Getting an ILP PLAN from AIA

[Perisher]

Oh, and yeah... most people in this thread don't get what's your perspective. What do you propose is a better alternative to ILP? That's the main topic anyway.

 

[parchiao]

Let me tell you why this is pointless. You are essentially ignoring DCA here. Did you note I say DCA STI ETF?

Another point, I linked an article in one of the older threads in the shares forum, the article was about a famous investor who pointed out that over the long run(decades), where someone keep buying at the high vs someone who kept buying at the low of the market will give a result that is of small difference. The effort to try to capture the low and high are therefore pointless for the average investor.

Anyway, we are giving a range of about 8-10%, nobody is expecting it to be exactly some %. I don't know what's your fuss about?

Besides that, how do you know when is high and when is low? You expect someone who is an average investor to time it?

And anyway, why are you expecting people to put an effort into investing?
Does someone who buy an ILP seems like someone who wanna put an effort into understanding investing?

And are you trying to teach people to time the market? Timing the market is beyond any casual average investor...

DCA has its disadvantages too, especially in the form of opportunity cost. A search on the internet should reveal this and other reasons. Note, I did not say DCA is bad, I just said there are disadvantages.

As for asking people to learn about investments before investing, it is in my view a far more superior way understand the opportunities and risks.

I'll skip the question about ILP since I have already criticised the idea of investing or participating in an investment without first understanding.

 

[limster]

My pleasure. I am going for a holiday tomorrow using my annual 5 digit dividend income. ?

Since you are also adopting dividend warrior strategy, then you are just trolling Perisher? Just like Wahkao, with whose resume is enough to get a $15,000 a month job offer from investment bank, yet claiming that his investment strategy is FATA?

When you hit 65 and your Term insurance expires, your 5 digit annual dividend income and share portfolio provides the protection and capital that you need for retirement (plus hospitalisation insurance).

Yet you claim that you cannot compare BTIR against ILP because term insurance stops at 65 (actually if you go with TM, you can go up to 70 or 75)

 

[parchiao]

Oh, and yeah... most people in this thread don't get what's your perspective. What do you propose is a better alternative to ILP? That's the main topic anyway.

I have stated this already. Buy a traditional life policy if insurance is the objective. Go study about investments first if one wants to invest. Don't but into the idea that index funds is automatically a good option for investing.

 

[parchiao]

Since you are also adopting dividend warrior strategy, then you are just trolling Perisher? Just like Wahkao, with whose resume is enough to get a $15,000 a month job offer from investment bank, yet claiming that his investment strategy is FATA?

When you hit 65 and your Term insurance expires, your 5 digit annual dividend income and share portfolio provides the protection and capital that you need for retirement (plus hospitalisation insurance).

Yet you claim that you cannot compare BTIR against ILP because term insurance stops at 65 (actually if you go with TM, you can go up to 70 or 75)

But you have no insurance cover on your life with what you mentioned. Hitting 65 does not mean that one does not have dependents.

 

[Perisher]

The problem with your statement here is that life policies are about investments. It is the investment that the insurer undertakes to produce the cash value. If someone is good with investments, that person could use a ILP to produce higher returns on the cash value. We already more or less agree that there are better investment alternatives, but that discusion is pointless if the product does not provide for the insurance element in the same way as a life policy or ILP.

I would say this is not really but you got a point. Life policies do indeed have investment elements. I still stand by my point that life policy isn't really about investment. More like a protection and savings.

 

[trojanguy]

sorry

This is my first and only plan yet.

its coverage is only 80k life insurance and 30 CI.

im cancelling it already.

thanks for the advised guys. really so noob on this insurance thingy

 

[Perisher]

I have stated this already. Buy a traditional life policy if insurance is the objective. Go study about investments first if one wants to invest. Don't but into the idea that index funds is automatically a good option for investing.

Haha, I see where we diverge. You clearly don't encourage people to invest at all if they are not going to study deeply about it.

Index fund is indeed a good option except it won't fit into your ideal way of investing.

 

[Perisher]

But you have no insurance cover on your life with what you mentioned. Hitting 65 does not mean that one does not have dependents.

