total savings/balance in the account. Thus we did not include in the overall calculation.

If the credit card expenses and/or the salary is hard to achieve, you can look at the lower tier one where you just need to:

1) Spend $500 on their credit card

2) Set-up 3x Giro/bills with $30 each

3) Deposit net salary of $2,000

With this you will get 2.35%; that is 47x your savings account rates.

Note: Not all company have the option to deposit your salary to BoC. If your company doesn't allow, the next best option is Maybank. If still cannot, then it'll be either UOB or OCBC account.

If you have more than $30,000 in your savings, then UOB One Account is preferred. Else can use OCBC 360 Account which gives you slightly higher interest rate.

For UOB One Acc, the interest rates are incremental from 1.5%~3.33% depending on your balance. If you have $50,000 fixed, then you will enjoy an interest rate of 2.48%. That is, monthly you will get $103! Compared to just $2 if you put into your Savings Account. And you just need to do 2 things:

1) Spend $500 on their credit card

2a) Set-up 3x Giro/bills   OR

2b) Deposit net salary of $2,000

If you are still keeping your money in your normal Bank Savings Account, don't waste your time anymore, take action now!

So instead of having a free McChicken ($2) every month, you can get yourself and your loved one a free buffet for 2 ($100) every month :)

If we would to rank them (based on salary of <$6,000 & card bills >$500):

1) 3.00% Maybank SaveUP
2) 2.48% UOB One Account
3) 2.35% BoC SmartSaver

Consolidated banks interest rates:

Integrated Shield Plans - Potential Claim Dispute

I took up the "Private Hospital" plan for my Integrated Shield (IP) plan and everything is "As Charged". Or is it really "As Charged"?

Beware.

For "Private Hospital" plans it normally covers only the "standard ward". Should someone warded under "deluxe" or "luxury suite" or whatever ward that's non-standard, pro-ration will apply! And it can be BIG pro-ration.

Let's have a look at one of the "Private Hospital" IP plan's policy wording:

E.g. Mr.A covered under Myshield Plan 1 hence entitle to stay in private hospital standard ward. However upon admission, for whatever reasons, he admitted to luxury suite instead.

Room rate for standard ward	$500/day
Room rate for luxury ward	$1,500/day
Pro-ration factor applicable	500/1500 = 33%
Total hospital bill incurred	$100,000
Total claimable (after pro-ration of 33%)	$33,333
Total non-claimable	$66,666

Mr.A has to pay :$66,666


Mr.A might say that it is the hospital who "auto upgrade" the ward type for him or no standard ward available so no choice have to take luxury suite. Whatever the reason, Mr.A has enjoyed the luxury suite and may be "special care" that comes with luxury suite and nothing comes free. In the policy wordings it already stated clearly that they will only pay for expenses incurred when they stay in standard ward, therefore it will be a near zero chance to try and claim for the "luxury comfort".

Don’t scrimp on the travel insurance for your vacation

It’s the June school holidays! 

And it is also a popular period of the year when families choose to go on a getaway outside of Singapore. We know that this is a peak period to travel, but I wonder how many of us are actually aware that more than half of Singaporean travellers don’t buy travel insurance for their trips (according to a report here).

While I can reconcile with some of the extreme budgeting measures that a traveller adopts in order to scrimp and save for their big vacation, going without travel insurance is one that I fail miserably to understand. What’s even more alarming is the statistics that was revealed in the report mentioned above!

Now, let me attempt to pen down the intensity of my astonishment toward this alarming statistics by listing a few key benefits that travel insurance could offer to the Insured traveller, and hopefully after reading this, you think of getting travel insurance the moment (or even before) you book/plan for a trip. Bear in mind, leaving it until you need it, is too late.

