Wednesday, September 29, 2010

12 Weeks Equals 1 Year

Forget about a year. Let's redefine a year. A year is now 12 weeks. No, there are not four periods in a year, that's old thinking. Think about the implications of a 12-week year. The excitement, energy, and focus that happen every December now happen continuously. The year-end push to hit our goals now takes place not once every 12 months, but all the time.


How many bad weekdays can you have in a 12-week year and still hit your goal? And if you can't afford a bad week, then each day of the week automatically becomes more important. Periodization narrows the focus to daily and weekly, which is where execution occurs.

A Period-by period focus keeps us from getting ahead of ourselves and ensures that each week counts.

Commitments are powerful. I’m sure you can recall a time when you were determined to accomplish something meaningful to you, and were willing to do whatever it took to make it happen. I remember back when I was a young boy in fifth grade and how I yearned for a new 10-speed bicycle. Boy, was it a beauty! Metal-flake green paint with racing tires and a black leather saddle! The problem was it was a hundred bucks, which was a lot of money for a ten-year old kid back then. But that didn’t stop me. I had to have that bike. So I did anything and everything I could to earn money. There was nothing that was going to keep me from owning that bike. That’s an example of commitment, a personal promise that you make with yourself. Keeping self-promises builds character, esteem, and success.

We all know intuitively that commitment is fundamental to effective execution and high performance. Any yet many of us fall short of our commitments on a regular basis. It seems that when things get difficult we find “reasons’ to focus on other activities. Often our interest wanes when things get tough. There is a difference between interest and commitment. When you’re interested in doing something, you only do it when circumstances permit. But, when you’re commitment to something, you accept no excuses, only results. When we commit to something, we do things that we would not ordinarily do. The question if “if” goes away and the only question is “how”? Commitment is powerful, and yet there are times when all of us struggle to commit.

There are four keys to successful commitment:

  1. STRONG DESIRE – in order to fully commit to something you will need a clear and personally compelling reason. Without a strong desire you will struggle when the implementation gets difficult. With that compelling desire driving you, “insurmountable” obstacles become exciting challenges. In other words, the end result that you are striving to achieve needs to be meaningful enough to get you through the hard times and keep you on track.
  2. CLEAR ACTIONS – Once you have an intense desire to accomplish something, you then need to identify the core actions that will produce the result you’re after. In today’s world, many of us have become spectators, rather than participants. We must remember that it’s what we do that counts. In any endeavour, there are numerous activities to accomplishing an effort. In most cases there are few core activities that account for the majority of the results, and in some cases there is one, perhaps two, primary activities that ultimately produce the result. It is critical that you identify the one or two core actions and focus on them.
  3. COUNT THE COSTS – Commitments require sacrifice. In any effort there are benefits and costs. Too often we claim we desire something without considering the costs. Costs are the hardships that you will have to endure to accomplish your desire. Costs can include time, money, risk, uncertainty, loss of comfort, etc. Identifying the costs allows you to consciously choose whether or not you are willing to pay that price. It is extremely helpful when you are in the middle of one of the costs to recognize that you anticipated this and decided it was all worth it.
  4. ACT ON COMMITMENTS, NOT FEELING – There will be times when you won’t fell like doing the critical activities. We’ve all been there, getting out of bed at 4.30am to jog in the cold can be daunting, especially when you are in a toasty warm bed. It is during these times that you will need to learn to act on your commitments, not your feelings. If not, you will never build momentum and will be continually starting over, or as is so often the case, giving up. Learning to do the things you know you need to do regardless of how you feel is a core discipline for success.
Many times commitments are made more arduous by the time frame in which the commitment is made. It is difficult to commit to anything for a lifetime. Even keeping a promise for an entire year can be challenging. With periodization you are not asked to make lifetime or annual commitments, but rather period commitments. It is much more feasible to establish and keep a 12-week commitment than an annual promise. At the end of the period you reassess your commitment and begin again.

Commitments ultimately shape our lives. Making and keeping commitments starts a constructive process that is self-reinforcing and empowering.

Tuesday, September 28, 2010

Monday, September 27, 2010

Travel Insurance FAQ

Travel insurance is an essential part of any trip and is something that should not be put aside as it is as important as the tickets to your destination. People usually have heard about travel insurance, but might not know the specific reasons why they need travel insurance. There are many who undermine the importance of travel insurance.

But is it also a fact that numerous individuals have suffered immensely because of not having travel insurance. In order to ensure that you do not ruin your entire trip and repent later, it is best to find out all about travel insurance and getting it done. The following are frequently asked questions for travel insurance.

What is travel insurance protection?

Travel insurance is a type of insurance that covers you financial for any losses or illness that may unfortunately occur to you while on your trip. Having travel insurance policy is the best idea to reduce your risks and increase your enjoyment while traveling.

Why should I buy travel insurance?

Travel insurance will help and provide necessary protection you will need in the occurrence of an unfortunate event while traveling. Any individual traveling anywhere without travel insurance will be in a dangerous situation if an accident occurs. There are many things that can suddenly happen, leaving you in dire straits. In case of emergency situations, you should always have travel insurance to fall back on.

Have you ever imagined what would happen if a planned trip gets cancelled or the airline you were planning to flu with goes bankrupt? These are situations that are, indeed, unlikely. But at the same time, they are not impossible. As the old saying goes, it is always better to be safe than sorry. So getting travel insurance is a very good idea.

