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“My mortgage is late. Should I call my bank and explain why?”

The following is my answer to a Quora question: “My mortgage is late. Should I call my bank and explain why?”

Yes. When it comes to taking loans from any financial institution, it is always important to be in constant communication and update them. A bank can tolerate late payment if they understand the reason why payment is late, and there is a date of payment. Even if there is a contention, this communication ensures that you have an avenue to negotiate, and even get a waiver on late fees.

Going silent on the bank sends them the signal that you are a likely recalcitrant defaulter, and they will treat you accordingly, including levying punitive fees. If you have failed to respond to their correspondence, they move your loan to the bad debt ledger, and that is a precursor to further legal action, including application for bankruptcy.

Terence Kenneth John Nunis

[Shared with permission from: https://terencenunisconsulting.blogspot.com/2020/05/quora-answer-should-i-call-my-bank-to.html?m=1 ]

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Why do I feel like I am gambling with my life when I buy insurance?

The following is my answer to a Quora question: “Why do I feel like I am gambling with my life when I buy insurance?”

On the contrary, I contend that you are gambling if you do not buy life insurance. Without liability protection, do you have sufficient funds set aside in the event of disability or terminal illness? Having a stroke, and being incapacitated means someone else must take care of you. That is the loss of two incomes in the household. Getting a nurse is not cheap. Neither is the cost of hiring a maid. There is also the cost of renovating your house to make it wheelchair accessible, for example. What about evacuation if you fall ill overseas? What about loss of home and means of living in the event of a disaster? It is illogical not to get life insurance.

Terence Kenneth John Nunis

[Shared with permission from: https://terencenunisconsulting.blogspot.com/2020/05/quora-answer-why-do-i-feel-like-i-am.html?m=1 ]


I agree. You are gambling with your life if you do not take the necessary precautions, liability protection and risk mitigation measures.

As for the Muslim misperception that insurance is itself gambling, I will address them in Dispelling Myths of Riba series.

Zakat on Savings: Savings in the bank

[Zakat in Practice (part 10)]

[Introduction: This series is a sharing on zakat from the perspective of a financial planner. It is hoped to be educational, informative as well as practical to help readers better understand Zakat, especially Zakat on Wealth, as a Muslim in Singapore.

Topics to include: Zakat on Investment, Zakat on Savings, and Zakat on Estate.]

[Previously: Zakat on Savings]


As mentioned in the previous post, Savings in the bank can be categorised into:

  1. Accessible
  2. Non-accessible

For savings accounts that are accessible (ease of withdrawal), such as the common savings accounts and current accounts, Zakat is due when you have fulfilled:

  • Nisab (“minimum sum”)
  • Haul (holding period of 1 Hijri year)

As mentioned in part 5, one’s Nisab may not fall on Ramadan. However, there is no harm to defer one’s zakat payment to Ramadan, so long as it does not reach another Haul.

However, this leads to confusion for some: having to backtrack 12 months to the previous Ramadan. And it does not help that your bank statement does not follow the Hijri calendar.

My proposed solution:

Adopt a financial year. Generally, one’s financial year would be January to December.

If the amount at the end of December is above Nisab, you pay zakat on it (2.5% of amount).

This is in accordance to the Hanafi madhhab, which I find to be more practical. At the same time, it is also the manner in which one would calculate zakat on investment.

Hence, it would facilitate one to coordinate paying zakat for both his savings and investments.

(Financially speaking, savings is a form of investment, albeit the worst, as it brings minimal or no returns. But assurance of safekeeping.)

(To be continued)

Zakat on Savings

[Zakat in Practice (part 9) ]

[Introduction: This series is a sharing on zakat from the perspective of a financial planner. It is hoped to be educational, informative as well as practical to help readers better understand Zakat, especially Zakat on Wealth, as a Muslim in Singapore.

Topics to include: Zakat on Investment, Zakat on Savings, and Zakat on Estate.]

[Previously: Zakat on Gold]


Zakat on Savings comes in 2 forms:

  1. Savings in the bank
  2. Savings plan with insurance companies

Savings in the bank can be further categorised as:

  1. Accessible
  2. Non-accessible

By accessible, they are accounts that one can easily withdraw his money from, such as:

  • Savings account
  • Current account

By non-accessible, they are accounts that are usually “locked in” for a certain period or tenure, such as:

  • Fixed deposit

Each of these accounts require a different approach in gauging when zakat is due/liable.

It is a common mistake and misunderstanding to regard them as the same, or to combine the amounts in all those accounts together and paying zakat on the total amount.

(To be continued)

Zakat on Gold

[Zakat in Practice (part 8) ]

[Introduction: This series is a sharing on zakat from the perspective of a financial planner. It is hoped to be educational, informative as well as practical to help readers better understand Zakat, especially Zakat on Wealth, as a Muslim in Singapore.

