Asked on 13 Jul 2020
I have 2 ILP policy under AIA, then I have continuously funding it for 3 years. I feel that the policy or fund is not performing but my agent keep telling me that his other client are profiting because they select a certain allocation of the fund. Then now he is trying to tell me to buy another one to put allocation under global technology. But I feel like canceling one of the 2 current ILP plan as I feel that I have been cheated on. What are the penalty and is it worth it to cancel?
Sorry to hear about your negative experience. Is your ILP of the protection sort? If it is, then please don't cancel the ILP yet as you are covered if anything happens. Instead, take some time to evaluate the alternatives first (e.g. term fo death/TPD, whole life for CI cover). Make sure that your coverage is not adversely affected. You will definitely suffer financial losses if you cancel prematurely, but I am more concerned that you will lose valuable coverage. At this stage of the policy, you are far from break even.
If your ILP is of the investment sort, you need to see if you have alternatives that might help you offset the losses from investing. Maybe you want to invest on your own. Maybe you actually wanted something safe (in which case, ILPs are not guaranteed and not suitable).
At any rate, I really don't recommend investing via an insurer, and also to keep insurance separate from investing.
Underlying the AIA Global Tech fund is the Franklin Templeton Franklin Technology Fund, which you could just buy off any UT platform that distributes it, without having any lock-ins or the like. The fund hasn't really outperformed the bench mark based on the latest June 2020 fact sheet that I pulled out. 1 year rolling returns was beaten cleanly by the bench mark, 3/5/10 year returns are not even 1% higher than benchmark. I can't say it's a clear out performance.
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We will have to look into your needs in order to determine whether it's worth cancelling the plans. Cancelling your plans early may mean forfeiting your premiums or getting back a fraction of what you've paid for based on the Product Summary.
With regards to your current plans, I will suggest you perform a fund switch instead with the current policies that you have instead of getting another ILP plan. The fund switches will be useful and it's free as well (especially if it's AIA Pro Lifetime Protector or AIA Pro Achiever)
The AIA Global Technology Fund has consistently outperformed benchmark over the long term, you can actually refer to the performance of the fund on the AIA website. But do also note that the Global Technology Fund is classifed as a higher-risk equities fund so depending on your risk appetite, that will affect the fund allocation.
Also, you can view the performance of your investment via myAIA app to know how it's been performing over the past 3 years. Financial planning is an integral part of life. You can reach me here to find out more.
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Oh Yi Ning
14 Nov 2020
Insurance Portfolio Summary
Firstly, one of the most important things to do is to have a complete understanding of your existing insurance portfolio. Through this process, it allows us to understand the coverage that we have, any financial gap, as well as to find out whether we are overpaying for our insurance policies.
Key Reasons Why:
Additionally, we will understand the investment associated with your existing portfolio and determine what we can do to improve it to meet your needs. Above all, committing into a new policy does not mitigate the risk and return associated with your existing portfolio. Thus, I will discourage you from doing so at this point.
In case you are wondering, here is the latest fund performance from AIA Singapore: https://www.blog.pzl.sg/aia-singapore-investment-linked-fund-performance/
Accordingly, it gives you a general direction on where your portfolio should sit. If need be, speak to your agent again and do a proper portfolio management. As always, feel free to reach out for a professional independent advice on your situation.
I share quality content on estate planning and financial planning here.
Nigel Tan, Senior Financial Planner (AFC) at Great Eastern Life
Answered on 14 Jul 2020
If you have an ILP with insurance mixed in, the premium allocation rates are usually lower which could potentially explain why you feel the funds are "not doing well". ILPs are long term commitments.
If you are uncomfortable with or do not understand how ILPs work, its better to avoid it altogether.
The penalty would be that you would forfeit a majority of your premiums paid into the policy. Weigh your options carefully before surrenderring.