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Question on whether to terminate an ILP PDF Print E-mail
Written by Wilfred Ling   
Tuesday, 21 September 2010

Question: Hi, I am 27years of age, i have an ILP with one of the Insurance company. My emergency cash savings is rock bottom. My Financial Advisor gotten me to sign up for ILP Insurance 4years ago, saying that this ILP can be used as my Critical Illness/Death/TPD Insurance instead of WholeLife/Term. Should i cancel my ILP and get a WholeLife/Term Plan now instead? Seeing that ILP actually does not benefit and DIY in unit trust when i am financially stable?

Answer: It is too late to terminate your ILP. The capital lost is too great. If you terminate and buy a WL, you are just paying another round of commissions and thus enriching the next adviser. Your ILP now is likely not paying anymore commissions or very little of it. So moving forward, it will not be very costing for you. However, do bear in mind that the insurance charges will escalate when you are older.

The next time, it is important to choose whom you trust and always safe guard your own interest by doing your own due diligent. No one will take care of you except yourself.

Wilfred

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The Watchman  - From the pan to the fire.   |220.255.7.152 |2010-09-21 21:03:10
If he switches to WL it is like jumping from the pan to the fire..because WL is even worse than regular ILPs. Ask him to make adjustment to the coverage and reduce the premium to a comfortable level.
Regular ILP is at least more flexible than WL although both are scam.
Desmond  - Level charges for ILP   |202.156.10.252 |2010-09-23 13:28:19
Hi Wilfred,

I would just like to point out that there are a couple ILP plans that do offer level insurance charges like Manulife's Manulink FlexiPlus, or AXA's Inspired Flexi2, which offers limited level insurance charges even.
Wilfred  - re: Level charges for ILP   |SAdministrator |2010-09-23 21:44:17
Desmond wrote:
Hi Wilfred,
I would just like to point out that there are a couple ILP plans that do offer level insurance charges like Manulife's Manulink FlexiPlus, or AXA's Inspired Flexi2, which offers limited level insurance charges even.


For Manulife's Flexi Plus the insurance charges for death benefit and its critical care accelerator rider are indeed level based on entry age. However, unlike level term and whole life, the insurance cost for death benefit are not guaranteed.

For AXA Inspired Flexi2, the level insurance cost option for death benefit is only available for Max Cover. Regardless of whether the main plan is Max Cover or Select Choice, the Living Accelerator Rider is still YRT (escalating).

If you are an adviser selling these products, hope you have fully disclose to your client that what you state above is only half of the story.
Desmond  - re: Level charges for ILP   |202.156.10.252 |2010-09-23 23:00:22
Hi Wilfred,

Thanks for informing me. I am aware of what you mentioned in the last paragraph.

When I pointed out the ILP plans that have level insurance charges, it was in relation to what you mentioned in your answer about the fact "that the insurance charges will escalate when you are older."
Tan  - Personal Accident, ILP & Whole Life   |183.90.103.173 |2013-04-13 21:33:33
Hi Wilfred

I have two questions :-

1) How necessary it is to have a personal accident insurance plan.

2) I bought an ILP in 2007. Seeing that the returns are not that good and wanting to reduce my insurance premium, I bought a whole life last year and thought of terminating my ILP. Is it advisable for me to cancel my ILP?

Thanks
Wilfred   |SAdministrator |2013-04-15 19:21:49
Tan wrote:
Hi Wilfred

I have two questions :-

1) How necessary it is to have a personal accident insurance plan.

2) I bought an ILP in 2007. Seeing that the returns are not that good and wanting to reduce my insurance premium, I bought a whole life last year and thought of terminating my ILP. Is it advisable for me to cancel my ILP?

Thanks


Most people buy PA plan to pay for medical expenses and lost of income.

But medical cost should be from using a good medical plan while lost of income should be from using a disability income plan.

The exception is for occupations which cannot be insured with a disability income insurance like a policemen and pilot. In this case, the PA may come handy. But policemen will have a problem buying PA plan because their job is too risky. However, they can get it from the HomeTeam group insurance.

It is generally not advisable to cancel a policy which already has been in-force for so long like your ILP. It is likely there is little or no more commissions to pay. The on-going cost in the future is likely to be low. It is better to learn why you bought the ILP only to have second thoughts after 6 years. Terminating an ILP just because it gave you poor return is not a good reason to terminate. You can lose your entire capital in the stock market but that does not mean that stock market is bad.
Anonymous   |220.255.2.37 |2013-04-21 11:03:26
Given up regular ILPs and buy wholelife insurance is jumping from the pan to the fire, ie. whole life is WORSE.
What have the ILPs and the whole life in common? HUGE cost due to HIGH commission to the agents. Who makes and benefits from these 2 products....even monkeys can answer these questions.
Anonymous   |220.255.1.167 |2013-06-09 22:25:45
You should have bought a low-cost term insurance as replacement, and start a regular savings plan into bank deposits and money market funds, together with regular investment plan into no-frills ETFs or UTs.

Since you already bought the wholelife as replacement --- is the coverage enough?

I seriously doubt it. But since you already bought, and if the sum assured is much higher than the ILP and if you're happy with that, then it's up to you.

You can also reduce the ILP sum assured to the bare minimum -- $50 a month(?).
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