Topics to include: Zakat on Investment, Zakat on Savings, and Zakat on Estate.]

[Previously: Conditions of Zakat]


Zakat on Gold comes in 2 forms:

  1. Gold in the form of bars, bullions, nuggets & coins.
  2. Gold in the form of jewelry.

Gold in the form of bars and its like are usually kept as a form of savings/investments. As long as they weigh more than 86 grams (nisab value), one needs to pay zakat on it.

Whereas for gold in the form of jewelry, its nisab is 860 grams, as it is customarily excessive to have that amount of jewelry. Generally, people would not have that amount of jewelry except for the wealthy.

[To be continued]

HDB Resale Levy: when and why

Perhaps you’ve read HDB Resale Levy: What Second-Time Flat Buyers Need To Understand Before Buying Another Flat from DollarsAndSense.sg.

Image credit: DollarsAndSense.sg

Reading the numbers, the facts and figures, you’re scared to consider buying your second flat, crushing your dreams to upgrade your living space.

But hold on! As much as the article is scary and could instil doubts into your mind, I invite my friend, Fayyadh Muhammad, Group Director at PropNex Singapore, to share his thoughts and possibly address your concerns.

Second-Time Flat buyers need to pay Resale Levy?

This statement is true and false at the same time. I am not saying that this article is wrong. In fact, this is a really good article and a good reference to understanding Resale Levy.

However, to commoners who have purchased their first one and only HDB flat, they may miss the details written in this article. At the same time, not having full understanding what is happening in the HDB Resale market, this article will definitely scare them.

Take a deep breath, relax, and read it slowly.

No, you do not always have to pay Resale Levy for your second HDB Flat, in fact it seldom happens; if you are like most of the Singaporeans with their property transactions.

Put it this way: in 2012 you decided to tie the knot, and booked a BTO 4 room flat. In 2015 you got the keys. Upon fulfilling your Minimum Occupation Period in 2020, you decided to upgrade to a 5 room flat.

Situation 1: you sell your current flat and proceed to purchase a 5 room flat from the resale market, probably at $450,000. And this whole process can be completed in the year 2020 itself.

Situation 2: you decide to book a BTO again! Now Resale Levy kicks in, because this is a subsidised flat. You buy it cheaper, $400,000. But you have to pay a Resale Levy of $40,000 in cash. Making the purchase a sum of $440,000. Not much of a difference in price. On TOP of that, you will have to wait another 3 years or so to get your keys, and then live in the house for another 5 years more for your MOP to complete. Making that a total of 8 years.

So, first situation:

  • bought at $450,000
  • able to sell in 2025

Second situation:

  • bought at $440,000
  • able to sell only in 2028
  • $10,000 cheaper but 3 years on lost opportunity

Generally, people will choose Situation 1. For those who choose Situation 2, the chances of being successful taking this route is lower as a high percentage of BTO flats are allocated for first-time buyers.

In other perspective, Resale Levy is a measure put in place to ensure that the subsidised flats are reserved for those who really need the subsidy.

[You can get in touch and follow Fayyadh on his FB page: Fayyadh – Real Estate ]

Conditions of Zakat

[Zakat in Practice (part 7)]

[Introduction: This series is a sharing on zakat from the perspective of a financial planner. It is hoped to be educational, informative as well as practical to help readers better understand Zakat, especially Zakat on Wealth, as a Muslim in Singapore.

Topics to include: Zakat on Investment, Zakat on Savings, and Zakat on Estate.]

[Previously: Zakat on Wealth]


Before we proceed on Zakat on Wealth, it is important to know what are the conditions of Zakat. They are:

  1. Muslim
  2. Full possession/ownership of wealth
  3. Nisab is reached. (Nisab is the market value of 86 gram of gold.)
  4. Haul is reached. (Haul is possession of assets/wealth for 1 Hijri year or 355 days.)

(To be continued)

Is Whole life insurance or Term life insurance better, for a 25 year-old?

The following is my answer to a Quora question: “Which do you think is better, whole life insurance or term life insurance, for a person under 25-years-old?”

If you are that young, it would be better for you to buy a whole life policy. The reason is because a whole life policy has level premium, meaning that the premium does not increase as you age. The premium is calculated based on the payment term, which is your expected life expectancy less the age of policy inception. So, for example, if the life expectancy for someone in your region, demographic and gender is 80 years, then your premium term is calculated as 80 less your age of 25, making it 55 years. Your premiums for your that length of time is cheap considering your monthly or weekly cash flow. The whole life policy also gains a surrender value, making it a financial instrument that you can borrow against, as a last resort, or surrender for cash if you absolutely need to.

