I don't recommend someone to buy investment linked plans (ILP) because we are the ones who bear the risk, not insurance companies. When we buy insurance, we want our risk to be transferred to the insurance companies. ILP can't achieve this objective. However, I never say that ILP is not good. It is just that you have to take the investment risk when you buy ILP.

I am not promoting ILP because of the following reasons. But, I never say that ILP is not a good product. It is just that we need to take the risk of investment.


i) The return is not guaranteed. When I open my AIA sales illustration system and choose ILP, the first 2 pages show me a lot of beautiful figures for investment value. But, after I read the third page, I am surprised because all the figures just now are getting less and less and reach ZERO. I am sure that if I show it to my propects, they will be surprised and may consider to terminate all their ILPs purchased previously immediately if their insurance agents never tell them about this before. Some insurance agents tell us that we can get 9.5 % or 12 % annually for their ILP. Hello, these figures are just projection and estimation and are not stated in the policy contract. So, I prefer something that gives me guaranteed benefit although it is not much and not high. At least I know what I will definately get it when I need it the most no matter how bad the world economy is in the future. If we want to invest to get a high return, I will suggest investing in shares.

ii) Like what b00n have said, protection is protection and investment is investment. Don't mix. As we all know, the premiums of riders are not guaranteed to be fixed generally. After 10 to 20 years, the premium rates may increase. This may affect the investment value of ILP. If the world economy is in crisis like what is happening now, we may need to pay extra premium so that the ILP will not lapse.

iii) I am not an investment expert. So, I don't know how to explain the risk factor well. What I know is every investment involves risk. According to Warren Buffett, high risk is not knowing what we are doing. We buy unit trusts or ILP because we have no knowledge and there is a group of so-called experts there to help us to invest and monitor the performance. In other words, the risk for ILP and unit trust is very high if we don't know what we are doing. If we know what we are doing, why not we do our own research and invest ourselves in shares which give us much higher returns in the long run.

For the main differences between traditional life insurance and ILP, please read KCLau: Personal Finance Money Tips.

Please correct me if I am wrong.

This post has been edited by lcl832002: Mar 9 2009, 05:21 PM

Hi. I recommend you to buy 4 in 1 plan from AIA. It is not an Investment Linked Plan (ILP). I never suggest my clients to buy ILP due to several reasons. If you are 30 years old, male, non-smoker and working in office, the monthly premium is RM 182, around RM 6 per day.

RM 182 per month? 4 in 1 plan? RM 6 per day? What does it cover?
It actually covers the following things:
1) Whole life insurance - RM 100,000.
2) Medical card - annual limit RM 60,000 and lifetime limit RM 200,000, guaranteed renewability subject to reasonable terms and conditions.
3) Critical illness - RM 50,000.
4) Personal accident - RM 100,000 (death benefit); RM 1,000 per month up to 180 months (RM 180,000, serious disability income); RM 3,000 per year for each accident (medical reimbursement); RM 100 per day up to 730 days (accident hospital benefit); RM 5,000 (compassionate allowance).

If you are interested, you can call your AIA agent to know more about it...

I hope it helps you...

This post has been edited by lcl832002: Mar 9 2009, 11:34 PM

I will not defend AIA if it is really unstable. Why? Because I am also a consumer. For your information, all the financial institutions including banks and insurance companies in Malaysia are regulated closely by Bank Negara Malaysia (BNM). So, BNM will not allow bankruptcy happening to them. If a financial institution really has to declare bankruptcy, BNM will protect our interests as consumers and policyholders.

Your agent is right. Even AIG bankrupts tomorrow, AIA Berhad is still very stable as it has been separated from AIG. Last year, AIA in Malaysia earned a pre-tax profit of around RM 200 million. The words "An AIG Company" will be deleted when AIA changes its logo again in the future. AIA is no longer called AIA. In the near future, AIA will be named as AIAG, AIA Group. So, AIA is a group by itself.

If you are still worried, please read my blog. There is a letter written by the CEO of AIA Berhad. Just click the link below...

This post has been edited by lcl832002: Mar 10 2009, 01:04 AM

What is the point of being the largest in the world if AIA is not financially stable like AIG? AIA group has more than $ 60 billion of assets. What do you think about this figure? I myself don't care whether AIA is the largest in the world. What I care is whether it has branches in other countries. AIA can be found in Indonesia, Thailand, China, Hong Kong, Brunei, Vietnam, Philipine, Singapore, South Korea and many other countries.

When we say AIA is separated from AIG, we mean that AIA's financial management is free from AIG's intervention. AIA is like a son and AIG like a father. Now, AIA wants to marry. Does it mean AIA has nothing to do with AIG any more after marriage? No, the relationship between them is still there by law and nature. But, AIA has its own family now. So, it can make decision on any matters by itself. This is what we called AIA is independent in terms of management system.

In fact, all these things are not important. The most important thing is AIA is still earning a lot of profit. Last year, AIA's pre-tax profit is around RM 200 million. AIA still can get this amount of pre-tax profit last year when AIG nearly collapse last September.

About the website, AIA needs some time to do update.

I hope you get a better understanding on AIA situation now.

This post has been edited by lcl832002: Mar 10 2009, 01:23 PM

Thanks for your praise...