The idea behind BTIR is that you will eventually accumulate enough to cover for what ever you need to cover for with the investment part by 65 or 70.

 

[parchiao]

Because they don't make any sense and show a lack of understanding.
I might not agree with Perisher's views, but at least I understand what he is saying.

These are some of your posts:


If you don't understand why you are not making sense, Perisher tried to explain it to you but you probably think you are correct. In which case, why is no one supporting your reasoning?

For example, your explanation that if you buy when the stock market is high, your profits will not be high, is basically a variation of Wahkao saying you should buy after a crash.

Even FP_IFA, trying to give some balance to the ILP vs other stuff debate, is avoiding adopting any of your reasoning.

Maybe because they have no idea what you are saying too. See other posts in this thread by kletian and anfielder.

I have said that it is imperitive to learn about investing before doing it, there are many considerations to make. Maybe some of you come from an angle where you are firm on investing in one way and so recommend to others to do likewise. I don't for the reason that the holy grail in investing does not exist. So I highlighted that there are other things to consider. Why is it so difficult to understand?

 

[Perisher]

I have said that it is imperitive to learn about investing before doing it, there are many considerations to make. Maybe some of you come from an angle where you are firm on investing in one way and so recommend to others to do likewise. I don't for the reason that the holy grail in investing does not exist. So I highlighted that there are other things to consider. Why is it so difficult to understand?

Haha, I see why it's so difficult to understand your point of view because we are setting out in different path. I don't think you will ever understand people who do not wish to put in much effort to understand investment and and only want to do some simple investment.

You disagree to do something unless one put effort into it. In a way, you are firm in investing in 1 way too but I shall not further this discussion in this direction.

 

[kletian]

I'm not too sure about the insurance product universe but here are some further comments:
If it's true that only ilp and life insurance provides CI, death benefits and other medical stuff after 65/70/75 etc, and both costs the same for similar coverage, then maybe ilp has its uses if your insurance objective is to cover the after 65/70/75 part. This might not make economic sense but it's a valid concern.
Though I still think it's possible to mix other products to achieve better returns or lower costs such as stack on riders for UL that can be afforded if you do btir for some years, or maybe somehow get life insurance that has low investment return amount but stack loads of riders then invest rest.

A problem with pure btir is that there might be some medical problem after 75 that MAY lead to the savings not enough to cover but somehow the ILP/life insurance can. Still, if the cover is like 100k or 200k then maybe the gains from btir beats that anyway.

I know you are saying that objectives are important but in this case, ILPs (to me) are just so bad that for most investment/insurance objectives you can think of there is something better and/or cheaper out there.

Actually, how many on this forum really do purely dca index investing lol. It's just a good simple solution and start point for everyone who even needs to ask about investing.
ADD: I agree that for those who wish to learn investing (instead of just for tips on what to get/invest/do financial planning etc), could explore more options instead of pushing dca index investing down everyone's throats.

 

[trojanguy]

Question:

if ILP is so bad why they offer this to people?

I'm meeting the agent again, i told her to cancel this and i will get term insurance.

But the main point of me getting insurance is to save up for my childs education and also get hospitalization.

Anyone can advised me on this?

 

[limster]

if ILP is so bad why they offer this to people?

ILP is a suitable product for the ignorant, gullible, or lazy. No shame in that, I have an NTUC Living Policy, and I bought it when I was ignorant. Lucky it broke even and annual premium quite small.

Cancel the ILP only if you want to put in some effort into reading and learning about investment. Otherwise, please carry on with your ILP (my view is different from others who say cancel no matter what).

But the main point of me getting insurance is to save up for my childs education and also get hospitalization.

How much % return do you need to fulfil your objectives?

If 4% returrn is sufficient to save up for child's education, 50% bond/50% share portfolio should be safe enough.

If you need 10% return to have enough money, then either forget about your children going to Harvard, NUS good enough, or focus on getting salary upgrades. Investment cannot guarantee this.

Finally, I have mentioned elsewhere that investmentmoats.com has an article about some sample returns from ILP. The normal CAGR appears to be around 3%, though there are some where losses were incurred. Based on these past performance of ILP, I have some doubts when their brochures project 4% or 8%.

