Review of one of my Investment Linked Policy (ILP)

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

finance4uandme -ilp1

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.

Conclusion
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.

Annex: Global Technology Fund details
finance4uandme -ilp2

Why health insurance is important (personal experience)

obamacare-health-insurance-for-me-ftr

I have a 9 month old son and the experience has been overwhelming but rewarding. All parents will know that infants cry for a lot of reasons (eg, hungry, pooped just to name a couple).  The biggest worry is when infants fall sick because they cannot express themselves.  It happened to me about three months ago when my son’s fever just does not subside after a few days of taking paracetamol and ibuprofen after he took a vaccination jab.

My wife and I brought our son down to the A&E department of private hospital as we have already insured him through one of the integrated shield plans for private hospitals. After four days of hospitalization (including blood test, urine test and several medication), my son recovered and was discharged.

The recent Medishield Life discussion prompted me to look at my son’s hospitalization bill and the medical insurance claim. See below diagram for the breakdown and my analysis.

finance4uandme -integrated shield plan

“After-Action-Review”

I am very glad that I had purchase a health insurance for my son. Compared against the total bill of $7k , $1k (majority from CPF-Medisave) is definitely much more affordable and easier on the pocket.  In addition, I can also claim for pre- and post-discharge medical fees (+/- 90 days) for my son.

While Medishield Life is good, its enough to cover one for up to B2 ward in government restructured hospitals and will only be implemented in 2015. Personally, I do not have very good opinions of government restructured hospitals due to various experiences, hence I only opt for the private hospitals.

I highly recommend new parents to get an integrated shield plan (private hospital) for their children because:
– you want to insure them when they are young and healthy;
– of guaranteed renewal;
– you can bring them to private hospital (especially for infants, you want fast and prompt service);
– you still have the choice of going to government restructured hospital (if you really want to)

Does your child have a health insurance?  If not, you should start to think about getting one for him/her and yourself as well.

PS: With the $825 daily cash rider payout, the daily cash rider premium for the next 9 years has already been paid for. 🙂