In order to understand about this issue, I will briefly talk about the mechanism of Investment link product(ILP).

ILP is designed in such a way that the premium you paid(a portion of it for the first 6 years) will be used to purchase fund unit and then the accumulated fund unit will be used to pay for your insurance charges.

What is insurance charges?
Every of the rider you added in will incur a charges. Cost of insurance (COI) aka Insurance charges will increase over the time according to the mortality and morbidity table.

The accumulated of the fund unit after deducted the COI, the left over will be your "cash value" aka saving.

The reason you may upgrade your protection without upgrade your premium is because your "cash value" have enough fund to sustain your policy without increasing the premium. The "cost of increasing benefit" is absorb from your cash value instead from your additional premium.

Please take note that since COI is increasing over time, without proper planning, the fund might be depleted and might need to top up at later year.

Well, I'd advise you to look into the new medical card feature as the insurance charges is affordable and the benefit is great, with over a million annual limit and unlimited lifetime limit.

For age 60 years old, male, class 1, non smoker, the annual COI only additional RM442. It's great value for money if you don't plan to upgrade your medical card for the next 30 years.


This post has been edited by ExpZero: Jul 16 2014, 05:36 PM

Bro, you may right, I miss out the point. It is common that health risk is increase by age, so to the Cost of Insurance.

It just had so much to explain and I can't put in a single statement. Just a simple quotation is 20-40 pages.
Of cause it is agent job to educate their client, just it will spend hours to explain the everything from scratch.
Different client have different expectation, some they just want to know every single line like lawyer, some just want to know what they getting and the coverage only.

Now the trend is going towards ILP instead of Traditional Insurance Plan due to many advantage to it. You can check out my page as the link below.

This post has been edited by conqu3ror: Jul 15 2014, 01:56 PM

This could a big miss, and potential lead to people to misunderstand the standalone medical premium keep on increase, while with ILP, its premium of medical coverage doesn't.

The fact, ILP never state the premium is guaranteed forever the same.
It depends on the cash value to compensate the COI.

Imagine after listen to an agent saying ILP premium will be the same until maturity, after 20 years later, insurance company sent a letter stated, cash value of ILP not enough to cover, need to top up premium, if not risk of cease of coverage.
How do you feel about the "miss" done by the agent only after 20 years later on?

This post has been edited by cherroy: Jul 15 2014, 04:30 PM

i strongly agree with cherroy statement above . . . if compare for medical rider attached to ILP / traditional / standalone card the INSURANCE PREMIUM will still increase as age increases.

Why ILP does not increase in most cases told by agent? It's because ILP or investment-link policy have cash value
in the policy & will increase year by year. Insurance company will project the return of certain % FORECAST in the quotation as investment return less the inflation on medical charge. Do take note there is no guarantee in any Investment.

+points for getting ILP early or when you are young:
*insurance charge is low compare to majority of other range of product
*can accumulate some form of savings & policy will not easily lapse compare to standalone
*flexible to top up / reduce the coverage from time to time

oic.. this is very informative.. thank you very much!!