What is the coverage for travel insurance?

Travel insurance provides coverage for medical cost, transportation to a medical facility, and reimburse you for certain or some nonrefundable costs due to a interrupted trip, and financial loss of funds. It also provides coverage if you lost your luggage at the airport.

Travel insurance covers stolen or lost possessions but there may be limits on cash or individual items. It can protect you from all substantial losses that includes canceled trips, lost luggage, medical emergencies or other unexpected situations.

How does Travel Insurance help you?

Travel insurance is a great friend in need. Even if you fall ill and cannot travel, thanks to travel insurance, you can rest assured about getting your money back.

The whole point of insurance is to guard you from unprecedented trouble. Life is uncertain. There is no way in which we can tell what is about to happen even in the very next moment. Thus, it is best not to take chances and make proper arrangements so that when you land up in trouble, you have something to fall back on.

Travel insurance is very important because it provides a buffer for you in case anything goes wrong. It is especially important when you are in a foreign land, you are at a greater risk because your familiarity with the place is low.

How much does travel insurance cost?

It will depend on your insurance company provider and their policy. The cost of travel insurance usually will range up to 12 percent of the cost of your vacation/trip. If you are investing more in your trip, you need more protection.

Is travel insurance really important and how many people actually get paid for their claims?

Travel insurance is highly recommended, there are usually about 10% of people who file claims. Some travelers may have taken a overly expensive trip when they have to pay out of their own pocket if they did not buy travel insurance.

What is the medical care coverage?

When there is a case of illness or serious injury, medical transportation to an appropriate medical facility and medical treatment will be covered.

How long will travel insurance provide coverage?

Travel insurance can be brought starting from as little as one day to up to a year. Different insurance companies may vary with their service of coverage.

When is the best time to buy travel insurance?

The best time to buy travel insurance is as soon as possible before you go on your trip or vacation. Travel insurance should be active during your entire trip.

Thursday, September 23, 2010

Perils of the financial safety net

http://www.todayonline.com/Business/Invest/EDC100923-0000044/Perils-of-the-financial-safety-net
by Jan M Rosen Sep 23, 2010

SHAKEN by what seemed to be an earthquake in the world's financial markets two years ago, millions of retirees fled to safety, shifting their holdings into savings accounts, Treasury bills, money market funds or certificates of deposit.

Now, they are suffering from the aftershocks: With short-term interest rates well below 1 per cent, their assets are not producing enough income for daily living expenses.

What to do? There is no quick answer to that question but four leading financial advisers offered a variety of ideas for investing with significantly better yields while limiting risk.

Diversifying portfolios is a main theme and it's important to analyse cash flow and assess financial priorities, distinguishing between needs like money for food and utilities and favourite outlays like family gifts that may no longer be practical.

Some may discover that, although portfolio values have fallen in the last two years, their assets are still sufficient for their long-term needs. Others may have to rethink their financial plans and tailor their portfolios accordingly. What follows are the advisers' suggestions:

Dr Jason T Thomas, chief investment officer of Aspiriant, a wealth management firm, emphasised the need for a diverse portfolio with a strong equity stake meant to provide solid cash flow. In trying to avoid risk, many people have incurred "purchasing power risk", he said, because the return is lower than the level of inflation.

Dr Thomas also favours real estate investment trusts because they are "an opportunity to buy into a depressed market" and many pay dividends of 5 per cent and higher.

Commodities are "an unloved asset class", but holding them or an exchange-traded fund that holds them is a way to hedge against rising prices of raw materials in the future.

When buying high-yield bonds, he prefers a fund because of its professional management and diversified holdings. He said he would avoid most Treasury and corporate bonds for now because interest rates are so low. As rates rise, bond prices fall, so holders may have to keep the bonds until maturity to get their principal back. In repositioning a portfolio, Dr Thomas said: "Don't do it all at once; do it in steps."

Mr Mark L Pollard, wealth management adviser and senior vice-president at Merrill Lynch warned: "In desperate times, people do desperate things. If you blow your capital, it's gone. It maybe necessary to temper expectations."

Still, he said, a prudent investor can do much better than staying in cash or Treasury bills. A portfolio of high-quality stocks can yield dividends of 4 per cent and offer a potential for long-term capital appreciation.

Retirees who have enough for basic expenses from other holdings, pensions or Social Security and are bullish on the underlying stock might find the notes attractive for generating income, provided they are comfortable with the downside risk.

Mr Jamie Kalamarides of Prudential Retirement said retirees in their late 60s may live for 30 more years; many fear they may outlive their money. Yet, as investors, they tend to be risk-averse.

He recommended slowly shifting to a diversified portfolio from money market funds and CD's. Traditionally, that would include preferred stocks and bonds, and perhaps a fixed annuity for guaranteed income. Today, he said, Prudential and others offer a new generation of annuities with a guaranteed minimum-withdrawal benefit.

The product is meant to overcome misgivings about traditional annuities while providing lifetime income, appreciation if the market rises, flexibility in withdrawing money and money for the estates of holders who die within 20 years.