The coverage of the travel insurance begins from the day you schedule the policy, right to the day you arrive back in Singapore. And to some extent, even hours/day(s) after you are back! A big part of our travelling expenses are time-sensitive, e.g. Accommodation – i.e. we pay according to the number of nights we booked the hotel room and likewise for the duration which we used the Jet Ski in the resort. Fortunately, this does not apply to travel insurance. The premium rate of travel insurance is applied on the duration of the vacation. However, the Insured traveller is eligible for claimable events even before and/or after the vacation.
Just an example to contextualize this: If something happens to the Insured due to medical or compassionate grounds that prevents him/her from travelling, AND/OR if the Insured needs to visit a doctor a couple days after he/she had touched down back home are claimable events provided under the scope of benefits of travel insurance. Hence, that is why you should get your travel insurance as early as possible.

Certainly, there are more reasons to get travel insurance. Medical expenses and Emergency Repatriation benefits, just to name of couple, would already chalk out a hefty sum when the need arises and regrettably so, if the risk was not transferred to the Insurer.

There is also the Personal Accident coverage when a holiday is greeted by an accidental mishap. The payout under this benefit would definitely render some form of assistance to the Insured and/or the Insured’s family members. Under the same benefit, even incidents of much lesser magnitude, for example, food poisoning, could be compensated.

In a nutshell, travel insurance essentially covers you for a much longer period that you effectively pay for. The diversity of the magnitude of insured events is also incredibly enormous. I hope you have gotten my drift after reading this. Yes, get your travel insurance. And get it early. In addition, please help to share the importance of this with people whom you care and matter to you.

[Newsletter]Which estate cannot be distributed by Will?

Which estate cannot be distributed by Will?
  o Bank Account
  o CPF-OA (Ordinary Account)
  o CPF-IS (Investment Scheme)
  o Insurance Policies (without nomination)
  o Property held under "Tenancy In Common"

Click here to answer this question and the first 10 correct answers will win a USB Mobile fan (for Android)

[Newsletter]We can only surrender our insurance policies back to the insurer. True or False?

The answer is FALSE.

Before proceeding on surrendering your policy, do take note the following:
1) Insurance purchased is meant for long term
2) If you intend to surrender/sell your insurance policy because you plan to buy new ones, it's recommended to get the new policy approved first (clear any additional underwriting) before surrendering the old one. If everything is the same (no extra condition/underwriting e.g. health is as good), then can consider to proceed surrendering your old policy.
3) Do note also that though some old insurance policy covers lesser things e.g. number of Critical Illness, but the terms used is more generic also. The more generic the term, someway it can mean more coverage. Currently the new terms used are quite specific like which specific artery burst then only can be claimed.

Recently I wanted to surrender my policy (for personal reasons), I checked the company website and the amount indicated is the exact amount in the "Projected 5.25% investment return" column in my policy 5 years ago. So far this is the only company that never gives below the higher end of the projected target. My policy:

   Company: Tokio Marine
   Plan: Towards My Legacy Plus (LP)

Yup, it's "Tokio Marine". The famous company that so far, the only company that never fails to pay at the higher end of the projected investment return column in your policy.

Luckily or coincidentally, I read an article from "The Edge" (dated 20th June 2016) about selling your life policies to 3rd party. You can even submit it online for a free quote. Since I plan on selling, I gave it a try. I emailed them my details and within 2 working days, they came back with a quote. And to my surprise, it's about 5% (~$300) more than the surrender amount that my original company provides.
According to the PIC, if the policy is endowment policy, the surrender amount is even higher.
Especially if you bought an endowment for the first year and plans to sell it the 2nd year. Normally the original company (or provider) have no surrender value for first year or two. But the 3rd party does. And I heard, it's quite substantial also.

So I agreed with him on the amount, and he ask me to go directly to Tokio Marine office to meet him. There I sign a "Absolute Assignment of Insurance Policy Proceeds" form to the company. Once signed, the cheque of the full amount is given to me immediately.

Currently the 3rd party companies which I know that accepts policy selling are:
1. Purvis Capital - Accepts both Endowment & Whole Life Policies
2. REPs Holdings - Accepts only Endowment Policies
As my policy is Whole Life, I used "Purvis Capital" and the service is quite prompt.

So if you plan to surrender your policy, check out some of the 3rd party website for "free quotation".