Prudential ILP Cashing Out

[cookieemonsterr]

Hi guys,

I have been reading quite a bit about the ILPs and noticed there is a general negative sentiment about this product.

I pay about 130 (108 for the main policy) a month for my ILP which I purchased in mid 2008 when I was 20. Thus far paid about 7kish, surrender value is 3.6k at the moment.

The funds have been performing woefully (China India and Global Basics)

To be really honest I didnt know what I was getting into. *hands-up* so I am culpable, the projections and so seemed ok for my first foray into doing something with my own money. Really small investment of 100 odd anyway.

At 21 policy year (paid 27k to date), returns (at 4%) expected at 24k and at 26 policy year (paid 34k to date) its expected (at 4%) to be 31k.

Even at 4% returns (from what I know prudential funds have been performing even worse recently), I am expected to lose.

I have got 100k TPD,Death,TI each and 30k accident cover with it..

Feel like cashing it out (unless of course I did my maths wrongly) but thought Id get some advise from guys here.

Thanks in advance.

 

[Successor.]

IMO, please do not cash out. The market will even itself given enough time and usually there will be an average upward trend.

If you cash out now, unless you have better investment opportunities, I rather you just keep the money inside considering you are only paying 130 bucks in total a month.

 

[kenzio8]

Interested to hear more too.
Bookmarked.

 

[Keverus]

have fun looking for ur agent

 

[cookieemonsterr]

Found him, talked to him. Appreciate your concern or lack of for that matter

Thanks successor

 

[NiteX2]

I would suggest that you look into term or wholelife plan instead. ILPs are not efficient as much of the first few years' premium go towards distribution charges such as comms, legal charges, admin fee etc.

If you want the investment element, then u can either invest via unit trust directly or into stocks.
There is a monthly admin fee for the policy which is pretty substantial given the amount you are putting in every month

 

[sanzhu]

$130
put Saf term cover 200000

 

[Successor.]

Sanzhu, I think you misinterpret TS's post. TS is talking about ILP; one that combines investment and insurance product. SAF term life is merely insurance.

The difference in the latter is that you won't get any payback, while the former you will get a return based on the market performance.


NP cookiemonster glad I could help

 

[Shiny Things]

Nah, you're doing the right thing. $3400 is a bit of an expensive lesson at this stage in your life, but it's cheap compared to what you'd lose if you hadn't learned this lesson and piled in with more money later.

Bail.

 

[yourfriendlybanker]

hie hie,

check with your agent if you could do switching with your ILP. any switching fees involve and admin fees if any. most insurance company dun charge, but please ask beforehand. as there is still an insurance coverage of 100k there, thus if anything does happens to you, your 7kish multiplies into a 100k fat cheque for your family. lets be candid about it.

But if your investment outlook is right on the current markets happening, there is still chances of breaking even for your ILPs

i normally dun recommend ILPs to my clients as they have a tendency to eat into your profits through 2 levels of management fees and also they staggered your investment amount through your policy years.

Do remember that in the T&Cs of the policy contract, the insurance company does charge you an annual management fee for HELPING you invest your money into UNIT TRUSTS.

i feel stupid typing this out, i dunnoe why people still bother buying ILPs.. i would prefer to separate investments and insurance into individual category den to mix both together.

Sinkies tend not to read the fine prints of terms and conditions. there is always a reason to read even if its BORING.

lastly, Insurance agents takes a bigger cut of commission in recommending ILPs to client.

 

[MultiplyYourWealth]

Both funds under performed its MSCI benchmarks and with all the fees and charges, i don't see how you can break even anytime soon.

 

[yourfriendlybanker]

thats why doing a portfolio review on the funds TS is in would serve him purpose if he still wants to keep the policy.

no point him placing his funds in china/india and god knows where global basics in vested in, when the outperfomance now is in DM.

Consider an approach to euros, japan and usa for the portfolio would be much better comparatively to staying in the same geographical allocation.

just a recommendation. you got to stay invested to breakeven or profit, if he cashes it out now, it will be real loses.
similarly to this, market could go opposite and your loses will be greater. but its only 7kish. you can earn it back anytime

 

[MultiplyYourWealth]

It is a sunk cost. It shouldn't be taken into account when making a rational decision.

She should stay invested on her own and not through an ILs if she knows where to park her money in.

 

[yourfriendlybanker]

can't agreed better if she knows where to invest on her own.