Ms Elizabeth Schlueter, national practice leader for the private wealth management group of JPMorgan Chase, advised retirees to look at the total return of their portfolios, not just interest and dividends. "We believe as a firm that it is important to stay invested," she said, with diversified holdings of equities, bonds, mutual funds and alternatives like hedge funds, commodities and currency but changes in a portfolio should be made over time, not suddenly. The New York Times

Wednesday, September 22, 2010



Experts recommend having three to six months of living expenses squirreled away for a crisis -- twice that amount in a bad economy! Find the cash for it with these steps.

To complete this How-To you will need:

Cash
Savings account
Automatic deposits
Discipline

Step 1: Boost your take-home pay

Increase your take-home pay by reducing or temporarily suspending your 401K contributions and any other voluntary paycheck deductions. If you usually get a tax refund, ask your employer to reduce the taxes taken out of your paycheck. Resume your 401K contributions as soon as you can.

Step 2: Increase deductibles

Lower insurance costs by increasing the deductible — the amount you pay out of pocket before your insurance kicks in. Higher deductibles mean lower monthly premiums.

Step 3: Sell what you don't need

Sell possessions you can live without on eBay, through online classified ads such as Craigslist, or at a yard sale.

Step 4: Open a savings account

Put the proceeds of your cash-generating measures into the highest-yielding interest account you can find that does not penalize you for early withdrawal.

Tip: Online savings banks usually offer the best rates.

Step 5: Divert money into savings

Set up an automatic deduction from your paycheck that goes directly into your savings account.

Step 6: Earn more

Earn some extra money with part-time work. Maybe a local merchant could use an extra pair of hands over a holiday. Or perhaps there's a resort area nearby that hires part-time seasonal help. Babysitting and yard work are also effective standbys.

Step 7: Hands off!

Keep your hands off the money unless you have a true emergency.

Tuesday, September 21, 2010

All-out effort to pay out unclaimed CPF savings

CPF members from January can opt to have their savings transferred directly to CPF accounts of their nominees instead of having the payouts made in cash when they pass away. CPF board will automatically disburse the money to the nominees.

CPF savings if left unclaimed for seven years following the death of a member will be moved into the general monies of the CPF Fund. However, claimants will still be able to approach CPF board any time after the seven years to claim the money due to them.

CPF board will trace beneficiaries by exploring all ways to try to locate them. It will go through its own records and residential listings to locate the beneficiary. If this fails, letters will be send to the person who notified the board of the member’s death of to the last known address of the dead member.

If there is no response, advertisement in major newspapers will be placed to ask beneficiaries to come forward to claim the money.

To prevent unclaimed money, if you have not done a CPF nomination, making a nomination will be recommended if you like your nominees to receive proportion of CPF savings when you are no longer around.

Monday, September 20, 2010

Who can make you richer?

Whether or not you're clueless about money, it pays to have a financial expert to help you manage and grow your wealth.

When you are young, you were given your first piggy bank and encouraged to save for a rainy day. Years later, you are still doing the same thing – saving for a rainy day, albeit with more sophisticated instruments. Your piggy bank may long have given way to internet banking. It’s not really enough to just have savings.

What is more important is making sure your money is growing, whether you have parked it. Unfortunately, keeping your cash in a traditional savings account, however stable, wouldn’t deliver the big bucks – not with today’s interest rates. What you need are people who can help you make your money grow, and make you richer in the long run.

A financial planner helps you to map your financial future. He will create investment plan to help you meet your targets: your children’s education or your retirement. Combination of investment products that will deliver the returns you expect within the risks you can tolerate will be implemented.

Financial planner will help carry out your retirement plan, maximise your investments, minimise your risks, having the right insurance product to cover these risks, manage your budget and reduce your debt, determine how you can save on taxes, and so on.

Don’t let financial experts fool you with sales talk, if he promises high returns for low risks, that’s a major red flag. Higher returns always mean more risks, there are no exceptions. To protect yourself from such hype, insist on written information and advice from your expert. If he is qualified, your expert will be happy to comply. If you have the advice or information in writing, it allows you to review your options before making a decision.

Friday, September 17, 2010

Six Retirement Mistakes to Avoid

http://www.cnbc.com/id/39197343
By: Cindy Perman
CNBC.com Writer

You know you need to save for retirement and to max out your company matching.

But beyond that, do you really know what you’re doing? It’s quite possible you’re still making mistakes with your retirement savings.

If you’re not scared, you should be: With most retirement mistakes, you’re losing money that you’ll never get back. And, it’s a lot of money. Imagine if your employer screwed up your paycheck. You wouldn’t tolerate that at all. And you certainly shouldn’t tolerate it from yourself — your retirement is your paycheck after you retire.

“Saving for retirement needs to be a higher priority,” said Greg McBride, a senior financial analyst at Bankrate.com. “There is a widespread, cavalier attitude toward retirement savings because our parents got along just fine with very little retirement savings, thanks to pensions and government benefits. But today’s workforce has no assurance of either once they retire.”

So, we checked in with a few financial analysts and here are Six Retirement Mistakes You Should Avoid.

1. Not utilizing tax-savings options.

Admittedly, this doesn’t sound sexy, but pay attention: Never pay any tax on your retirement savings before it’s time. In 401(k)s, Simple Employee Pension plans, Individual Retirement Accounts and Keogh plans for the self-employed, you are only taxed when you withdraw money. So don’t withdraw it until you’re ready to retire, or you will not only lose that money to taxes — but also the compound interest that money would make in your account. In the case of Roth IRAs and Roth 401(k)s, there are never any taxes — even in retirement.

