Question about Insurance and ILP

[agenda]

Hi guys, I'm about to graduate soon and will be running out of my student insurance so I have been looking at some to get myself covered and at the same time, with new earning power, I'm looking to do some capital appreciation.

After speaking to a friend about his products, I got a rough idea about what I can buy and also, have some doubts because it seems too good to be true. Did some research on the forum and it seems most people would not go for ILP.

Have some questions, hopefully you guys can help me clarify.

Some background info, my friend is from prudential. I am into investing, have done some forex trading but over the past 4 years, I'm still about negative $1,200, highest cumulative loss was about $2,500 as I'm pretty cash-strapped.

So I understand that I would minimally need to get a shieldplan which is pretty cheap but this is currently covered by my student insurance policy (but he keeps telling me, there's some sort of limited coverage) but anyway, I do not see an immediate need to get one within the next year.

Onward to the main gist:

It seems that ILP and Whole-life are much viable options than term life since you don't get money back at all. He did some arbitrary graphing and it seems term is pretty much a waste of money. Subsequently, he compared WL to ILP and it looks really good on paper, since the paid premiums is much lower on ILP. However, I noticed that his curve for ILP seemed intentionally drawn at the same level on the axis.

Shouldn't it function more as a s-curve with each curve overlapping and surpassing each other? I also read in the forums that there are alot of hidden fees here and there?

Looking at the funds under prudential, it seems that the performance over time is about 5%, reaching even 7%. I did more research and found that investing in REITs might actually be a better option since the return is pretty much the same minus the middle-man fees.

Considering all these, is it even worthwhile to consider any of these investment policies from insurance companies?

 

[NiteX2]

Hi guys, I'm about to graduate soon and will be running out of my student insurance so I have been looking at some to get myself covered and at the same time, with new earning power, I'm looking to do some capital appreciation.

After speaking to a friend about his products, I got a rough idea about what I can buy and also, have some doubts because it seems too good to be true. Did some research on the forum and it seems most people would not go for ILP.

Have some questions, hopefully you guys can help me clarify.

Some background info, my friend is from prudential. I am into investing, have done some forex trading but over the past 4 years, I'm still about negative $1,200, highest cumulative loss was about $2,500 as I'm pretty cash-strapped.

So I understand that I would minimally need to get a shieldplan which is pretty cheap but this is currently covered by my student insurance policy (but he keeps telling me, there's some sort of limited coverage) but anyway, I do not see an immediate need to get one within the next year.

Onward to the main gist:

It seems that ILP and Whole-life are much viable options than term life since you don't get money back at all. He did some arbitrary graphing and it seems term is pretty much a waste of money. Subsequently, he compared WL to ILP and it looks really good on paper, since the paid premiums is much lower on ILP. However, I noticed that his curve for ILP seemed intentionally drawn at the same level on the axis.

Shouldn't it function more as a s-curve with each curve overlapping and surpassing each other? I also read in the forums that there are alot of hidden fees here and there?

Looking at the funds under prudential, it seems that the performance over time is about 5%, reaching even 7%. I did more research and found that investing in REITs might actually be a better option since the return is pretty much the same minus the middle-man fees.

Considering all these, is it even worthwhile to consider any of these investment policies from insurance companies?

I always tell my clients to separate their insurance from their investments. Reason why insurance companies came up with such products is mainly for tax purposes in the western countries, where we don't have those problems here. Also, they are unable to offer direct investment products and hence some form of insurance will be embedded inside. The charges will more or less always be the same few: admin fees, policy fees, distribution costs in the initial years, insurance charges etc.

Get yourself covered with an integrated shield plan ASAP as well!

 

[havetheveryfun]

there are already a lot of threads on ILPs in this section. You might want to search for them and read up on them first.

But the general opinion regarding ILPs in this forum is that ILPs suck!

 

[reinphd]

Hello, the insurance part you're paying for ilp is crazily high age band after age band. I just sold off 2 ILPs at a loss because I tabulated in the long run even including now, level term I am paying to cover till 75 and my investment far beats the ilps combined by a few notches

Sent from Samsung SM-G900F using GAGT

 

[reinphd]

7% gain minus 1.5% fund management fee(usually) minus $5/mth policy fee - insurance coverage which steps up with age

Sent from Samsung SM-G900F using GAGT

 

[agenda]

Wow, I did more reading. Saw that this guy made a total of $15,000 payment over 13 years and his current value is only $15,3xx. That is only 2% growth over 13 years? Didn't even beat inflation and if he surrenders, there is admin charge which means he lost money.

Granted, he was covered throughout the entire period for a meagre sum of 50k.

I guess there really isn't much to contend? BTITR seems to be the most viable option. Even if I do not invest, ILP will at most increase the value of my money by a negligible amount with a certain risk factor.

 

[disavowed]

The insurance industry is a scheming cesspool which tries to influence people's mindset that investment is difficult and need to be managed by their 'experts' or 'professional fund managers'. Really now any layman can invest in relative safety by buying ETFs that track a whole market etc. The key is to be conservative and hold for the long term while dollar cost averaging and don't panic or get excited by market conditions. Start small with something like posb invest saver and then move on to stocks and other asset classes. Diversify your asset classes and have a long term horizon. I can guarantee your returns will be higher as there is no management fee or admin fee etc which eat up a bulk of your gains.

