Investment advice - surrender ILP?

[limster]

Not selling the 101% as a plus point, but at least if something happen, the family will be able to get back something.

if i invest in ETF and stock and something happens, my loved ones will be able to get everything , not just "something."

 

[then00b]

Yep, so ILPs bad investment vehicles unless the money is inconsequential and you have no time/inclination to manage it - established.

Back to the question - is it worth surrendering early?

Lump sum quarterly fees: 0.282% (1.128% annual)
Lump sum flat quarterly management fee: $155
Lump sum early surrender fee schedule:

• Year 1 - 11.280%
• Year 2 - 10.152%
• Year 3 - 9.024%
• Year 4 - 7.896%
• Year 5 - 6.768% <-- today
• Year 6 - 5.640%
• Year 7 - 4.512%
• Year 8 - 3.384%
• Year 9 - 2.256%
• Year 10 - 1.128%
• Fees reduce to 0% at the end of the 10th policy year
• Fees are a % of the current policy value

Regular savings annual fees: 1%
Can withdraw at any time, but must keep at least $10,260 otherwise it's considered surrendered
Regular savings early surrender charges, as a percentage of initial unit value, based on years to end of premium term:
30 years - 91.50%
29 years - 91.00%
28 years - 90.50%
27 years - 89.50%
26 years - 88.50%
25 years - 87.50%
24 years - 86.50%
23 years - 85.50%
22 years - 84.00%
21 years - 82.50%
20 years - 81.00% <-- today
19 years - 79.50%
18 years - 77.50%
17 years - 75.50%
16 years - 73.50%
15 years - 71.50%
14 years - 69.00%
13 years - 66.00%
12 years - 63.00%
11 years - 60.00%
10 years - 56.50%
9 years - 52.50%
8 years - 48.50%
7 years - 44.00%
6 years - 39.50%
5 years - 34.00%
4 years - 28.50%
3 years - 22.00%
2 years - 15.50%
1 year - 8.00%

Surrendering both now would bring a loss of ~$24k. I'm inclined to believe that through self-education and self-managed alternatives I could recoup this and make better returns in the long term.

If I wait another 5 years, assuming a continued annual growth of 1.8% on both, and an additional $20.7k in premiums paid, I would be at $180.5k. Early surrender then would put me at a loss of ~$35k. Waiting, therefore, doesn't seem to confer a lot of benefit.

I'm leaning towards surrendering the regular savings now, taking the loss, and reinvesting the remainder, as well as re-deploying what I would have been paying in monthly premiums. The lump sum also seems to make sense to surrender now - waiting another 5 years would only reduce the loss by ~$5k, which I should be able to make back longterm by investing something with better average returns than 1.8% for that 5 year period..

 

[tangent314]

The 81% surrender fees for the RSP only applies to the $10,260 minimum, not to the entire RSP value, correct? Otherwise you can make 2 withdrawals, the first one to draw down to $10,260 without any penalty, then the second withdrawal would be 19% of the remaining $10,260 and the rest is penalty.

It would thus make sense to surrender the lump sum, and to simply maintain the minimum $10,260 in the RSP.

 

[JuniorLion]

Yep, so ILPs bad investment vehicles unless the money is inconsequential and you have no time/inclination to manage it - established.

Back to the question - is it worth surrendering early?

Lump sum quarterly fees: 0.282% (1.128% annual)
Lump sum flat quarterly management fee: $155
Lump sum early surrender fee schedule:

• Year 1 - 11.280%
• Year 2 - 10.152%
• Year 3 - 9.024%
• Year 4 - 7.896%
• Year 5 - 6.768% <-- today
• Year 6 - 5.640%
• Year 7 - 4.512%
• Year 8 - 3.384%
• Year 9 - 2.256%
• Year 10 - 1.128%
• Fees reduce to 0% at the end of the 10th policy year
• Fees are a % of the current policy value

