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Good financial planners are, in a sense, like doctors in preventive medicine.

This connection isn’t always intuitive but it is rather apt once we get to the heart of the matter.

Both are (supposed to be) professionals, and (again, supposed to) follow a set of standard of procedures for the people that seek their expertise.

In a medical consultation, a patient would first describe the injury or symptoms, followed by a medical examination. The doctor would then make a diagnosis and prescribe the medication. Either the doctor would suggest a follow up or the patient would have recovered.

Turns out that Financial Planning works pretty much the same way. Here’s a quick side by side analysis:

By Wealth Quotient LLP © All Rights Reserved

The 7 Steps to Financial Nirvana (or close to it)

1) Mutual Introduction (Adviser & Client: 1 to 2 hours)

In this first meeting, both the client and the adviser would share more about themselves. The client would describe his concerns, goals & objectives while the adviser would explain how he works with clients and the necessary disclosures.

(Editor: At this stage, it is best to know if you are willing to be completely open with the adviser – they can only do their best work if they have all the information. Same as with describing your symptoms to any doctor, you shouldn’t leave anything out)

2) Financial Situation Analysis (Adviser: 1 to 2 hours or more depending on existing plans)

At this stage, client would provide information about his current financial situation and existing plans. The quality of advice depends on the information given by the client.

Whether the client’s objective is insurance planning, retirement planning or investment planning, the adviser will get to understand the client better with inputs from the client. Advisers are not mind readers! The client’s existing plans are also reviewed and analyzed together with the client’s overall situation.

3) Benchmarks & Guidelines (Adviser: 1 to 2 hours)

Steps 3 and 4 are the parts that clients don’t see, yet require the most work. The client’s financial position and goals are compared with international or local benchmarks and guidelines for planning. The adviser might also use proprietary models and financial software to evaluate the gap between the client’s current situation and his goals.

(Editor: Regardless of how the final numbers are obtained, it is important you understand them as a consumer – along with any of the key assumptions made)

4) Strategies & Solutions (Adviser: 2 to 4 hours)

The adviser starts to customize several strategies based on the client’s age, life stage, financial background and time horizon. They may also include budget and investment allocation.

A variety of products are then selected to build a portfolio for insurance or investment. Before the products are chosen, comparisons of similar products from different providers are done to find the most efficient and effective solutions.

5) Suggesting Informed Decisions (Adviser & Client: 1 to 3 hours)

Financial advisory is about helping clients to make a prudent decision and this inevitably involves some form of education to empower the client with financial wisdom.

The adviser would explain the whys and the hows and go through every option including the pros and cons with the client. After understanding and clarifying the different solutions, the client would have the choice to select and adjust the final strategy based on his preferences.

Also: Read about why being a perfect Insurance client helps you

6) Implementation (Adviser & Client: 1 to 3 hours)

When all’s said – its time to roll up the sleeves and get to work

Once the client has decided on the course of action, the adviser will assist the client with the tedious and occasionally mind-boggling administrative procedures, which include applications, appeals and amendments.

The implementation duration may range from several days for investment execution to several months for medical (and possibly financial) underwriting.

7) Follow Up

The old paradigm is that when you buy a product from an adviser, you expect the adviser to serve you for the rest of his (or your) life. As you can see, a good adviser does a lot of work.

The graceful swan you see on the lake is paddling hard underwater! The basic service to demand for insurance is claims support. For investments, the monitoring and management may be done by the adviser, financial institute or the client depending on the arrangement.

For fee-based advisers, there are two choices: one-time advice or continuous advice. Instead of buying financial products, sometimes randomly, to fulfil a specific purpose, prudent clients may prefer to enhance their overall wealth in a more disciplined and holistic manner.

Rome was not built in a day. It is not possible for the adviser to impart everything you need to know in a few sessions. By retaining a professional relationship with the right adviser over time, the adviser would understand you better in terms of financial habits (good and bad), investing style (reckless or overly conservative) and your personal mindset on money, which could be holding you back in protecting or enhancing your assets.

With a dedicated service, you can gain insights into your personal finance tailored to you. This is offered through a retainer to coach, educate and advise you on a quarterly, half yearly or yearly basis.

All in All

The whole advisory process takes about 3 to 4 meetings to complete.

On average, the adviser takes a total of 7 to 16 hours to finish the job – and that is a lot of coffee needed!

Still, the purpose of highlighting these steps is to provide a good overview of the actual amount of work and planning required for Financial planning, which should never be a rushed job.

About the Author

Shawn Yap is a holistic and independent wealth adviser known as a Client-Owned Adviser®(COAdviser), who fulfils 7 criteria.

He is among the Top 10 Financial Planners in Singapore (Financial Advisory-Open Category) at the FPAS Financial Planner Awards 2018. Unlike the Million Dollar Round Table (MDRT) and company awards which are solely based on sales production, this award recognizes financial planning quality and excellence based on a written financial plan that includes the understanding of clients’ financial situation, risk analysis, suitability of advice and recommendations.

Contact:

http://www.WealthQ.Asia

www.ClearlySurely.com aims to eradicate the knowledge gap between consumers and Life Insurance. Our Vision is that one day, every Man, Woman, and Child will be properly insured.

The post 7 Key Steps in Financial Planning [A Clinical Analysis, in more ways than one] appeared first on Singapore's Insurance Blog.

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I was having a lovely dinner with a friend the other day when our conversation somehow led to the topic of household chores. I was complaining about the endless supply of dirty laundry at home as he raised his eyebrow and this question.

You heard of washing machines, don’t you?

“It isn’t just about the washing. It is the hanging of the wet clothes, removing them once they are dry, folding and ironing them.
At 11 pm after a long hard day at work. And the cycle repeats itself after a day.”

