Financial: The useless ILP, & how to go about terminating it

[serenade]

ILP has a place. For those who are either too lazy to apply for Term Life, too indisciplined to save money monthly or no time to buy and monitor shares. For these, if an agent does not get them to buy ILP, they are without protection nor savings. At least an ILP will get them to save, and eventually get back capital + 1% p.a gains after many years.

 

Agree that for a disciplined individual, Term Life + PA is the way to go. And use the monthly savings to buy blue-chip shares which average 4% to 5% dividend, with chance of capital appreciation.  

 

And of course once accumulated enough savings to retire, and kids are working, break the ILP. Take the capital back for a self-treat holiday or toy. The family protection objective is no longer needed.

[Kusje]

ILP has a place. For those who are either too lazy to apply for Term Life, too indisciplined to save money monthly or no time to buy and monitor shares. For these, if an agent does not get them to buy ILP, they are without protection nor savings. At least an ILP will get them to save, and eventually get back capital + 1% p.a gains after many years.

 

Agree that for a disciplined individual, Term Life + PA is the way to go. And use the monthly savings to buy blue-chip shares which average 4% to 5% dividend, with chance of capital appreciation.  

 

And of course once accumulated enough savings to retire, and kids are working, break the ILP. Take the capital back for a self-treat holiday or toy. The family protection objective is no longer needed.

 

You sure this is guaranteed? (even without considering the possibility of the insurance coy going bust).

[Mustank]

My prudential ilp 18 years lose 7k

[%>{^~*]¥[<\#]^*#£>£~*_^_%[<<|*

Got money put in kids cpf, parents cpf, ownself cpf

Still got extra, put srs

Still got extra, govt bond

Still got sextras?!?!??! Go JB

Edited October 10, 2017 by Mustank

[Daniu82]

The person that you are talking about a bit like me cos I also bought ILP from my cousin in 2008 or 2009. Even the monthly payment is about the same. I am a person who is lousy with numbers so when my cousin approached me then and I agreed to buy it. From many stories, I know ILP confirm lose money one but i am still holding now to it. Recently, then I know my cousin quit that company and maybe jumping ship to another company (please go and look for news that many agents jumping from 1 company to another company then you will know what company I am talking about), the thing I am angry is that she didn't even tell me that she quitted. Haiz.... 

 

Have you previously bought for yourself or your loved ones investment-linked policies (ILPs)? Well, on the surface such instruments put forth a rather enticing proposition: secure substantial insurance coverage, at the same time have funds funneled into unit trusts to grow your nest egg. But the somewhat fuzzy manner in which things actually "work" behind the scenes typically means you the client will in all likelihood be shortchanged despite your best efforts to be discerning. It shouldn't come as a surprise; after all, actuarial science is a notoriously sneaky slimeball exploited to benefit an insurer's bottom line first and foremost.

Let's discuss a real life case (yes it happened!) in which an individual in his thirties who until late September 2017 has been contributing a not quite insignificant monthly premium of $215.66 towards a $200,000 sum assured ILP offered by a well-known international insurer. Having done so for the past eight years plus since June 2009 (which therefore spans a duration of 12 × 8 + 3 = 99 months), he would have forked out a total of $21350.34. The bloke finally came to his senses and decided to cut his losses after much deliberation, so he surrendered his policy and received a cheque for an amount slightly less than 16k. How much did he throw down the drain altogether? A whopping five thousand dollars plus change! Utterly shocked? You should be. In a nutshell, here are the main reasons why the purchaser of an ILP will almost surely be at the losing end of the deal:

Your premiums are used to pay for a lot of crap other than for actual investment purposes

In the initial years, chunks from your premiums are taken to cover distribution costs, with the remaining funds (obviously no longer a 100%) being used to actually invest in unit trusts sans typical 5% sales charges. And then there are insurance charges incurred alongside policy fees which are deducted by selling away units on a monthly or annual basis. As one ages, insurance charges soar, not in a linear fashion mind you, but in an exponential one, which means the scenario where the units held in your policy end up being completely sold away just to account for these costs can arise, and you may even have to fork out extra monies to top up for the outstanding shortfall. In a nutshell, you could become a very unhappy holder of a policy with zero cash value, and still have to burn cash for continued insurance coverage in your twilight years.

More at Financial: The useless ILP, and how to go about terminating it

 

[Kusje]

The person that you are talking about a bit like me cos I also bought ILP from my cousin in 2008 or 2009. Even the monthly payment is about the same. I am a person who is lousy with numbers so when my cousin approached me then and I agreed to buy it. From many stories, I know ILP confirm lose money one but i am still holding now to it. Recently, then I know my cousin quit that company and maybe jumping ship to another company (please go and look for news that many agents jumping from 1 company to another company then you will know what company I am talking about), the thing I am angry is that she didn't even tell me that she quitted. Haiz.... 

 

Lol.

 

Own cousin also wanna cheat. 