Regular savings annual fees: 1%
Can withdraw at any time, but must keep at least $10,260 otherwise it's considered surrendered
Regular savings early surrender charges, as a percentage of initial unit value, based on years to end of premium term:
30 years - 91.50%
29 years - 91.00%
28 years - 90.50%
27 years - 89.50%
26 years - 88.50%
25 years - 87.50%
24 years - 86.50%
23 years - 85.50%
22 years - 84.00%
21 years - 82.50%
20 years - 81.00% <-- today
19 years - 79.50%
18 years - 77.50%
17 years - 75.50%
16 years - 73.50%
15 years - 71.50%
14 years - 69.00%
13 years - 66.00%
12 years - 63.00%
11 years - 60.00%
10 years - 56.50%
9 years - 52.50%
8 years - 48.50%
7 years - 44.00%
6 years - 39.50%
5 years - 34.00%
4 years - 28.50%
3 years - 22.00%
2 years - 15.50%
1 year - 8.00%

Surrendering both now would bring a loss of ~$24k. I'm inclined to believe that through self-education and self-managed alternatives I could recoup this and make better returns in the long term.

If I wait another 5 years, assuming a continued annual growth of 1.8% on both, and an additional $20.7k in premiums paid, I would be at $180.5k. Early surrender then would put me at a loss of ~$35k. Waiting, therefore, doesn't seem to confer a lot of benefit.

I'm leaning towards surrendering the regular savings now, taking the loss, and reinvesting the remainder, as well as re-deploying what I would have been paying in monthly premiums. The lump sum also seems to make sense to surrender now - waiting another 5 years would only reduce the loss by ~$5k, which I should be able to make back longterm by investing something with better average returns than 1.8% for that 5 year period..

Change the fund allocation? What fund are you buying now?

 

[giraffey]

Yep, so ILPs bad investment vehicles unless the money is inconsequential and you have no time/inclination to manage it - established.

Back to the question - is it worth surrendering early?

Lump sum quarterly fees: 0.282% (1.128% annual)
Lump sum flat quarterly management fee: $155
Lump sum early surrender fee schedule:

• Year 1 - 11.280%
• Year 2 - 10.152%
• Year 3 - 9.024%
• Year 4 - 7.896%
• Year 5 - 6.768% <-- today
• Year 6 - 5.640%
• Year 7 - 4.512%
• Year 8 - 3.384%
• Year 9 - 2.256%
• Year 10 - 1.128%
• Fees reduce to 0% at the end of the 10th policy year
• Fees are a % of the current policy value

Regular savings annual fees: 1%
Can withdraw at any time, but must keep at least $10,260 otherwise it's considered surrendered
Regular savings early surrender charges, as a percentage of initial unit value, based on years to end of premium term:
30 years - 91.50%
29 years - 91.00%
28 years - 90.50%
27 years - 89.50%
26 years - 88.50%
25 years - 87.50%
24 years - 86.50%
23 years - 85.50%
22 years - 84.00%
21 years - 82.50%
20 years - 81.00% <-- today
19 years - 79.50%
18 years - 77.50%
17 years - 75.50%
16 years - 73.50%
15 years - 71.50%
14 years - 69.00%
13 years - 66.00%
12 years - 63.00%
11 years - 60.00%
10 years - 56.50%
9 years - 52.50%
8 years - 48.50%
7 years - 44.00%
6 years - 39.50%
5 years - 34.00%
4 years - 28.50%
3 years - 22.00%
2 years - 15.50%
1 year - 8.00%

Surrendering both now would bring a loss of ~$24k. I'm inclined to believe that through self-education and self-managed alternatives I could recoup this and make better returns in the long term.

If I wait another 5 years, assuming a continued annual growth of 1.8% on both, and an additional $20.7k in premiums paid, I would be at $180.5k. Early surrender then would put me at a loss of ~$35k. Waiting, therefore, doesn't seem to confer a lot of benefit.

I'm leaning towards surrendering the regular savings now, taking the loss, and reinvesting the remainder, as well as re-deploying what I would have been paying in monthly premiums. The lump sum also seems to make sense to surrender now - waiting another 5 years would only reduce the loss by ~$5k, which I should be able to make back longterm by investing something with better average returns than 1.8% for that 5 year period..

it seems that you have made your own calculations already. If you are confident that you can make back more than the losses and know your risks, I would say, go ahead. I did surrender my ILP around 5 years as well. Reinvested in other channels and did in fact, made much more than the ILP.