Tan Kin Lian
Incontestable Clause
Most life insurance companies have an "Incontestable Clause". It states that the insurance company will not contest any claim after two years, except in the case of fraud. Some insurance professionals claim that they can contest a claim if there is material non-disclosure, on the grounds of fraud.
I hold a different view - that the insurance company has to prove that there is fraudulent intent, in order to reject a claim after two years. I find that insurance professionals are too ready to reject a claim, even on weak grounds.
My position appears to be supported by this chapter from a textbook on "Principles of Risk Management and Insurance" by George Rejda.
The incontestable clause states that the insurer cannot contest the policy after it has been inforce two years during the insured's lifetime. After the policy has been in force for two years, the insurer cannot later contest a death claim on the basis of a material misrepresentation, concealment, or fraud when the policy was first issued. The insurer has two years in which to discover any irregularities in the contrct. With few exceptions, if the insured dies, the death claim must be paid after the contestable period expires.
The purpose of the incontestable clause is to protect the beneficiary if the insurer tries to deny payment of the claim years after the policy was first issued. Because the insured is dead, he or she cannot refute the insurer's allegations. As a result, the beneficiary could be financially harmed if the claim is denied on the grounds of a material misrepresentation or concealment.
The incontestable clause is normally effective against fraud. If the insured makes a fraudlent misstatement to obtain the insurance, the compnay has two years to detect the fraud. Otherwise, the death claim has to be paid.
However, there are certain situations where the fraud is so outrageous that payment of the death claim would be against public interest. In these cases the insurer can contest the claim after the contestable period runs out. They include the following:
> The beneficiary takes out a policy with the intent of murdering the insured.
> The applicant for insurance has someone else take a medical examination.
> An insurable interest does not exist at the inception of the policy.
Friday, June 20, 2008
Monday, June 09, 2008
capitalism
Tan Kin Lian
Sunday, June 08, 2008
Financial Speculators
There is a growing body of opinion that financial speculators are the major cause of the large increase in oil and commodity prices. These new financial bubbles will burst one day. In the meantime, the speculators make a lot of money and the ordinary people have to pay for their greed, through the high inflation and cost of living. The capitalist, free market system is falling apart. It will not stay long in this manner.
Posted by Tan Kin Lian at 10:32 AM
SingaSoft said...
Capitalism will never fall a part.
It is the best system in the world so far to create material well-being.
Capitalism is about nature. Nature that human is a selfish being. The law of nature takes place in capitalism world.
You see, communism idea is noble one, but it could not work to produce material well-being because it goes against human natures.
So I think capitalism is still the way to go to improve material well-being, to grow the economy, to produce more things, to improve productivity, etc.
But we need some right dose of buddhism teachings...being compasionate, consume only what is needed, avoid killing (even animals) and to control our own mind (human biggest enemy is our very own self)...
Tan Kin Lian
Saturday, June 07, 2008
What a wasteful world!
AN OPINION.
We are a wasteful world. We bring people from the rural areas into crowded, congested cities. They spend several hours each day commuting to and from work. A lot of time and energy is wasted in this commuting.
We produce material goods that are excessive for a comfortable life. We have too many products and choices. We buy too many things that we do not use, to be thrown away. We keep producing more, and use up the limited materials and minerals.
We work too many hours in an excessively competitive environment. We compete to survive. We destroy our competitors and take over their assets. We have too little time to enjoy leisure.
No wonder - we are short of oil, minerals and food. We see the huge spike in prices. It will lead to more hardship on the poor. It may lead to unrest.
The capitalist, free market system has not given people a good life. It is time to re-think of a new model for the world.
Posted by Tan Kin Lian at 11:40 AM
SingaSoft said...
Interesting idea.
I'd suggest capitalism with Buddhism nature...Bhutan might be the model of the rest of the world..
Always compete and think of better ways to outdo your competitors, but compassionate at heart, wise to consume and use only what is necessary....
Sunday, June 08, 2008
Financial Speculators
There is a growing body of opinion that financial speculators are the major cause of the large increase in oil and commodity prices. These new financial bubbles will burst one day. In the meantime, the speculators make a lot of money and the ordinary people have to pay for their greed, through the high inflation and cost of living. The capitalist, free market system is falling apart. It will not stay long in this manner.
Posted by Tan Kin Lian at 10:32 AM
SingaSoft said...
Capitalism will never fall a part.
It is the best system in the world so far to create material well-being.
