I refer to the letter from Ms Seah Geok Hong entitled "Time Life Insurance Association spoke up" (Straits Times, 19 July). Ms Seah asked the Life Insurance Association to substantiate its claim that regular premium investment plan are suitable for older people.
I like to speak for NTUC Income and address the underlying question.
Compared to a traditional life insurance plan, an investment-linked plan (ILP) has the following advantages:
- flexibility in making regular and adhoc savings, including temporary suspension,
- choice of investment funds,
- flexibility in types and amounts of insurance coverage,
- transparency in the mortality, expense and other charges.
In choosing between different ILP plans available in the market, the consumer should look at the charges and also the investment risks in the various funds.
Older people pay a higher mortality charge for their insurance protection. However, the amount of insurance needed at the older age should reduce, as the children are older and the policyholder has probably already accumulated sufficient savings.
One way to reduce the charge is to deduct the accumulated savings from the initial amount of insurance. The premium will reduce with the lower insured amount. The policyholder also has the flexibility to terminate the insurance coverage on their retirement.
A flexible ILP plan is more suitable for today's uncertain job environment.
The policyholder will need to be properly advised on how to tailor this plan to meet their needs. NTUC Income offers free financial counselling to our policyholders using salaried insurance consultants. We will extend this free service on a limited scale to the general public.
Tan Kin Lian
Chief Executive Officer
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