Sunday, April 27, 2008

Investment linked plans from NTUC Income

Someone, probably a NTUC Income agent, made an anonymous posting about the regular premium investment-linked plans (namely the Ideal plans ID2 and ID7) introduced by me when I was CEO. He (or she) accused me of being unfair in recommending against investment linked plans now. Although it was a personal attack against me, I have decided to post the comment.

Those who correctly read my blog knows that I am recommending against regular premium ILPs that take away two years of savings, especially sold to customers who are not informed about the high charges.

The Ideal plans introduced during my time have the following upfront charges:
ID2 - 7 months premuim
ID7 - nil

They are much lower than the charges of the regular premium ILPs sold in the market. Read this comparision:

The Ideal ID7 is a good plan for the customer. But the insurance agents are not willing to sell it, as they earn a low commission. You have to buy it from the business center (if they still offer it).

You can avoid all the upfront charges by investing in the STI ETF. For the life insurance cover, you can buy a decreasing Term insurance. Read this FAQ:

Recently, I withdraw a large sum of money from the money market fund and wanted to re-invest in the Combined Fund. Although it was a topping up of any existing policy, I was asked to pay a upfront spread of 3% for the new investment. I decided against it. I took out the money and invested it in the stockmarket directly.

By not taking care of the interest of an existing policyholder, NTUC Income has lost a large investment.

1 comment:

Khiat Han Hwee Adrian said...

Logically, the consultants in Business Centres have to earn back their salary and the fixed cost involved in running the business.

ID7 comes with low cost and low commission. The consultants in Business Centres may not be keen to recommend this plan unless you asked for it.

The best hedge against losing is to know about Insurance and investment yourself. However, if you do not have time to learn all these, accept to pay an advisory fee for someone to guide you.

Adrian Khiat

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