2. Not utilizing catch-up provisions for those 50 and older.
When you turn 50, the annual contribution limit goes up for both IRAs and 401(k)s. With the IRA, you can add an additional $1,000 per year for a total of $6,000. And with the 401(k), you can add an additional $5,500 for a total of $22,000.

Even if you're on track to meet all of your retirement goals, this is tax-free money that can start working for you now. And, like mistake No. 1 — if you miss the opportunity now, you'll never get the chance to make up that money later. So tuck a little more away now — and you'll rest easier in retirement.

3. Withdrawing or borrowing from your retirement plan — FOR ANY REASON.

But I need it to buy a house! But I need it to send my kid to college! I promise I’ll pay it back!

Whatever reason you can come up with for why you need to borrow money from your 401(k), it’s never a good idea. Let’s repeat that so we’re clear: It’s NEVER a good idea.

The reason why is simple: You’ll never get that money back — even if you repay it.

“No one would argue with the merits of sending your kid to college. Or the notable benefits to homeownership,” McBride said. “But you won’t get a higher contribution limit next year because you took money out this year — You will always have that amount less. There’s no way to close the gap.”

“If you have to raid the retirement account to buy a house — don’t buy a house,” McBride said. “Your kid can borrow money to go to school — but you can’t borrow money to retire.”

4. Underestimating how long you’re going to live.

So your parents lived until they were 80 or 90 but you’re convinced you’re going to 70 tops.

Say, where’d you get that crystal ball?

The official retirement age was set at 65 because the average life expectancy used to be 62. But guess what? Now it’s in the mid-80s.

“When we plan out retirement for our clients, we assume life expectancy of 90 for men and 95 for women,” said Stacy Francis, a personal financial adviser and founder of Savvy Ladies, a group aimed at educating women about money.

“Our clients just look at us and roll their eyes,” Francis said. “They say — if I’m still around at 88 there’s just no way!”

Well, unless you have a time machine and know for sure — you should follow Francis’s lead and plan for living into your 90s — or even to 100. If not, you can be pleasantly surprised … with all the money you have left over.

5. Overestimating your returns.

So, you took quite a hit in your retirement savings during the past two years. You feel humbled. You feel like you’ve learned a lot.

But have you?

If you’re assuming that you’ll get back to an average of 8 percent to 10 percent returns by the time you retire, then the answer to that question is “No.”

“We call this the ‘New Economy’ because the returns we expect on our portfolio are closer to 6 percent — maybe even 7 percent,” Francis said. “A lot of people have really used the market as a backup to get them where they want to go … We’re telling people, ‘Guess what? There’s a new normal.’”

Francis advises people to take a long, hard look at their lifestyle, and consider a different standard of living for retirement. If you have two homes, maybe downsize to one. Spend less. Really, how much more stuff do you need?

6. Failing to make a retirement budget.

In these working years, you probably know what your annual salary is, what your net take-home pay is — and what your expenses are.

But do you know those numbers for your retirement?

How exactly do you expect to live?

It’s not enough to just dump money into an account. You need to know how much is there, how much it’s projected it will grow — and if it’s going to meet your income needs.

“The assumptions that people have about retirement are generally insane,” said Jerry Lynch, a financial adviser and owner of JFL Consulting in Fairfield, NJ. “They don’t realize the potential cost of medical care and they assume rates of return which just aren’t realistic,” he said.

Lynch says a safe withdrawal for your retirement income is 4 to 4.5 percent. That means, if you have a million dollars when you retire, you should be drawing no more than $40,000 to $45,000 a year.

If you don’t set up a budget now — and make sure your savings plan is set up to meet that goal, you could be in for a big surprise.

“The quality of your retirement is going to die if you think you’re going to run out of money,” Lynch said.
Ask yourself this: If you run out of money, how easy would it be to get a job at 85?

Wednesday, September 15, 2010

Investing is like buying clothes

An investment portfolio is not very much different from clothes in a wardrobe as we rely on our financial goals, time horizon and risk appetite when we decide how much we want to invest in each asset class.

Cash, equities and bonds are common investment instruments. All of them come with different degree of risk. Cash is the safest of them all but it will not maintain its value over time because of inflation. Equities which include shares and unit trusts are relatively riskier than cash and bonds.

Equities generally give positive returns if one has a long investing horizon and is able to ride out the volatilities of the market but they are riskier assets. There is a simple rule to calculate the percentage to put in equities, but this formula may not suit everyone.

The optimal combination depends on your risk appetite, risk capacity, financial goals and age. You will be able to sleep soundly through any economic cycle when you have a suitable portfolio that matches all these factors.

Tuesday, September 14, 2010

Who should have life insurance?

Simply put, insurance is the protecting of assets, giving you the peace of mind knowing your property is safe. List of types of insurance goes on from health, life, vehicle, and house. People living in the developed world have at least one form of insurance.

Insurance is protecting something by paying insurance company a monthly premium and they will in return protect your property, health or loved ones if something were to happen.

