Crossroad to decide regarding ILP

[Mecisteus]

That is a good policy but no point discussing about it if it's no longer available today. Just like saying last time DBS stock was $9 only when now it's $20. Now can buy? 888/year, return 60k after 30 years? I would like to buy one as a form of alternative investment, since it's 4.88% guaranteed over 30 years which is better than CPF.

its good that you highlighted. i wanted to question on the sustainability.

so in short, the returns are not sustainable thus policy is not available anymore.

 

[wts2013]

That is a good policy but no point discussing about it if it's no longer available today. Just like saying last time DBS stock was $9 only when now it's $20. Now can buy? 888/year, return 60k after 30 years? I would like to buy one as a form of alternative investment, since it's 4.88% guaranteed over 30 years which is better than CPF.

hahahahahaha, who on earth tell u the policy is no longer available, wah hahahahahaha

 

[wts2013]

wow, you think it is a free lunch?

hahaha whatever they can do, i can do it myself too.

hahaha i am a shareholder too.

hahaha we are all shareholders of some companies too.

wah hahahahaha, u work hard for your money lor, I leave it to ntuc to pay me lor, hahahaha

 

[wts2013]

Fyi, that 14k difference is average market return while the wl you pick is more an exception than the average. And that is discounting the fact I use a term policy covering double of your wl policy so the actual difference is even more.
Nobody's gonna stop you throwing your $$ down the drain due to your theories.

wah hahahaha, moi will get my money back at 4.88% wor, where got go down the drain, go down the drain means u dun get your money back lah, hahaha, u only get when u die, not when u are still alive, hahahaha

 

[w1rbelw1nd]

That is a good policy but no point discussing about it if it's no longer available today. Just like saying last time DBS stock was $9 only when now it's $20. Now can buy? 888/year, return 60k after 30 years? I would like to buy one as a form of alternative investment, since it's 4.88% guaranteed over 30 years which is better than CPF.

Guaranteed? Are you sure it was guaranteed at the point of policy inception?

Think its good to clarify whats legally obliged and whats the non-guaranteed portion. Hindsight even a suboptimal investment can be a good investment

 

[limster]

That is a good policy but no point discussing about it if it's no longer available today. Just like saying last time DBS stock was $9 only when now it's $20. Now can buy? 888/year, return 60k after 30 years? I would like to buy one as a form of alternative investment, since it's 4.88% guaranteed over 30 years which is better than CPF.

Last time got Whole Life policy break even after 7-8 years. Nowadays, got WL policy take 20 years to break even (at 4% projected growth of participating fund).

So rather than "always bad" or "always good", just say, show me a WL policy that can break even after 7-8 years on the basis of 4% projected return, then I'll say good.

Why breakeven of 7-8 years good. It allows you start your investment journey by buying the WL policy and BTIR at the same time. Allocate a bit of money to each.

After 7-8 years:

* if your BTIR is super successful, you can think about surrendering your policy and going for 100% term policy since you are likely to beat the insurer's participating fund performance.
* if your BTIR is moderately better than insurer's participating fund, then you can keep the policy but don't add more to it but the proportion of your portfolio that relates to insurance will get proportionately smaller
* if your BTIR returns are terrible because you put all your money in penny stocks or you use someone's SURE-WIN investing strategy for forex or whatever, then you will count yourself lucky that you got WL policy as backup.

 

[peterchan75]

Not all ILPs are bad. I am not an insurance expert.
My I paid using CPF for AIA ILP, after 9 years I cash out at 5% per annum gain. For GE crit illness ILP(> 10 years), I am about even. I am thinking of bailing out as premium is eating up my cash value.

 

[doody_]

Guaranteed? Are you sure it was guaranteed at the point of policy inception?

Think its good to clarify whats legally obliged and whats the non-guaranteed portion. Hindsight even a suboptimal investment can be a good investment

I don't know, ask the guy who says his relative will get back 60k guaranteed after 30 years. 4.88% returns guaranteed, sign me up please.

