Read my comments and would appreciate if you could address my concern on the last paragraph in regards to losing out which I mentioned.

Yes I know your concern that investments shud not be mixed up together with insurance. I strongly agree with that because as an insurance agent, i also do not use ILP as an investment vehicle because of the BS return at the end of the day. What I want to address out is the for younger age, get an ILP because the ratio of premium to sum assured is very very low even if you compare directly with a term assurance. This is in point with your saying that we shud pay the least for insurance premium for a said sum assured, then the extra cash we have, we pump it into other investment vehicles.

Just a simple illustration here (based on Allianz illustration) based on a Male of age 30 Non-smoker:

Term Life with riders:-
Term Life : 200K
Critical Illness: 200K
P.Accident: 200K
Medical Card: R&B 400, Lifetime Limit RM1.5M
Waiver benefit
Cost: 5,175.23/annum

ILP with the same benefits:
Cost: RM 3,900

So the difference is roughly RM 1,200/annum and you can use this money to invest anywhere you like. This is the point I wanna point out.

rgds,

This post has been edited by chew_ronnie: May 16 2009, 11:34 AM

most important for me to have ...

1.medical card
2. life & pa insurance.

chew_ronnie,

There is a CATCH here which you need to bring up. All those number are ASSUMING that the I (investment ) portion of the ILP return X % per year. So, what is that X%?? The last 3 years, KLSE went up 30%. If you assume that X is 30%, it will DEFINITELY not happen. And, if the actual return is much much lower than X, I would bet that ILP will cost a lot more than term insurance.

So, what is X assumed in your ILP quotation??

Mark my words. We will see a lot of screaming and crying from people buying ILP in one or two years. They THINK that they got a bargain.

Dreamer

Dreamer,

Good for you to point this out as what you say is true to the fact that if someone pays yearly for ILP, then the phenomenon you say will happen if the X value is low. It is advisable to pay premium on a mthly basis as dollar cost averaging will work by buying more units at lower price.

Yes, 30% will not happen thru out, but I've seen some of the funds has achieved 20 odd% in the bull run. But this is still not the point here, just that paying premium in monthly basis shall get thru this issue.

X is assumed at 3% yearly. Which may may be higher or lower in real case scenario. So there may be some time that policy holders need to top up if the funds performs too low.

I believe, the whole insurance industry is moving towards ILP, and traditional plans shall be phased out very soon. So does this means that ppl SHUD NOT buy insurance when all traditional plans are removed?

Thanks for your sharing here.

chew_ronnie,

<<X is assumed at 3% yearly. >>

1) That number does not seem to be correct.

2) What happen when the return went negative for 2 years??

<<the whole insurance industry is moving towards ILP, and traditional plans shall be phased out very soon. >>

3) That simply mean this plan is GOOD aka MORE PROFITABLE for insurance company. Which means it is BAD for consumer.

4) A 2 years bear market will wake people up very quickly.

Dreamer

This post has been edited by dreamer101: May 16 2009, 10:50 PM

Really? If that happens, yes I won't buy insurance from that company. I'm sure there will be other who will spring up to offer traditional. When there is demand, there will be supply.

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Added on May 18, 2009, 3:10 pmWhat if the market has only ILPs? Means no insurance for you. I can bet with you that this day will come.

This post has been edited by chew_ronnie: May 18 2009, 03:10 PM

Sorry, I'm not into gambling or betting but investing. If that days comes, I will raise funds to start a insurance company for like minded people who are investment savy and want to have insurance security. BTW, I think I will win if I bet.

While insurance companies are pushing for ILP. I don't believe that it will completely overtake traditional plans. I believe all plans have thier pros and cons and serves various purpose for various people, be it traditional or ILP.

its unfortunate that even till this day we hear about people getting misleaded by agents in buying insurance products that doesnt serve thier purpose.

ILP are not horrible investment products but they're not great either. so its important to take note that your primary purpose for ILP is INSURANCE, the returns that comes with it are a BONUS. knowing its pros and cons and conditions that comes with it helps as well.

Some favorable ILP points
1. Affordability - premium to coverage ratio are low
2. Flexibility - riders can be added/removed as seem fit, funds as well
3. Cash Value are not tied up

Some downside
1. NON GUARANTEED - depending on market/funds cash value might even drop to 0
2. risky as age goes older
3. Time to time monitoring/adjusting is needed.

therefore ILP is not for every one unless you meet a certain criteria.
recommended criteria:
1. young (25-30)
2. need high coverage FAST
3. limited budget
4. want to cover a temporary risk (such as loans)
5. willing to stretch every ringgit

other tips in buying ILP includes
1. think twice when proposed projections are high (usually the funds invested are high risked)
2. make sure that the policy contains the funds you choose.
3. apply for a automatic conversion scheme where risk will decrease as age goes higher.
4. make sure the plan meets your purpose!

No point to argue over this matter. Just leave it for the near future to see.

This insurance agent I know came to talk to me about an overseas investment fund. He told me like an investment expert he has done his research and analysis over the last 2 years, his conclusion is the fund gives good returns and is very safe. On further enquiry , he told me the fund invests in futures.

To my knowledge futures are very risky investment, and this guy doesnt even understand some of the basic stuff about investment. The reality is insurance agents are not investment experts even many of them called themselves financial planners. Before committing on these investment, always better to get a second opinion from an accountant or somebody knowledgeable as these financial planners will not -
Give you fair and unbiased advice since they are trying to sell and make commissions
Many of them dont even have proper knowledge to offer good advice

A good read on the matter against endowment policies, from ex NTUC CEO. Same issue in Singapore

http://tankinlian.blogspot.com/search/labe...s%20Bonus%20Cut

So by this definition, savings are investments?

saving is a type of investment. just with low return

I think it is quite hard to define investment.

According to economic theory, buying shares is not an investment. But to many of us, it is.

wodenus,

No. Savings are emergency fund. Which by definition, you need to touch and use when emergency. Hence, you MAY do something about savings in 5 years.

Dreamer

I see. So Fixed Deposits are investments then?

wodenus,

FD is not investment. An investment needs to keep up with the inflation. FD is used as saving instrument.

Dreamer

But you can go to sleep and do nothing for five years and you will be fine. And it will survive stock market crashes.