Insurance has become a very important aspect of our daily lives. Imagine you are driving your car and you get rear ended, insurance doesn’t exist. What will you do? Chances are you will have to pay for the repair bill or you will have to sue the person at fault in court. Imagine your house is burned down and you don’t have insurance. You will be out of a house and you will still have to pay for the mortgage. Insurance allows us the peace of mind to purchase expensive assets and know that they are safe.

If insurance didn’t exist, most people wouldn’t buy expensive cars, houses and people will be paying thousands of dollars in medical bills when they are sick. Some might be thinking insurance isn’t worth it. This may be true for insurance such as boat insurance that you might use only once or twice a year. But for valuable asset such as a house, car or your health, insurance is almost a must.

Wednesday, September 8, 2010

Tuesday, September 7, 2010

She has 3 policies, but no coverage

WITH three critical illness policies under her belt, she assumed her insurance coverage was comprehensive enough.


Ms Theresa Tan's policies with Prudential saw her dutifully forking out a total of $600 in insurance premiums every month.

She believed she had forked out about $77,000 for them over the years. But when it came to coverage, the mother of three, 42, thought wrong.

She was diagnosed with early stage breast cancer, or stage 0, in June.

That same month, she went through a 12-hour operation at Gleneagles Hospital to remove her right breast and to have reconstructive surgery done, using skin and fat from her stomach.

The operation and hospitalisation cost $30,000 and was covered by another insurance policy she had with Aviva.

Ms Tan then tried submitting her claim to Prudential this month for loss or potential loss of income.

She thought she could claim up to $100,000 for one policy and up to $107,000 for another policy.

But her claims were rejected by Prudential, which explained to her in a letter that her condition was non-invasive and "does not fulfil the definition of cancer".

Ms Tan's condition is known as ductal carcinoma in situ (DCIS) in her right breast.

This is a condition where the cancer starts in the milk ducts of the breast. It was considered non-invasive at that stage as the cancer had not spread beyond the milk ducts into the surrounding breast tissue.

In Ms Tan's case, she had a mastectomy because the cancer cells were located in various parts of her breast.

Prudential's decision has surprised Ms Tan, especially since her family's medical history was known to her insurance agents.

Her mother was diagnosed with breast cancer when she was 19 years old. She subsequently died in 2003 after a long battle against cancer.

Her mother's illness was what made Ms Tan buy her first insurance policy when she was 22.

Said Ms Tan, who is the co-partner of nanzinc.com, an online portal set up with her friend, entrepreneur Nanz Chong-Komo: "Fortunately, my mum had a pension plan so her treatment was covered.

"But seeing what she went through and given I was not under pension, I wanted to make sure that I was provided for.

"I thought by buying three policies I was covering myself in every circumstance, but it didn't work out that way."

She claimed the gaps in her policy - it did not cover early stage cancer - was not explained to her by her insurance agents.

Neither was the option of a rider to supplement her existing policies offered.

"What does this term mean?"

Did she think she should have read the fine print in her policy documents?

She said: "Even if I had read the fine print, I don't think I would have understood what DCIS meant as a layman."

Ms Tan, who set up a blog - A Clean Breast of It - about her battle with breast cancer, said she later found out that most insurers do not pay out for non-invasive, early stage cancers.

Critical illness coverage typically covers the loss of income that comes from up to 30 critical diseases. These include major cancers, heart attack, coronary artery bypass, stroke and kidney failure.

Fortunately, Ms Tan, who is on three months' medical leave since her operation, has not suffered loss of income as she is still being paid.

Apart from the online portal, Ms Tan also runs a writing agency, earning on average $5,500 per month.

But she said: "It does limit my options. I can't continue to keep being paid if I'm not working. What happens if I still don't feel well after three months? Or if I need to take a six-month break to rest?"

Currently, she suffers from stomach cramps and can barely sit up for two hours at a go, she said. Ms Tan said: "I hope telling my story will create more awareness. I tell my friends to check their coverage and to make sure they are covered in full."

What she wishes is for the insurance industry to broaden its definition of critical illness to include non-invasive and early stage cancers.

Or to at least make it compulsory to offer to customers other options which cover the gaps in any policy, she said.

Ms Tan lives in the east with her husband, 43, a civil servant, their son, 11, two daughters, four and nine, and her parents-in-law, both retirees in their 70s.

A spokesman for Prudential Singapore said Ms Tan's policies "unfortunately do not qualify for stage 0 cancer."

She said coverage of early stage cancers depend on the kind of policy purchased and the definition of cancer in that particular policy.

She said: "Standard critical illness (CI) policies typically do not cover stage 0 cancer... It is important to know that each and every critical illness stated in the CI policy is precisely defined.

"They are based on standard definitions given by the Life Insurance Association (LIA). Unless the person's disease or surgery has fully satisfied the definition in the policy, no claim is payable."

But the spokesman pointed out that Prudential has policies like PruSmart Lady, which provide coverage for female-related illnesses that are non-critical in nature such as DCIS.

Policy booklet

She added that all information pertaining to a specific policy is provided in the policy booklet given to customers.

Dr Wong Seng Weng, 40, consultant oncologist at The Cancer Centre, drew a distinction between cancers where the person's longevity is compromised versus conditions which are treatable.

He said: "DCIS, if diagnosed and treated early, usually the survival rate is 100 per cent.

"Usually life insurers pay out when a person's longevity is compromised."