Capitalism is about nature. Nature that human is a selfish being. The law of nature takes place in capitalism world.
You see, communism idea is noble one, but it could not work to produce material well-being because it goes against human natures.
So I think capitalism is still the way to go to improve material well-being, to grow the economy, to produce more things, to improve productivity, etc.
But we need some right dose of buddhism teachings...being compasionate, consume only what is needed, avoid killing (even animals) and to control our own mind (human biggest enemy is our very own self)...
Tan Kin Lian
Saturday, June 07, 2008
What a wasteful world!
AN OPINION.
We are a wasteful world. We bring people from the rural areas into crowded, congested cities. They spend several hours each day commuting to and from work. A lot of time and energy is wasted in this commuting.
We produce material goods that are excessive for a comfortable life. We have too many products and choices. We buy too many things that we do not use, to be thrown away. We keep producing more, and use up the limited materials and minerals.
We work too many hours in an excessively competitive environment. We compete to survive. We destroy our competitors and take over their assets. We have too little time to enjoy leisure.
No wonder - we are short of oil, minerals and food. We see the huge spike in prices. It will lead to more hardship on the poor. It may lead to unrest.
The capitalist, free market system has not given people a good life. It is time to re-think of a new model for the world.
Posted by Tan Kin Lian at 11:40 AM
SingaSoft said...
Interesting idea.
I'd suggest capitalism with Buddhism nature...Bhutan might be the model of the rest of the world..
Always compete and think of better ways to outdo your competitors, but compassionate at heart, wise to consume and use only what is necessary....
Natural Logarithms and Exponentials
Uniqueness (or 1 to 1) Property: If a > 0, b> 0 and ln(a) = ln(b) then a = b
Inversion Properties:
ln(exp(x)) = x for all real x
exp(ln(x)) = x if x > 0
Fundamental property of logarithms: ln(ab) = ln(b) +ln(a)
Fundamental property of exponentials: exp(x1) · exp(x2) = exp(x1+x2) This follows from the uniqueness property of logarithms and the fundamental properties of logarithms.
The fundamental property of logarithms implies
ln( 1/a) = (-1) ln(a) as 0 = ln(1) = ln ( (1/a) a )
ln(am) = m ln(a) for all whole numbers and then for all integers. integers.
am = exp( ln(am)) = exp(m ln (a))
a1/m = exp( (1/m) ln(a) )
am/n = (am)1/n = exp( (m/n) ln(a))
Inversion Properties:
ln(exp(x)) = x for all real x
exp(ln(x)) = x if x > 0
Fundamental property of logarithms: ln(ab) = ln(b) +ln(a)
Fundamental property of exponentials: exp(x1) · exp(x2) = exp(x1+x2) This follows from the uniqueness property of logarithms and the fundamental properties of logarithms.
The fundamental property of logarithms implies
ln( 1/a) = (-1) ln(a) as 0 = ln(1) = ln ( (1/a) a )
ln(am) = m ln(a) for all whole numbers and then for all integers. integers.
am = exp( ln(am)) = exp(m ln (a))
a1/m = exp( (1/m) ln(a) )
am/n = (am)1/n = exp( (m/n) ln(a))
Sunday, June 08, 2008
An Intuitive Guide To Exponential Functions & E
http://betterexplained.com/articles/an-intuitive-guide-to-exponential-functions-e/
e = 2.71828
Example Time!
Examples make everything more fun. A quick note: We’re so used to formulas like 2^x and regular, compound interest that it’s easy to get confused (myself included). Read more about simple, compound and continuous growth.
These examples focus on smooth, continuous growth, not the “jumpy” growth that happens at yearly intervals. There are ways to convert between them, but we’ll save that for another article.
Example 1: Growing crystals
Suppose I have 300kg of magic crystals. They’re magic because they grow throughout the day: I watch a single crystal, and in the course of 24 hours it creates its own weight in crystals. (Those baby crystals start growing immediately as well, but I can’t track that). How much will I have after 10 days?
Well, since the crystals start growing immediately, we want continuous growth. Our rate is 100% every 24 hours, so after 10 days we get: 300 * e^(1 * 10) = 6.6 million kg of our magic gem.
Example 2: Maximum interest rates
Suppose I have $120 in a count with 5% interest. My bank is generous and gives me the maximum possible compounding. How much will I have after 10 years?
