Mr. Tan Kin Lian’s Blog
Many people in Singapore probably know that Mr. Tan was the former CEO of NTUC Income. Under his watch, NTUC Income has grown into one of the largest insurance companies in Singapore. It has a reputation of offering low-cost products and practising fairness in the treatment of its customers.
Ever since Mr. Tan’s retirement from NTUC Income earlier this year, he has been blogging regularly on various topics at tankinlian.blogspot.com. One of the many things he writes about is on financial planning, especially with regards to life insurance and how to invest for retirement.
Mr. Tan is an advocate on using term policy for insurance protection and investing separately for retirement needs, instead of using the traditional whole life insurance policies or endowment products. This is especially so for the educated or financially savvy people. Sometimes, I like to compare Mr. Tan with Vanguard’s founder Mr. John Bogle. Both of them believe that “cost matters” in investing. In Mr. Tan’s case, he advises people that investing in low cost funds, instead of putting money in non-transparent and “locked-in” whole life or endowment policies for retirement needs, is the better way to go.
Pundits might argue that NTUC Income also sells endowment products and whole life policies under his watch. That part I agree is true but do consider the reasoning given in his blog entry:
The drawback of these [endowment and whole life] products are:
a) The high charges (used to pay commission to the agent)
b) The high penalty on early termination of the policy
When I was chief exective of NTUC Income, I addressed the drawbacks in the following ways:
a) Reduce the commission and other distribution cost, compared to the market
b) Provide higher cash value and shorter breakeven period
I was able to benefit a million policyholders by giving them a higher return, compared to similar products offered in the market.
This is similar to the situation where actively-managed funds are also offered by Vanguard during Mr. Bogle’s watch. Even though Mr. Bogle believes that indexing is a better choice, he concedes that “low-cost” actively-managed mutual funds could also be suitable choices in certain cases. For the same reason, low-cost endowment and whole life policies could also be feasible for certain people. In both cases, the key word here is “low-cost”.
So, stop by Mr. Tan’s blog and read about the advantages of buying term policies and investing the difference. Do not be fooled by or reach for a FA or IFA who would never consider term policies for their clients (In my opinion, there is at least one such financial advisor on the Sgfunds forum from my experience there).
Shown below — Meeting between Mr. Tan and Mr. Bogle.
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