But this doesn't mean that the cancer has to be very advanced, before a claim can be made, he clarified.

Even if the cancer is at stage 1, the insurer can pay out if it is an invasive form that spreads, he said.

Ms Tan is grateful she caught her cancer early. She said: "I'm thankful I caught it earlier so I didn't need to go through chemotherapy and radiation.

"But I believe cancer is cancer, whether in the early or late stages."

Why most standard policies don't include non-invasive cancer

WHY do the bulk of standard critical illness policies not include non-invasive cancer?

MsPauline Lim, executive director of Life Insurance Association (LIA), explained: "Carcinoma in situ is specifically excluded from cover as these cancers can be treated and is not viewed as a 'critical' condition."

She said: "Insurers base their premiums on the extent of coverage.

"There is a much higher incidence of the less serious cancers, so if they are also covered, it means premiums will cost much more and become less affordable for most ordinary people.

"This is not beneficial from a public policy perspective. LIA reviews its standard CI definitions from time to time."

The LIA standardises the definitions of critical illnesses.

Ms Lim said consumers should look out for the following:

  • The scope of coverage and the circumstances under which policy will pay out.
  • Whether the amount of critical illness (CI) payout is sufficient.
  • If the CI premiums are fixed or if they increase as the policy holder gets older.
  • If there are exclusions for any of the CI conditions
Recent policies

Recent policies in the market do offer early stage coverage or multiple critical illness coverage.

These typically cost more than policies based on LIA's standard definitions, said the spokesman.

One such policy is Great Eastern's Early-Payout Critical Care (EPCC), which provides payouts at earlier stages of critical illness.

Its Great Eastern PinkLife plan pays out 25 per cent of the sum assured for carcinoma in situ, for cancers in the female organs.

This article was first published in The New Paper.

Monday, September 6, 2010

Don't let your health get you in the red




By The Life Insurance Association







Economists call it "hyperbolic discounting", but really, it is at the heart of human nature.

Discounting is the human tendency to put a higher value on something that reaps little benefits at present over something that can bring you greater benefits in the future.

This can be easily applied to health insurance coverage. With pressing financial needs such as your mortgage and car loan playing tug-of-war for your wallet, you would rather not spend on a personal health insurance plan, thinking that the national healthcare schemes will help to pick up the tab.

Our national healthcare system is targeted to ensure affordability, and whilst our healthcare system is one of the best in the world, the truth is that healthcare costs are escalating.

The increase in our healthcare costs is inevitable, given our ageing population, the shift towards "rich-country" chronic degenerative diseases that cost more and take longer to treat, and a general attitudinal shift towards a preference for private healthcare.

In Singapore, whilst 84 per cent of our population is covered by Medishield (as of 2009), against a backdrop of rising healthcare costs, many of us may potentially find ourselves in dire straits when an accident or debilitating illness strikes and wipes out a large portion of our savings account.

The bare minimum

If you are working, you will have Medisave, a dedicated savings account that is meant for medical treatment. However, there is a limit to how much you can withdraw a year, provided you have an excess of $34,500 in your Medisave account. Factor in escalating medical costs and it will be highly likely that any major surgery will wipe out your Medisave account for future use.

Even a simple accident can set you back more than you think. Tear your knee ligaments because of slip down a staircase, and the operation can set you back anywhere from $6,000 to $10,000. That could be a big financial burden for someone in his 30s trying to achieve financial stability.

True, Medisave provides minimal cover and can be used to buy Medishield, a low cost insurance scheme that covers medical expenses of major illnesses. However, Medishield will still leave you with a significant portion of your medical bill to cover, and will only pay for expenses in a Class B2/C ward. Should you want treatment in a Class A ward or a private hospital, Medishield suddenly begins to look threadbare.

As such, having a comprehensive personal health insurance plan is especially important. It prevents you and your family from enduring any financial suffering when you face a health crisis.

The truth is, only the indigent or large families living on very modest incomes cannot afford some kind of basic health insurance these days. A family of four could probably get a private Shield plan for as low as $300 a year. To put it in perspective - that is less than a cheap holiday for four, and certainly cheaper than a couple of nights out every week.

Health insurance actually comes in several different forms, and knowing the difference goes a long way in getting you the appropriate coverage

Integrated Shield Plans

If you are looking for higher medical expense coverage than what your Medishield provides, you can consider Integrated Shield Plans that are offered by some insurance companies.

These are suitable if you plan to use Class B1, Class A wards or private hospitals and the best part is that they are combined with your basic Medishield so that you only pay one premium for coverage under both the private plan and the basic Medishield.

To make things even easier on your pocket, you can actually use Medisave to pay for your premiums, up to the prevailing withdrawal limit set by the Ministry of Health.

Medical Expense Insurance

If you are looking to cover your medical expenses, then you may want to consider Medical Expense Insurance.

It will pay medical expenses incurred as a result of an accident or illness as well as cover expenses for inpatient medical treatment or surgery, some outpatient charges for day surgery, consultations with specialists before and after the hospital stay and x-rays and laboratory tests.

Note, however, that medical insurance will not pay you more than the actual medical expenses incurred, regardless of the number of policies you have.

Also, you should be aware that there are limits to the amounts you can claim, as each policy will have varying criteria. Some medical expense policies may also have deductible and co-insurance features.

