Should I continue with the traditional Whole Life insurance multiplier with a 25 years premium term from Pru or cancel and take up a new ILP Plan? - Seedly
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Insurance

Whole Life Insurance

Investment Linked Policies (ILP)

Anonymous

Asked on 24 Apr 2019

Should I continue with the traditional Whole Life insurance multiplier with a 25 years premium term from Pru or cancel and take up a new ILP Plan?

26 years old

WL Premium: $130/mth. Had paid for 3 years.

Coverage: Death/TPD/CI:$150K,drop to $50k after 65.

Early CI: $87.5k,drop to $35k after 65

Surrender value @ age 65 (@3.25%) : ~$32.5k

ILP Plan:

Coverage: Death/TPD/CI:$150K (fixed) No Early CI

Premium: $200/mth

Surrender value @ age 65, 4%: $120k (non-guaranteed)

Allowed to withdraw funds in times of emergency after 2nd yr

If I surrender my traditional WL, loss =$4,680.

Need some advice. Thank you.

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Hey Anon, first off you're comparing apples and oranges when looking at a traditional WL vs an ILP.

WL plans have level premiums, which means that cost of insurance won't get more expensive as you age. ILPs have increasing cost of insurance and would become unsustainable in old age as you'll be deducting the cost of insurance from your investment units.

This, ILPs aren't that suited for whole of life cover due to this.

If you want coverage for whole of life, stick to your WL plan. If you want more, you can buy another one.

WL plans also have guarantees, ILPs are 100% non guaranteed and have to be closely managed by either yourself or your advisor.

I also probably think that you have some fundamental ideas of insurance a little off. If your advisor is advising you to replace the WL with an ILP, lose ECI cover, pay higher premiums, plus take on more risk on the variable return, I think its a bit of a red flag.

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Hariz Arthur Maloy
Hariz Arthur Maloy

24 Apr 2019

Valid! Then I'd suggest getting another WL policy if you want more coverage for whole of life. An ILP's cost of insurance is too expensive for you to keep whole of life too. So you'll have no coverage after 65 or end up slowly reducing your policy value.
Loh Tat Tian
Loh Tat Tian

25 Apr 2019

Can I check on this. Let's say I have CI at age 65. My surrender value is now $80,000. My coverage for death and CI is $50,000 each (but CI is accelerated). How does it work then? Does my policy terminate and I get my coverage + bonus?
Thank You!
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Brandan Chen
Brandan Chen, Financial Planner at Manulife Singapore
Level 7. Grand Master
Answered on 25 Apr 2019

Same thoughts as Hariz.

For WL, you would be getting ECI cover and a fixed premium payment term. However for the ILP which your advisor suggested, you lose ECI cover and it's not guaranteed that you would be able make those returns.

The advice provided by your advisor doesn't make sense. What if one is down with ECI? Does your advisor also suggest that you surrender your ILP to meet your expenses?

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Thank You!
Can you clarify
I wonder if
This is so helpful ūüĎć
What about
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