Advice on ILP

bunnyE

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Hi all,

I am looking into buying insurance for myself and my dad's agent has offered me an ilp; which i am not feeling to comfortable about. The policy he mentioned is the AIA Family First Protect/Secure (not too sure which is the one) with 100% of the funds invested in AIA Acorns of Asia fund.

The policy provides 100k death coverage as well as CI coverage, with premium of $150 monthly.

I JUST signed the policy yesterday and the agent has told me that:
1. The policy entitles me to a "premium holiday" in the event that I am out of income, and the policy will not be terminated
2. I am allowed to withdraw money from my policy, as long as i keep min $1000 in it
3. The policy is flexible - I am allowed to surrender the policy anytime.

However, I am looking into changing my policy, as I have read that:
1. It might take 15-30 years to breakeven
2. There is no guaranteed value
3. I am looking more towards savings (preferably with some sort of life protection; death cover, CI), and I do not want to be in a situation where I'm losing my savings

Can anybody please advice? A friend of mine recommended that I take up the AIA Guaranteed Protect Plus instead (for protection, as he feels that protection > savings).

Spoke to the agent just now and he doesn't seem too keen on me changing the policy. I will be meeting up with the agent this Saturday to rediscuss the policy so I hope to get as much input as I can prior to the meet up.

A bit more about myself:
I am 21, female, non smoker. My dad is paying my premium for the next 2 years until I graduate from uni and start working.

Will greatly appreciate any input from everyone here! :)
 

wts2013

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cancel it, dun buy ILPs, consider insurance from ntuc where u can get your money back, wholelife policy, call to find out
 

limster

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However, I am looking into changing my policy, as I have read that:
1. It might take 15-30 years to breakeven
2. There is no guaranteed value

Thanks to ntucagent for finding the thread. I repost my comment from that thread:

According to the brochure page 9, after paying a total of $90,000 premium after 30 years, the projected non-guaranteed cash value at 4% return = $70,200. If he dies, the total payout is $150,000

If you invest $3,000 a year at 4%, at the end of 30 years, your portfolio is worth $168,254.81

Who would want to buy a policy that cannot break even after 30 years? As I said in the earlier thread, pls look at page 9 and tell me if I'm reading it correctly.

https://www.aia.com.sg/en/resources/...rst_Secure.pdf
 

Perisher

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Not necessarily. We have to be rational on why ILPs has gotten a bad name.

ILP is just a shell to hold unit trust investments with a renewable term insurance combined. The main killers of ILP are the low allocation of premiums to investments in the initial years and high COI in the later years where mortality charges to maintain that renewable term insurance is horrendous which may even be higher than your premiums paid!

If we could somewhat have 100% of premiums upfront channel to the funds selected and reduce that COI to minimum, ILPs become an attractive investment class on its own. Imagine a unit trust with premiums paid protection irrespective of market conditions!

Another key benefit of ILP over normal unit trusts is the ability to do a nomination. To distribute the proceeds of unit trusts, you have to either write a will or depend on ISA in the absence of a will.

Hope this helps.

How about comparing it to directly purchasing ETF+term insurance?
 

wts2013

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How about comparing it to directly purchasing ETF+term insurance?

hahaha, chiu have to make few hundred times more in etf to cover chiu's 100% loss in term insurance, cannot remember the formula, there is a saying famous with traders, hahaha

anyway, ts got advice from expert liao lor, hahaha
 

ochazuke

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Forget about ILP. just get Term Insurance. ILP investment very hard to break even and even if you do, the money spent on other investments like the STI ETF will get you better returns.
 

Perisher

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hahaha, chiu have to make few hundred times more in etf to cover chiu's 100% loss in term insurance, cannot remember the formula, there is a saying famous with traders, hahaha

anyway, ts got advice from expert liao lor, hahaha

eh? Since when one needs to make few hundred times more in etf to cover term insurance?

