Insurance - ILP

[ocs_woodlands]

I spent the 3 day weekend over the New Year combing through all my families' policies.

I am quite financially literate BUT i have always found insurance daunting and has hence avoided even looking at my policies and trying to understand them.

In short, I have been ignorant.

Now after the review, I am stumped by the fact that my family has so many policies - me, wife and 2 kids have 37 policies altogether. These include the everyone must have type ie Medishield life all the way to Eldershield... and pte insurance...

I also discovered among the 37 policies, there are 5 ILPs.

And the weekend cramming of knowledge about insurance have made me realise what a dud ILPs can be.

I am quite fortunate, 4 of my ILPs with A** are actually doing quite ok. I happen to have chosen the best funds BLINDLY many years ago.....

ILP 1 - 16 years - in the money - average return 5% per year compound.
ILP 2 - 15 years - in the money - average return of 4% per year compound.
ILP 3 - 6 years - out of money by about 1K
ILP 4 - 5 years - out of money by about 1.5K
ILP 5 - 9 years - out of money by about 7K.

My question is, generally speaking is it good to terminate the above water ILP?

I am not concerned about the protection element as I can easily buy term. insurance.

Seeking some opinions....

 

[akwl88]

Insurance is for protection, not for investment.

 

[anfielder]

I spent the 3 day weekend over the New Year combing through all my families' policies.

I am quite financially literate BUT i have always found insurance daunting and has hence avoided even looking at my policies and trying to understand them.

In short, I have been ignorant.

Now after the review, I am stumped by the fact that my family has so many policies - me, wife and 2 kids have 37 policies altogether. These include the everyone must have type ie Medishield life all the way to Eldershield... and pte insurance...

I also discovered among the 37 policies, there are 5 ILPs.

And the weekend cramming of knowledge about insurance have made me realise what a dud ILPs can be.

I am quite fortunate, 4 of my ILPs with A** are actually doing quite ok. I happen to have chosen the best funds BLINDLY many years ago.....

ILP 1 - 16 years - in the money - average return 5% per year compound.
ILP 2 - 15 years - in the money - average return of 4% per year compound.
ILP 3 - 6 years - out of money by about 1K
ILP 4 - 5 years - out of money by about 1.5K
ILP 5 - 9 years - out of money by about 7K.

My question is, generally speaking is it good to terminate the above water ILP?

I am not concerned about the protection element as I can easily buy term. insurance.

Seeking some opinions....

If I were in your position, I would terminate all. My rationale is, I can invest in essentially the same thing without incurring the charges that ILPs levy.

Look at the underlying funds for those that are making money and look at their returns. I'm sure the returns of the funds are much higher than the 4-5% returns that you got through the ILP.

 

[ocs_woodlands]

If I were in your position, I would terminate all. My rationale is, I can invest in essentially the same thing without incurring the charges that ILPs levy.

Look at the underlying funds for those that are making money and look at their returns. I'm sure the returns of the funds are much higher than the 4-5% returns that you got through the ILP.

You are right. The main funds driving 3 of my policies are superperformers. They are actually up by 30%+ this year..

While I begrudge the A** company, I also count my blessings that I have chosen the right funds through anyhow hantam years ago...

So my question is that if the underlying funds are doing very well and 2 of my ILPs are doing relatively well, should I terminate those 2 and run? Or terminate all 5?

Sent from Common Sense using GAGT

 

[anfielder]

You are right. The main funds driving 3 of my policies are superperformers. They are actually up by 30%+ this year..

While I begrudge the A** company, I also count my blessings that I have chosen the right funds through anyhow hantam years ago...

So my question is that if the underlying funds are doing very well and 2 of my ILPs are doing relatively well, should I terminate those 2 and run? Or terminate all 5?

Sent from Common Sense using GAGT

I'm not talking about 1 year performance. How has the funds performed for the last 15-16 years?

I would terminate all 5 and switch to ETFs. Far lower expense ratios (can be 0.3% p.a. or less vs ~2% p.a. for ILP funds) and you won't have to pay $5 per month admin expenses for each policy. Anything an ILP fund can do, you can do at a lower cost elsewhere.

 

[Maeda_Toshiie]

You are right. The main funds driving 3 of my policies are superperformers. They are actually up by 30%+ this year..