 

[doody_]

hahahahahaha, who on earth tell u the policy is no longer available, wah hahahahahaha

Since it's still available, why not you share the insurer and policy name? You can even give me your agent's contact and I will buy from him. Next time he might treat you to a big meal for giving him so many referrals and commission.

 

[Perisher]

wah hahahaha, moi will get my money back at 4.88% wor, where got go down the drain, go down the drain means u dun get your money back lah, hahaha, u only get when u die, not when u are still alive, hahahaha

wah hahahaha, And I will get back mine at 6-8%, where got go down the drain, go down the drain means u dun get your money back lah, hahaha, u only get when u die, not when u are still alive, hahahaha

 

[reinphd]

hahaha, the joke is they like u people more, all those who buy term, cos u are all paying their salaries, moi still can get my money back, u read lor, my relative paid 26k plus premiums, take back 60k plus surrender value, what u paid goes down the drain, go to pay insurance companies/agents, goes to pay me my dividend, hahaha I'm a shareholder, hahaha

Hi,

Instead of going wahahhaa all the time, why don't you share some information? this is a learning forum but not otherwise. Put on a learning-and-sharing hat please. thank you for your contribution in advance.

 

[archcherub]

hahaha, the joke is they like u people more, all those who buy term, cos u are all paying their salaries, moi still can get my money back, u read lor, my relative paid 26k plus premiums, take back 60k plus surrender value, what u paid goes down the drain, go to pay insurance companies/agents, goes to pay me my dividend, hahaha I'm a shareholder, hahaha

nope.
term policies typically pays only % commission that is the length of a plan, usually like 10% or 20% max.
a certain insurer pays 3.5% something.

The premium is barely 30 bucks a mth for a a male younger than 30s, for abt $200k? I'll be generous and say 20%, so thats $6 a mth? (but the hard truth is its more like 3.5%, so thats actually $1.05)

ILP typically pays abt 50% commission. Another certain insurer pays 60%
A ILP Plan of $200,000 for the same guy would costs at least $200 a mth

Thats $120 a mth commission.

And im ignoring the annual bonus that is scaled based on the agent's total premium sold. As well as the overseas convention, that is scaled based on premiums as well. To sell term, you need to sell at least 6 term plans to match 1 ILP plan for the same overseas convention qualification.
And for the 3rd quarterly contest that spring up now and then, tendencies then to be awarding gifts for numbers of ILP sold, not number of term plans sold. Another certain insurer offers electronics devices if u sold X number of ILP, and then another better device for Y number of ILP sold.

I hardly see any other term insurance contest.


Why would insurance agents like a policy that net him $1.05 to $6, than another policy that nets $120?

 

[archcherub]

if you can find an insurance agent that is happier financially from term insurance sales than ILP sales, I will be very interested to meet him and know his principle insurer.

I have know people working in the insurance corporates side, and I have absolutely no idea that there are people inside who happier with term sales more than ILP.
I guess their specific marketing unit for ILP must be a front to confuse others.

 

[diediex]

i don't really understand why ppl are so fixated with the "break even" thing.

I have an analogy but not sure if it makes sense anot;

Imagine you need to eat a $2 plate of chicken rice once every month.

The chicken rice stall uncle's daughter approaches you and draw out a plan which u can eat their chicken rice for free,

The plan is as follow, every month you pay a premium of $12 to the stall, with which, as the daughter explains, $2 will be paid for the chicken rice and $10 for an investment proposal.

After a total of 10 months, the daughter says, you will be guaranteed $120 returns. (Any back off from the plan within these 10 months will see all your premiums eaten).

Voila, after 10 months, you literally break even your 10 plates of chicken rice!


Sounds good? Not so,

You start to think; if i pay $2 for the chicken rice and throw the $10 into my own DIY investment, following the market average return, I can get back around $150 after 10 months.