In the end, I won the argument. He started to appreciate his Dad better for doing his laundry.
Oh yes, he was telling me how easy it is to do laundry without experiencing it himself!

The uneven path of adulthood

When we talk about being adulthood, we are not referring to an arbitrary number or National Service. Turning 21 does not change your life in any way. National Service may be seen as a rite of passage for Singaporeans but it cannot be one simply because females do become adults too!

These cute things do grow up to be adult too, yeah..

Adulthood that we refer to is to leave your parent’s house and start living on your own or with your own family. In Singapore, this process is usually signalled by a purchase or rental of a flat.

I used to think that adulting is easy – what is so difficult about buying an HDB?

From my own experience, it is not that straightforward. I had to view several units every weekend for a good four to five months before my partner and I could agree on a unit that we both like. The price negotiation is another tough cookie. The housing agent applied several pressure tactics along the way to try to make us increase our offer.

Then there are problems with the renovation contractors, the movers and even the delivery of furniture. Murphy’s Law applies at almost every junction. The TV guy forgot to bring the wireless dongle; the bed installation dude came on the day that my lift was broken.

Sounds like a horror movie?
Not really.

At the end of the day, you feel accomplished. You finally managed to get a flat. Your spouse appreciates your effort when she sees a wonderful product in the end. Even though the place may not be the most luxurious, it is a place that you can call home.

The real difficulties of adulting

But that is not really the most difficult part of adulthood. When the rewards are tangible, you don’t mind it too much as you can see the rewards. There is some excitement to keep you going. On the other hand, you just don’t get that kind of joy from cleaning the dishes, do you? You are not going to go WOW over a rack of sparkling plates or a heap of clean clothes.

Look at how happy she is, waiting for her clothes to be done.

Yet these household chores are necessary. If you don’t do it, your spouse has to do it. And when both don’t do them, you will end up wearing pyjamas to work or eating out of plastic plates. However, it is unlikely you will enjoy them because there is no excitement or adulation involved.

These tasks are not hard on their own. They are difficult because they don’t seem rewarding in any manner. You have to keep grinding and grinding, Day in day out. Yet you know you have to do them so that the house doesn’t stink.

Unpleasant adulthood tasks are not just restricted to just mundane household chores.

You have to stop #YOLOing and start saving
You have to be patient with your kids.
You have to be around when things get rough, instead of running away like you used to do.

To be an adult, it takes more than just getting a home. Proper adulting means taking care of yourself and your family in every aspect. You do not just have to be physically able, mentally strong but also financially sound to be a proper adult.

Adulthood. Not as easy as you thought, huh?

How Insurance can help you to adult

Imagine this.
You have done everything right and everything is fine and dandy.
Then out of the sudden, you are severely sick.

Can you afford the medical bills? Can your family do without your income for a prolonged period of time? Do you still afford the mortgage?
If the answer to any of these questions is no, you better start doing something about it.

You have to start doing this really boring thing called financial planning.  I know that sitting down with some stranger and talking about money may be a chore to some but it has to be done. You need to hear about the financial potholes that you do not see on your own and get them fixed.

You rather watch rain dry than to sit down with a Financial Advisor.

It turns out that insurance is the best tool to help you to maintain status quo when an accident strikes.  We understand that buying a policy is one of the most joyless events that you encounter. You are essentially betting that you may be ill, injured or dead so that there is a payout.

To be a proper adult though, you have to undertake some of these boring stuffs. Taking personal charge of your finances is as important as educating your children as both pave a brighter future for them.

Need some help with that?
Learn about insurance.
Compare prices and benefits.
Discuss it with good and knowledge people.

We wish we know some website that can do all these things.

Finally adult!

Adulthood is not all fun and game.
It is not easy at all especially for a guy like me who has been enjoyed the comfort of my parents’ home all these while.
However, you know it is all worth when you know you have taken good care of your family.

At the same time, it doesn’t hurt to make adulthood a little easier.
A dishwater, a nanny or a piece of paper that secure your financial future help to ease your adulthood journey.
All these in exchange for a secured future.

So have fun doing all these joyless yet important chores.
Just because it is the most adult thing to do.

www.ClearlySurely.com aims to eradicate the knowledge gap between consumers and Life Insurance. Our Vision is that one day, every Man, Woman, and Child will be properly insured.

And on this Father’s day, you may want to thank your Dad for being a proper adult.
Or for doing your dirty laundry!

The post Why insurance helps you to adult better [Here’s how] appeared first on Singapore's Insurance Blog.

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Don’t you hate to be responsible for someone’s elses mistakes or actions?

I know I do.

That colleague of yours who goes over-zealous in a meeting and promises the moon and the stars – but you end up being the one who has to deliver.

That “friend” of yours that promises to go on a trip together – but flakes out at the last minute because “his goldfish caught a cold”. Guess who is left holding the bag?

The server in a restaurant who misheard your order – and you’re stuck with 2 extra servings of clam chowder. Hope you are a big fan of soup!

This has always been a problem in Insurance – especially so for Motor Insurance

For insurance, premiums have always been calculated as a huge group of people, who are assumed to have homogeneous risks and behavior.

For example, if you belong to the age group of 21-25 male drivers, then your premiums are significantly higher than say an age of group that is 15 or 20 years older. This is because younger male drivers on the whole, are deemed (and statistically proven) to get into more accidents. Hence everyone in that age group is charged more.

This may not be how you drive, but you could well be paying for it all the same

It doesn’t matter if you are the safest young driver around – you are still “penalized” simply for being classified as a young driver.

That sucks.

Enter Vouch – The Platform that rewards you for safe driving

Wouldn’t it be nice if we could have some control over our premiums, especially if we take the extra effort to drive safely?

Vouch is the platform that was born out of this idea. Regardless of your age or motor insurance premiums, you get to band together with like-minded people whose aim is to drive safely and not make any claims as far as possible.

