ILP Analysis - might as well transfer money to your agent
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- Опубликовано: 3 авг 2024
- I analysed an ILP sent to me by “Danny” who bought this policy from a friend 1.5 years ago.
It looks like a 101% ILP, but unfortunately…
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Chapters:
00:00 - Intro!!
00:33 - Policy illustration
01:23 - Long-term obligation?
01:58 - Investment projections and comparisons
05:24 - Annual management fees are higher than projections
05:42 - Why buy this ILP?
06:20 - Distribution cost
06:56 - If you already bought it
07:43 - If you are going to buy one
07:55 - Outro!! 
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Thanks Seth for sharing this! I am also looking into this plan now and glad to have come across your video. May you share that other than the high upfront fee which is the same for almost all insurance products, is this particular policy still a decent one for one who does not know much about investment?
There are many better options to invest if one don't know much about investment. Roboadvisers are quite.a fuss-free way of investing.
yes you are right.
Hi Seth, what are the alternatives you mentioned that you would share in the comments? Thanks.
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hi Sethisfy, are the figures in the illustration table accounted for inflation...?
Nope! Inflation is not accounted for in those numbers
Hi Seth love the content. Whats your thoughts on singlife savvy invest?
Looks like it's cut from the same cloth as the ILP I analysed
Hi Seth. I've had an ILP for about 7 years now which includes Early Critical Illness. Do you think I should cancel the policy now? The total premiums so far are about 18k while the surrender value is 14k+. So if I were to surrender now, it would be like spending 3k+ on coverage for these 7 years. I've noticed though that in recent months, the surrender value has finally been on a slow rise above the amount of premiums that have been allocated in investment.
Hi Vincent, the worst parts of the ILPs are the upfront commissions and in your case the worst is over. “Break even” does not mean much because the commissions have been paid regardless of how the investment fares.
I don’t think there is a point terminating the policy unless it no longer serves your purpose or if it prevents you from getting proper coverage due to budget constraints.
@@Sethisfy Well noted Seth. Thanks so much for the reply.
Hi Seth, what are your thoughts on FWD Invest First Plus?
You can refer to this video: ruclips.net/video/BdNj61X34rk/видео.html
Hi Seth. Thanks for your informative video. Do you have any thoughts on specifically Manulife SmartRetire (III) ILP? It is a regular-premium one. It states "100% of basic premiums paid will be used to invest into one or more fund(s) of your choice". Before knowing about this whole avoid-ILP business, I was thinking of putting $800/mth for 12 years policy. I am 32 this year. Are your sentiments on this ILP same like the rest? Your reply will be greatly appreciated.
It probably works very similarly to this. You can compare the pages of the product summary to the ones I went through
I bought an ILP from an unethical agent almost 2 years back... so regret I wasn't told all these downsides u shared by the agent... by the time I realise I bought shit... too bad cooling period over.
You can consider writing a complaint via FIDReC: www.fidrec.com.sg/
Can u elaborate abit more what is "distribution cost" ?
Distribution costs refer to the amount paid to “distributors” who sold you the policy. The bulk of it are paid as agent’s commissions, bonuses, and the agent's manager's overriding commissions/bonuses.
Frice?
Ok what would you say to the advisor that says yes you can buy these off the market but I value add by monitoring for you and picking and buying the funds, so I cater to a segment who really dont know or cannot be bothered to DIY
Advisers can already sell those funds outside of an ILP wrapper. Although that would get them a first year commission of $18 to $20 versus the $2,000-$3,000 they'd get for the $3,600/year budget so it's obvious why most don't do that.
What investing expertise do advisers/agents have to justify the thousands of dollars of upfront fees? Basically nothing. Most are just good at sales
Are there any ILPs that are “decent”? 😅
Single premium ILPs tend to be ok if they're the kind without high upfront fees. Singlife Grow isnt too shabby once you consider the sign-up bonus and extra returns for Singlife Account ruclips.net/video/vleKFgQfhs4/видео.html
Valid points, however there's AI funds which the general public don't have access to. Check out fundsmith UK, I allocate most of my client's money into this fund.
I'm also a FA so I'm keen to hear your thoughts, cheers!
Your fund needs to be miraculously good because it needs to accomplish a few things: 1) overcome a RP-ILP’s horrible charges; 2) overcome its own management fees; and 3) give significantly better return for the added trouble of ILPs and its higher fees.
As far as I can tell QQQ gave comparable returns in the past ten years, and since one doesn't have to buy a crappy ILP to invest in the QQQ, and the expense ratio is much lower, they'd be much better off just investing in that.
Also if someone really wants this particular fund, I’m sure there are plain vanilla 101-ILPs that can access such funds. Not the best, but better than the usual types of crappy ILPs being sold. So what's the point of RP-ILP again?
@@Sethisfy ur not addressing the question properly are u sure u can buy AI funds outside? Certain ILPs are good while certain are alright so to each of its own. However u did not state the advantages of these kind of high net worth funds which the public cannot access. Moreover they are structured in a way to benchmark it against indexes like the usual S&P 500. This discussion can go on for days ultimately u must find the correct audience to hold such tools. It’s comparing between active managing vs passive managing. ILPs are more suited for people who do not have time to manage their own portfolios.