Should I continue my current ILP plan?

Dear Mr Tan

1)Is the difference for Term Insurance and Life Insurance only lies on there are saving in the life insurance and whereas the converage is generally the same for both type of insurances.

Reply: Generally, the coverage is the same. In the case of a life insurance policy, the protection and savings are combined into one product. I advocate that protection should be bought separately. This gives you greater flexibility in your investments and ensure that you get a better return.

2) I am 40 years old and I have a ILP life insurance which I bought 12years ago and only recently the cash value is about the same as the total premium I have paid, will it be better if I surrender this policy and buy term insurance policy which is cheaper and invest the rest in the global fund on a monthly basis.

Reply: It depends on the charges that you will continue to pay on your ILP policy.

You have incurred high charges in the past, which explains why it takes 12 years just to break even. This has been a bad investment (due to the high charges) but there is no way for you to recover them.

You can study the charges on your ILP policy for the future years, compared to the alternative type of investment (which also have charges). I suggest that you visit the business center of NTUC Income and talk to a consultant.

See www.income.coop.