In addition to any No Claims Discount (NCD) that the insurer gives, Vouch also rewards you with up to 15% of your annual premium for driving safely.

That sounds interesting! What’s the process like?

We document the 4 elegant steps presented on the Vouch website.

1. Buy your Policy – via Vouch

Head over to the site and create an account. You will be prompted for your details like so:

You will then receive quotes from different insurers, which currently are NTUC Income, Sompo, and Tokio Marine.

Go ahead to make your purchase. 15% of your annual premium will then be set aside as a reward for safe driving. (You don’t pay anything extra. It is called the NCR – No Claims Rebate)

2. Join a Group

Think of them as your driving kakis. One for all, all for one.

You will automatically be enrolled in a public group – probably people that are just as interested as you in staying safe, and getting up to 15% of their annual premiums back for not claiming.

Let our powers combine – and huat ah!

Prefer to form your own group? That’s also possible via a private group in Vouch. Who knows, there could be a Hello Kitty fan group in there! (I’m totally down for that, don’t judge)

Within the group, everyone’s NCR is aggregated.

3. Drive Safely

D.U.H.

(Short for Drive Ultra Heedfully)

The best case scenario? Everyone in your group does the same, and no one makes a claim. For each claim made, the available pool of NCR decreases. (It drops by up to $2000 for each claim made, depending on claim amount)

4. Kaching, baby

End of the policy year, the available NCR for the pool you are in is tallied and distributed.

If everyone in your pool does not make a claim – that is the full 15% of your annual premium heading your way via cheque.

If there were claims paid out, then each person’s NCR will decrease correspondingly.

What we like – and what we would like to see

There is literally no downside as a driver. You’ve got to pay premiums anyway, so why not take advantage of the potential upside?

And this encourages safe driving – which can be argued to be the more invaluable reward. Not only for yourself, but for all road users!

Our minor gripe?

Right now 3 Insurers are on board, which may be a hassle if you’ve already been insured with another company. Hopefully there are plans for Vouch to expand on their list of participating insurers.

Definitely worth a look right here:

>> Take a tour of the platform that rewards: Vouch <<

www.ClearlySurely.com aims to eradicate the knowledge gap between consumers and Life Insurance. Our Vision is that one day, every Man, Woman, and Child will be properly insured.

We would like to thank Vouch for inviting us to review their services – and can wholeheartedly get behind such an initiative. (Save us a place in the safest group of drivers in your pool please. And drop me a line when there is a Hello Kitty fan pool)

The post It’s fun to be rewarded for not making a claim [Also a reality now – by Vouch] appeared first on Singapore's Insurance Blog.

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Psst! What is our favourite thing to do, besides writing about insurance?
Clue: Take a look at our Facebook page. Yes, the obvious secret is out – we have a fetish for memes.

Although we have previously crafted our own insurance memes here, we feel that more can be done.
This idea hits us hard.
Why not revisit our past blog posts and turned them into memes?
Thus, we have created funny insurance memes as alternative captions to the different articles.

Did we just make insurance easy & fun?
Oh yes, we did!

My friend is selling me Insurance – what should I do?

An old friend, whom you have not met for some time, calls you and makes arrangement to meet.
Your joy turns into disappointment when he starts selling insurance policies.

Read this at https://www.clearlysurely.com/blog/educate-yourself/my-friend-is-selling-me-insurance-what-should-i-do/

3 important lessons that you can take away from Sally Low’s despicable fraud

We suck at photoshop.
Just like how Sally sucks at insurance ethics.

Read this at https://www.clearlysurely.com/blog/pitfalls-to-avoid/3-important-lessons-that-you-can-take-away-from-sally-lows-despicable-fraud/

One day, she wasn’t fine at all

Andrea was fine.
She wasn’t fine the next day.
And an insurance policy (and agent) saved her life.

Read this at https://www.clearlysurely.com/blog/guest-contributions/one-day-she-wasnt-fine-at-all/

I am a smoker. Should I declare when buying insurance?

Declare that you are a smoker and pay a higher premium.
Should you lie about it?
We help you to make a decision.

Read this at https://www.clearlysurely.com/blog/educate-yourself/i-am-a-smoker-should-i-declare-when-buying-insurance/

Unable to obtain Insurance due to existing health conditions?

Do you have chronic illnesses?
These two plans may just be what you need.

Read about AIA Pro Lifetime Protector here and Prudential PruVital Cover here.

The buffet table is now closed – What will become of us?

A local meme for a uniquely Singapore situation.
Pay more premium, get less benefit. *suck thumb*

Read this at https://www.clearlysurely.com/blog/essential-reading/the-buffet-table-is-now-closed/

My Financial Planner is new to the Industry: Should I give him a chance?

New =/= noob.
We tell you why having an advisor who is a newbie may not be bad news.

Read this at https://www.clearlysurely.com/blog/educate-yourself/my-financial-planner-is-new-to-the-industry-should-i-give-him-a-chance/

Tears, Hardship, and Constant Rejection: The Tale of an ex Insurance Agent

For those insurance advisors still hustling, we feel you.
Doing the right thing is always not easy.

Read this at https://www.clearlysurely.com/blog/real-lives-real-stories/tears-hardship-and-constant-rejection-the-tale-of-an-ex-insurance-agent/

Do you love our insurance memes?
Follow us on Facebook then!

www.ClearlySurely.com aims to eradicate the knowledge gap between consumers and Life Insurance. Our Vision is that one day, every Man, Woman, and Child will be properly insured.

The post We recaptioned our past articles. And they are Memetastic! appeared first on Singapore's Insurance Blog.

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Expectations can be so one sided.

Often we gripe about insurance professionals being… less than professional.