If you were to get a term plan, the premiums would only be slightly cheaper than a whole life, but it is level only for the duration of the term. So, assuming a term plan of 20 years, when the coverage is up for renewal, your new inception age is 45 years, which means that your premiums suddenly jump by more than 100%. Another disadvantage is that this new term plan, depending on where you are, is sometimes considered new coverage. This means, if you claimed against the previous term, it would be considered a pre-existing condition and not be covered.

I would suggest that you get affordable coverage via a whole life at age 25. As you get older, and your earning increase, plan to top up that with a second whole life plan every three to five years, until you reach age 35, where it starts to get expensive. If you absolutely need an increase in coverage, which is likely against terminal or critical illness, then you may consider a term plan to top it off.

Terence Kenneth John Nunis

[Shared with permission from: https://terencenunisconsulting.blogspot.com/2020/05/quora-answer-is-whole-life-insurance-or.html?m=1 ]

Photo by Mark Csabai from FreeImages

While I agree with Terence in principle, I often find myself adopting a slightly different approach, depending on several variables such as:

  • budget
  • time horizon
  • other financial commitments and obligations

I personally would advise that client gets maximum coverage first, as according to his Financial Needs Analysis.

Hence, for clients on a budget, quite often they would likely take up a Term life insurance while still having budget for wealth accumulation/growth needs.

Client can choose to convert his Term life insurance to a Whole life insurance later on when he can afford, without the need for medical underwriting.

Zakat on Wealth

[Zakat in Practice (part 6)]

[Introduction: This series is a sharing on zakat from the perspective of a financial planner. It is hoped to be educational, informative as well as practical to help readers better understand Zakat, especially Zakat on Wealth, as a Muslim in Singapore.

Topics to include: Zakat on Investment, Zakat on Savings, and Zakat on Estate.]

[Previously: Do I have to pay Zakat on wealth in Ramadan?]


Zakat on Wealth, as practiced in Singapore, is applicable on:

  • Gold
  • Savings
  • Shares/Investment
  • Insurance
  • Business
  • CPF*

(Ref.: https://www.muis.gov.sg/Zakat/About/Zakat-in-Islam)

It is to be highlighted that Zakat on Wealth no longer applies for CPF. However, I will be addressing Zakat on CPF in a subsequent post for discussion sake, to highlight a learning point.

This learning point is important as it will explain my premise and perspective as a financial planner in viewing Zakat on Wealth as a whole in practice.

(To be continued)

Do wealthy people buy life insurance?

Photo by Jeremy Doorten from FreeImages

The following is my answer to a Quora question: “Do wealthy people buy life insurance?”

Wealthy people buy the most life insurance. It is an irony of sorts that the people who really need life insurance underinvest in it, whereas the people who might have a lesser need overinvest. People of a higher socioeconomic strata have benefited from better financial education. As such, they understand the need to indemnify themselves against loss. They have more to lose.

The difference between the life insurance portfolio of the mass affluent, the high net worth and the ultra-high net worth, beyond the value of their policy portfolio, is in how they structure it. For example, a professional buys life insurance coverage for himself and family, against death, disability and critical illness. He owns the policy no matter who the insured is.

A HNW or UHNW individual has the benefit of a personal tax accountant, personal banker and personal financial advisor. He would likely assign the policy to a company or revocable trust. He is also likely to view insurance policies as another class of financial instruments, and treat them accordingly. For example, he could buy a large single premium life policy that allows him to pay a percentage of that large single premium, and have premium financing arranged that is lower than bank lending rate for a normal loan. This maintains his liquidity, but creates an immediate estate.

That policy is considered fully paid up, and he can take a credit line of up to 105% from his bank with that policy as a collateral. In some circumstances, it can be done up to four times. This means that a possible down payment of less than $20,000 has created a cash flow of several million since it is the size of the policy, not the premium that is the factor.

Insurance also plays a significant role in business succession planning. When a director or executive dies or is disabled, or stricken by terminal illness, creditors may not have as much confidence in the company. They can call back the loan, or refinance it at a higher risk rating. This affects cash flow and leverage. Also, should a major shareholder pass away, his shares revert to his estate or trust. The existing shareholders should have the option of buying out their erstwhile partner without severely crippling the cash flow of the business. In such a case, they use term plans, assigned to the company, with a legal agreement to pay out a certain percentage to the estate of the deceased or first option on the shareholdings. These policies are then put on the books as a benefit to the director in question to mitigate personal income tax.

Insurance policies, managed well, are still the easiest and cheapest way to create an immediate estate. They have many uses, and there are policy types to cover every contingency if you have the money for the premiums.

Terence Kenneth John Nunis

[Shared with permission from: https://terencenunisconsulting.blogspot.com/2020/05/quora-answer-do-wealthy-people-buy-life.html?m=1 ]