I am not saying that 3% CAGR is bad (even then,it is not guaranteed and some ILPs have even lost money), because if you ask the ignorant, gullible or lazy to DIY their own investment, high likelihood their CAGR will be less than 3% - they may even lose all their money.

To give an example that is relevant again. In 2008, some people proudly posted in various forums that they were 100% invested in China, because 2008 is the Beijing Olympic Year and the govt will never let the stock market drop in an Olympic Year. These people are not posting anymore and we haven't seen them since. If you are this kind of investor, better buy ILP.

Hospitalisation insurance, many other threads, nothing to do with ILP.

 

[yeokheelin]

Just want to share that I just surrendered my AIA Achiever recently.

Bought it 8 years ago.
Premium paid $48,000 for 8 years ($500 monthly)
Surrender Value $51,321.39

The charges are too high and I will not recommend it to anyone.

 

[havetheveryfun]

Question:

if ILP is so bad why they offer this to people?

erm isnt this obvious? Insurance companies are not charities.. its still all about profits and revenues at the end of the day. The insurance market is already a bit saturated since almost everyone has some kind of insurance already, so of course they need to come up with new ding dongs and whistles to get people to pay for something else

 

[Perisher]

But the main point of me getting insurance is to save up for my childs education and also get hospitalization.

Anyone can advised me on this?

You can have a saving/stocks/bonds mix to achieve a decent return.

Go to a broker, open a cdp account, buy a mix of bonds and shares.

For bonds, can consider FCL's bond which pays 3.65% for 7 years, or CMT's 3.08% 7 years bond, both capital guaranteed.
Also get A35 bond which is mostly government bonds like HDB, LTA. It pays about 2%+/- yearly and is relatively safe.

For stocks, dollar cost averaging STI ETF will spread out the risk/reward and ensure you will get averaged returns which will be about 8-10%. STI ETF pays a 2%+/- dividends yearly that pays out 1%+/- every 6 months.

Then for savings account, use CIMB's starsaver which give 0.8% with not much work other than the need to increase the savings by $100/mth, it's automatically done for you if you throw in a lump sum. Or consider other higher yielding savings account that needs a bit more work like OCBC 360 or SCB's esaver. These are capital guaranteed.

The bond and savings part can return about 1-3% yearly while the stock part can return about 8-10% yearly, once set-up, it's a few minutes work per year to make it work.

The amount of time you took to understand ILP can be better use here.
Of course, there are other style, but these are some basics.
Ask anything that you don't understand.

Oh, I think H&S is important, do get it.

 

[limster]

Just want to share that I just surrendered my AIA Achiever recently.

Bought it 8 years ago.
Premium paid $48,000 for 8 years ($500 monthly)
Surrender Value $51,321.39

The charges are too high and I will not recommend it to anyone.

Thanks for sharing, this is valuable information as insurance companies do not publish their 'track record' of previous ILPs. From my calculation that is a CAGR of about 1.7% (my maths not so good, pls correct if wrong).

If someone selling you an ILP tell you that their track record is 1.7% CAGR, would you still buy it? Probably not? That's why its better for them to say "projected 4% and projected 8%" than to publish actual track record?

 

[yeokheelin]

Thanks for sharing, this is valuable information as insurance companies do not publish their 'track record' of previous ILPs. From my calculation that is a CAGR of about 1.7% (my maths not so good, pls correct if wrong).

If someone selling you an ILP tell you that their track record is 1.7% CAGR, would you still buy it? Probably not? That's why its better for them to say "projected 4% and projected 8%" than to publish actual track record?

I think my agent earns more than my investment throughout the 8 years. Moreover, he has no risks.

 

[ston12345]

Thanks for sharing, this is valuable information as insurance companies do not publish their 'track record' of previous ILPs. From my calculation that is a CAGR of about 1.7% (my maths not so good, pls correct if wrong).

If someone selling you an ILP tell you that their track record is 1.7% CAGR, would you still buy it? Probably not? That's why its better for them to say "projected 4% and projected 8%" than to publish actual track record?

Think the CAGR is closer to .84% per year.

(51,321.39/48,000)^1/8 - 1 = CAGR.

That's pretty stunning though, knowing the actual figures.