Oh she was really pushy and just trying to sell me something.
Met him at a roadshow, but didn’t feel he really understood me as a person.
I just sat down with her and I am supposed to commit thousands of dollars every year, to a near perfect stranger?

Easier sometimes to point at others than ourselves

But what if we stood in front of the mirror and did a bit of soul searching?

Truth be told (or asked), have we been the greatest clients ourselves?

(Some people may feel a sense of entitlement just because they are the “customer”. It is that sense of entitlement that governs their behavior negatively. I also have a term for these people, which is unfortunately rather impolite to state in writing.)

Before we start on the “how to be the perfect insurance client” journey, it is perhaps instructive to understand why it benefits us in the first place.

So in case you might have any lingering thoughts about your entitlement as a customer, set those aside for a moment as we cross over to the realm where humility reigns supreme.

Why be the Perfect Insurance client?

You won’t waste time

I’m referring to your own time and the financial planners’ time. Being the Perfect Insurance client doesn’t mean saying yes to every agent you meet. It doesn’t mean having to buy a new policy each time you sit through a financial review.

Ah, truly the stuff of life. Why waste it?

When you know what exactly your coverage requirements are, and if they are already met – then you save tonnes of time (for all parties) by not entertaining any more requests “to meet over coffee”.

Conversely, if you know your own coverage requirements are lacking – then you won’t waste any time in trying to meet up with a suitable advisor to help you address your needs. But I suspect a perfect insurance client will not stay in a needful state for long!

You will have heightened receptivity and perception about insurance advice

Think of this as having spidey senses. Being a great client entails being open and receptive about new information and advice coming through all the time. By not having that sense of entitlement, you can more easily absorb and digest any new protection ideas that might come your way.

Maybe your own senses won’t show up as dramatically, but still.

Again, that does not entail you necessarily scrapping your previous policies or signing on new dotted lines each time, but just by being able to know more – you will have the ability to make better choices.

The fact that you are still reading this now says a tonne about you, so go ahead and give yourself a pat!

That takes care of the why. Lets tackle the main issue of how.

How exactly to be the Perfect Insurance client?

Have an open mind

No one likes a know-it-all. (Certain US presidents come to mind)

I know everything about building walls, conducting trade wars, and tweeting at odd hours of the day

Having an open mind will allow you to absorb new ideas and knowledge about insurance – as opposed to always thinking “Insurance is insurance, what else is there to know”.

Case in point – till this day, we are still learning and discovering new things about insurance. And we’ve been at it for over a combined period of 20 years! #justsayin

Understand that you need Insurance

In terms of coverage, you exist in one of two main states:

You need Insurance, but you already have all the coverage you require.
You need Insurance, but you don’t have all the coverage you require.

Notice the similarity? That makes a world of difference.

No matter your age or financial situation, things might always take a turn for the worst – which is exactly why everyone needs insurance cover in the first place.

By understanding that fact of life, you’ve already taken a giant step towards behaving perfectly as a client.

“Accept, Acknowledge and Awake.”
― Aditya Ajmera

Read up on your own to ask intelligent questions

Every decent insurance professional I know prefers their clients to have more knowledge about insurance rather than less. (Key word: decent)

This instantly sets clients up for deeper, more meaningful discussions rather than spending time on the basics. I tend to think of it this way – if you are not challenging your advisor enough, then you are not fully utilizing his knowledge and professionalism.

As a client, you want to push your planner to get more done – instead of being a push-over yourself.

And knowing more will always be an asset to you, since you will be able to discern who is genuinely serving your needs and who is out to make a quick buck.

Don’t be afraid to say No

Ghosting is really… immature. So is constantly saying “I am too busy, can we reschedule for next month, or the next decade?”

Just say it out already, if you know your mind is made up

As mentioned earlier, you exist in either state of coverage: Enough or not enough.

If you have enough already, then just state it outright and say no. Planners will respect and thank you for that, trust me.

But if you are merely entertaining an advisor and yet never going to take action – go ahead to make that outright rejection! (Else he or she will be stuck in the insurance equivalent of the friend zone)

Don’t be afraid to say Yes

Conversely speaking, if you exist in the state of insufficient cover (which actually most of us are), then do not be afraid to say yes.

Yes to sitting down for a frank and honest discussion.
Yes to exploring different coverage options.
And finally, yes to committing to buy the policies you need.

If you’ve kept an open mind all this while, and acknowledge that insurance is something necessary, while reading up on your own – then making a decision should be the easiest part.

Commitment doesn’t have to be hard

If nothing else, there are only people in this world that regret not saying yes to Insurance when they could.

Go forth and be Perfect!

Did we miss anything out? Feel free to comment in the comments section below!

www.ClearlySurely.com aims to eradicate the knowledge gap between consumers and Life Insurance. Our Vision is that one day, every Man, Woman, and Child will be properly insured.

Inspiration for this article came from reader JV Lim, for which we are thankful.

The post How to be the Perfect Insurance Client [It really helps you too!] appeared first on Singapore's Insurance Blog.

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For the longest time, a group of Singaporeans have been given a derogatory name by the Government. Once you reach the ripe age of 40, you are termed as an Elder. Not in a cool way like Elders of the Universe but you are automatically included in this long-term care insurance scheme, Eldershield.

Obviously many Singaporeans object to this uncaring name-calling. Thankfully, we have a Government who listens to us via numerous Singapore Conversation dialogues. They have since introduced CareShield Life so that we no longer feel old at 40. We are so lucky to have a government that cares so much about us.

Remember all the recent talk about building a more inclusive society? The Government is putting its money where its mouth is by making sure that all Singaporean have to participate in CareShield Life!

If you are keen to know more about CareShield, you can head over to the MOH website. Or you can enjoy these informative videos with strangely uplifting background music.