Hospital Cash Insurance

If you want to receive a fixed amount of cash while you are in hospital, then Hospital Cash Insurance is what you are looking for.

This kind of policy actually pays you a fixed amount of benefits for each day that you are in hospital, regardless of the actual expenses incurred for your stay.

The point to note with this type of policy is that the total amount you are paid may be more or less than your actual expenses.

Critical Illness Insurance

On the other hand, Critical Illness Insurance reduces your burden in the unfortunate incidence that you are afflicted by a major illness or disease.

While the types of diseases covered by these policies vary from one insurer to the next, there is a list of major illnesses that are covered by almost all policies. These include cancer, heart attack, coronary artery bypass surgery, stroke and kidney failure.

It is important to note that benefits are paid only if the disease or surgery exactly meets the definitions stated in the policy. These definitions are fixed across all insurance companies in Singapore and can be found in website of the Life Insurance Association (www.lia.org.sg).

As long as you can prove that you are diagnosed with one of the diseases, as it is defined by your policy, you are entitled to the payout, which usually comes in the form of a lump sum. The amount paid does not depend on being admitted into hospital or the actual medical expenses you incur.

Disability Income Insurance

One of the main concerns of the breadwinner of the family is where the money will come from should they be unable to work. This underscores the advantage of disability income insurance.

These types of policies pay out a fixed amount of money, usually up to 80 percent of your monthly salary, on a monthly basis to ease the burden on those you who were dependent on you. The monthly payout income benefit will usually be paid for up to five or 10 years, or until you are 60 or 65 years old.

The most important point to note with disability income insurance is the definition of disability used in the policy. Some policies define it as not being able to perform your usual work while others define it as not being able to work at all, so be sure to check with your financial adviser on the definitions before taking on the policy.

Long-Term Care Insurance

For rapidly ageing Singapore, long-term insurance care is becoming increasingly relevant. For these policies, benefits are paid when you cannot perform 'activities of daily living', which include bathing, dressing and moving around.

However, these policies have strict definitions and may vary from one policy to the next. To qualify for payment benefits, you must meet those definitions and the minimum number of activities you are unable to perform. Should the number of activities you are not able to perform fall below the minimum required number, payment of benefits will stop.

Pinpointing your healthcare needs

Of course, it is more likely that more than one of these policies might apply to you. It is not unusual to have more than one - but the first thing you should do is check the extent of your current private coverage, and any coverage that your employer might be providing before making a choice.

You may want to approach a financial adviser who will be able to perform a fact-find process. It is a detailed analysis that assesses and identifies your insurance needs so that your financial adviser can then recommend the suitable products to meet your healthcare needs.

The outcomes from discounting can be very dear so don't risk it - for the sake of your family.

Friday, September 3, 2010

What Happens to Me if I Have a Medical Catastrophe I Cant Afford?


A medical catastrophe can generate enormous bills. Beyond that, it can affect your ability to earn a living. A serious illness or injury can be devastating to your health and your finances.

Thursday, September 2, 2010

She has 3 policies, but no coverage


Tue, Aug 31, 2010
The New Paper






WITH three critical illness policies under her belt, she assumed her insurance coverage was comprehensive enough.

Ms Theresa Tan's policies with Prudential saw her dutifully forking out a total of $600 in insurance premiums every month.

She believed she had forked out about $77,000 for them over the years. But when it came to coverage, the mother of three, 42, thought wrong.

She was diagnosed with early stage breast cancer, or stage 0, in June.

That same month, she went through a 12-hour operation at Gleneagles Hospital to remove her right breast and to have reconstructive surgery done, using skin and fat from her stomach.

The operation and hospitalisation cost $30,000 and was covered by another insurance policy she had with Aviva.

Ms Tan then tried submitting her claim to Prudential this month for loss or potential loss of income.

She thought she could claim up to $100,000 for one policy and up to $107,000 for another policy.

But her claims were rejected by Prudential, which explained to her in a letter that her condition was non-invasive and "does not fulfil the definition of cancer".

Ms Tan's condition is known as ductal carcinoma in situ (DCIS) in her right breast.

This is a condition where the cancer starts in the milk ducts of the breast. It was considered non-invasive at that stage as the cancer had not spread beyond the milk ducts into the surrounding breast tissue.

In Ms Tan's case, she had a mastectomy because the cancer cells were located in various parts of her breast.

Prudential's decision has surprised Ms Tan, especially since her family's medical history was known to her insurance agents.

Her mother was diagnosed with breast cancer when she was 19 years old. She subsequently died in 2003 after a long battle against cancer.

Her mother's illness was what made Ms Tan buy her first insurance policy when she was 22.

Said Ms Tan, who is the co-partner of nanzinc.com, an online portal set up with her friend, entrepreneur Nanz Chong-Komo: "Fortunately, my mum had a pension plan so her treatment was covered.

"But seeing what she went through and given I was not under pension, I wanted to make sure that I was provided for.

"I thought by buying three policies I was covering myself in every circumstance, but it didn't work out that way."

She claimed the gaps in her policy - it did not cover early stage cancer - was not explained to her by her insurance agents.

Neither was the option of a rider to supplement her existing policies offered.

"What does this term mean?"

Did she think she should have read the fine print in her policy documents?

She said: "Even if I had read the fine print, I don't think I would have understood what DCIS meant as a layman."

