STI: Insurance is solution to all his needs

May 3, 2009

me & my money

Insurance is solution to all his needs

It is protection, savings and investment all rolled into one for financial planner

By Lorna Tan 

 

When Mr M.P. Sellvem, 53, started work at age 17, he was paid a measly $4.80 a day. This was in 1973, when he worked as a clerk at the former Public Works Department (PWD).

 

He took night classes and obtained an A-level certificate. In 1981, he tried his hand at running a coffee shop in Hillview. When the landlord declined to renew the lease of the coffee shop two years later, he decided to go into insurance and joined his army buddy at British insurer Prudential Assurance. He has never looked back.

 

In 1985, Mr Sellvem made it to the prestigious Million Dollar Round Table (MDRT) and continued to qualify for it six years in a row. For that achievement, he was made an MDRT life member. In 1990, he moved into management and headed an agency of advisers. Four years later, he was appointed financial services director at Prudential.

 

A certified financial planner since 2004, he is also a past president of the Insurance and Financial Practitioners Association of Singapore.

 

Not surprisingly, insurance forms a significant portion of his investment portfolio.

 

'Insurance is a form of disciplined savings. I want a tool that will provide for retirement as well as take care of contingencies in case something goes wrong. Also, compared to other investments like stocks, insurance requires less monitoring,' said Mr Sellvem.

 

He acknowledges that insurance does not give the best returns but it certainly gives him peace of mind.

 

He is divorced and has a daughter, Sudha, 21.

 

Q: Are you a spender or saver?

 

I guess I am more a spender than a saver. After paying off my insurance premiums and settling all the monthly bills and household items, I do spend on what I feel like spending.

 

I don't observe a very rigid cash- flow pattern but I make sure that I have enough cash to take care of six months of expenses.

 

Q: How much do you charge to your credit cards every month?

 

I have five credit cards but frequently use only one card. On average, my monthly credit card bills amount to about $2,000 to $3,000 and I pay off the outstanding balance each month.

 

I withdraw about $500 from the ATM weekly.

 

Q: What financial planning have you done for yourself?

 

I am a conservative investor and I rely on insurance for my protection, savings and investments.

 

I have various life insurance policies with Prudential that provide about $1 million in coverage and some critical illness coverage.

 

They are basically endowment, whole life and investment-linked plans (ILPs). The unit trusts in the ILPs invest in Asian equities, China and India. My annual premiums amount to $30,000.

 

This is my retirement provision.

 

I also own a Safra group insurance plan for life and critical illness under the national servicemen scheme and a Shield hospitalisation plan with Prudential. I do not speculate in the share market.

 

Q: Moneywise, what were your growing-up years like?

 

I am the eldest child in a family of seven.

 

My father was a driver with the PWD and my mother was a housewife.

 

Dad was earning a basic pay of $126 a month but we managed to have enough to eat. Life was tough and simple.

 

We lived in a rented two-bedroom terrace house in the PWD quarters in Bukit Timah until 1981 when we moved to a four-room HDB flat in Hillview Avenue.

 

Q: What are your property investments?

 

In 1992, I bought two shop units with a combined floor area of 1,000 sq ft at Selegie Centre for $1 million. They were rented out for $10,000 a month but the rent slowly declined. I sold them for $1.4 million last year.

 

Q: What's the most extravagant thing you have bought?

 

About 10 years ago, I bought a club membership at the Singapore Recreation Club (SRC) for $29,500. Not long after, I paid for a membership at the Republic of Singapore Yacht Club at $25,000.

 

I regret buying the two memberships as I don't frequent the clubs, so I find it wasteful having to pay the monthly subscription fees of about $60 at SRC and $100 at the yacht club.

 

Q: What's your retirement plan?

 

If all goes well, when I reach age 65, my life insurance proceeds should accumulate to a substantial amount.

 

God willing, I am likely to live a decent lifestyle with a monthly sum of about $5,000. By then, I should have fully paid up my home mortgage and be debt-free.

 

Q: Home is now...

 

A three-storey corner terrace in Hoover Park, off Upper Bukit Timah Road.

 

This was bought in 2004 for $1.1 million. I spent another $700,000 demolishing the original property and building a new house in its place on the 3,100 sq ft of land.

 

Q: I drive...

 

A tealite blue E200 Mercedes- Benz.

 

WORST AND BEST BETS

 

Q: What has been your worst investment to date?

 

When I was working for PWD in 1981, I joined a colleague who was an active stock trader in investing and speculating.

 

The first two investments earned some profits after a couple of weeks. The third one was an investment in a Malaysian Clob share, United Motor Works.

 

I got my fingers burnt and I had to borrow about $7,000 from friends to settle my loss of $9,000.

 

It was painful to lose such a big amount over three weeks and it taught me a lesson: I learnt that stock investments can go either way and can be disastrous.

 

Q: And your best investment?

 

My best investment was probably my first home at Toh Yi Drive.

 

It was an HDB executive maisonette which I bought for $130,000 in 1990 and sold for about $500,000 after living in it for about 12 years.