Our rate is 5%, and we’re lucky enough to compound continuously. After 10 years, we get $120 * e^(.05 * 10) = $197.85. Of course, most banks aren’t nice enough to give you the best possible rate. The difference between your actual return and the continuous one is how much they don’t like you.
Example 3: Radioactive decay
I have 10kg of a radioactive material, which appears to continuously decay at a rate of 100% per year. How much will I have after 3 years?
Zip? Zero? Nothing? Think again.
Decaying continuously at 100% per year is the trajectory we start off with. Yes, we do begin with 10kg and expect to “lost it all” by the end of the year, since we’re decaying at 10 kg/year.
We go a few months and get to 5kg. Half a year left? Nope! Now we’re losing at a rate of 5kg/year, so we have another full year from this moment!
We wait a few more months, and get to 2kg. And of course, now we’re decaying at a rate of 2kg/year, so we have a full year (from this moment). We get 1 kg, have a full year, get to .5 kg, have a full year — see the pattern?
As time goes on, we lose material, but our rate of decay slows down. This constantly changing growth is the essence of continuous growth & decay.
After 3 years, we’ll have 10 * e^(-1 * 3) = .498 kg. We use a negative exponent for decay — we want a fraction (1/ert) vs a growth multiplier (e(rt)). [Decay is commonly given in terms of “half life”, or non-continuous growth. We’ll talk about converting these rates in a future article.]
More Examples
If you want fancier examples, try the Black-Scholes option formula (notice e used for exponential decay in value) or radioactive decay. The goal is to see e^rt in a formula and understand why it’s there: it’s modeling a type of growth or decay.
And now you know why it’s “e”, and not pi or some other number: e raised to “r*t” gives you the growth impact of rate r and time t.
e = 2.71828
Example Time!
Examples make everything more fun. A quick note: We’re so used to formulas like 2^x and regular, compound interest that it’s easy to get confused (myself included). Read more about simple, compound and continuous growth.
These examples focus on smooth, continuous growth, not the “jumpy” growth that happens at yearly intervals. There are ways to convert between them, but we’ll save that for another article.
Example 1: Growing crystals
Suppose I have 300kg of magic crystals. They’re magic because they grow throughout the day: I watch a single crystal, and in the course of 24 hours it creates its own weight in crystals. (Those baby crystals start growing immediately as well, but I can’t track that). How much will I have after 10 days?
Well, since the crystals start growing immediately, we want continuous growth. Our rate is 100% every 24 hours, so after 10 days we get: 300 * e^(1 * 10) = 6.6 million kg of our magic gem.
Example 2: Maximum interest rates
Suppose I have $120 in a count with 5% interest. My bank is generous and gives me the maximum possible compounding. How much will I have after 10 years?
Our rate is 5%, and we’re lucky enough to compound continuously. After 10 years, we get $120 * e^(.05 * 10) = $197.85. Of course, most banks aren’t nice enough to give you the best possible rate. The difference between your actual return and the continuous one is how much they don’t like you.
Example 3: Radioactive decay
I have 10kg of a radioactive material, which appears to continuously decay at a rate of 100% per year. How much will I have after 3 years?
Zip? Zero? Nothing? Think again.
Decaying continuously at 100% per year is the trajectory we start off with. Yes, we do begin with 10kg and expect to “lost it all” by the end of the year, since we’re decaying at 10 kg/year.
We go a few months and get to 5kg. Half a year left? Nope! Now we’re losing at a rate of 5kg/year, so we have another full year from this moment!
We wait a few more months, and get to 2kg. And of course, now we’re decaying at a rate of 2kg/year, so we have a full year (from this moment). We get 1 kg, have a full year, get to .5 kg, have a full year — see the pattern?
As time goes on, we lose material, but our rate of decay slows down. This constantly changing growth is the essence of continuous growth & decay.
After 3 years, we’ll have 10 * e^(-1 * 3) = .498 kg. We use a negative exponent for decay — we want a fraction (1/ert) vs a growth multiplier (e(rt)). [Decay is commonly given in terms of “half life”, or non-continuous growth. We’ll talk about converting these rates in a future article.]
More Examples
If you want fancier examples, try the Black-Scholes option formula (notice e used for exponential decay in value) or radioactive decay. The goal is to see e^rt in a formula and understand why it’s there: it’s modeling a type of growth or decay.
And now you know why it’s “e”, and not pi or some other number: e raised to “r*t” gives you the growth impact of rate r and time t.
