I bought an ILP in 2010 and further bought a whole life plan in 2014. My agent suggested that I can actually use my investment returns from ILP to fund the WL plan. Does this work in the long run? - Seedly
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Whole Life Insurance

Investment Linked Policies (ILP)


Asked on 09 Nov 2018

I bought an ILP in 2010 and further bought a whole life plan in 2014. My agent suggested that I can actually use my investment returns from ILP to fund the WL plan. Does this work in the long run?

I had made 2 withdrawals over last 2 years and kind of regret this decision and i did not access my situation well and bought the WL plan. Should I terminate / convert to paid up for my WL plan and buy a term plan with higher coverage at lower cost? (understand that term life has no cash value).

I had reduced my SA for ILP to go full allocation of premium into investment.

I had also just started with POSB invest saver.


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Your ILP is just another investment vehicle. If your portfolio is sound, there's nothing wrong with withdrawing from it to pay for anything you want.

The thing you need to ask yourself now is that do you have enough coverage?

The rule of thumb is about 10 X of your income for Death Coverage and 3-5 X of your income for Income Protection Due to Critical Illness.

Cancelling any insurance plan early always comes with hefty penalties. And converting it to a paid up policy this early could be an option but i doubt you'll have much coverage left.

You should buy a term if you're also planning on investing yourself. A whole life plan can safely provide you 3 to 4% returns after about 20 years. It's a guaranteed asset. While a term plan is just an expense.

So make sure you have enough coverage first, and if you don't and need to purchase more coverage, ask yourself if you'll be truly investing the difference and confident in achieving a higher return over the long run.

Your age right now and number of dependents will also determine your decision.


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Loh Tat Tian
Loh Tat Tian
Level 8. Wizard
Answered on 12 Nov 2018

It seems to be you are not at all familiar with the various tools and products at your disposal. You will need to understand what you are buying.

1) Focus on getting value for the plans you already had. Understand what are they used for. We also need to know what ILP you have bought. Timebomb ILPs drain your value by fees and cost of insurance. Using something that is suppose to be for long term, to fulfill a short term gap is not ideal at all.

2) For insurance, please cover the most important insurance, (a) medical insurance, followed by either Disability income / Critical illness insurance. Term life (till age 65) is for your dependents / total & permanent disability (which should taper down as you age, as there will be less liabilities).

3) For Whole Life, its meant to be bundled with CI (because term death/TPD is so cheap... BTIR works even with your high interest saving account/SSB).

Work with someone whose knowledge in insurance is excellent and is able to understand ROI needed to cover the cost of insurance (so that you can do a comparison).


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Brandan Chen
Brandan Chen, Financial Planner at Manulife Singapore
Level 7. Grand Master
Answered on 09 Nov 2018

Similar thoughts as Hariz.

You should speak to your financial advisor first, and discuss your priorities in the following order:

  • Hospitalisation Plan

  • Life Insurance (Death/TPD Coverage)

  • ECI/CI coverage

After figuring out the right amount of coverage to have, you should work on the budget to make sure it is comfortable and affordable to you. Insurance is a risk management tool, its not meant to burden your finances.

As for the termination of the WL, unlikely converting it to a paid up policy would give you much value (since it appears that you only signed it in 2014)


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