Thursday, April 03, 2008

Poor return on ILP policy

Hi Mr. Tan,
Great to chance upon your website!

I have an issue with my ILP investment. My annual premium is $1200, and I have been paying it for 2 years and eight months, current cash value at only $600.

I'm aware it's too late to cancel the account. Even though my monthly premium is not high, I still don't like the idea of paying for mortality charges.

Do you think it's more worthwhile to cancel now, suffer some loss and start investing in better products for a longer term gain? Does this make sense?

As you have paid two years of premium, most of the upfront charges have already been incurred. I suggest that you keep the current investment account.

You can ask the insurance company for the mortality charges for the next five years and compare them with the benchmark rates shown on the attached.

If the mortality charges are too high, you can cancel the life insurance cover and buy a term insurance policy. You can still keep the investments.

If the mortality charges are reasonable, you can continue the policy for the next 5 to 10 years. You can cancel it when you reach age 60 or 65.


Anonymous said...

Don't cancel it. Your 2+ years of premium is already in the agent's pocket. You can say you have already paid your due or debt to the agent and the company and you are free now.
What is troubling you is you have high protection coverage and a relatively substantial amount of money is taken out to pay the mortality charge.You can improve your saving by reducing your protection to the minimum if you don't want protection. Forget about the loss .Ask your agent to reduce the coverage.
Mr., this is not a bad product if you know what it is. The problem lies with the agent or the salesman
who sold you. He didn't disclose to you fully and probably you didn't tell him your needs.And this was a perfect match for mis-selling, misrepresentation and unethical practice to happen.
Remember the cooperation of both parties is crucial to the best outcome.


Anonymous said...

If you die die must invest regularly in NTUC funds. Let me recommend the cheapest way to do so. First set up an investment account with $5k and arrange for a monthly, quarterly or yearly recurrent top up by giro. This way you save the advisory fee. You need to pay the front end charge only, ie.3.5% for every dollar.
Alternatively, buy the ID7 through the business centre. Don't buy ID2, you will be slaughtered with a 45% charge for advisory work. But what work or advice is given? Don't be fooled.

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