While I begrudge the A** company, I also count my blessings that I have chosen the right funds through anyhow hantam years ago...

So my question is that if the underlying funds are doing very well and 2 of my ILPs are doing relatively well, should I terminate those 2 and run? Or terminate all 5?

Sent from Common Sense using GAGT

Terminate all of them and put the money elsewhere. If you find the stock valuations to be too high for your tastes, put them inside ABF. Otherwise dump them into IWDA if you think the bull has a year or more to run.

 

[ocs_woodlands]

I'm not talking about 1 year performance. How has the funds performed for the last 15-16 years?

I would terminate all 5 and switch to ETFs. Far lower expense ratios (can be 0.3% p.a. or less vs ~2% p.a. for ILP funds) and you won't have to pay $5 per month admin expenses for each policy. Anything an ILP fund can do, you can do at a lower cost elsewhere.

Of the 5 ILPs my family has, only 2 are > 15 years. One 16 and another 15. The first one pa about 5% (using financial calculator to calculate), the 2nd one 4%....

Both ILPs underlying fund (different weights) is the fund below ....

One policy started in 2001 another in 2002.

My main doubt is whether the same idea that apply in equity investing ie LET THE WINNERS RUN would also apply to ILP or would ILP's overall cost structure pull down even winners..

Sent from Common Sense using GAGT

 

[oceanicmanta]

Of the 5 ILPs my family has, only 2 are > 15 years. One 16 and another 15. The first one pa about 5% (using financial calculator to calculate), the 2nd one 4%....

Both ILPs underlying fund (different weights) is the fund below ....

One policy started in 2001 another in 2002.

My main doubt is whether the same idea that apply in equity investing ie LET THE WINNERS RUN would also apply to ILP or would ILP's overall cost structure pull down even winners..

Sent from Common Sense using GAGT

u hv to look out for the mortality charges as u get older. these will eat into your units, & less get invested as you age, regardless of market/fund performance.

there is at least a 3% bid-ask spread on selling.

for those in the money, I would terminate them ... 5-6%pa return is quite good.

same goes for those out of money, just cut loss.

 

[starfish.starfish]

Since you are financially literate, why not manage the investment portion on your own? Better change all out of ILP before your health condition changes.

ILP has heavy premium charges if you do more analysis on your insurance plans. I see liao I faint for mine. Unfortunately, I cannot do anything about mine anymore. if You are able to, please do it!

I spent the 3 day weekend over the New Year combing through all my families' policies.

I am quite financially literate BUT i have always found insurance daunting and has hence avoided even looking at my policies and trying to understand them.

In short, I have been ignorant.

Now after the review, I am stumped by the fact that my family has so many policies - me, wife and 2 kids have 37 policies altogether. These include the everyone must have type ie Medishield life all the way to Eldershield... and pte insurance...

I also discovered among the 37 policies, there are 5 ILPs.

And the weekend cramming of knowledge about insurance have made me realise what a dud ILPs can be.

I am quite fortunate, 4 of my ILPs with A** are actually doing quite ok. I happen to have chosen the best funds BLINDLY many years ago.....

ILP 1 - 16 years - in the money - average return 5% per year compound.
ILP 2 - 15 years - in the money - average return of 4% per year compound.
ILP 3 - 6 years - out of money by about 1K
ILP 4 - 5 years - out of money by about 1.5K
ILP 5 - 9 years - out of money by about 7K.

My question is, generally speaking is it good to terminate the above water ILP?

I am not concerned about the protection element as I can easily buy term. insurance.

Seeking some opinions....

 

[akwl88]

fees,fees,fees,fees

 

[Shion]

Terminate those that already break even ?

 

[ocs_woodlands]

u hv to look out for the mortality charges as u get older. these will eat into your units, & less get invested as you age, regardless of market/fund performance.

there is at least a 3% bid-ask spread on selling.

for those in the money, I would terminate them ... 5-6%pa return is quite good.

same goes for those out of money, just cut loss.

Ok. I see your point on mortality charges. Perhaps the past 15 years or so, the charges were low and I was very "heng" about the underlying funds selected...

So now, in my mid 40s, I should start to exit ILPs before the mortality charges go up.