 

[Darkzi0n]

U sure he is your friend? He is exploiting ur lack of experience and knowledge in financial products.

And forex (trading) is different from investing.

 

[Shiny Things]

After speaking to a friend about his products,

Be careful. The reason he's telling you about how good ILPs are is that if you buy one he's going to get a truckload of (your) money as commission. The going rate is something like 50-100% of the first year's commission, going straight into your friend's pocket.

It seems that ILP and Whole-life are much viable options than term life since you don't get money back at all.

This is a trick that salesmen use to persuade you to buy WL and ILP policies (which come with a higher commission).

The difference is that for term life, you get a lot more coverage for a lot less money. The sort of price you'd pay for a $100,000 whole-life policy will get you $500k or $1mio of term life; or, to put it another way, you can save 80% or 90% by buying term life instead of whole life.

And that money you save on insurance can go into investments. Instead of handing it over to the insurance company and getting crappy returns (and paying huge fees), you can invest it yourself and get better returns.

Considering all these, is it even worthwhile to consider any of these investment policies from insurance companies?

It's not worthwhile, no. You did the right thing to ask around here - you'll save yourself hundreds of thousands of dollars over your life.

 

[cupcorn]

I'm not an insurance agent and i don't sell insurance. But i just wanna share my 2 cents. ..Get the Shield plan and include the cash rider - look around there's 5 from different companies. That's very important; one year ago I was hospitalised and had to undergo emergency surgery. That would cost a bomb if not for the shield plan - fact is Murphy is lurking and we never know who he would call upon next.

I don't know your profile so I can't tell if a Ilp is suitable or not. The charges are high and it's like buying a annual renewable term plan, yes - the spread is darn expensive too at 5%. But it works for some client who don't mind the cost in exchange of simplicity and professional fund management. In the past I do have groups of doctors who come to me to buy that and that's the reason they wanted it - provided you ensure your benefits expenses are well managed.

Don't jump too fast into btitd also - most people do not know how to manage their investments and drawdown distribution. And talk is cheap that "we can always btitd and get better return at low cost". Work out an investment plan and investment policy statement before deciding if this is something you can and want to do.

You are young so priority is to get adequate insurance first; the rest think later. Most importantly cover hospital expenses so make shield cover your utmost priority. Then consider term coverage - saf group insurance is a good start if you are nsman; cheap and meet your life stage needs while not suck dry your investible net worth.

Once your foundation is built, look at investments. I am a full time trader and I also manage funds for family office and I have this to share with you - setup a proper core fund structure; well diversified index/etc in the 4 major asset class (allocate according to your risk apoetite) - cash/bonds/stocks/properties. Once you have that, monitor and rebalance and start to build your satellite structure - you do FX so that could be one. If you are active in trading then make sure you control your leverage (makes no sense to go 1:400 - that's playing Russian roulette; 1:50 is all right). Look into other investments you have interst in over time such as business. Most importantly make sure that's money you can lose and not bat an eyelid; otherwise put it in the core portfolio.

Key is slow and steady -start with the basics and build upwards. There's no return without risk but there's nothing better than buying discounted money that an insurance can provide.

All the best !

 

[Keverus]

take that friend out of your life, he/she is toxic and after your money.

 

[djchris]

Hi guys, I'm about to graduate soon and will be running out of my student insurance so I have been looking at some to get myself covered and at the same time, with new earning power, I'm looking to do some capital appreciation.

After speaking to a friend about his products, I got a rough idea about what I can buy and also, have some doubts because it seems too good to be true. Did some research on the forum and it seems most people would not go for ILP.

Have some questions, hopefully you guys can help me clarify.

Some background info, my friend is from prudential. I am into investing, have done some forex trading but over the past 4 years, I'm still about negative $1,200, highest cumulative loss was about $2,500 as I'm pretty cash-strapped.

So I understand that I would minimally need to get a shieldplan which is pretty cheap but this is currently covered by my student insurance policy (but he keeps telling me, there's some sort of limited coverage) but anyway, I do not see an immediate need to get one within the next year.

Onward to the main gist:

It seems that ILP and Whole-life are much viable options than term life since you don't get money back at all. He did some arbitrary graphing and it seems term is pretty much a waste of money. Subsequently, he compared WL to ILP and it looks really good on paper, since the paid premiums is much lower on ILP. However, I noticed that his curve for ILP seemed intentionally drawn at the same level on the axis.

Shouldn't it function more as a s-curve with each curve overlapping and surpassing each other? I also read in the forums that there are alot of hidden fees here and there?

Looking at the funds under prudential, it seems that the performance over time is about 5%, reaching even 7%. I did more research and found that investing in REITs might actually be a better option since the return is pretty much the same minus the middle-man fees.

Considering all these, is it even worthwhile to consider any of these investment policies from insurance companies?

I've fallen victim to this when I graduated from poly too. Friend just wants you to buy so that he makes a truckload of commission. You cant blame him. It's his job to sell.

In my case, I also supported my friend and bought an ILP policy from said friend. He decided to switch agency and my policy became an orphan policy after earning the commission. This could happen to you too.