Why ILP? Why not direct investment in funds?

Hi Anon,

If you do not need the protection element of an ILP, it might make better sense to invest directly into the funds. Charges for higher for ILP, but it's mainly due to mortality charges, which increases with our age.

So meaning the older you are, the higher your mortality charge and it's this mortality charge that affects your investments in an ILP. More so than the admin charges in an ILP.

Also when you bought an ILP product, technically you as the buyer are responsible of your own investments, because the difference between an ILP and a Participating policy is that; a participating policy is where the insurer does the investing themselves. But for an ILP, you should have been made aware that you are responsible of the investments yourself. (if you weren't aware then the advisor wasn't being truthful and cleart to you) Though I do believe that some advisors do keep themselves updated with the funds so that they are able to advise their clients better, but it's a 2 way street, both parties, the client and the adviser should discuss and see what would make sense.

So that regardless of the results of the investments, there should not be a finger-pointing on whose fault is it.

ILP from insurer are mainly two types, ILP for investment, ILP for protection. The premium allocations and charges are very different.

For pure investment purpose, ILP is not so liquidate and flexible as other platform, like ifast, phillip securities, etc. Penalty and lock-in period are involved. The funds are limited to choose although it covers all the main sectors. They may not be your preferred ones.

If you are looking for protection product with cash values, protection ILP may be a wise choice under certain circumstances. The product features are often suprerior than conventional whole life or term product. Be alert that some agents misell ILP as a wrapper, low coverage, high premium.
P.s. Under the current economic situation, insurers are under pressure to sustain parcitipating fund returns. Very likely, MAS will lower the projected return which insurers follow. Participating whole life policy may adjuested more expensive than before. Term policy rate is trending down.