Tea with Matt: Customer service quality of two insurance companies.

This is the second article contributed by a reader, Matt, who used to be the owner of an SME.

As many of us probably have whole life insurance policies, Matt's recent experience is of interest to us. Well, it is definitely of interest to me since I have one policy from AIA and one from Prudential. The former was bought some 16 years ago while the latter was bought some 25 years ago. There will come a day when I will have to surrender them.

As Matt did not reveal the names of the two companies, we can only wonder at their true identities. Go ahead and read about his experience and, perhaps, try guessing which two companies he visited.

Recently, I terminated two Whole Life Insurance policies after having paid the premiums for 20 years. As is the same for most of us, the original agent who serviced me then was no longer in the business and it was practically left to me to speak and deal directly with the companies. That was when the level of customer service I received was a revelation. Let’s just name the companies A and B.

Company A

I called up the agent who was listed as the agent servicing me to enquire how I should go about terminating the policy. The disinterest was felt from the way the answers were given. Of course she probably did not receive any commission from my policy after 20 years but to her credit, she sent the form to me a week later. I asked whether I should send the forms back to her and she encouraged me to go to the office directly so as to get the money faster.

Fine, I did that and submitted the form with the original policy at the concierge counter. A lady at the counter took the form and original policy from me after looking through. I enquired how long it would take to process the documents. "Oh, we will call you" was all that she answered. I thought, "They are an MNC. Surely, they will call me."

Ten days later, there was still no phone call from the company and I thought it was strange to take so long to process the documents. So I went back to the company and asked for an update. I was given a queue number and directed to see a CSO. She checked my IC and told me that I had missed out submitting a form. She printed the letter and showed it to me.

 

The letter was dated one day after I submitted the document. I told her I did not receive the letter. The initial response was, maybe, it was the postal service’s mistake. She promptly printed another set of forms and got me to sign them.

 

My signature was compared to the one I had used in the original policy. She told me that there was a slight difference in my signatures. Of course there was, signatures could have changed in 20 years, whaaat (Singlish)!

 

She asked me to try and sign as similarly to the original as possible or else the auditors might question them on the discrepancy. Huh? Anyway, not wanting to give her a hard time, I tried my best to reproduce my signature used 20 years ago.

Then, I was told that the cheque should be ready the next day. Not wanting to take a second chance of not receiving the cheque, I told her that I will personally collect the cheque two days later. The very next day, lo and behold, the letter which was supposedly sent to me was in my mailbox, a full 2 weeks from the date it was supposed to have been sent.

Not wanting to jump to conclusion, when I went to collect the cheque, I took the letter and asked the CSO who served me earlier and asked her whether she initiated the sending of the letter after I told her I had not received the letter. She said that she did not. So it was not the postal service’s fault after all!

This episode set me thinking on the deficiencies of the customer service in this company :

• When forms are handed in, no acknowledgement or reference number was given to confirm that documents were received. I did not think of this earlier but after going back home after submitting the documents, my wife asked me whether I had asked them for an acknowledgement. I told her that they are a MNC and should have a system. She looked at me incredulously and told me that I should always ask for an acknowledgement, MNC or SME, especially when handing over original documents.

 

• Why did the letter that I was supposed to received the next day after handing over the documents reach me 2 weeks later? Compounding the effect was the fact that the agent did not send me the form and the concierge did not spot it as well when she checked my documents at the point of submission. Come to think of it, their premium due notices also reached me after the due date. I told the CSO that there must be something wrong with the way and timing of the company’s letters being sent out.

 

• Only the cheque was given without any other documentation such as a copy of the termination submission form.

 

Company B

On the day I went to seek an update on the status of the termination at company A, I also went to company B to submit a termination notice. I was all prepared to demand that they handle my submission properly and promptly as well. What a surprise and a refreshing reception I received when I was at the front desk.

Within 2 minutes, I was sitting in front of a CSO who went through the details with me and explained what the process entails. She filled up my forms and got me to sign the documents. I asked her whether my signature is different from the original policy. Her answer was that it did not matter. She had prepared a form for me to sign that declares that my signature is as the current one.

 

Next, she offered to deposit the cheque for me into my bank account so that it would be banked in as soon as the cheque was issued that afternoon. All I had to do was just to sign a form confirming my bank and account number.

 

She also offered to send me a copy of the documents once the cheque was out. That afternoon, the cheque was deposited into my bank account and the very next day, I received a mailed copy of the documents as well as a copy of the cheque and deposit slip!

Two days later when I went to collect the cheque from company A, my wife came along and we went over to company B to enquire on her policy. The front staff checked her IC and told her on the spot what the surrender value was without having to even see a CSO and it took less than 1 minute. My wife was impressed, especially after the service I had received at company A.

Was it a coincidence that company B’s policy performed a lot better than company A, monetarily wise, at least as far as my policies were concerned? I am comparing apple to apple here since both policies had the same insurance coverage face value and were bought within one month of each other twenty years ago.

