In January 2020, I was pressured into buying a AIA Pro Lifetime Protector - Max. This is my first investment linked insurance policy. My yearly premium is 4K. Should I withdraw? - Seedly
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Anonymous

Asked on 20 Jun 2020

In January 2020, I was pressured into buying a AIA Pro Lifetime Protector - Max. This is my first investment linked insurance policy. My yearly premium is 4K. Should I withdraw?

I did not understand the policy and trusted my agent who is also my friend. After purchasing it, I regretted after realising I could invested in other avenues. I felt cheated and after educating myself with finance information, I would rather go through SSB/ETFS/Short term endowment plans. Its beyond the window period (90days). Please advise if I should withdraw this policy.

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The Professor
The Professor
Level 4. Prodigy
Answered on 21 Jun 2020

ILPs are the worst, no matter what people tell you.

I was in a similar situation, ended up surrendering the policy with a loss of a few K's and used the money to invest into the stock market instead. Best decision I've ever made.

I'd say get out as soon as you can but ultimately the decision is yours. NEVER mix insurance and investment together. There's a reason why agents love to push ILPs, I don't think I need to tell you why. Have a look at all the threads on ILPs on the HWZ forums ;)

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👍 7

Hi anon,

Did you pay it yearly or monthly? Is there death/TPD/CI cover?

If you paid it yearly, you would still benefit from the coverage given by the policy. I will say this: Surrendering the policy now would still result in no surrender value, but the lost of your coverage from now till Jan 2021. If you choose to let the policy continue first and not renew on Jan 2021, you would have at least gained one full year of coverage since you already paid for it (I hope you get what I mean)

Instead, use this time to find suitable alternatives. Look for coverage if you need it. Open you investment account and start investing if you have to. Just remember that if you will be under insured should this policy lapse, then you should do something to ensure that alternatives are in place and there is no gap first. I do not recommend mixing investments with insurance, there are probably more cost effective ways to insure, and better ways to invest than via the confines of a policy. As mentioned, use this time to sort things out first.​​​

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👍 4
Frankie Rappaport
Frankie Rappaport
Top Contributor

Top Contributor (Jul)

Level 9. God of Wisdom
Answered on 20 Jun 2020

Life Insurances are as Endowment plans structured products,

structured particularly complex so that the client cannot understand. Stop the contract early.

Read a lot how DIY investing, which nowadays is easy, after some reading, serves you better.

On what not to do, and what to consider,

you could read here:

https://seedly.sg/questions/what-is-your-general-investing-philosophy-strategy

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👍 3

Hi Anonymous,

If you were pressured into buying an investment-linked policy, and/or if you did not understand the policy's structure before buying, then something is not right between you and your FA friend. The questions you need to ask yourself is:

  • Did you mention your financial goals and gaps clearly to your FA?

  • Did your FA make suitable product recommendations to meet your financial goals and fill your financial gaps?

In other words, it is important that you maintain good communication with your FA to help meet your financial needs.

Now that more than 90 days have past, seek advice from your FA if your AIA Pro Lifetime Protector - Max policy is suitable for you to continue servicing. If the policy is deemed to be no longer suitable for your financial needs, you may either surrender it to AIA or sell it to a resale insurance policies broker for higher cashback.

Disclaimer: I own a business trading insurance policies.

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Boon Peng
Boon Peng
Level 6. Master
Answered on 20 Jun 2020

Hello there! It seems that you have already decided your answer. Since you do not know what you are purchasing, best is to withdraw. Alternatively, you can also clarify the product specifications with your friend.

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S
SYDZNL
Level 3. Wonderkid
Updated on 27 Jun 2020

Non financial related comment coming through. If you feel cheated, your friend isn't your friend. Withdraw him/her too.

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ZL
Zack Liew
Level 2. Rookie
Answered on 26 Jun 2020

Alot people have the misconception that ILP is a shit plan. ILP is actually a good plan if your concern is more about protection as a minimum of 100 dollar can get you 100k coverage.