Just to check, how can we find out what are the mortality charges applied for a particular ILP?

 

[anfielder]

Ok. I see your point on mortality charges. Perhaps the past 15 years or so, the charges were low and I was very "heng" about the underlying funds selected...

So now, in my mid 40s, I should start to exit ILPs before the mortality charges go up.

Just to check, how can we find out what are the mortality charges applied for a particular ILP?

it's in your policy booklet.

after 50 the mortality charges go up a lot.

 

[dendii]

How do you have 37 policies.... Thats..... ALOT.

How much are you paying yearly?

 

[ocs_woodlands]

How do you have 37 policies.... Thats..... ALOT.

How much are you paying yearly?

Not me alone.

My family of 4 collectively.
And i realised I made a mistake. I calculated medishield separately from the integrated shield plans. So minus 4. So collectively we have 33 plans.

Annual premiums about 25k. Actually I have some really cheap policies eg 4 POGIS policies which cost me less than 2k total but cover 500k X 2 + 300k X 2....

Sent from Common Sense using GAGT

 

[akwl88]

Not me alone.

My family of 4 collectively.
And i realised I made a mistake. I calculated medishield separately from the integrated shield plans. So minus 4. So collectively we have 33 plans.

Annual premiums about 25k. Actually I have some really cheap policies eg 4 POGIS policies which cost me less than 2k total but cover 500k X 2 + 300k X 2....

Sent from Common Sense using GAGT

would love to be your agent

 

[dendii]

My advice is to do a review.... with another agent. 25k for a family of 4, with 33 policies is still ALOT.

What is the coverage like may i ask?

Not me alone.

My family of 4 collectively.
And i realised I made a mistake. I calculated medishield separately from the integrated shield plans. So minus 4. So collectively we have 33 plans.

Annual premiums about 25k. Actually I have some really cheap policies eg 4 POGIS policies which cost me less than 2k total but cover 500k X 2 + 300k X 2....

Sent from Common Sense using GAGT

 

[ocs_woodlands]

My advice is to do a review.... with another agent. 25k for a family of 4, with 33 policies is still ALOT.

What is the coverage like may i ask?

Coverage wise is quite a lot.

For me alone, I pay about 10k and I get about

730k for death
566k for TPD
650k for CI.

The bulk of the coverage is from a very cheap POGIS insurance that gives 500k for each category..
My H&S is as claim even for Pte Hospitals. No deductibles..

I Have 11 policies of which 3 are ILPs. I just terminated one which I made a decent 5% yearly returns on. I am watching the other 2 cos they have significant coverage for life/tpd/CI and currently slightly under water..

I Have 3 disability insurance (including elder shield) which collectively give me 6.2k pm if needed.

The other 4 policies are simply fire insurance for my HDB, DPS and 2 H&S...

Actually, I believe that my 11 policies for myself (and 33 for my family) looks a lot because we have many small policies. I don't believe in buying a single big one requiring 5-6k premium per year. It's too inflexible if I ever need to terminate/reconsider for cash flow purposes..

Posted with Common Sense HardwareZone Forums app

 

[oceanicmanta]

Finally ditched my PruLink ILP after 24 years

Feeling good today.

Finally ditched my PruLink ILP after 24 years !

The investible premium was $1.2K a year.
I got back $53.6K, giving a IRR of 4.63% pa IRR.

Including Critical Illness premiums (about $20k), IRR becomes 0.65% pa

Including various Crisis Waiver + Riders + Misc cover (about 8k), IRR = -0.57% pa

Total premiums (Investible + CI + riders) paid around $56.6K. There were a lot of unnecessary add-ons ... small items that all add up over the years !

Good riddance

 

[Shion]

Feeling good today.

Finally ditched my PruLink ILP after 24 years !

The investible premium was $1.2K a year.
I got back $53.6K, giving a IRR of 4.63% pa IRR.

Including Critical Illness premiums (about $20k), IRR becomes 0.65% pa

Including various Crisis Waiver + Riders + Misc cover (about 8k), IRR = -0.57% pa

Total premiums (Investible + CI + riders) paid around $56.6K. There were a lot of unnecessary add-ons ... small items that all add up over the years !

Good riddance

Wow...Those riders really affect a lot