Hmm, not only did i break even the 10 plates of chicken rice, I can breakeven an extra 30 cups of ice lemon going at $1 per cup too, or 20 sticks of otah going at $1.50 per sticks, or whatever break evens you can think off! LOL

 

[simwb90]

hahaha, moi not saying ilp is good, dun just deduce leh, moi quote real example 1.2k cover 500k term from another post, u go read lor, then u tell me how much need to be invested in this example for the btir, wah your case luggi worst, 1.2k cover for millions, how much u need to pay whole life to cover millions, then u save that amt to invest, u earn so much ah, hahaha

pls read this post and all the discussions that follow, real life example of what moi is talking about, ie whole life policy vs term http://forums.hardwarezone.com.sg/95410354-post53.html, all just posted a few hours ago, hahaha

then read this http://forums.hardwarezone.com.sg/95410728-post25.html, are u greedy?

moi also dun believe in ilp, but got money can consider single premium, cos regular premiums u will lose just based on the out front sales charge of 5%, u need to earn more than 5% to recover that cost first, hahaha, dream on, use your common sense lah, hahaha

single premium = annual premium?

 

[wts2013]

single premium = annual premium?

no, single premium means pay one time, one lump sum upfront, annual premium is till regular premium = u either pay mthly or annual,

single premium vs regular premium ilp are different, go ask your agent for the differences, single is better

 

[hyperbole]

Insurance agents always like to tell you that you get nothing at the end of term policies to make you sign up for their more expensive plans. In reality they just earn very little commissions from term.

Keep in perspective that insurance is supposed to be sunk cost. You're paying in case something happens, but praying that nothing happens.

 

[wts2013]

Insurance agents always like to tell you that you get nothing at the end of term policies to make you sign up for their more expensive plans. In reality they just earn very little commissions from term.

Keep in perspective that insurance is supposed to be sunk cost. You're paying in case something happens, but praying that nothing happens.

hahaha, that's where u need to make your own decisions, what do u want, insurance is pian chiak (sunk cost), dun let them pian lor, my relative bought whole life, paid 26k premiums surrender value 60k after 30 years, u say sunk cost or not, its your choice/view lah, hahaha

 

[Mecisteus]

i don't really understand why ppl are so fixated with the "break even" thing.

I have an analogy but not sure if it makes sense anot;

Imagine you need to eat a $2 plate of chicken rice once every month.

The chicken rice stall uncle's daughter approaches you and draw out a plan which u can eat their chicken rice for free,

The plan is as follow, every month you pay a premium of $12 to the stall, with which, as the daughter explains, $2 will be paid for the chicken rice and $10 for an investment proposal.

After a total of 10 months, the daughter says, you will be guaranteed $120 returns. (Any back off from the plan within these 10 months will see all your premiums eaten).

Voila, after 10 months, you literally break even your 10 plates of chicken rice!


Sounds good? Not so,

You start to think; if i pay $2 for the chicken rice and throw the $10 into my own DIY investment, following the market average return, I can get back around $150 after 10 months.

Hmm, not only did i break even the 10 plates of chicken rice, I can breakeven an extra 30 cups of ice lemon going at $1 per cup too, or 20 sticks of otah going at $1.50 per sticks, or whatever break evens you can think off! LOL

your analogy is good and thats exactly what i am trying to explain.

1) your plan will be hot selling if the daughter is a pretty one
2) most singaporeans will bite and buy because they will receive some cashbacks at the end of X months. this is a "good" plan with no money down the drain

 

[goldsilvercity]

hahaha, that's where u need to make your own decisions, what do u want, insurance is pian chiak (sunk cost), dun let them pian lor, my relative bought whole life, paid 26k premiums surrender value 60k after 30 years, u say sunk cost or not, its your choice/view lah, hahaha

An investment of $26000.
Im going to give a wide margin of error and allocate $6000 for term insurance. Given that was 30 years ago, it is a lot more than the market rate.

The remaining $20,000 to be invested in stock index.
I am going to give a low rate of return of 5%
After 30years, this boring technique of investing in stock indice will only net you a total of $86,438.85

If 8%, a return of $201,253.14


Of course, if you choose not to see and consider other alternatives, then someone would be be happy with his choice of getting $60,000 from a $26,000 WL insurance in 30 years. There is nothing wrong with it. We made our choices and we like to justify it.