Ms Tan, who set up a blog - A Clean Breast of It - about her battle with breast cancer, said she later found out that most insurers do not pay out for non-invasive, early stage cancers.

Critical illness coverage typically covers the loss of income that comes from up to 30 critical diseases. These include major cancers, heart attack, coronary artery bypass, stroke and kidney failure.

Fortunately, Ms Tan, who is on three months' medical leave since her operation, has not suffered loss of income as she is still being paid.

Apart from the online portal, Ms Tan also runs a writing agency, earning on average $5,500 per month.

But she said: "It does limit my options. I can't continue to keep being paid if I'm not working. What happens if I still don't feel well after three months? Or if I need to take a six-month break to rest?"

Currently, she suffers from stomach cramps and can barely sit up for two hours at a go, she said. Ms Tan said: "I hope telling my story will create more awareness. I tell my friends to check their coverage and to make sure they are covered in full."

What she wishes is for the insurance industry to broaden its definition of critical illness to include non-invasive and early stage cancers.

Or to at least make it compulsory to offer to customers other options which cover the gaps in any policy, she said.

Ms Tan lives in the east with her husband, 43, a civil servant, their son, 11, two daughters, four and nine, and her parents-in-law, both retirees in their 70s.

A spokesman for Prudential Singapore said Ms Tan's policies "unfortunately do not qualify for stage 0 cancer."

She said coverage of early stage cancers depend on the kind of policy purchased and the definition of cancer in that particular policy.

She said: "Standard critical illness (CI) policies typically do not cover stage 0 cancer... It is important to know that each and every critical illness stated in the CI policy is precisely defined.

"They are based on standard definitions given by the Life Insurance Association (LIA). Unless the person's disease or surgery has fully satisfied the definition in the policy, no claim is payable."

But the spokesman pointed out that Prudential has policies like PruSmart Lady, which provide coverage for female-related illnesses that are non-critical in nature such as DCIS.

Policy booklet

She added that all information pertaining to a specific policy is provided in the policy booklet given to customers.

Dr Wong Seng Weng, 40, consultant oncologist at The Cancer Centre, drew a distinction between cancers where the person's longevity is compromised versus conditions which are treatable.

He said: "DCIS, if diagnosed and treated early, usually the survival rate is 100 per cent.

"Usually life insurers pay out when a person's longevity is compromised."

But this doesn't mean that the cancer has to be very advanced, before a claim can be made, he clarified.

Even if the cancer is at stage 1, the insurer can pay out if it is an invasive form that spreads, he said.

Ms Tan is grateful she caught her cancer early. She said: "I'm thankful I caught it earlier so I didn't need to go through chemotherapy and radiation.

"But I believe cancer is cancer, whether in the early or late stages."

Why most standard policies don't include non-invasive cancer

WHY do the bulk of standard critical illness policies not include non-invasive cancer?

MsPauline Lim, executive director of Life Insurance Association (LIA), explained: "Carcinoma in situ is specifically excluded from cover as these cancers can be treated and is not viewed as a 'critical' condition."

She said: "Insurers base their premiums on the extent of coverage.

"There is a much higher incidence of the less serious cancers, so if they are also covered, it means premiums will cost much more and become less affordable for most ordinary people.

"This is not beneficial from a public policy perspective. LIA reviews its standard CI definitions from time to time."

The LIA standardises the definitions of critical illnesses.

Ms Lim said consumers should look out for the following:

• The scope of coverage and the circumstances under which policy will pay out.

• Whether the amount of critical illness (CI) payout is sufficient.

• If the CI premiums are fixed or if they increase as the policy holder gets older.

• If there are exclusions for any of the CI conditions

Recent policies

Recent policies in the market do offer early stage coverage or multiple critical illness coverage.

These typically cost more than policies based on LIA's standard definitions, said the spokesman.

One such policy is Great Eastern's Early-Payout Critical Care (EPCC), which provides payouts at earlier stages of critical illness.

Its Great Eastern PinkLife plan pays out 25 per cent of the sum assured for carcinoma in situ, for cancers in the female organs.

This article was first published in The New Paper.

Wednesday, September 1, 2010

Protect the roof over your head, buying cover early can save costs



A family’s biggest ticket item is the house they own but only 3 out of 10 home loan customers in Singapore buy mortgage insurance.

We need to realize that home loans need to be insured too on top of all of our needs, from children’s education to hospitalisation.

Mortgage insurance can be extended to cover permanent disability, critical illness and unemployment by offering decreasing coverage over your outstanding mortgage loan duration.

Family stands to lose the roof over their heads should the bank reposes the house if the breadwinner who is paying the mortgage dies prematurely.

Mortgage insurance is compulsory for HDB flat owners who use his CPF savings but it is not a bank requirement for private home owners. However, some banks do bundle mortgage insurance into their home loan packages.

Mortgage insurance is an important part of an overall financial plan as your home is probably the biggest purchase and financial commitment in a lifetime. Family must ensure they will not be burdened with outstanding home loans, or possibility of selling the house in the event of unforeseen circumstances.

There are a few considerations when shopping for mortgage cover.
  1. The amount of cover
  2. Buy on a joint life basis
  3. Buy early
  4. Interest rate assumption
  5. Guaranteed premiums
  6. Check the supplementary benefits