Introduction to CareShield Life - YouTube

CareShield Life in 30 seconds - YouTube

A Question that keeps us up all night.

No, our question is not why the name sound likes a legume. Obviously, the idea was hatched at Cashew Road, and probably by a nut job.

What we are actually perplexed about is this.
Why is Eldershield not merged into CareShield Life scheme?

Despite our earlier satire, we are quite pleased about the new CareShield. In our earlier post about Eldershield review, we made these three suggestions

  1. Increase claim payouts
  2. Prolong the duration of payout
  3. One-time waiver of disability assessment fee.

We are glad that these improvements are been adopted by the committee and put into place in the new CareShield scheme.

At the same time, we warn that the unnecessary nationalization of Eldershield will equate to a higher premium. Unfortunately, that prediction came true too.

We are surprised though that Eldershield still operates as a separate scheme, instead of being absorbed into CareShield.

Why this matters

The recent furore over CareShield revolves around the costly premium rate which is a concern that we share. Some have suggested No-Claim Discount while others question the statistic employed by MOH. These are valid and relevant points that the government should address as premium subsidies cannot be the long-term solution.

On the other hand, CareShield premiums have been priced higher than its present cost because it has to build up adequate reserves to meet the demands of tomorrow. We have a rapidly ageing population and this may become a real problem if CareShield is not built for the future.

That is where Eldershield can come in and help.
With an established insurance pool, it can provide an immediate cushion for CareShield Life which then lowers the premium for everybody.

How insurance pooling works

To understand how Eldershield pool can help, we must first understand the concept of insurance pooling.

When you buy any policy from an insurance company, the insurance company gather the collected premium from you and other customers and put them in an insurance pool. This pool will also pay out in the event of a claim.

For the insurance pool to remain solvent, the premium collected must be higher than the claims. The actuarial department has to calculate a rate that keeps the pool afloat not just for now but also for the future. The underwriters have to ensure that each person going into the insurance pool is a suitable risk.

You can think of it as a leaking pail that the insurers have to keep filling

This insurance pool can be a good or a bad one, depending on the makeup. If the underwriters are prudent and cover good risk, then the pool will not only be solvent but also profitable. On the other hand, bad underwriting decisions may result in a loss-making business which in turn drives up the premium rate. This can be observed from the increase in shield plan premium in the past few years.

Why merging Eldershield with CareShield is the right way to go

Eldershield insurance pool is an insurance pool that is definitely above water and making good underwriting profits. This statistic speaks for itself.

“From 2002 to end-2015, about $2.6 billion have been collected in premiums for ElderShield insurance and around $100 million have been paid out in claims, adding that about $130 million in premium rebates have been given to policyholders so far, the first tranche in 2007 and another in 2012.” – Hansard

Instead of starting off with a big fat zero, CareShield can rely on the huge Eldershield reserves that have been accumulated. Unlike Medishield Life whereby medical inflation affects the pool, the Eldershield is a rather stable insurance pool as the payouts were fixed. With a profitable insurance pool to depend on, the premium for CareShield can be lowered as the insurance pool is under less pressure to build up an adequate reserve.

A positive side-effect of merging the two plans is that Eldershield shield pool will not suffer in the future. When the year 2020 comes by, Eldershield is no longer be an automatic opt-in scheme. The premium collection will be reduced as existing customers may switch over to CareShield for better benefits. As we know from Integrated Plan precedence, this will result in increased premiums or reduced benefits for Eldershield clients.

A merger of the two schemes will not only lower the premium for CareShield but also benefit Eldershield customers too.

Wrapping up

We have to give credit to the governing body for listening to the public and implementing an insurance scheme that will serve the fast-ageing population well in the future. The Eldershield scheme is inadequate to meet the demands of the nation and thus, should be replaced.

However, it is rather perplexing that CareShield and Eldershield exist as two separate entity. To us, it makes sense to integrate the two for cost-saving purposes.

Perhaps it is difficult to take back Eldershield from the private operators in terms of logistics and administration. However, it is something to be considered if it benefits Singaporeans. CareShield Life with lower premium will be a great national long-term care insurance plan.

Let us hope that various suggestions from the public will change the minds of the policymakers although we are not holding our breath. Meanwhile, you have no other choice but to keep calm and carry on (since you have no choice about Careshield anyway).

www.ClearlySurely.com aims to eradicate the knowledge gap between consumers and Life Insurance. Our Vision is that one day, every Man, Woman, and Child will be properly insured.

The post We have one question about CareShield and the answer may be the key to unlock lower premiums appeared first on Singapore's Insurance Blog.

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Healthcare in Singapore is ranked among the best in the world, but it does not come cheap. If you are a citizen or permanent resident you have to have the national health insurance plan known as Medishield. This helps to pay for hospital stays and specialist treatments. If you are working for one of the larger companies, you may be partly covered by a company scheme, but healthcare insurance in Singapore is vital if you do not fit into any of these categories.

You may see prices for healthcare insurance online, but until an insurance company has vetted your proposal, you will not have a definite cost. There are things that can affect how much they charge you, so you want to be able to show them how healthy you are to keep the premiums low.

Exercise

Warrick Wynne via Flickr

Regular exercise can lift your mood, help to stave off some health conditions and generally make you feel better. The more you exercise, the more energy you will have and it can help you to have a good nights sleep.

The exercise you opt for and how much you do is down to your physical abilities and your age. It is always a good idea to mention it to your doctor before you start anything strenuous.

Eat Healthily

Healthy eating habits can make a huge difference to our well being. Choosing the right foods, and preparing them by healthy methods is not only good for us but can give us a much more varied and tastier diet.

Even if you are travelling on business or away on holiday there is no need to let your eating habits suffer. With so much choice available, even if you use a service such as Deliveroo, you will have no problem maintaining your healthy eating regime with great wanton noodles or Teochew food.

