From which company is this ILP?



My understanding is ->

Premium gets divided to four account = Basic Optional Benefits (BUA) + Add On Benefits (PUA) + Investment Unit Account (IUA) + Supplementary

BUA - Death / TPD / CI

PUA - Medical Card, basic payor riders

IUA - Your Investment (Fund Account)

Supplementary - Lady riders, parents, spouse waivers

When your ILP is being set up, you could spesify your requirement, either to BUA or PUA (maximum protection) or to IUA for (maximum investment)

When your initial monthly premium is being calculated, the calculation is done as to make sure that as long as you pay your premium on time, it will cover the insurance charges to you. Any leftovers will remain in the account and accumulate value over time. The growth of the BUA is not going to be spectacular. Same goes to the PUA. IUA is your investment fund. As long as you keep paying your premiums, whatever is in your IUA is not going to be touched. Supplementary, if you have it works like the other accounts.

So, how does it work out. Of course, BUA and PUA charges go up, but initially, BUA and PUA Premium > BUA & PUA Charges. That means every year although BUA & PUA charges increase, so does the BUA & PUA Fund, supported by the premium being put in to cover those charges. IUA definately increase, as charges for the fund is quite minimal (0.5% for bond fund, if not mistaken)

If pru wants to increase the charges, they would have to notify you using the 90 days as above. It is written in the policy, no way to go around this. Now, what happens when there is an increase in the charges, depends on your fund performance and such in your account. You may have sufficient fund to fund the increase without increase in the premium.

What happens if BUA + PUA fund runs out? Charges are now taken out from your IUA, again supported by your premium that you pay, until your IUA runs out, then you have to have a premium increase.

Now, the best feature here is the BUA + PUA are all flexible. You can add benefits or discontinue benefits, or just reduce the sum assured to maintain the premium you are paying. Or you could pay an increased premium should you decide to keep all the benefits. Some here are advocation removing certain benefits because they seem to be useless at a certain age anyway.

End of story, yes, you could actually maintain the premium level you pay for a life policy. However, it requires a bit of monitoring to do so.


This post has been edited by mfitri77: Mar 17 2010, 04:14 PM

ILP works the same in any insurance company, isn't this governed by BNM?... unless it is not ILP. No harm telling though, i bought mine from AIA.

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This post has been edited by waiyeap: Mar 17 2010, 09:25 PM

Check my edited post above, thats how pru structure the ILP. Thinking about it, it is quite possible to maintain the premium you are paying. Had to go through my books just to refresh my memory on this.

This post has been edited by mfitri77: Mar 17 2010, 04:24 PM

Good discussion for a simple question

IMHO u should separate ur investment from your insurance.

Get a term/ whole life policy with CI & medical coverage to maximize your $ per coverage and set aside some extra money for investment in UT/ stocks or real estate. More liquidity & diversification + maximize your dollar average

Of course buying an ILP is much easier 'all in one'

nice and detailed explanation...

Yes, well I think its about time somebody does this anyway. From my experience, ILP's are generally the most misunderstood insurance product of all.

An insurance company have to set aside a 'reserve' for every dollar of premium collected much like banks with deposits. Hence unless all customers suddenly dies the insurance company will be able to meet its indemnity obligations. When the insurer fails it will only effect its shareholders funds not its reserves. Recently, M'sian insurer adopted 'Risk Based Capitalization' which is even more strict on the 'claims reserve' parts i.e. capital > 150% of short term risk/ liabilities.

Don't take AIG as its the holding co that failed not the insurer. Take locally K****, it technically failed recently (mid 2009, liabilities > capital) did u know? Did they stop paying your motor claims? Nope but shareholders needed to inject more capital via R/I but most policyholders did not even notice as their claims were still paid and business as usual.

Ultimately, insurance co. will not fail to 'honor' the indemnity part but might effect the 'returns' part

waiyeap, I have huge doubt over your qualification.. . Have you ever read a yearly ILP policy statement? Let me scan the first page of my ILP yearly statement for you .. no offence really.

