Asked by Anonymous

Why do people still buy Investment Linked Policies. Don't they see the mortality charges increase with age, high surrender cost, platform fee, and tons of other fee together mortality charges?

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  • Yong Zheng
    Yong Zheng
    Level 2. Rookie
    Answered on 22 Nov 2018

    People who buy ILP is either they don't know about the plans or they know what the plans can give to them.

    Why people still buy ILP.

    1) Flexibility (increase/decrease coverage wo medical underwriting at milestones, premium holiday, these can be very importance for self employed, free lancer)

    2) This is not the only protection plans that they have, usually they will have a base plans, when their loans, responsibility does not require that much coverage, they have the option to decrease or surrender the plan.

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  • Loh Tat Tian
    Loh Tat Tian
    Level 6. Master
    Answered on 22 Nov 2018

    Well,

    1) They are not informed of the various cost by their agents (because they are looking at the "big" picture").

    2) They looked at it like an insurance product (with the 4% and 8% returns and is convinced).

    3) They did their own calculation and found that ILP is slightly better (very rare instances but there are situations it is), since they want to depend on others for investing.

    4) Or they just sign and never read the terms and conditions fees etc.

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  • Yixiong Chang
    Yixiong Chang
    Level 5. Genius
    Answered on 22 Nov 2018

    Because they are sold to them by the sales agents.

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  • Alan Kor
    Alan Kor
    Level 4. Prodigy
    Answered on 23 Nov 2018

    Don't they see the mortality charges increase with age, high Surrender Cost, Platform Fee, and tons of other fee together mortality charges?

    most consumers dont even know all these things and the seller will not want to be transparent with it.

    they are misled by the sellers.

    ilps are rubbish products, low coverage and non-guaranteed returns for ridculous high premiums.

    better avoid!

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  • Hariz Arthur Maloy
    Hariz Arthur Maloy, Independent Financial Advisor at Promiseland Independent
    Top Contributor

    Top Contributor (Apr)

    Level 7. Grand Master
    Answered on 22 Nov 2018

    Protection ILPs that charge only the Net Sum at Risk insurance coverage actually can be a more cost effective BTIR alternative as you pay Cost Of Insurance on the Sum Assured when younger, and it is also a road to self insurance.

    You pay lesser insurance when your investment is doing well, but still protect your downside if markets tank and the life assured passes away, you just have to make sure you cancel or reduce the sum assured to 0 when you're in your 60s or so.

    Also, ILPs allow you to get both protection and investment with a low starting premium.

    I'm not advocating everyone to get it or that I would even recommend the policy, but ILPs have their uses and is not a 'bad' policy per se.

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