Siam Commercial Bank

[curlywatt]

just wanted some info regarding the above, the g/f has take out a policy, i just want to make sure everything is legit, this month will be her 3rd year paying 39,723 baht, from what i can gather the general outline of the policy is as follows, she will pay just under 40k a year for 15 years, years 16-25 she pays nothing and after 25 years recieves a lump sum of 600k, now with this policy they say she will get 20k interest every 3 years (year 3,6,9,12,15,18,21,24) does anyone have this type of policy or know anything about it, thanks in advance

[Morden]

I seem to have read about this sort of policy somewhere before and thought it was a poor investment but I can't remember the details.

Insurance policies have conditions, benefits, limitations and exclusions. It's not enough to read only the benefits. For example, what would happen if she were to die before all of the benefit was paid?

There is only one place to buy insurance and that is through a broker who will give impartial advice, Having said that, I don't know what the regulatory regime is for such advisers in Thailand and I wouldn't hold out much hope of getting compensation for bad advice from one who claimed to be regulated in his home country unless the policyholder is also in that country.

Additionally, I would not trust the advice of a bank employee who is under pressure to sell insurance and has to work long extra hours if he or she is behind target. I know an employee of this bank who is expected to sell as a sideline at her cashier's desk all week and then is made to work on a Saturday in a Mall branch to make up her target. That is not the way for a customer to get good value except by pure chance.

You might consider getting a good quality translation of the policy and read it yourself. It might cost a tidy sum but there is a lot of premium at stake.

Good luck.

Edited January 10, 2011 by Morden

[curlywatt]

thanks morden, any more info from anyone would be appreciated

[nullx8]

honestly .. sounds quite interesting, Kasikorn offered me something semilar .. but the payout was much less ..and the Timespan ... well way longer.

do you know the name of the product ?

[Derifo]

I had something similar for my daughter, but canceled it because I can make more than the interest they were going to pay out if I trade with the money. It took me a long time to convince my wife that it wasn't worth all the hassle.

[curlywatt]

honestly .. sounds quite interesting, Kasikorn offered me something semilar .. but the payout was much less ..and the Timespan ... well way longer.

do you know the name of the product ?

its called new york life and its through siam commercial bank, you'll find the website via google

[pipo1000]

Kasikorn has offered me something similar and I thought it would be classified under insult instead of investment.

Roughly said you have to sign up for 25 years,if you withdraw before you will lose your profits.

You get 8 times 20.000 Baht interest that is 160.000/25 is 6400 Baht a year over a timespan of 25 years while you invest 600.000 Baht.That is an interest of 1,065 % a year over 25 years with even the risk that the bank goes broke and you lose your money.

In 25 years things can have changed a lot.Only 15 years ago you got 14% interest in this country remember.

[curlywatt]

i will give the g/f the link to this topic so if you guys and girls want to offer advice it would be greatly appreciated, if anyone is familiar with new york life your comments will be especially appreciated

[nullx8]

Kasikorn has offered me something similar and I thought it would be classified under insult instead of investment.

exactly that was it .. same conditions ... (only different was that they offered me this with 500k)

the Girl in the bank was very proud to present this to me ... and ignored very good pretty much the same calculation you just maded.

she just added (if you have this .. we up your creditcard limit to 300k (up the credit was the reason to go there actually)

but on the same conditions (20% interest) .. so no winning at all .. exept the bank have more profit.

[aurelius]

The question you need to ask is what is the Internal rate of return on this product. This is the base method of comparing all of these types of products. There are many different terms - 25 years, down to 7 years. Probably 2-2.5% or similar, including the tax saving on premiums paid. If you want insurance cover and are willing to accept that low a return, then its probably ok. But if its purely an investment and you don't have much need for the insurance part of it, then its a lousy return. New York Commercial Life is a reputable firm; but the selling tactics of most people in the insurance industry are fairly heavy handed. It pays to be clear about what your objectives, not be sold into something with scare tactics.

