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“Double Charges” in a Regular-Premium ILP

There are charges involved in both investing and getting insurance coverage. Purchasing stocks incurs a brokerage fee, and investing in unit trusts involves annual management fees and sales charges. Bulk of the first few years of premiums of an insurance policy goes to “distribution costs” (mainly commissions to the agent). Typically, distribution costs are highest in the first year and steps down over the next few years of a policy.

Regular-premium investment-linked policies (ILP) are touted by many agents to be for both insurance and investments, but do you know that many such policies charge the policyholder distribution costs (on top of investment charges) on his investments, and investment charges (on top of insurance charges) on his insurance?

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No Trouble Until Claim? Smear Tactics Employed by Unethical Agents

In my line, I have always heard horror stories and unbelievable anecdotes of how some agents go all out to make a sale. Some of these are rather complex and difficult to describe to people outside of the industry, but the following is something that is easily shared.

NTUC Income has some pretty good insurance policies that are also cost-effective. Tied agents of other companies usually feel hard pressed to compete with these policies. I have faced this previously, and while I eventually decided to offer my clients better value by crossing to an IFA, other agents have come up with “creative” smear tactics to discredit their competitors, like branding NTUC as – “No Trouble Until Claim”, a play on the abbreviation.

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More on Disability Income Insurance

There is some confusion between Disability Income (DI) insurance and insurance coverage that provides a payout for Total & Permanent Disability (TPD). Despite already writing a post introducing DI insurance before, I believe that more clarification is good to clear the air regarding such a policy that few people, including industry practitioners, are aware of.

TPD coverage is a lot more commonly explained as it is found in many insurance policies. DI insurance, on the other hand, is a very specific type of policy which coverage is markedly different from TPD but often conflated to be the same as they both seem to cover “disability”.

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What is Buy Term Invest the Rest?

Buy Term Invest the Rest is a strategy that provides an alternative to whole life insurance policies. The rationale for such a strategy is that one can invest the savings in premiums one receives by purchasing an inexpensive term policy rather than a pricier whole life policy. The accumulated savings and investment returns will then make up a sum of money for one’s insurance needs in future when the term policy ceases.

Here’s the Math for such a strategy:

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