Friday, October 14, 2016

Confused with integrated shield plan

I picked up a call to my office

Voice: Mr. Tan, I am in my late 60s. I am insured under NTUC Medishield plan. Should I stay with this plan or not? I don't know what to do.

TKL: If you are well off, and money does not matter to you, you can stick with the integrated shield plan from NTUC or from any other company. But if money matters to you, then you should compare the premium rate charged by Medishield Life and the integrated shield plan. You should also find out what is the difference in cover from the plan.

Voice: I went to NTUC's office in Bras Basah Road. The counter staff was not able to explain the difference to me. They do not know their product well. I am confused. I also find the integrated shield plans from other insurance companies to be confusing. So, I am asking for your advice.

TKL: Sorry, I do not have the time to explain the difference to you. If you don't know what you are being covered for, you should move back to Medishield Life. I am covered under Medishield Life. It is all right for me. I pay a premium of $600. I understand that the premium for integrated shield plan is several times higher.

330 people have watched my educational videos

I have uploaded 9 videos on financial planning and insurance. They have been watched a total of 620 times or an average of 65 times for each video.

330 people have watched the videos. The average is 2 video per person. I hope that they will return to watch the other videos.

If you want to join this crowd, go to

I am now using login by Facebook or Google. I guess that most people would have 1 or both of these logins.

Increase in premium for integrated shield plans

A task force was formed to look into the increase in health insurance claims. It has recommended the following:

a) Do away with the rider that covers the deductible and co-insurance.
b) Set medical fee guidelines.

The task force also hinted that the premium for integrated plans will increase by 9% to 15% next year.

My advice to consumers is:
a) Do not buy the rider. It is too expensive and encourages escalation of hospital bills. Everybody pays.
b) Stick to Medishield Life. Do not buy the integrated shield plans.

You can watch my video at

Thursday, October 13, 2016

Vote and win!

Click in this link and vote "for" or "against" on the six issues presented to you one by one.
It should take you less than 10 minutes.
And you will win the e-book "Financial Planning for Young People".

Coverage for young drivers

If you have a son or daughter below 30 years who has just obtained a licence, check that your motor insurance policy cover them as a named driver.

Some insurance company excludes coverage for young driver below 30 years or with less than 2 years of driving experience, unless they are named in the policy as a named driver.

If they are not covered and an accident occurs, it can be very expensive for you. The young driver might get into trouble for driving with coverage.

Watch the video on motor insurance in

Premium for Medishield Life

You should compare the premium for your integrated plan with the premium under Medishield Life. Look at the premium not only for the current year, but for the rest of your life. Consider if you can afford to pay the higher premium for the integrated plan.

If not, it is wise to move back to Medishield Life. Here is the premium for Medishield Life.

Easier to submit your vote

I have created a new user interface which makes it easy for you to vote on these issues:

Are the proposed changes to the Elected President targeted at Dr. Tan Cheng Bock. Do you agree with the changes to ensure that each minority group can take turns to be the elected President?

Who will make a better President for USA - Clinton or Trump?

Is China bullying Singapore over the South China Sea issue?

Should the Bukit Panjang LRT system be taken down? Or will it be too wasteful?

Give your vote to this issue and win the popular e-book on Financial Planning.

Have a balanced financial health

I have created a 25 min video "Have a balanced financial health". It explains how you can prepare for retirement by investing your savings wisely and avoid losing them through scams or bad investments. You can watch the video here:

Rider to cover Deductible and Co-insurance

I advise consumers to avoid buying the rider to cover the Deductible and Co-insurance under an integrated shield plan. Here is my reason.

The average amount that you have to co-pay is $3,000. Let us assume that the chance of getting hospitalised for your age is 1 in 10 years. If you buy the rider, you probably have to pay $450 a year.

Over 10 years, you would have paid $4,500. You may have no claim during this period, so all the premium that you have paid goes to pay somebody's else claim.

You may have one claim during this period, which is most likely. You are still out of pocket by $1,500 having paid $4,500 to get back a compensation of $3,000.

You may have two claims during this period. So you claim back $6,000 and paid $4,500. You make a gain of $1,500. But the chance of this occurrence is 1 in 10.

You have a 90% chance of losing and a 10% chance of winning when you buy the rider.

If the cost of the rider is less than $450, it means that you are at a younger age and the chance of being hospitalised is even lower.

Insurance works best when you have to cover big odds, such as the chance of dying in an accident in a year. This chance is 3 in 10,000. So you pay $45 to insure for $100,000. That makes sense.

Buying insurance to cover the Deductible and Co-insurance will make you lose and give a good profit for the insurance company.

The insurance agent encourages you to buy the rider because they can earn a commission of 10% or 15% on the premium that you have to pay each year.

Wednesday, October 12, 2016

Low payout under Medishield Life

Andrew Loh paid $3,239 for a quadrupled heart bypass operation. Here is a breakdown of the charges.

Total bill: $10,727
Government subsidy - 6,767
Net 3,959
Medishield Life - 720
Paid by Cash/Medisave 3,239…/

He was surprised that Medishield Life paid so little. In fact, the bulk of the subsidy came from the government, as he stayed in a subsidised ward.

