Benefit illustration for ILP

Dear Mr Tan,

I recently met up with an agent who showed me a benefit illustration at 5% and 9% rate of returns for his company's ILP. However, I am not sure whether I should believe if those returns are reasonable.

Can you advice how should I approach this? Thanks!

REPLY

All insurance companies use 5% and 9% to "illustrate" their projected returns. These interest rates do not reflect what you can get in reality.

The actual returns is based on what the insurnce company can earn on its investments, less its charges.

Insurance companies usually have high upfront charges to pay the commission to their agents and annual charges to meet their fund management expenses.

Read this FAQ:
http://www.tankinlian.com/faq/expense.html

Also, read this webpage:
http://www.askdrmoney.com/Ins_ILP_RP.htm