[curlywatt]

thanks for your input aurelius

[Morden]

honestly .. sounds quite interesting, Kasikorn offered me something semilar .. but the payout was much less ..and the Timespan ... well way longer.

do you know the name of the product ?

its called new york life and its through siam commercial bank, you'll find the website via google

New York Life products are also sold on the street by tied agents who are recruited from the same place. They go through a period of training and brainwashing and then hassle people in their own homes with spurious data to force a sale. They are more of an obtrusive nuisance than Amway agents. Their tactics have been illegal in regulated Western countries for many years. Sales documentation is thin in disclosure and the whole process depends for its success on the ignorance of the buyer.

[ericthai]

My GF had the same policy with Siam for her mother and her. After her mother died 3 years into the policy the insurance company made every excuse in the book not to pay and in the end gave her back her installments. She contacted the ministry of insurance regulation and of course they did nothing. She kept going to the bank everyday and they finally give in and give her money back, of course she tried to get the installments back on her policy but no luck, she cancelled it.

[Morden]

My GF had the same policy with Siam for her mother and her. After her mother died 3 years into the policy the insurance company made every excuse in the book not to pay and in the end gave her back her installments. She contacted the ministry of insurance regulation and of course they did nothing. She kept going to the bank everyday and they finally give in and give her money back, of course she tried to get the installments back on her policy but no luck, she cancelled it.

Disgraceful but not unexpected. This type of policy is a big investment for many people but the insurance industry here seems to have no voluntary standards of ethics and no effective consumer protection legislation. No surprises there I suppose.

[CWMcMurray]

These types of Insurance policies are only interesting if you are in a high tax bracket and can get a 30-40% refund on the annual premiums paid when you do your taxes. In the OP's example, he would increase his total return by 25% if he was in the 30% tax bracket.

If in 30% tax bracket....

40,000 * 0.3 = 12,000 thb per yr

12,000 * 16 = 192,000 thb (additional "payout" if you can deduct premiums from your taxes)

Otherwise the return is about the same as you would get if you just left the money in the Bank.

I also have one of these deals, but it is a bit shorter... pay 30k for 6 years get around 235k at 10yrs

Edited January 11, 2011 by CWMcMurray

[curlywatt]

These types of Insurance policies are only interesting if you are in a high tax bracket and can get a 30-40% refund on the annual premiums paid when you do your taxes. In the OP's example, he would increase his total return by 25% if he was in the 30% tax bracket.

If in 30% tax bracket....

40,000 * 0.3 = 12,000 thb per yr

12,000 * 16 = 192,000 thb (additional "payout" if you can deduct premiums from your taxes)

Otherwise the return is about the same as you would get if you just left the money in the Bank.

I also have one of these deals, but it is a bit shorter... pay 30k for 6 years get around 235k at 10yrs

you make a great point, my g/f is outside the tax bracket and therefore cannot receive additional "payout" as you put it, its for this reason i have told her the policy isn't such a great deal, she has a seperate accident insurance policy so its not these benifits that attracted her to the policy, its the 600k after 25 years + 8 payments of 20k that appeals to her, do you guys know of something that would be a better option for her, if she cancels this policy she has 120k to invest now and 40k per annum for the next 15-25 years

[lopburi3]

My GF had the same policy with Siam for her mother and her. After her mother died 3 years into the policy the insurance company made every excuse in the book not to pay and in the end gave her back her installments. She contacted the ministry of insurance regulation and of course they did nothing. She kept going to the bank everyday and they finally give in and give her money back, of course she tried to get the installments back on her policy but no luck, she cancelled it.

Unable to compute bold items - you seem to say no and yes in different parts of your post. Also would be interested to know why life insurance was not paid if she died? Did they claim policy obtained with false information or something?

[CWMcMurray]

I would recommend investing in the SET or if she is adverse to investing in stocks, there are some Bond funds available in most Banks.

You mention that she is not in the higher tax bracket, but if she is paying any taxes, she can invest in stocks and bonds under a "Long Term Fund" (must keep invested for a min of 5 yrs) and she can then deduct up to 150,000 thb (or actual contributions) per year from her taxable income. .

