A financial adviser said, "Investment-linked policies are not design to benefit insurers or agents, as reported by Tan Kin Lian, but is an option for those willing to take higher risks (hoping for higher return, so you have to decide yourself".
Here is my reply to his comment.
For those who wish to invest in shares, buy the STI ETF, which is an index fund. The fee charges is only 0.3% per annum. If the shares earn 6% per annum (my estimate for the future), you get 5.7%. If you buy a ILP, the insurance company and the agent takes away 4% from what you earn. So, the gross of 6% becomes 2%.
If you earn 2% per annum (on ILP) over 30 years, compare to 5.7% p.a. on the index fund, the difference at the end of 30 years is 40% (after allowing for the cost of the life insurance protection). You get 40% less from the ILP.
If the accumulated savings is $500,000, the ILP pays you $300,000. The $200,000 goes to make the agent and the insurance company rich and the consumer poor.
I do not know why the financial adviser, who was supposed to look after the interest of the client, can advise the client to invest in such a bad financial product, i.e. ILP?
The financial adviser can continue to give misleading and bad advice, but I will continue to point out their mis-statements. Consumers, beware!