A better understanding towards AIA pro achiever 3.0

While some individuals may be drawn to Investment-Linked Policies (ILPs) for reasons such as avoiding the time and effort required to manage their investments or outsourcing the complexities of investment management to their financial advisor (FA), there are compelling reasons to reconsider before opting for ILPs.

1. Efficient Alternatives Exist: Various Fintech investment platforms offer alternative solutions that cater to investors seeking to bypass the intricacies of self-management. These platforms provide access to MAS-licensed client advisors for wealth and investment management advice. The user-friendly interfaces and streamlined onboarding processes make investing more accessible. Investors can even set up recurring monthly investments, simplifying the process and adopting a "set and forget" approach. Best of all there are typically no lock in period for these investment products.
2. Lack of Comprehensive Advisory Support: One critical drawback of ILPs is the deficiency in comprehensive and regular active advisory support and coaching for clients.
3. Policyholder Bears All Investment Risks: A significant concern with ILPs is that all investment risks are borne by the policyholder. This means that if a financial advisor provides poor advice, they face no consequences for their mistakes or inaction. Even if a client's investments suffer losses, the financial advisor remains unaffected. The fees charged by advisors are not tied to the performance of the investment, creating a scenario where FA compensation remains constant regardless of the outcomes for the policyholder.

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In summary, the allure of ILPs may be overshadowed by more efficient and supportive alternatives, such as Fintech platforms, which offer a more client-focused and risk-conscious approach to investment management. It is essential for investors to carefully consider these factors before opting for an ILP to ensure their financial well-being and peace of mind.

Important considerations before committing to an Investment-Linked Policy (ILP):

• Assess your ability to commit to a specific number of years required to reach the breakeven point for your policy surrender value.
• Reflect on your risk tolerance for investment losses of i.e. 20%, 30%, and 50%, gauging whether you can maintain peace of mind without constantly monitoring your investment portfolio and not consider surrendering policy to cut losses.
• Evaluate your ability to commit to premium payments in the event of job loss or financial hardship, considering scenarios like:

a. Pursuing higher education without a income source in near future.

b. Experiencing retrenchment without sufficient savings to cover expenses while seeking new employment.

c. Requring large sum of money in later years for housing, renovation, marriage, childcare, parent expense etc.

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If any of these considerations yield a unconfident answer, it is advisable to steer clear of the Investment-Linked Policy (ILP).

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Signs of an untrustworthy insurance agent:

• Pressuring clients to close the deal hastily, attempting to secure a contract during the initial consultation.
• Lack of thorough understanding of the client's financial background and literacy, including knowledge of a detailed comprehension of the client's risk appetite, such as the ability to withstand investment losses of i.e. 20%, 30%, or even 50%.
• Inability to communicate transparently and understandably with the client, particularly in relation to:

a. Clearly explaining and disclosing all fees charged.

b. Clarifying the investment exposure to stock markets and bonds, emphasizing the risk of substantial capital loss.

Hi! I'm an AIA FA and I can help answering your questions.

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1) The minimum amount is $200/month, there are welcome bonuses available, and they increase with your investment amounts. (E.g. $600/month gives more welcome bonuses vs $400/month etc.)

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2) The biggest factors imo are affordability and sustainability -- is the investment amount affordable? The minimum Initial Investment Period (Lock-in Period) is 10 years. Are you able to continuously fund your APA for 10 years with an investment amount that's well within your budget?

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3) Pros and cons can differ from FA to FA as it's mostly subjective. Imo, pros are that you outsource your investments to fund managers and asset management companies, saving you time and energy. Cons would be the fees of course, and also I guess if you are a high achieving stonkbro, you can be better off making more money investing/trading yourself.

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I firmly believe that most insurance/investment policies offered by most companies are very similar, the main differentiating factor is the FA themselves -- are they prompt? responsible? take initiative? Ask yourself if you would trust your friend with a large sum of your own money many years down the line, if your answer to that question isn't a confident yes then...

Some pointers I want to share with you:

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1. Welcome to the world of insurance. Each document you get here will be this long and chunky, but they will be what save you if you know exactly what to look and where to look, so please do spend some time to read through it slowly. If your friend from AIA does not wish to explain it to you in detail and with patience, then find an agent who will because they are supposed to do so.
2. Now to answer the questions, for 1. , you need to check with your agent, but the illustration assume you pay $500 per month minimum, so it gives you an idea on the financial commitment needed. If you are in NS, it is unlikely you can afford it. And for most things you do post NS, you will still be unable to afford it.
3. I will lump 2 and 3 together for this ILP. Most important thing I am wondering is my question to you: What are you hoping to achieve in pursuing this ILP? That you took the effort to look into this means that your purpose must be important to you.

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I can give you a breakdown on the risks and benefits + pros and cons of this ILP, but it will be like a full fledged article, which I will need you to patiently read. A google search can give you ideas on what I would likely say. In summary, a combination of policies can do it better and for cheaper than most if not all ILPs.