Tan Kin Lian's Blog: High charges on regular premium ILP

Monday, January 07, 2008

High charges on regular premium ILP

Hi Mr. Tan,

I've just realised to my horror that I've tied myself down to a useless investment product - a regular ILP. This is with X. My monthly premium is $100.

I have been paying premiums for the past two years. The value of the investments is only about $600. If I surrender the policy, this is what I'll get back. Should I continue? Will this investment ever even break-even?

REPLY

You have incurred most of the upfront expenses already. From now on, most of your premium will be invested. What you have spent in high charges in the past should be written off. I suggest that you keep this ILP policy.

Lesson: Avoid regular premium ILP. The charges are too high. 18 months of the premium has been taken away to pay commission and marketing expenses.

8 comments:

Anonymous said...: Dear Mr Tan,

How about Income's ID7 ILP? Is it consider expensive too?

I'm thinking of putting aside $200 monthly for an investment. Which medium should i go to?

Pls advice. Thanks.

StudentXXX; January 07, 2008 9:17 PM
Anonymous said...: What do you think of Enhanced Fund? Is it a gd fund to invest in esp with the oil price soaring high and a possibility of a recession in US.; January 07, 2008 9:21 PM
Anonymous said...: Mr Tan,

I disagree with you. What has occurred in the past is a sunken cost. What is more important is to consider the allocation ratio of the ILP from now to the future and compare it to the next best alternative of buying unit trusts. One should not hold on just because he has incurred the bulk oft the cost.

HK; January 07, 2008 10:59 PM
Priyadi said...: i would suggest moving away from it immediately, if only for making a point. would you continue doing business with someone who just ripped you off, even if you are certain that he won't do it again in the future? there are other insurers who are more than willing to do business with us, and they can provide us with the same protection for more or less the same amount of money.

moving to BTAID is free, and it only cost a little of our time. besides, there are benefits of BTAID other than lower costs/better returns.; January 07, 2008 11:43 PM
Anonymous said...: www.fundsupermart.com
www.dollardex.com

Check them out.
No advisory charges at all.; January 08, 2008 12:54 AM
Anonymous said...: Your horror is you were too trusting and gullible and clueless. The problem is many customers think they are smart. You are not, even you are a professional. That is why insurance products are sold and not bought.
There are some very bad products, with rip off cost that are selling well like revosave and prucash and other similar products.
Why? simple . The customers do not know what they buy . They only know after a third party review or they wake up from the spell cast by the insurance salesgirl or man.
The blame is on you . You didn't ask a lot of questions. You didn't bother.; January 08, 2008 9:26 AM
Anonymous said...: i think its a matter of wrong expectations.

an ilp product is basically still an insurance instrument (but with better returns when compared to a whole life plan).

whether for regular savings or otherwise, if looking for pure investment then get unit trust from a bank or online but not from an insurer unless protection is needed also.; January 08, 2008 1:02 PM
Anonymous said...: Income's ILP has been in market since 2000.

So best to do is ask those with such plan, what is the value today.

Dr Money also wrote in his website, the company that charge the least in regular premium ILP is Ntuc Income's ILP.

It will be good if the market dip for the next three years and boom then, you will then see the results.

Those who took Income's regular premium ILP when combined fund was introduced in 2003, most of the regular premium ILP are mostly positive now.; January 20, 2008 8:48 PM