If Andrew had taken an integrated plan, he would have paid a higher premium and would still have to pay a similar sum out of pocket. The integrated plan would require him to pay a deductible of $1,500 and a co-payment of 15%, so that would still come to about $3,000 or more.

I will be creating a video to explain Medishield Life. Meanwhile, you can watch my other videos on financial planning and insurance

Young drivers should check their insurance coverage

Susan drove her father in law's car. The car was badly hit by a van that did not stop. It happened fast. She was not able to get the plate number.

She sent the car to the workshop and was shocked to learn that the policy did not cover her, as she was under 30 years old. The father in law did not buy the cover that include family members below 30 years old.

The repair cost more than $15,000. She was not covered. She could have committed an offence of driving a car without the erquired insurance.

Be careful. If you are under 30 or have less than 2 years of driving experience, check that you are covered when you drive a car belonging to a family member.

Learn about motor insurance in

Sunday, October 09, 2016

Learn the secret that a few tens of millions are now enjoying

There are tens of millions people in America who are getting a good return on their investment and have been making the right investment for a few decades. Their return has been more than 6% per annum.

But there are many more people in America who are making  poor investments and are losing money by investing in bad products. Remember the subprime loans and the structured products derived from it?

Most investors in Singapore are also losing a lot of their savings in bad financial products. And many are getting a losing return of 3% or less by locking up their savings for many years. If they give up, they will suffer a big penalty.

I like to share the secret that is already known by the the tens of millions of wise investors in America. They invest in the index fund created by Jack Bogle and sold by Vanguard Group.

You can learn the secret of investing in the index fund. Watch my short video that can be viewed here

You can learn about it by attending this talk on 15 October. Do not miss it. I have no plans to hold another talk.

Insurers make a big profit on Eldershield

If you want to know how much profits are being made by the insurance companies on Eldershield (technically described as individual disability insurance), you can view the results here.

The insurance companies are making a profit margin of 30% after providing for reserves for future claims. Yes, they are making a lot of profits, maybe $100 million a year! It is huge.

So, consumers are getting a poor payout for their premiums paid into Eldershield.

Low payout under Eldershield

Dear Mr Tan,
Based on CPF annual report.
Last year premium for Eldershield is 364 million dollars.
Total premium since 2002 is more than 3 billion dollars.
Only 7,300 people claim and total claim is only 90 million dollars.
Total investment return from the reserve is more than 150 million dollars.
The claim per year is 10 million dollars, less than 7% of yearly return.
There are 120 million policy holders. The pay out is too low.

Eldershield provides life time cover.
The premium that is paid now will result in claims in 30 years time.
So, the immediate payout ratio is not indicative of the final payout.

However, it is true that Elderhshield gives a poor payout for the public, even after allowing for reserves for future claims.

If you want to know how much profits are being made by the insurance companies on Eldershield (technically described as individual disability insurance), you can view the results here.

The insurance companies are making a profit margin of 30% after providing for reserves for future claims. Yes, they are making a lot of profits, maybe $100 million a year! It is huge.

250 people have registered to view these videos

I have produced videos on the following topics:

Financial Planning
Financial Products sold by banks
Invest in an index fund
Buying Life Insurance
Critical Illness Policy
Motor insurance

Each video runs for 5 to 10 minutes. They are targeted at ordinary people in Singapore. They answer the questions that are often asked by them.

Over 250 people have viewed them during the past three weeks.

You can view these videos at

Be careful about your savings and your health

If you have a few thousand dollars in savings, you stand the risk of losing a large part of it in a bad investment. The bad investment could be sold to you by a marketing staff in your bank. Just imagine.When you thought that your bank is a safe place, it is not the case.

You also need to take care of your health, especially when you are older and have children.

Why not achieve two goals in a 3 hour talk? And it is free! You can also join the networking during the tea session.

Register now for next Saturday 15 October.

Be careful when walking on slippery ground

Six months ago, I slipped while walking in a light drizzle in Rancamaya, which is a hill resort outside of Jakarta. I fractured three ribs. It took a few weeks to heal. I had to take pain killer to ease the pain during this period.

I am now careful when I walk. I hold to the railings when I use the stairs. If the floor is wet, I will walk with slightly bent legs, so that the center of gravity is lower and the step is firmer.

There was a light drizzle last week when I walked to Thomson Plaza from my office for lunch. I walked carefully to avoid slipping. I explained my walking style to my lunch partner. She had also slipped and fractured her ribs a few years ago. She understood the trauma.

She said, "Mr, Tan. I just saw a younger person slipped and fell. She was in a hurry. She was cursing her bad luck. We are older and need to be careful when we walk".

I agree with her.

Learn a useful skill

I spoke to a staff at a restaurant. She was at the counter preparing the waffle.

TKL: How do you make the waffle?
Staff: I get the prepared waffle mix, add butter and egg, put the material into this waffle pan and heat it for 5 minutes. Then it will be ready.
TKL: Are you working here full time?
Staff: I am a part time staff. I study Hospitality course in Nanyang Poly and work here during the weekends.

This is a useful and practical skill. Maybe, she can manage a restaurant one day. Or start a bakery business.

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