Is AXA Wealth Accelerate a good ILP plan? - Seedly
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AXA Life Insurance

Investment Linked Policies (ILP)

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Anonymous

Asked on 30 Sep 2019

Is AXA Wealth Accelerate a good ILP plan?

For the FAM Global Opportunities Plus Fund and paying $600 per month?

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I don't advocate mixing investments with insurance.

Investments should always give you the flexibility to liquidate whenever, without any penalty whatsoever (other than being able to accept the market price of your investments when you liquidate, as well as transactional costs when you buy/sell).

In a regular premium ILP, you are probably going to be hit by many different charges. A very quick look at the WA product summary lists the following fees:

  1. Account maintenance fee

  2. Investment management fee

  3. Early encashment charge

  4. Partial withdrawal charge

  5. Bonus recovery charge

  6. Redemption and Switching fee (currently 0, but they have the right to change it)

That's not counting the fund charges which are priced in at the fund level. I would not think that I would want to pay so many fees, and find myself locked in without the ability to withdrawal penalty-free should I need my funds.

You would have more options in terms of asset classes, availability of funds, etc and greater control if you directly invest, whether on your own or with the assistance of an independent advisor like myself. The options are very wide when it comes to the investment universe. Speak to someone to get an understanding of your risk appetite, motives, objectives, etc before you start investing. The worst thing you could do is rush into the flavour of the month without doing your research. Global markets (especially the US) may look good at this point, but when you invest, it is for the long run and you need to have a strategy to address this.

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Azure

02 Aug 2020

Hi Elijah, thanks for your detailed overview. I have a few queries of my own after I spoke to my agent who is recommending AWA to me. Feel free to share your thoughts on the following points: - Agents says that the fee is only 0.25% if I'm investing for a period of 30 years. This is tabulation of the AMF and IMF fees over 30 years. It does state 3.4% but it caps at the end of the 5th year which is named IUA. But the IMF remains at 1% per year. Based on this calculation, wouldn't the cost be rather "cheap" at 0.25% as compared to other investment charges? - Agent says that there is no insurance component at all, other than the 101% payout if the policy holder were to pass on or have terminal illness. This "insurance" do not incur fees on the policy holder. Thus, he told me that this is indeed a pure investment policy. What are your thoughts on this? - My plan was recommended at $700 per month for 30 years with an "expected" ROI of 8% per annum. Is this percentage too high? I don't know enough to comment, can you kindly share your thoughts? Lastly, if you were to disuade me from going ahead with this ILP, how would you recommend a financial newbie like me proceed next to manage my own investments wisely? Thanks!
Elijah Lee
Elijah Lee

05 Aug 2020

Hi Azure, 1. As far as I am aware, 3.4% on IUA units value for the whole premium duration and 1% on whole policy value for the premium duration. That's nowhere near 0.25% to me. Please clarify with him what your he is talking about. How can the cost be 0.25%? 2. Correct, there are no insurance coverage components. But 101% coverage on your capital upon death/TI is something that you won't live to benefit from, since it requires you to be diagnosed with TI or dead already. 3. Only equity funds have a realistic chance of 8% p.a. over the long run. But the question is, what is the net return to you? It's likely closer to 5%. So what kind of fund is he recommending? And if 8% p.a. isn't achieved, then what's next? The fund may return 8%, but if you take back an equivalent of 5% after policy level fees, then was it really worth it? You can either learn and invest on your own, or get someone to manage for you (not via a policy, please). Those are your two options.
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Zeal Ong
Zeal Ong
Level 2. Rookie
Answered on 01 Oct 2019

Investment link policies are in the market for a reason. Generally, there are better ILP out there. Of course, most people will take about the fees, I do agree fee are slightly higher as compared to other investment platforms. But you must understand that the open another brand new doors for mass-market investors like you.

Wonder how the rich get richer while the poor get poorer? One of the reason, rich people get to invest in things that poor people cannot. The financial industry deems these rich people as accredited investors. Through "Good" ILP, they open these AI Funds to the mass market and allow them to hop on the ride.

Can you buy these AI funds via normal platform?

The answer is yes, proof of $300K income /year or net assets of $2million, you will be deemed as Accredited Investors.

If the return of the funds has been fantastic, then what is that additional 1-2% of charges you paying for the ILP, in my opinion, is worth it.

Not forgetting the idea of Trust vs Insurance.

ILP is due deem as life insurance, and you are still under SDIC protection. Lastly, ILP may charge more, but they do provide you with an attractive welcome bonus package.

The bonus incentive will assist you to earn more when the times are good, they will be able to cushion your loss when the time is bad such that you do lose your capital.

Having said that, ILP also provides flexibility withdrawal. Of course ultimately whenever you choose to buy must align with your financial goals.

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Takingstock @
Takingstock @

02 Oct 2019

I like these comments. Harvey, why don't u create an answer so I can upvote that
Harvey Tan
Harvey Tan

02 Oct 2019

Nah, not necessary. The rest of the answers are pretty accurate and I do not have anything else to value add. I replied to this answer because it stuck out from the rest and it needs to be addressed before anyone take his answer too seriously
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If you lived in the 1990s and 2000s, I would say ILP is in a way to access some funds that are previously not available in the market. There was not much broker house that offers low transactions fees and not only that, estate duty tax exist way back in 2008, which hedges against this when you need to distribute your estate.

Now in 2019,

(1) There are robo-advisor offering low cost alternatives,

(2) Investment through IB and AMTD brokers,

(3) DBS Vickers with low cash upfront

(4) DollarDex, Poems, FSMone, offering lower fees alternative and unit trust

I'm really trying to argue for a case for ILP now, sadly there is none.

You pay Fees for a value premium. What is the value created by the person that wants you to pay him? That is your answer.

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Cedric Jamie Soh
Cedric Jamie Soh, Director at Seniorcare.com.sg
Level 9. God of Wisdom
Answered on 30 Sep 2019

I prefer not to mix investment with insurance.

A lot of investment-linked insurance plan has many hidden costs:-

  1. monthly admin or policy fees

  2. premium gets into a bid-ask spread of 5%, means you get charged 5% for every dollar that goes in

  3. the funds' expense ratio is usually higher than stand-alone unit-trust or funds that are similar or EXACTLY the same. Insurance company feeds into them, hence extra layer of charges

  4. assurance charges may be levied by insurance firms.

  5. all the policy fees, assurance fees etc may not be deducted directly from your premium. Your premium goes into bid-ask of 5%, then the policy deducts the units to pay for the fees. Meaning this roundabout way gets extra 5% out of you. I hate this a lot, it's a dishonest way to squeeze money out. Why can't they just charge the fees outright?

For these various reasons, I think its more worthwhile to separate insurance and investment.

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Thank You!
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