Stop Smoking

We all know that smoking is not good for us and being able to confirm that you are a non-smoker on your proposal form can make a huge difference to the amount you are asked to pay.

Get Enough Sleep

– Catriona Ward via Flickr

Many people do not get enough sleep, and that can affect your health mentally and physically. While you are sleeping your body will heal and repair itself, which is something it struggles to do while you are awake. A lack of sleep can badly affect your metabolism, moods, concentration, memory, motor skills, stress hormones, immune system and cardiovascular system.

Drink Water

Most food and drink we consume contains water, but there is nothing to beat drinking enough of it as a liquid on its own. It is the most natural way of cleansing our insides, as it will flush out toxins when we sweat or urinate. Water is also a good way to stay hydrated, which helps our brain function properly.

One At A Time

If these are changes you need to make, do not try to do them all at once as that more or fewer guarantees failure. Pick them one at a time, and when the chosen one has become a regular habit, introduce the next. It might take a bit of time this way, but you are far more likely to succeed and the health insurance provider will be quoting you a better price.

www.ClearlySurely.com aims to eradicate the knowledge gap between consumers and Life Insurance. Our Vision is that one day, every Man, Woman, and Child will be properly insured.

The post 5 Ways To Stay Fit And Healthy And Keep Your Health Insurance Down appeared first on Singapore's Insurance Blog.

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It is no secret that we love life insurance. We have been running a website that educates the public about life insurance. Moreover, we have spent the last 3 years of our lives writing about it whereas some couples don’t even last more than 3 days!

Like old married couples who have days when they feel like murdering each other, we have our complaints about life insurance too. Despite what we do, it seems that insurance literacy still falls short. Coverage gap still exists. And there are many other practices in the industry that annoys us immensely.

So hear us out as we vent our frustration.
You may find yourself agreeing with us on some of them.

The Dirtiest Word in the Industry: Pre-existing Conditions.

The first complaint about Pre-Existing Conditions  – the prefix “pre” is redundant. Things either exist or they do not – they cannot pre-exist!

An oven is heated or not. Pre-heating does not make sense.

Besides the semantics, Pre-existing conditions are the worst things you can write on your insurance proposal. You may have to pay a higher premium or the insurer may impose exclusions. Even worse, these two words may render you uninsurable.

What really annoys us is the fact that some people are un-insurable through no fault of theirs.

While there are instances whereby pre-existing conditions occur due to self-neglect, there are some who may be born with hereditary defects or have met with an unfortunate accident or ailments. Yet these innocent folks are denied the chance of being covered and have to spend their entire lives without a financial peace of mind.

On the other hand, an insurance company exists to make profits like any other corporate entities. It does not make any financial sense for an insurer to take in supposedly worse risks.

It appears that this problem cannot be cracked at all.

Commission-based system and its negative impacts.

We spoke to an industry practitioner on the same topic in our previous post.

>> Click here to understand the difference between commission-based & fee-based advisory <<

What is worth repeating is that the commission based advisory system creates a horrible dilemma for everyone.

Financial advisors are placed in sticky situations where they have to make certain recommendations that lead to a sale as opposed to proper financial advice. After all, their pay cheques are dependent on sales and not the quality of their advice.

It is an easy decision until you realize that the wrong way pays better.

The commission-based system creates a moral dilemma for the consumers too. Knowing that their advisor does not get paid makes it hard for customers to walk away from a financial planning session without making a purchase.

At the same time, the commission model affects how the insurance companies operate. Since the insurers are paying good money, they count on the advisors to be the face of the company. This sets unhealthy expectations that we shall elaborate further next.

The commission based system may have its advantages but the misalignment of interests has been plaguing the industry for years.

Unreasonable burden levied on the Financial Advisors

Expanding on the previous point, financial advisors are expected to do everything for the insurance company. Let us do a quick run-down.

Educate the customers on insurance.
Understand the client’s financial needs.
Dispense proper financial advice.
Fill up proposal form and collect the premium.
Advise on claim procedure.
Apply for medical reports for claim purposes.
Collection & delivery of claim documents

The list goes on and on but the point that we are making is that financial advisors are supposed to be giving financial advice. That is his area of expertise. If we do not rely on a car salesman to repair our vehicles, why should we expect a financial advisor to handle our claims?

Caught between his employer and customers.

This is because Life insurance companies have delegated all consumer-related tasks to their agents. This should not be the way – we should still be able to contact the insurer directly for policy information. The insurance companies should be assigning professionals to tend to our claims, especially for complex cases.

Everyone expects the advisor to be able to play all sorts of roles and that is unhealthy. It is time for insurers to step up to the plate and deliver proper service to the customers directly.

Insurance scams are still happening

From Sally Low’s despicable act of selling non-existent policies to the recent revelation that MAS is taking up prohibition orders against 6 errant agents, insurance wrong-doings continue to be prevalent. This irks us as much as it worries us.

Life insurance is too good of a financial product to be tainted by such misconducts. These wrongful acts overshadow the good things that life insurance brings to the customers. We fear that the punishment meted to those misbehaving agents may be too lenient and too slow.

For misconducts that took place from 2009 to 2015, the prohibition order was reportedly only issued this year. Most of the errant agents are barred from insurance sales for 2 to 7 years without any other punitive measures. It has been seen by the public as a slap on the wrist.

That is what the penalty looks like to the general public.

As an effective deterrence to any advisor who has ill intentions, the regulator must impose more severe penalties. The punishment must be meted out quickly before more harm can be done. After all, white collar crimes like these are actually more damaging than the street equivalent.