But if your main motive is to invest, then this is not suitable for you and surrender the plan is the best option

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Thomas Ng
Thomas Ng
Level 2. Rookie
Answered on 26 Jun 2020

ILP is gd for those who wanted high coverage but no budget and usually those young people who just started into the workforce. For ILP, u can be flexible in your control on the coverage and investment portion... But do take note that the insurance cost for ILP is rather high if u are reaching late 40s or into 50 onwards... So end of the day it depend on what ur needs and wants before we can make a judgement on the ILP plan that you have bought. :)

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A
Anonymous
Level 2. Rookie
Answered on 22 Jun 2020

Hi there, please do look through the contract or contact your insurer on alternative ways than to surrender the policy. You can also look into reducing your regular premium for ILP policies if $4k per year is too steep for you.

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XiaoFeng Zou
XiaoFeng Zou
Level 2. Rookie
Answered on 22 Jun 2020

If you feel this is a mis-sell, raise it to the insurer and MAS to prove your point. You may get a chance of getting your premiums refunded.

But if it is just purely because you discover your returns have been compromised especially due to Covid-19 situation, consider re-selling your policy or just simply cut your losses by early termination.

Lastly, don't buy what you don't understand.

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Cedric Jamie Soh
Cedric Jamie Soh, Director at Seniorcare.com.sg
Level 9. God of Wisdom
Answered on 22 Jun 2020

I don't like ILP with its high fees and sales charge and hidden expenses fees in the funds

but I'm more puzzled by your thinking that SSB / ETF / short term endowment plans are substitute for an ILP. they are totally different needs

in the Long term an ILP would most likely invest higher roi than SSB. they are different instruments for different needs.

but yes I'll say no to ILP, stick to robo investor and ETFs

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Colin Lim
Colin Lim, Financial Services Consultant at Colin Lim
Level 7. Grand Master
Answered on 22 Jun 2020

Ilp normally is advise to pay monthly as to tap into DCA strategy. So you are paying monthly or yearly?

I would suggest you to talk to your fren. I don't think u got cheated. At that point of the sale,you dont really understand.

Right now, i neee understand what are the funds you invested in,

2nd) what model of ILP isit... It will be best to show the policy document to let us go through.

Lastly, talk to you fren... 14 days free look period is up.. So either u make a decision to cut loss or continue...

U need to understand your time horizon and what is passive investing. What is your risk appetite?

#planwithcolin

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William Seah
William Seah
Level 4. Prodigy
Answered on 22 Jun 2020

I wonder why he chose that policy. What was his wish, to insure, to invest, to do both?

Regardless the idea to use SSB/ETF/Short term endowment is strange; unless you intend to create a portfolio, in which case that works, these three are not quite substitutable.

My suggestion would be to see if the agent is capable to manage this portfolio for the client. If so, leave it as it is, use other money to invest.

Ilps have their strengths, but you gotta know how to use them. Over a long time period, their fees are low; and insurance costs is actually on a one year renewable term so that makes it even more affordable. ILPs can be used to simulate a BTIR format; especially if you have limited funds.

I don't know your salary; 4k can be high or low. It also depends on your coverage desires.

Best bet is to meet an advisor or two, or even the initial advisor. Go back to understand why you bought this plan. What do you want out of it. Why do you now what to change? What triggered the change?

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We need more details in order to give you a better assessment on what you should do. Firstly, find out the coverage under this policy, as well as on the insured amount.

Next, spend quality time to evaluate whether this plan is able to help you achieve your future planning, e.g. in terms of insurance protection. Generally, AIA Pro Lifetime Protector is used as an insurance protection policy, together with an investment cash value. As the emphasis is on protection, therefore we need to set our expectations right.

Once you have a better understanding on the policy and know how you wish to plan for your future, speak with your agent to understand why this policy was proposed to you, and whether it helps you achieve your needs.

If it doesn't work out, then you have probably made the wrong choice in the first place. On the other hand, if you feel that the policy may be able to help you meet your goals, make the right adjustments to that end, e.g. fund switch, premium holiday when required, etc.

I share quality content on estate planning and financial planning here.

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I think the freelook period is actually 14 days instead of 90 days but it doesn't matter since its June already.

An ILP serves more as a protection policy with long term growth potential in investments. Perhaps ask around more or have a discussion with another agent you may know to see if it really does align with your financial goals. Otherwise, treat it as a painful lesson to remember.

You have a full year to think about it since you paid it on a yearly basis. No doubt you will still get some amount back, but it will be quite minimal.

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