There are 2 sub-categories of ILPs: ILP as a life insurance type and ILP as a pure investment type. The main difference is that the first type provides a guaranteed sum assured as protection (eg 100k). The second type also gives you a payout benefit, but usually just based on the current value of your ILP (i.e. No guarantee). The next difference is that for ILP as life insurance, your main goal should be protection, NOT investment returns imo. Confusion sets in when clients (and agents) mix up the 2 objectives.
Allocation rates for pure investment ILPs will be much higher (even exceeding 100%) from day one of premium payment. Distribution costs are also different because for the life insurance ILP, part of your monthly premium goes to paying the mortality charges (which increases as you age); basically the cost of that guaranteed sum assured. This alone will give you a hint why the protection and investment returns objectives are conflicting.
WHY people are still buying this product? Of course there are merits, especially if you got it really young. Post is getting long but hope it helps
if you want a more detailed answer pm me