I purchased an ILP 13 years ago in 2007 and am thinking of terminating since the coverage is only 50k and I already have the savings for that. Is there an optimum time to terminate it? - Seedly
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Anonymous

Asked on 27 Jul 2020

I purchased an ILP 13 years ago in 2007 and am thinking of terminating since the coverage is only 50k and I already have the savings for that. Is there an optimum time to terminate it?

What should I take into account? How do I know if the coverage is cheap or not? If I terminate now, I will have realised a loss of 3k. Does ILP ever make money in long run especially since my cost of insurance will go up?

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Hi there,

Currently you have 50k in coverage, which in today's standard is not alot. However, don't dismiss this policy all together because of the time which you bought the policy. Fortunately, you managed to stay invested through 2 major financial crisis in the past 12 years. You policy is actually close to breaking even, and you should actually continue to hold it for yourself as a form of alternative investment. Should you know how to manage your funds, you can still make a decent return for yourself.

I have clients with ILP that perform way above the benchmark, its dependent on whether the advisor is able to dispense timely information with regards to your investments. Should you not require the insurance part of the ILP, you can reduce the sum assured to 0 at 55, or if your policy is from Prudential, you can do so now, as the policy has been in force for 10 years.

Do provide more information, so that we might understand your situation better.

E.g. your premiums for your coverage, age taken up

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ūüĎć
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Question Poster

28 Jul 2020

This policy is with Manulife and I currently pay 100 + 4 (for rider) monthly. it was taken up when I was about 24 years old. question: why should I wait till 55 to reduce it when I don't think I require the insurance part now? yes, 50k is not a lot by today's standard and I have already saved this up. if I don't pay this 104 monthly, I will likely just do RSP via poems or another brokerage to buy into SG shares.
Duane Cheng
Duane Cheng

28 Jul 2020

You definitely have the option to reduce your SA to 0, should you come to a conclusion that you do not need insurance coverage from this policy. The key difference in a claim scenario, is that the company will pay you the 50k+account value, vs you liquidating your 50k saved up in a chance event. If you are comfortable with controlling your risk, and using your own liquidity in the claim event it is only up to you to decide. There are many options to take, with Manulife allowing you to RSP into their funds with greater exposure to the different sectors. If you DIY, it is possible but your exposure will only localized to Singapore. Depending on your investing strategy the path taken can vary widely.
Thank You!
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