I'm thinking of surrendering my ILP with a lost of $5k?

Hi anon,

Please don't surrender your ILP yet. I am no advocate of ILPs, but it is the only thing you have that is currently protecting you, so hang on to it first.

Right now, some of the options you can use to buy some time are either changing the payment mode to monthly if it is not on that mode already, or going on a premium holiday. The cash value of the policy will be able to sustain the mortality charges (i.e. the cost of insurance for covering you for that death/TPD/ECI/CI)

You're going to need to speak to an advisor first to understand your needs. As a single with elderly parents whom I presume you need to support, then two things come to mind

• Death/TPD coverage: You will need to cater for a sum that will last your parents till their life expectancy + 5 years (as a buffer, in case they are blessed with longevity). A term plan will suffice, but you need to have an idea of the amount of coverage in addition to the duration of coverage

• Income protection against critical illness: A.k.a a CI plan to provide a payout in case critical illnesses strike and render you unable to work. You'll need to have enough to sustain 5 years of expenses at least, with some monies also to tackle treatment costs that aren't covered by your hospitalization plan (you should have this already). There are many forms of CI plans, ranging from whole life limited payment, to single payout, to multipay plans. To understand such plans well, it would be better to speak to an advisor so that you can ask all your questions about the various options; any competent advisor will be able to highlight the pros, cons and the differences between the plans.

Should you decide to surrender the ILP in favour of other plans, please do so only after you have given due consideration to several factors, including

• Your current health

• The scope and amount of coverage

• The loss of accumulated benefits of the ILP

• Forsaking the premiums paid vs the amount you get back

• The 90 day waiting period for critical illness

I hope you will find a solution to your situation. Good luck!

Hi there,

If you're looking at insurance coverage, then a protection based ILP can work if you're looking at protection while accumulating a form of cash value as well. It comes with its pros and cons because this protection based ILPs typically shouldn't be kept beyond a certain age band because the mortality costs would have eaten up your cash value (usually in the early 40s to 50s).

An average protection plan without investment-derived cash value may have cost you approximately somewhere in the two to three thousand dollars range annually. Multiply that by two years and you would have paid approximately somewhere in four to six thousand dollars range. That would be around the same as you paying six thousand dollars for a protection based ILP while getting back a thousand dollars of cash value back. This isn't to support the purchase of protection based ILP but upon hindsight, what did you lose then? The only difference would be if you've gone for a whole life plan, you only need to pay for a period of ten to twenty years to be covered for life while any term/ILP will need you to pay continuously.

So in that sense, you did not make a loss because this plan is NOT meant for investment purposes. It can only be a loss if you know that 100% of what you put in is invested in. If you're looking for investment purposes, you might want to opt for a 101 ILP instead.

My advice to you will be to seek out a licensed financial consultant. Whether to terminate the plan will largely depend on your needs Because as mentioned, the protection ILP can't be kept forever but if you terminate it later on, you may run the risk of health conditions that pose certain exclusions to you. Also, the premiums won't get cheaper with age so the earlier you terminate it so the earlier you get a pure protection plan, the cheaper it will be.

Financial planning is an integral part of life. You can reach me here to find out more.