Needless to say, I filled up a customer service form and gave the CSO an excellent rating. I normally would decline to fill up such forms.

 

Related post:

Inflation adjusted retirement income plan.

Are public housing prices crashing?

We would remember a recent newspaper headline which announced that the government was looking at how to reduce BTO flats' prices by 30%. Wah! 30%?!

What would happen to all the people who bought their BTO flats recently? Should potential flat buyers wait to buy cheaper flats in future? Are we going to see public housing prices crashing?

I just read Minister Khaw's blog on the matter and he said:

"...if we offer such a low-cost housing option, it must come with restrictions to differentiate it from the existing BTO flats...

" Obviously, if we offer such an option, these restrictions of a longer minimum occupation period, or shorter lease or no resale in the open market will only apply to the new buyers, and will not apply to existing flat owners..."

I personally feel that a tier of meaningfully less expensive public housing is a good idea. People would have a choice of whether to buy a cheaper flat which they could not sell in the open market for a profit or a more expensive flat which they could possibly make money from in future.

The motivation for having less expensive public housing made available should be to meet the housing needs of certain groups of Singaporeans. I agree that these flats should not become money making tools for their owners.

Read Minister Khaw's blog:
Sleepless over possible HDB price reduction.

Inflation adjusted retirement income plan.

I like easy-to-understand financial products. I am not very good with numbers and I got flummoxed by complicated structured deposits offered by the banks before. 

Totally confusing.

I also get very confused by complex insurance products. My insurance agents know not to offer me anything that is too complicated. 

I usually tell them not to call me and that if I need something, I will call them.





I have bought products from AIA, Prudential, Great Eastern Life, NTUC Income, Aviva and AXA before and many are still in force. There was UOB Life as well but it was bought over by Prudential.

Today, I came across a product by AXA which claims to be an inflation adjusted retirement income plan. 

Sounds good, doesn't it? 

Intrigued, I decided to have a look see.

However, one look and the initial good feeling is gone:

OK, if you think I am going to start on how we can get better returns by doing our own investment, that is not what I am going to do. I am just going to share an observation which is I just don't think that the product lives up to its claim of being inflation adjusted.

In the example, the product says that there is a 3.5% increase in guaranteed annual income payout year after year from age 65 to 80 but does it provide us with inflation adjusted returns on our capital? 

This is my first impression when someone tells me that a plan is inflation adjusted.

In the example above, a total of $285,300 was contributed over 15 years or $19,020 per year. 

Then, there is a waiting period of 5 years (accumulation period) before a yearly payout over the next 15 years kicks in.

Almost 47% of the payout is non-guaranteed. The guaranteed portion amounts to S$463,500.





Assuming that inflation is lower than 3.5% per annum and that it is a more normalised 3% per annum, that $19,020 paid at age 45 would have to be $34,352.22 to keep its purchasing power intact at age 65. 

In the example, age 65 is when the first guaranteed annual income is received. Instead of $34,352.22, it is only S$ 24,000!

Each payment from age 65 to 80 would have to be at least $34,352.22 in order not to lose any purchasing power, year on year.

The nice chart with the lengthening bars over the next 15 years hides the fact that from age 65 to 75, the purchasing power of the payouts in those years are much reduced. 

Only at age 76 would the guaranteed annual income exceed $34,352.22. 

So, the first 10 years of guaranteed annual income are not able to compensate for inflation!





I don't need the annual payout to grow 3.5%. To me, that is a gimmick to give an appearance that the payouts are inflation adjusted. Just give me $34,352.22 every year as this would truly be inflation adjusted, assuming a 3% inflation rate per annum.

The total guaranteed annual income over a 15 year period should, therefore, be $34,352.22 x 15 or $515,283.33 to make the offer palatable. 

This is 11.17% more than what is guaranteed by the insurer.





Of course, they can say that there is a non-guaranteed component of $407,260 which could be paid out at age 80. 

Well, not only is 80 a long way to go, we need greater certainty at retirement and non-guaranteed just doesn't cut it.

This product is a no go for me.

Related posts:
1. Will I retire happy?
2. Good wife worries...

Ambassadors of financial freedom.

There is this section in The Business Times called "Young Investors' Forum". This is sponsored by Citibank and is targetted at young adults and tertiary students. However, I wonder how many young people read The Business Times?

Now that I have asked this question, I also wonder what is the proportion of young adults and tertiary students in ASSI's readership profile?






We all know that the earlier we start our journey to financial freedom the better it is. Also, there is really nothing smooth about the journey. It is, in fact, rather bumpy as we fall and pick ourselves up again (and again). It also entails sacrifices, many sacrifices.

Everytime I hear a story of some young person who is ruined financially, I would wonder if it was something avoidable. Very often, it was avoidable. If we could help people be more prudent financially, we would be doing good and these people would be better off.






"Today, i counted my life saving."

Today, The Business Times has an article which has some interesting numbers but what proportion of its target audience did it reach? Although ASSI's readership numbers are a small pool compared to The Business Times', I will do my bit.