You are suay - at least if is an agent, you can still peek half ball or whatever... Own cousin 

[Blueray]

The person that you are talking about a bit like me cos I also bought ILP from my cousin in 2008 or 2009. Even the monthly payment is about the same. I am a person who is lousy with numbers so when my cousin approached me then and I agreed to buy it. From many stories, I know ILP confirm lose money one but i am still holding now to it. Recently, then I know my cousin quit that company and maybe jumping ship to another company (please go and look for news that many agents jumping from 1 company to another company then you will know what company I am talking about), the thing I am angry is that she didn't even tell me that she quitted. Haiz.... 

 

so chio or not ?

[Mustank]

Own cousin also see is 天打雷劈啊！

[Blueray]

Own cousin also see is 天打雷劈啊！

[Mustank]

 

 

Own cousin also see is 天æé·ååï¼

Wah!!!! I know this one!!!!!

Nobody dare say him leh

You see

He sit also like a boss

[Alpha78]

ILP is relatively high risk investment marketed as low risk insurance.

 

It pays the FA better than regular insurance, for a reason right ?

 

Years back when I was fresh out of school, a couple of friends were in the insurance industry. Suddenly they keep promoting ILP as the policy that rules them all. A check with a more honest friend revealed that the commissions for ILPs were the highest.

 

Then I rationalized the whole scheme and realized, ILP investment gains are not guaranteed, you choose the wrong fund you can lose money. Portion of premiums parked with insurance coverage is equivalent to a term plan, i.e. money dumped into the drain. How then does this compare with a traditional life plan where there are at least some guaranteed returns, and insurance coverage? Insurance company passes the investment risk to you, and takes whatever it needs to provide you with term coverage. No way man.

 

Ends up, the insurance adviser who sold me the traditional plan, as well as term plans, he's still my adviser today. The friend who suggested cancelling the plans and take up ILP with him, haven't spoken to him for years.    

[Angcheek]

The person that you are talking about a bit like me cos I also bought ILP from my cousin in 2008 or 2009. Even the monthly payment is about the same. I am a person who is lousy with numbers so when my cousin approached me then and I agreed to buy it. From many stories, I know ILP confirm lose money one but i am still holding now to it. Recently, then I know my cousin quit that company and maybe jumping ship to another company (please go and look for news that many agents jumping from 1 company to another company then you will know what company I am talking about), the thing I am angry is that she didn't even tell me that she quitted. Haiz.... 

 

 

I think she will come back ask you to buy new policy    Better think how to siam 

[Bacteria83]

If you're buying an ILP and not buying it for investment purposes, then why buy it? There are other pure insurance plans out in the market. The problem with ILPs is that they are investment plans masquerading as insurance.

ILP main advantage is that you can alter the coverage amount and there is withdraw also as well. Unlike common whole life plan

[Lala81]

Recently a lot of insurance agents jump ship to their competitors (GE just lost few hundred to AIA) for big sign on bonus but with a lot of performance KPIs.

So watch out for your family members getting fleeced instead of taking up simple term insurance.

[Mustank]

I told my wife I lost 7k in my 18 yr pru ilp, her face ..........

When I told her I bought 2 for our sons also, she ............

I told my office girls to get their husbands to buy saf insurance for them

Those ft ones too bad

[Kusje]

Years back when I was fresh out of school, a couple of friends were in the insurance industry. Suddenly they keep promoting ILP as the policy that rules them all. A check with a more honest friend revealed that the commissions for ILPs were the highest.

 

Then I rationalized the whole scheme and realized, ILP investment gains are not guaranteed, you choose the wrong fund you can lose money. Portion of premiums parked with insurance coverage is equivalent to a term plan, i.e. money dumped into the drain. How then does this compare with a traditional life plan where there are at least some guaranteed returns, and insurance coverage? Insurance company passes the investment risk to you, and takes whatever it needs to provide you with term coverage. No way man.

 

Ends up, the insurance adviser who sold me the traditional plan, as well as term plans, he's still my adviser today. The friend who suggested cancelling the plans and take up ILP with him, haven't spoken to him for years.    

 

What exactly is a "traditional plan"? It also has an investment component to it right? 

[serenade]

You sure this is guaranteed? (even without considering the possibility of the insurance coy going bust).

 

Oh, I forgot to add that I took initiative to manage the investment part by switching out mid-way through to a better performing fund. And I got back ave 1% p.a over 20 years. Yes I know this is peanut returns considering that even the basic low risk bonds pay better than this.

 

Yes you are right that had I not switched out, my returns would be par or even negative.

 

ILP was a learning experience for me that put me off unit trusts as an investment vehicle for good. I have done much better for myself investing in securities, than putting money in professionally managed  unit trusts.

[Showster]

It's a loss of just under $60 per month for 8 years. And some forced savings, though the "interest" lost from the accumulated 21K over 8 years is also substantial.

[Piyopico]

I thought everybody knows the most bang for bucks is SAF term insurance coverage.

 

The information is all over the place and if you end up buy endowment, whole life or ILP or whatever then itz probably cos you did so to support the agent, too lazy to find out on your own or was missold.