Saturday, April 12, 2008
Value Investing
http://www.investopedia.com/printable.asp?a=/articles/05/012705.asp
The Idea of Intrinsic Value.
Intrinsic Value: the underlying fair value of a stock based on its future earnings power.
From a retail investor context, when we think of using Intrinsic Value to outperform the market we have to bear in mind that:
1. there are many smart people out there that know how to mathematically compute the intrinsic values of a company. In this area, it is no doubt that these smart people are more advance than any average retail investor
2. hence, for retail investor, using statistical & mathematical valuation alone is DEFINITELY not enough to outperform the market. We can only beat the market by looking at INTANGIBLE values, something that cannot be mathematically computed. What could be the INTANGIBLE values then? These are mainly: (a) management (b) company culture. No expert can put dollar value on how much a management or company culture is worth...
3. to outperform the market, retail investor need to look at a longer time horizon because prices reflected in market are very much short-term in nature
My main conclusion is this:
- mathematical valuations like PE & NTA are just the foundation
- the most important thing is still the management
The Idea of Intrinsic Value.
Intrinsic Value: the underlying fair value of a stock based on its future earnings power.
From a retail investor context, when we think of using Intrinsic Value to outperform the market we have to bear in mind that:
1. there are many smart people out there that know how to mathematically compute the intrinsic values of a company. In this area, it is no doubt that these smart people are more advance than any average retail investor
2. hence, for retail investor, using statistical & mathematical valuation alone is DEFINITELY not enough to outperform the market. We can only beat the market by looking at INTANGIBLE values, something that cannot be mathematically computed. What could be the INTANGIBLE values then? These are mainly: (a) management (b) company culture. No expert can put dollar value on how much a management or company culture is worth...
3. to outperform the market, retail investor need to look at a longer time horizon because prices reflected in market are very much short-term in nature
My main conclusion is this:
- mathematical valuations like PE & NTA are just the foundation
- the most important thing is still the management
Sunday, September 16, 2007
Sales - the no.1 thing in business
I attended a talk yesterday and one of the most inspiring speaker will be Merry Riana, a nice looking 27-year old Indonesian lady. She has made her 1st million at the age of 26. The Sunday Times has featured her early this year.
The key points that she shared with us are:
1. Entrepreneurship is the best way to become financially independent
2. Sales is the key to any business
3. Keys to successfully Sales: mindset to be able to take rejections, hardworking, and great discipline
The key points that she shared with us are:
1. Entrepreneurship is the best way to become financially independent
2. Sales is the key to any business
3. Keys to successfully Sales: mindset to be able to take rejections, hardworking, and great discipline
Monday, September 10, 2007
Lee Kum Tatt's answers to my comment
http://www.leekumtatt.blogspot.com/
Why Study Science?
Anonymous said:
At times I wonder . .. without all those advances in science, will human life be less happy or will it be less satisfying. I truly doubt so.
So what have all these advancement contributed to? They simply give us more reasons to earn more, to be financially successful so that we can enjoy them. Do the poor get to enjoy them? No.
Science saves more lives but it also kill more lives.
Improvement in science without improvement in our spiritual level is basically a zero sum game.
My Reply.
You commented that:
(i) you have doubts that without the advances in science human life will not be less happy or less satisfying and
(ii) that the poor do not get to enjoy what the advancement in science contributed.
These are very general statements. The issue is not on the study of science to generate more knowledge, which is neutral. It has more to do with the our wisdom (the ability to use the knowledge and experience) individually, collectively or as a country,to make sensible decisions and judgment.
As a country Singapore has not done too badly in transforming itself from a third world country to a 2nd if not 1st world country within a span of 48 years since we gain self governing status in 1959. We should ask ourselves how did we do this and what more could have been done? This is a question which many in the developing countries asked us.
We never had much science education and its application during the colonial days. We just existed and had hardly enough to live on. Now science education has given us more to live on and something to live for. The rest is up to us.
We must never allow ourselves to kill the spirit of science, the spirit to ask questions to get knowledge which can help us move forward. During the colonial days many of us have been taught the virtue of ignorance as expressed by the poem by Thomas Gray “On a distant prospect of Edon College” It reads as follows:
“Yet ah : why should they know their fate?
Since sorrow never comes too late.
Any happiness too swiftly flies,
Thoughts would destroy their paradise.
No more, where ignorance is bliss
‘Tis folly to be wise “
Gray emphasized that WHERE ignorance is bliss, ‘tis folly to be wise.
