Based on many investment books, forums, blogs, websites that I had come across, Investment Linked Policy (ILP) seems to be a ‘taboo’ and a big ‘no-no’ to all the investors out there.
I happen to have three ILPs, which were purchased well before I started to be more interested and taking an active role in managing my personal finances, around early 2014. One of the ILP is a single premium ILP and the other two are regular savings plan ILPs.
So, lets look at the the single premium ILP which was bought back in March 2004 and invested in the Global Technology Fund. (See fund details in Annex)
Fund and Portfolio Performance
Personal comment & conclusion
i. Decent capital appreciation
The ILP has offered an IRR of 2.88%, which I think is pretty decent given that it is after total fees deduction of S$600. If I was given S$10,000 10 years ago, I doubt I will be able to perform much better and the money would have been earning miserly bank interest.
ii. sub-par performance as term insurance
I think that the $12,500 death and TPD coverage, offered by the $50 annual fee I paid over each of the last 10 years, is very low. If I prorate one of my current term insurance, which covers me till 75 years of age, $50 annual premium would offer me a death and TPD coverage of $20,000.
My personal conclusion is that before one to purchase an ILP, check out what are the unit trust and term insurance plans available first. There may be a combination of unit trust and term insurance which may be able to offer better value than a single ILP for the same amount of money.
Action plan for this ILP on mine – SELL
I am quite happy with the 34% increase in value and I think its time to cash in. I’ve already missed an opportune time in Feb 2014, hopefully I can catch the next upswing soon.