Dear Mr. Tan,
I plan to buy insurance for my two boys - 9 and 6 yrs old. My agent recommended me the ILP product.
I learned that ILP is not good as compared to traditional life policy or term insurance. The ILP insurance cost is high when I get older. If the invested funds are not performing, I risk to have negative value in my ILP policy.
I am confused whether to go ahead with ILP or go for term insurance for my boys..
It is best to buy Term Insurance for the life insurance protection and to invest in a low cost investment fund (e.g. unit trust). Read this FAQ:
In selected an investment fund (unit trust or investment linked fund), look for a fund which invest 100% of the savings (i.e. no deduction to pay commission to the adviser) and which has low annual expense ratio.
I understand that the ILP from company X takes away 18 months of your savings to pay commission to the agent. You can check with the agent if this is the case. You should avoid this high charge.
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