ILP has no "cash value" per se my friend. By the time you surrender your ILP, the only 'cash' you have is the value of your (units * NAV)... It is so wrong to say 'cash value that gain thru investment will keep rising'...

Premium Holiday also doesn't seem to appear in my ILP dictionary, there is no such thing as premium holiday in ILP simply because there is no such thing as "Cash value" in ILP. It is so wrong to say 'it will use the cash value in your plan to deduct the insurnce cost in the plan...''. You enjoy the coverage so long as your units within your ILP are sufficient to cover the insurance cost.

oh mine,, why am I here.. I shouldn't even be here to jeorpadise this thread..

yeah...many ppl when heard about ILP plan, the first question they ask, will my money will be burned?.
every ppl's mind are planted with the idea of ILP will lead to losses. For that, many ppl will misunderstood the real concept of ILP and how it operate. Luckily gt agent such as you that can provide with the details. kudos to you..

I thank you for your thorought explanation on Pru's ILP .. haha..but end of the day, the possibility of 'insufficient' premium WILL HAPPEN based on your illustration above and it doesn't sway away too much from other ILPs that I know of... and we can never tell anyone "Maintain to pay X sum for Y years to get Z coverage forever"..period.

Lets not call it cash value then. Lets call it unit trust fund.

Premium Holidays are the name given to certain clauses that say your policy continues to be inforce as long as there are units in your ILP that can be deducted to keep the policy and the accompanying benefits in force.

for this i agree with waiyeap, overall the medical card cost in ILP is lesser than the standalone card offered by the same insurer. This is one advantage of ILP..somehow!

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Added on March 17, 2010, 4:50 pmyes, this is better explained. But to say 'ILP plan + rider wont deplete the unit in the plan" is just wrong , isn't it?

This post has been edited by numbertwo: Mar 17 2010, 04:50 PM

I think I've demonstrated ways for that not to happen. But each to his own, then.

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Added on March 17, 2010, 4:53 pmOf course it would deplete the unit in the plan. That is how insurance charges are paid in an ILP, by deducting from unit bought by the premium. The key here is to see which Unit Account gets depleted, and adjust accordingly.

This post has been edited by mfitri77: Mar 17 2010, 04:53 PM

Yes, indeed, ILP discussion shall stop here.. SOmeone has to advice the thread starter which is the Best Life insurnce here... Rgrds.

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Added on March 17, 2010, 5:06 pmhttp://forum.lowyat.net/index.php?showtopic=1016765&hl=

http://forum.lowyat.net/topic/871542

some threads related to ILP discussed before,in fact there is one more lenghty one which i couldn't find...

This post has been edited by numbertwo: Mar 17 2010, 05:06 PM

WaiYeap,

This is no offence, but to see your explaination on ILP from the point of view of an Insurance Advisor from AIA is totally dissapointing me. You don't understand the basic working principles of ILP. All riders comes with a cost and this will in turn being deducted from the units being invested. There is no one ILP illustration under the Code of Good Practice (COGP) that shows the investement return is only going upwards. Even in the real market scenario the funds wont sky rocket!!! Pls check your stuffs out before even thinking of writting in here as this will only confuse future ILP and insurance shoppers.

Buy insurance for protection........!!! Invest in unit trust or others!!!

From Fellow Insurance Advisor from another company (and hope you are not offended)!

sorry for any inconvenience caused.

We are all here to share, learn and correct our mistakes. These days illustration generated by the system put in worse case scenarios also so the client would be better informed.

ILP is certainly attracting more than it's fair share of criticism. Well if you stick with the principle that insurance is primarily for protection then you can't go wrong here with ILP. Secondary elements such as investment value (the term used usually to describe the unit trust fund value) should be a bonus element on top of the protection which shouldn't be used as a key to convince the customer.

The reason I think is mostly because agents take short cuts in explaining to prospects. They always argue that ILP will give you returns, much like unit trust agents.

The risk of losing your money will always be there, not matter if you park your money with ILP or just a unit trust. That's why financial planners exist, to help and assist you in managing your risks.

Sure, you can do it yourself, you can read about it in newspapers, but nothing beats experience. And experience gained is meant to be shared. That is what foruming should be.