This is taken from the article:

Saving does not simply help one to accumulate money; it signifies the beginning of one's financial journey.

Realities today further drive home the need for young Singaporeans to save and spend wisely.

A diploma holder earns a starting pay of about $2,000 while a university graduate earns about $2,800 on average.

Using current interest rates for paying a 30 year housing loan and a 5 year car loan, owning a $300,000 4 room HDB flat and a $130,000 Corolla would require a monthly instalment payment of about $2,400!








In such a climate of high housing and car costs, raising a child becomes an even tougher financial decision to make. TheAsianParent last year estimated the cost of raising a child from infancy to 21 years of age to be at least $340,000, not considering inflation.


Although I have blogged about savings and its importance many times before, these numbers are a reality check for anyone who is starting life as a working adult and planning to start a family together with all the attendant expenses. However, how many people who should read the article would have read it?

If we are thinking of buying a property, a car and having children, we should look more carefully at our income and expenses. If we are not saving yet, start saving. If we are already saving, check to see if we are saving enough. What is enough? This would depend on what we want now and in the future. There is, therefore, no one size fits all answer.

The difficult thing for ASSI to do is to reach out to people who have not even started to think about the journey to financial freedom. How do we reach out to these people?







Financial freedom is not a competition. Everyone who achieves financial freedom is a winner. No one is a loser on this journey. There is no fear that having more people on the journey would lower the chances of success for everyone. In fact, the opposite is true.

So, my message to readers is to be ambassadors of financial freedom. Even if the horse would not drink, at least try our best to bring the horse to water. 

We could be saving more than one life if the horse eventually drinks.

Related posts:
1. The very first step to becoming richer.
2. Retiring a millionaire is not a dream.
3. Rich Dad, Poor Dad: 2 are better than 1.

Make more money, do good and pay less income tax.

I filed my income tax return for the Year of Assessment 2013 (YA 2013) online.

Although I received more income last year, I will be paying less income tax for YA 2013 compared to the year before. Incredulous? How could this be? Could it be true?

Regular readers would know that a large portion of my income is passive and non-taxable. So, to pay less income tax for YA 2013 compared to the year before, did my earned income from employment decline? Nope, it remained more or less the same as the year before although the probability that it could decline in future exists.

The lower than expected estimated income tax for YA 2013 is because of donations I made to 6 charitable organisations last year which enjoy 2.5x tax deduction and the 30% personal income tax rebate I am eligible for from the government.

Of course, I am pleased to be paying less tax but I am happier still that I am doing good with my donations to several recognised charities in Singapore.

If we can afford it, let us be charitable and donate to the less privileged. We will also pay less income tax in the process. Everybody wins. Sounds good, doesn't it?

If you are wondering about the personal income tax rebate, the following table is taken from IRAS:

Age as at 31 Dec 2012	Personal Income Tax Rebate for the Year of Assessment 2013
Below 60 years	30% of tax payable, subject to a cap of $1,500
60 years and above	50% of tax payable, subject to a cap of $1,500

What I have also been doing every year is to contribute to my SRS account to the maximum amount allowed. This has been a big help in reducing the amount of income tax payable. I would encourage anyone who is currently paying income tax and who does not have an SRS account to consider starting one.

So, is it possible to pay less income tax while making more money and doing good? Yes, of course!

If you tell your family and friends about this and they don't believe you, share or like this page and tell them that if AK71 can do it, so can you! Believe in yourself.

Related posts:
1. Counting our blessings.
2. SRS: A brief analysis.
3. 2012 full year passive income from S-REITs.

Marco Polo Marine: Shipyard and Indonesia.

Why did Marco Polo Marine start a shipyard in 2005?

CEO: The shipyard is a support business with ship repair, conversion and maintenance... As we continue to grow..., we require more vessels... hence the natural progression into shipbuilding.

... the shipyard will remain focused on ship repair and conversions... the ship repair business is one that is seasonal but non-cyclical. If you own a ship, you are required to conduct mandatory servicing and maintenance.

Keppel Corp and Sembcorp Marine focus on shipbuilding and ship repairing of the larger vessels. We on the other hand target the medium and smaller vessels that take up most of the population of the ships around this region.

What are the prospects for Marco Polo Marine's core business, tug and barge operations, in Indonesia?

CEO: Indonesia produces over 200 million tonnes of coal every year... 36 new plants are currently being built in Indonesia and they have the combined capacity to generate over 20,000 megawatt of electricity.

... there are over 100 independent power plants in Indonesia, 80 to 90 additional tons of coal will be needed domestically in the near future.

How are you going to move the coal to the power plants? We need more tugs and barges because large vessels cannot manoeuvre around the rivers of the Indonesian mine sites... the demand for Indonesian flagged vessels will remain strong at least for the next five to six years.

Source: Marine Money Offshore.

Related post:
Marco Polo Marine: The CEO speaks.