Are ILPs overpriced in fees? Food for thought looking at Singlife vs ILP.?
Was reading Ming Feng's update on the Singlife account, and it states the insurance coverage on the Singlife account is 105% of account value. In the time frame, they pay you 2% and first 10k, and 1% on the next 90k.
In contrast, most ILPs try to cover you for 101% of the premiums, and try to eat up 1 to 2 years of your premiums in fees while charging ridiculous other fees and charges, and apparently not so cheap premium for this 101%.
Why is the ILP 101% death benefit so expensive?
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Singlife Account
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S$100
MIN. ACC BALANCE
Up to 2% p.a. base return + up to 3.5% p.a. effective returns
RATE OF RETURN
2% p.a. for first S$10K
INTEREST CAP
S$100
MIN. INITIAL PREMIUM
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It's not a fair side-by-side comparison. Singlife account is more of a non-participating endowment plan whereas ILPs are a mixture of insurance policies and different investment vehicles to give you both protection and wealth accumulation. Do also note that there's a cap to the death benefit by Singlife account at $50,000.
With ILP, your premiums are invested in the par fund and can potentially achieve returns greater than 2% (fixed for Singlife account).
If you are solely looking for insurance payout upon death, then you should look at death insurance.