Think you always had the misconception of buying term = lose $$ without considering the returns from 'invest the rest part'.
ETF makes 7-10% returns annually.

If you compare to a ILP, ETF+term will win it by a mile.
And no, you don't need to make a few hundred times, don't exaggerate.
 
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wts2013

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eh? Since when one needs to make few hundred times more in etf to cover term insurance?

Think you always had the misconception of buying term = loss $$ without considering the returns from 'invest the rest part'.
ETF makes 7-10% returns annually.

If you compare to a ILP, ETF+term will win it by a mile.
And no, you don't need to make a few hundred times, don't exaggerate.

hahaha, both are losers, u need to work hard to make your other money earn to pay your term which is a 100% loss, moi dun have term nor ILP for insurance, hahaha, moi dun like losers, moi only want winners for something which is pian chiak one, just in case one die, not when one is still alive, hahaha

insurance play on your fear and greed leh, so one needs to know how to manage lor, hahaha

oops, but moi recently bought a small single premium ILP to tap on a US fund only available to institutions for long term play, hahaha, it is an investment, not insurance leh, hahaha
 
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Perisher

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hahaha, both are losers, u need to work hard to make your other money earn to pay your term which is a 100% loss, moi dun have term nor ILP for insurance, hahaha, moi dun like losers, moi only want winners for something which is pian chiak one, just in case one die, not when one is still alive, hahaha

insurance play on your fear and greed leh, so one needs to know how to manage lor, hahaha

Term covers death just in case one die. Even whole life cost $$, dunno what you are driving at.
 

wts2013

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Term covers death just in case one die. Even whole life cost $$, dunno what you are driving at.

hahaha, u dun understand, wholelife moi get money back if still alive, term is a total loss of money,

there will be a time when death would no longer be a concern, then can surrender the policy liao and money used for retirement, hahaha, moi already gave example of one which gives 5% return over 30 years, hahaha

oops let me say it again, term vs ILP vs wholelife, are 3 different types of policies, 100% loss vs ??% loss depending on underlying asserts vs total asset/gain with surrender value, 3 different type of insurance, hahaha

and dun confuse insurance with investment leh
 
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Perisher

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hahaha, u dun understand, wholelife moi get money back if still alive, term is a total loss of money,

there will be a time when death would no longer be a concern, then can surrender the policy liao and money used for retirement, hahaha, moi already gave example of one which gives 5% return over 30 years, hahaha

oops let me say it again, term vs ILP vs wholelife, are 3 different types of policies, 100% loss vs ??% loss depending on underlying asserts vs total asset/again, 3 different type of insurance, hahaha

That policy is a rare one? If you look at term+ETF, it would very likely outdo most wholelife plans.

I know you can't wrap your head around the fact that wholelife also cost you $$ but it ultimately pays more than the cost, that's all.

If you can take term+ETF as a whole instead of always trying to separate them, it's also the same thing but pays you more eventually. Plus the benefit to withdraw anytime you want without penalty.

You do realise also that ILP and wholelife both has investment portion?
 

wts2013

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That policy is a rare one? If you look at term+ETF, it would very likely outdo most wholelife plans.

I know you can't wrap your head around the fact that wholelife also cost you $$ but it ultimately pays more than the cost, that's all.

If you can take term+ETF as a whole instead of always trying to separate them, it's also the same thing but pays you more eventually. Plus the benefit to withdraw anytime you want without penalty.

