A very popular topic which many have many views on and today I will like to share my personal views on this. In the past before I even step foot onto the industry I will condemn Investment Linked Policy (ILP) because I dun really understand them and the agents who sold me such products were unable to explain why do I need such products. In fact my understanding of insurance at that point of time is "Buy Term, Invest The Rest".
However after I studied and learn the various concepts on ILP, Term, Endowment and Whole Life insurances I manage to see the linkage between the various form of insurances and I will like to have this chance to share it with you.
The truth is that all insurance policies are actually Regular Premium ILP. Yup believe it or not that is how insurance companies actually make money and have the resources to pay out all the benefits. The only difference that Term and Participating products (Endowment and Whole Life) camouflaged it while ILP simply show what insurance companies do.
Also consider the following situation when one day you suddenly fail to pay for your premium for some good reasons, your Term products will lapse while your Participating and ILP products will continue to be in force and this mean your coverage is still active. Insurance products are just like any regular products you can buy on market, the lower the cost, the less features and lower coverage you get while it is the opposite when the cost is higher. It is just a simple playing with cost and features.
To me ILP is a great who needs flexibility in their policy, for Wholelife is good as you need not worry about rising cost of insurance, for Term well it is cheap for the high sum assured you getting and for Endowment you get a small portion of your premium paid as a guaranteed when the plan mature. But of cos each of these advantages come with its own disadvantages and I shall share them here as well.
For ILP, there is no guarantee on the return and basically it ride on the market values of the funds invested. For Wholelife, the premium paid will be high since the coverage is for the entire life till age 99. For Term well there is no cash value hence no returns even when it mature. For Endowment the coverage is only for a limited term and the premium is very high.
There is no product that is superior to the other. Each insurance product has its own plus and minuses and it really depends with what is your need, your budget and the sequence of purchase of the products. Do your own financial planning to know what you know and if you need help speak with your Financial Adviser to do a fact find on you.
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What is the difference between a term insurance and whole life insurance policy? Which policy is suitable for what kind of people? whole life vs term life insurance
greetings to all.
I would first like to thank the writers of this blog by sharing information, a few years ago I read a book called costa rica investment in this book deal with questions like this one.
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