Silver Linings

Thankfully, things are improving

Medishield Life is a health insurance that does not discriminate against folks with pre-existing conditions by making everyone pay a little more. More insurers are creating products that are catered to a certain group of people who have chronic illnesses. We have reviewed two of such products and you can find them here and here.

From the looks of it, MAS is keen to move to a fee-based advisory model but changes are likely to take place much later due to the slow acceptance. Perhaps a hybrid model of fee-and-commission can work in the transition period.

Final Words

As much as these little things annoy us, they do not turn us off.

We do what a good spouse does – to see beyond the shortcomings and appreciate the virtuous quality of the other half. We continue to see the good side of life insurance and how it has helped many families get back on their feet after a misfortune.

So thank you for listening to our grouses.
And may you continue to love us as much as we love insurance!

www.ClearlySurely.com aims to eradicate the knowledge gap between consumers and Life Insurance. Our Vision is that one day, every Man, Woman, and Child will be properly insured.

The post 4 Annoying Things about Life Insurance appeared first on Singapore's Insurance Blog.

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Today we feel like dragging out one of the most thorny issues ever to plague the Insurance industry:

Its compensation model.

More specifically, a commission based system vs a fee based system. (These are the two most well known in the market, with pure salaried advisers being rare to come by)

Of course we don’t mind dragging this out into the open, because we’ve written about it previously.

Now it is about letting some one else weigh in on the issue, and that someone being an active and successful industry practitioner.

Shawn Yap shares his thoughts on the highs and lows of each model – as well as how consumers can learn to safeguard their own interests.

Commission-Based Advisory

The model that we know and love to hate

This is the most traditional form of compensation for advisers. Consumers have long gotten used to “free” advice. However, free advice can sometimes be the most expensive advice. A 2002 study on the effect of commission-based remuneration on financial advice in Britain, submitted to the UK Financial Services Authority, found that financial advisers exhibited significant commission bias – recommending products or providers that pay them the largest commissions, for a small number of single-premium products.

Looks just about right

On the local front, the situation is described as “particularly disturbing”. According to a mystery shopping survey conducted by the Monetary Authority of Singapore (MAS) in 2011, 30% of the recommendations were unsuitable, 40% “may be suitable” and only 30% were suitable. This means that the recommendations are only reliable 30% of the time! Is it a coincidence that most advisers in Singapore are commission-based?

But it is not without its merits

It is not to say that the commission-based system is all bad. The commission from product implementation does help to pay for part or whole of the planning process leading to lower cost of advice for consumers, provided that the right and suitable product is recommended.

The financial institute that the adviser represents also make a difference. If the adviser only represents a sole product supplier such as a single insurer or bank, your choices are obviously limited. If the adviser has access to multiple insurers and fund managers, comparisons of similar products can be made to find the best deal for clients. With quantity comes value.

Protect yourself as a consumer

Always be on the look out for a product recommendation that is given before any advisory process is given. The advisory process is meant for the adviser to have a greater understanding of your needs and situation – you wouldn’t trust a doctor who starts a prescription without even understanding your symptoms!

Usually putting the cart before the horse doesn’t look this cool

Fee-Based Advisory

Slowly gaining popularity

At the moment, this is more common in developed countries like US and UK than in Singapore. A fee-based compensation has always been used by professionals. When you visit a doctor, you pay a consultation fee. When you consult a lawyer, you pay an hourly fee. When you engage an accountant, you pay a retainer.

With this model, you can expect to get more instead of a sales process. Interestingly, some advisers think that they are fee-based advisers just because they receive an annual investment fee. A fee-based adviser is different from an adviser who charges an investment advisory or management fee. The latter can still be a commission-based adviser.

The litmus test for a true blue fee-based adviser: He charges a fee for planning and advice. (usually nothing more)

But there are still potential flaws to be fixed

Although the fee-based model is touted to be the more transparent model, the fees can even exceed those of the commission based model. While those with larger sized transactions may benefit, the initial cost of $3,000 to $5,000 for a comprehensive financial plan and an annual retainer of $1,200 to $2,000 might be a hard pill to swallow for some.

(Editor: These seem to be a mid to high range of fees to be charged. The lower cost ones could be less than about half the amounts stated above)

Specific needs like insurance, investment, retirement or estate planning cost about $1,500. Some fee-based advisers either refund the commission or waive the fee. But others charge both a fee and collect the commission!

I have to pay fees and my adviser still receives the full commission?

In a triple whammy, some advisers receive a separate commission for insurance plans and a sales charge for investments on top of a paid financial plan! Slapping a “fee-based” tag on someone does not automatically guarantee any additional value to be had.

Protect yourself as a consumer

Nothing against higher fees if they are charged, as long as the advice provides good value. But look out for exorbitant upfront fees that have to be paid in a lump sum, regardless of advice given. (or yet to be given)

And always be on the look out for multi-layered compensation – you only need to pay for a cake once, not thrice!

Conclusion

The quality of financial advice cannot be determined solely by the mode of compensation. No single model can be the best for every client.

The most important factor to consider is the advisory process in planning for your wealth. . A proper financial planning process can save clients tens of thousands of dollars. It is not the price but the value that counts!

About the Author

Shawn Yap is a holistic and independent wealth adviser known as a Client-Owned Adviser® (COAdviser), who fulfils 7 criteria.

He is among the Top 10 Financial Planners in Singapore (Financial Advisory-Open Category) at the FPAS Financial Planner Awards 2018. Unlike the Million Dollar Round Table (MDRT) and company awards which are solely based on sales production, this award recognizes financial planning quality and excellence based on a written financial plan that includes the understanding of clients’ financial situation, risk analysis, suitability of advice and recommendations.

Contact:

http://www.WealthQ.Asia

www.ClearlySurely.com aims to eradicate the knowledge gap between consumers and Life Insurance. Our Vision is that one day, every Man, Woman, and Child will be properly insured.