You do realise also that ILP and wholelife both has investment portion?

hahaha, correct, now u got it, it pays more than cost, so is a profit, so worth it, let the insurer work hard to give moi returns, no need to work hard to recover the loss in term, hahaha

back to basics, insurance is just in case, for long term. If moi can make more money, the extra money can still be invested in etf leh, hahaha

dun think it is a rare policy, go tell that to NTUC, if one buy a wholelife, long term is a gain, interest rate will be rising trend, if NTUC manages it portfolio well, better returns will come, hahaha

dun be confused with ILP and wholelife, NTUC has to manage it funds well, it already bao chiak from term insurance, managed its funds to cover all insurance claims in future and to survive, wholelife premiums is part of the capital/portfolio of funds/assets it manages and returns will be shared with policy holders, hahaha
 
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Perisher

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hahaha, correct, now u got it, it pays more than cost, so is a profit, so worth it, let the insurer work hard to give moi returns, no need to work hard to recover the loss in term, hahaha

back to basics, insurance is just in case, for long term. If moi can make more money, the extra money can still be invested in etf leh, hahaha

dun think it is a rare policy, go tell that to NTUC, if one buy a wholelife, long term is a gain, interest rate will be rising trend, if NTUC manages it portfolio well, better returns will come, hahaha

Long term is a gain, but I'm talking about 5% p.a. over 30 years. That isn't rare?

Also, the gain if any is lesser than term+etf and usually the gap is big.
 

wts2013

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Long term is a gain, but I'm talking about 5% p.a. over 30 years. That isn't rare?

Also, the gain if any is lesser than term+etf and usually the gap is big.

hahaha, to each his own, moi not greedy for insurance purpose, hahaha

moi can only say there is not enough research/study on wholelife policies in this forum, people here only talk term and self investment is better, hahaha
 

Perisher

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hahaha, to each his own, moi not greedy for insurance purpose, hahaha
That's why get the most efficient insurance, term plan.

moi can only say there is not enough research/study on wholelife policies in this forum, people here only talk term and self investment is better, hahaha

BTIR has proven itself over decades, you can backtest in the US over century.
There are tons of articles on BTIR actually.

Wholelife policies is a mixed bag in terms of total return. There's a reason why BTIR is famous for it's returns while wholelife isn't.
 

bunnyE

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Hello all,

Thank you all so much for your inputs! Kamsahamnida! I will probably be switching to another policy. Anybody has any recommendations or suggestions? Should I go ahead with the life policy (AIA guaranteed protect plus)?

@wts2013: do you mind sharing with me roughly what wholelife policies are like? If I'm not wrong, the AIA policy I mentioned is a term policy?

@ntucagent: in this case, would the guaranteed protect plus plan be suitable? From what I know, that policy requires me to pay for 12/20 years, and I will be covered until 100. Have not gotten any info from my agent yet.

@ochazuke: I actually have no investment knowledge, and also don't have the funds to invest. So I will probably not be doing any investments in the short term.

@perisher: may I ask, what are BTIRs?
 

Perisher

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Hello all,

Thank you all so much for your inputs! Kamsahamnida! I will probably be switching to another policy. Anybody has any recommendations or suggestions? Should I go ahead with the life policy (AIA guaranteed protect plus)?

@wts2013: do you mind sharing with me roughly what wholelife policies are like? If I'm not wrong, the AIA policy I mentioned is a term policy?

@ntucagent: in this case, would the guaranteed protect plus plan be suitable? From what I know, that policy requires me to pay for 12/20 years, and I will be covered until 100. Have not gotten any info from my agent yet.

@ochazuke: I actually have no investment knowledge, and also don't have the funds to invest. So I will probably not be doing any investments in the short term.

@perisher: may I ask, what are BTIRs?

Buy term invest the rest.
 

wts2013

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That's why get the most efficient insurance, term plan.



BTIR has proven itself over decades, you can backtest in the US over century.
There are tons of articles on BTIR actually.

Wholelife policies is a mixed bag in terms of total return. There's a reason why BTIR is famous for it's returns while wholelife isn't.

hahaha, no need to go for the famous, no need to go for the hype, so long it meets my needs, its my business decision, its my retirement plan, hahaha
 

Perisher

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hahaha, no need to go for the famous, no need to go for the hype, so long it meets my needs, its my business decision, its my retirement plan, hahaha

You asked for research and there are many backtest and research for index ETF investing but I know I can't change your mind since you already made it up long ago...
BTIR does have some hype but most of it have substance.
 
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