Hi TS,
I did a calculation with these figures for my ILP (and i just cancelled it after 3 years with a '$3.8k' loss but heck it's worth it.
mine was family protect first (a play of name i guess) and $2k/year
Starting from now, paying a premium of $400-$500/year for a term premium coverage of $100k for death, major CI and TPD till age 75, that leaves me with ($2k-$500=$1.5k) for investment per year.
Supposedly the AIA funds can generate 7% CONSISTENTLY till 65 (which is a generous figure I am freaking giving it), and my own portfolio can generate 7% as well (easily achieveable with index investing, gains and dividends), we will see the break down as such
FOR ILP (I factored in that the 4th - 6th year it will be 100% and 7th to 10th year it will be 102% and 11th year onwards will be 105%):
At age 65, I would have the results:
Insurance premium paid: $32,339 (factoring in the rate of CI,TPD and death multiply by per $1k coverage. I was covered for $100,000 for all)
Investment: $176,503 (every year subtract fund management fee of 1.5%, minus policy fee of $5/month and minus amount deducted for insurance and a 7% growth yearly. I have yet to take into consideration if any other fees are involved)
For quitting now and getting a term to cover the same and doing self investment and at age 65, I would have the results ($500/year for term, $1.5k self-invest in etf with 7% return):
Insurance premium paid: $18,500
Investment: $240,506 (factoring in the charges i use for SCB)
It is a no brainer which is the winner right? hope people who want to buy ilp can see this. Of course if you are damn lazy to not want to do anything other than leaving everything to GIRO, then by all means go ahead with ILP
If you want to control a bit by spending a few minutes once a year to rebalance portfolio, you'll see yourself $70k richer with just the two different approaches
Cheers