If she is not paying taxes, then just invest normally (outside of LTF) and no benefit would be gained and her money would remain much more liquid and she would not face any penalties for "early withdraw"

[samran]

Forgive me if my maths are wrong:

She invests 595,845 baht (39,723 baht* 15 years) over the life of the policy (ie payed in the first 15 years)

She 'gets back' 760,000 in lump sum payout and the 3 yearly 'interest' payment.

Net (760,000 - 595,845)= 164 155 baht.

So in simple terms she 'earns' 27% more money than she puts in, over 25 years

That is an average annual interest rate of 1.1%.

1.1% !!!!!!!! Remember that insultingly low figure.

Forgive me for saying this, and perhaps you might not want to give her this link, but these policies are aimed at not only the financially illiterate but the more clueless elements of society.

If they think 1.1%p.a interest is good, then they need their heads read.

If they think that they are getting some extra benefits, then they need their heads read again. This isn't a health insurance plan, and it is a pretty piss poor life insurance plan. Added to that, it is a dreadful savings plan.

If they want a savings/investment plan, then you invest in fixed income products such as bonds

If she wants to 'invest' safely, she can easily buy government backed bonds from over the counter at ANY bog standard bank in Thailand. They are called 'pan-ta-bat' in Thai. They pay 3.7% p.a or so at the moment - so more than THREE TIMES as much as your GF will get through the SCB-NYL 'plan'. Even a bog standard 24 month term deposit at SCB yields 2.5%pa.

If she is conservative, but a little more sophisticated, then she could perhaps invest in bond issuances from say the top 10 listed companies on the Thai stock exchange. Banpu for instance in 2009 issue three tranches of bonds:

a 3 year bond @ 3.5% p.a

5 years @ 4.3% p.a

7 years @ 4.9% p.a

Dunno if it is too late for your GF to get her monies back, but she is being screwed, royally.

Edited January 12, 2011 by samran

[samran]

nb...the 1.1% 'return' from NY Life ignores inflation. Taking that into account, your GF isn't making any money at all, in fact, probably losing money.

[curlywatt]

thanks for all the help guys

[angiud]

Sadly, also my wife got caught from a vendor of SCB and I'll pay 4/5000 baht month for the next 20 years...

She has paid one year already so she cannot listen to just stop the monthly payments.

[samran]

Sadly, also my wife got caught from a vendor of SCB and I'll pay 4/5000 baht month for the next 20 years...

She has paid one year already so she cannot listen to just stop the monthly payments.

If it is your money, why not just stop the payments? You might has well cut your loses now, rather than pay money to them, that you'll never get a return on. Better to invest elsewhere from now on.

[kurnell]

Yes, my wife presented me with the Kasikorn plan and the returns seemed pathetic, especially compared to the 6% + rate I get from term deposits in Australia.

[cat5]

Assuming 3%...

Year Debit Credit Debit PV Credit PV 1 39,723

36,352 0 2 39,723

36,352 0 3 39,723 20,000 36,352 18,303 4 39,723

36,352 0 5 39,723

36,352 0 6 39,723 20,000 36,352 16,750 7 39,723

36,352 0 8 39,723

36,352 0 9 39,723 20,000 36,352 15,328 10 39,723

36,352 0 11 39,723

36,352 0 12 39,723 20,000 36,352 14,028 13 39,723

36,352 0 14 39,723

36,352 0 15 39,723 20,000 36,352 12,837 16

0 0 17

0 0 18

20,000 0 11,748 19

0 0 20

0 0 21

20,000 0 10,751 22

0 0 23

0 0 24

20,000 0 9,839 25

600,000 0 286,563

TOTAL 545,283 396,147

[cat5]

^ Oh, the formatting cocked up big time. My only excuse is I've had one or three too many to drink!

Anyway, to summarise, using present value calculations at 3% p.a. (I don't know if that is correct) you would pay 545K baht but receive only 396K baht.

Edited January 13, 2011 by cat5

[abcz9]

Hi there ive got an account which I put in 88000 every year for 6 YEARS and get 12000 every 2 years so thats 36000 . And then get my money back . Thats what I was told. And I did,t do it for the intresting . It so I couldn't spend it. Would this be the case thanks.