Have an existing ILP since 11 years ago, cash value of $13k. Should I encash my existing ILP and get term instead?

If you are using an investment-linked policy for protection, e.g. death coverage, total & permanent disability coverage, or critical illness coverage, then you need to be aware of the insurance charges tend to increase over time. In other words, this works in similar fashion to an increasing term policy - higher cost of insurance as you grow older.

Consequently, if you intend to be insured for the long-term, then such plans may not be the best fit. After all, nobody likes to pay escalating cost over time.

On the other hand, a term insurance policy works if you need coverage only for a fixed period of time, e.g. till age 75. For this purpose, there is a chance that a level term insurance policy will be more economical as compared to the cost of insurance in that investment-linked policy. Therefore, if you intend to use your investment-linked policy for protection, then we will need to recalculate your cost. Thereafter, it will become obvious on your next step.

More Details:

• What is a Term Insurance Policy

• Types of Term Insurance Policies in Singapore

Meanwhile, I will suggest for you to do a comprehensive financial portfolio review. This is with the intention to understand what you have, and to set goals for the future. Additionally, this ensures that we keep insurance policies that we need, and to optimise such cost to that end.

More Details:

• Why Every Client needs an Insurance Policy Summary

• The Importance for a Semi-Annual Financial Portfolio Review

After all, nobody is able to give you specific advice (that you are likely to look for) unless we have a complete understanding about you.

I share quality content on estate planning and financial planning here.

Avoid ILPs at all cost. Super high fees and many layers of fees within. Everyone in the pipeline gets a cut from you, and you are the goat at the bottom getting slaughtered by fees. Fees are critical as it reduces your returns significantly.

Only good for your adviser because they earn about 50% of the premiums you pay as commission, rubbish product