The post Clash of two Paradigms: Commission-based vs Fee-based Advisory [An Industry Practitioner shares his thoughts] appeared first on Singapore's Insurance Blog.

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Travelling is the third favourite past-time of Singaporeans, right behind queuing and complaining. According to a 2015 Expedia survey, almost 50 percent of Singaporeans take up to two vacations a year. Around 27 percent of Singaporeans take at least four vacations in a year!

Singaporeans Are Vacation-Deprived. Can You Believe It? 

The need to escape out of Singapore appears to be growing.

Expedia found that 70.8 percent of Singaporeans continue to find themselves vacation-deprived. This puts us in the top three of vacation-deprived nation globally (another accolade that we can “proudly” claim).

Travelling is also one of our favourites, especially to get a much-needed break from the hectic work life.

Why Doesn’t Everyone Buy Travel Insurance? 

There is, however, one small problem – when is the last time you bought travel insurance?

Despite our tendency to travel, about 45% of Singaporeans do not buy travel insurance when we travel overseas. Even for those of us who bought travel insurance, how many of us really understand what we bought and the benefits that come with our travel insurance policy?

Of course, when nothing happens (touch wood), nobody really bothers to look at their travel insurance documents. But in the event of an unfortunate incident, people would start panicking, scrambling for their travel insurance documents and eventually realize that they had under protected themselves.

It’s Time To Change People’s Mindset About Travel Insurance

Since it appears that there is a pervasive lack of understanding of how travel insurance works, it is ripe time to change that. After all, education is in our blood – insurance literacy being our foremost concern.

Step By Step Guide To Reading And Understanding Benefits From Travel Insurance 

We haven’t even expanded the Policy Conditions as yet!

The first complaint that most people have with travel insurance is information overload.

A typical travel insurance has 20-30 sections that you have to read through. Each section refers to a clause that allows you to receive an insurance payout from your travel insurer if the condition is fulfilled. And here’s where the complication kicks in. For each clause, there is a black-and-white definition stated by your travel insurer to explain what it means.

It is definitely painful to read through each and every clause. To make things worse, the definition of these policy conditions are not uniform amongst the travel policies.

As if things are not complicated enough!

What Are Your Biggest Risks During Travel?

Here’s one simple and effective way that you can avoid having to read through every single fine print. Instead of reading through every single clause, consider what are the biggest risks that you are most afraid of when travelling overseas.

Is it a possible terrorist attack on the city, given the rise in terrorism over the years?
Or is it the fear that your travel agency is going to become insolvent, just like Five Stars Tours that shut down abruptly?
And if you are not going to rent a car, why bother comparing the benefit?

Once you have established your biggest risks, focus on reading the clauses that respond to the top risks. This will reduce the time you need to understand the benefit of your travel insurance by up to 80 percent.

Picking Top 5 Risks to Compare

As a general rule of thumb, picking out 3 to 5 risks should be enough to cover most of your fears.

If you have more than that, it could be a sign that you are too paranoid to travel.

We find personal accidents, death/disability, medical treatment overseas and emergency medical situations as our biggest risks. After all, these are events that can really alter your life if you are not well-covered by your travel insurance. While travel delays and baggage losses claims are more likely to occur, these are minor inconveniences that we should not be overly concerned.

How To Compare Travel Insurance Benefits The Right Way?

As shrewd Singaporeans, we have to do our due diligence in comparing travel insurances to make sure that we get the most value-for-money deal. With so many clauses to compare, how do you ensure that your choice of travel insurance is the most value-for-money?

Metric For Smart Consumers: Benefit Per Premium Paid

Let us introduce this metric to you: Benefit per premium paid.

Instead of just looking at the payout of each clause, you gauge the plan by the abovementioned metric. Simplistically, the benefit per premium paid is a metric that shows you how much value you are getting out of the premium that you are paying.

With this, it gives you a common metric that allows you to compare across different travel insurance plans.

Leverage On Insurance Comparison Sites

To make the comparison process more efficient, leverage on travel insurance comparison sites like Insurance Market.

You can use the figures provided to do a quick-and-dirty calculation before zooming into detail for the travel insurance.

Remember the top 5 benefits you have identified?

Compare these 3-5 top risks across a few travel insurances that you have selected using the benefit per premium paid metric. Unfortunately, there may not a clear winner in comparing travel insurance in this manner. In order to confuse smart consumers that know how to use the benefit per premium paid metric, travel insurers will not allow their product to be completely overshadowed by its competitors’ product.

So, here’s the next trick you need to know. Among the top risks that you have identified, you need to have a clear ranking among them. If there isn’t a clear winner in your comparison, go with the travel insurance that has a better benefit per premium paid ratio for your higher priority risks.

Pressed For Time Before Flying Off? How To Buy The Right Travel Insurance in Minutes

This could happen to any of us, especially when work pressure is piling up before our vacation. If you do not have time, forget about your top-5 risks. You need to turn your attention to the top risk: Death.

Death is a risk that most of us are concerned about just because it affects those who you love the most. That is why that is the most powerful metric that you want to compare and buy quickly.

If you do not have any dependents, go to your 2nd top priority and compare that quickly.

Make Smarter Choices On Your Travel Insurance Starting Today

Now that you have the ultimate guide to making a smarter choice for your travel insurance, don’t let this knowledge go to waste. Take advantage of it the next time you embark on a trip out of Singapore.

And why not also share this piece of precious knowledge with your friends and relatives, especially those who travel often!

www.ClearlySurely.com aims to eradicate the knowledge gap between consumers and Life Insurance. Our Vision is that one day, every Man, Woman, and Child will be properly insured.

The post The Real Way To Compare Travel Insurance Insurers Don’t Want You To Know appeared first on Singapore's Insurance Blog.

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