20 Years of Investment-Linked-Product (ILP)
A major insurer in Singapore is proudly celebrating 20 years of investment-linked-product (ILP). The company claims to be “the first to bring a comprehensive suit of investment-linked-products to consumers“. Smart use of words there as they are not the first to introduce ILPs here. Another insurer did that earlier but ILPs did not take off then. The former had really popularise ILPs in Singapore.
The first batch of people 40 and above who bought into the ILPs would be reaching 60 and above now. Assuming they are still holding on the the policy with the same sum assured, insurance charges may start to escalate exponentially. This, coupled with the volatile market in the last few years, may be detrimental to their policy value. Those holding high risk funds (think the used-to-be-so-popular china-india funds) could face increasing insurance charges at decreasing unit prices, meaning to say more units will be deducted to pay for the insurance charges due to the low unit prices. Simply put, a double whammy.
Those with insurance charges on par or higher than premium paid may not have benefited from the dollar-cost-averaging effect of a regular premium plan as no premium would have been invested at low prices.
A friend of mine was shocked when she learned that there is no guaranteed return in ILPs. She said that 99.99% of people would not know about this. Her agent friend had proposed an ILP to her. Strangely, she blame the company for coming out with such products and not her friend for proposing it to her. A good friend indeed…
For those in the higher age bands, it’s probably a good time to update the status of their ILPs.