Reply to "Exercise caution when buying ILPs: Income chief "

Editor
Forum Page
Straits Times

I refer to the article entitled "Exercise caution when buying ILPs: Income chief " (Straits Times, 23 June 2005).

Your correspondent has quoted me correctly on most parts of the article. However, I have been quoted out of context on the following point:

Mr Tan suggested that term insurance without any investment component may be a better option. 'Buy term and invest the difference so that you can avoid paying the commission payable to agents' he said.

I wish to clarify that the insurance adviser receives a commission on the premium paid under the term insurance policy.

In my view, the adviser should also be paid to advise the policyholder on insurance and financial planning. This is a valuable service that should be adequately remunerated. The adviser has to spend considerable time to acquire the knoweldge to provide this advice.

Under the new ILP plan that will soon be launched by NTUC Income, we will pay a modest flat fee to the insurance adviser, which will be recovered from a small charge over the next 20 years.

The adviser will also earn a modest rate of commision on the regular savings in the ILP plan. As the charges are low, this plan will allow the savings to earn a fairly good rate of return over the long term.

Tan Kin Lian
Chief Executive Officer
NTUC Income