As I grew up I discovered that
Not all ignorance is bliss
Remaining ignorant is easy. It makes one lazy and selfish – two of human beings most pronounced and common trait. It only makes it easier for others to manipulate or control us.
After that I tried to learn how to be wise to search for wisdom with integrity and honesty for the good of others because “ When Wisdom reigns, Knowledge is Divine.”
Fewer people will be confused if we can do that.
Posted by Tan Kin Lian at 10:48 PM 0 comments
Why Study Science?
Anonymous said:
At times I wonder . .. without all those advances in science, will human life be less happy or will it be less satisfying. I truly doubt so.
So what have all these advancement contributed to? They simply give us more reasons to earn more, to be financially successful so that we can enjoy them. Do the poor get to enjoy them? No.
Science saves more lives but it also kill more lives.
Improvement in science without improvement in our spiritual level is basically a zero sum game.
My Reply.
You commented that:
(i) you have doubts that without the advances in science human life will not be less happy or less satisfying and
(ii) that the poor do not get to enjoy what the advancement in science contributed.
These are very general statements. The issue is not on the study of science to generate more knowledge, which is neutral. It has more to do with the our wisdom (the ability to use the knowledge and experience) individually, collectively or as a country,to make sensible decisions and judgment.
As a country Singapore has not done too badly in transforming itself from a third world country to a 2nd if not 1st world country within a span of 48 years since we gain self governing status in 1959. We should ask ourselves how did we do this and what more could have been done? This is a question which many in the developing countries asked us.
We never had much science education and its application during the colonial days. We just existed and had hardly enough to live on. Now science education has given us more to live on and something to live for. The rest is up to us.
We must never allow ourselves to kill the spirit of science, the spirit to ask questions to get knowledge which can help us move forward. During the colonial days many of us have been taught the virtue of ignorance as expressed by the poem by Thomas Gray “On a distant prospect of Edon College” It reads as follows:
“Yet ah : why should they know their fate?
Since sorrow never comes too late.
Any happiness too swiftly flies,
Thoughts would destroy their paradise.
No more, where ignorance is bliss
‘Tis folly to be wise “
Gray emphasized that WHERE ignorance is bliss, ‘tis folly to be wise.
As I grew up I discovered that
Not all ignorance is bliss
Remaining ignorant is easy. It makes one lazy and selfish – two of human beings most pronounced and common trait. It only makes it easier for others to manipulate or control us.
After that I tried to learn how to be wise to search for wisdom with integrity and honesty for the good of others because “ When Wisdom reigns, Knowledge is Divine.”
Fewer people will be confused if we can do that.
Posted by Tan Kin Lian at 10:48 PM 0 comments
Tuesday, July 03, 2007
Youngest vs Eldest - The Impact
From my observation on how my youngest brother behaves towards our parents and his elder brothers, I noticed that he is a person who don't have the urge to share good things with his brothers. I mean he is not the type who will pro-actively share.
Though there could be many reasons why he behaves that way, I think one of the possible cause is the fact that he is the youngest among us.
Such behaviour is quite a contrast with me as the eldest. I have in my heart a natural tendency to share. I'm not trying to say that I'm a better person than him. I know my youngest brother is a good person, but I realized that I cannot expect him to be like me in term of caring for our brothers.
My expectations on him to be as care as me were compounded by the fact that I knew he learned Dharma teaching. But I think living all these years being someone who is youngest in the family, I should be aware that I can never expect him to care (and show the care with concrete actions) as much as I care for our brothers.
Being the eldest or the youngest does contribute to who we are. It also contributes to our natural tendency to care & share. It will be interesting if there is a statistical figure to back my observation.
Though there could be many reasons why he behaves that way, I think one of the possible cause is the fact that he is the youngest among us.
Such behaviour is quite a contrast with me as the eldest. I have in my heart a natural tendency to share. I'm not trying to say that I'm a better person than him. I know my youngest brother is a good person, but I realized that I cannot expect him to be like me in term of caring for our brothers.
My expectations on him to be as care as me were compounded by the fact that I knew he learned Dharma teaching. But I think living all these years being someone who is youngest in the family, I should be aware that I can never expect him to care (and show the care with concrete actions) as much as I care for our brothers.
Being the eldest or the youngest does contribute to who we are. It also contributes to our natural tendency to care & share. It will be interesting if there is a statistical figure to back my observation.
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