Don't hate ILP policy. I tell you why

Allow me to share my ILP Prudlink and traditional Manulife Signature Protector wholelife insurance which I bought for my children in 2008.


Buying ILS insurance during Recession

ILP is investment link policy.  Interestingly, it so happened to buy these policied during Global Financial Crisis of 2008-2009 is widely referred to as “The Great Recession due to Sub-prime Housing Bubble burst.  

Over the next few years, the Recession persisted.   These few years of Dollar-Cost-Averaging (DCA) premium paying of buying into the subfund units were cheaper.  

Encash; not policy loan; not surrender my policy.

By the time the global stock market covered, The subfund units recovered. I sold some of my ILP units.

In 2012, I managed to cash withdraw from my Prudlink wholelife insurance plan.  

Then I use it to buy a leveraged GE PLG1 endowment of $150k.  I borrowed $108k, paid a single premium $42k.

Today this PLG1 is in its 8-year, nearing my breakeven surrender value and giving me an annual nett cash return of:

2020: Nett yield $3.6k

2021: Nett yield $4.4k

2022: Nett yield: $3.6k

My prudlink annual premium is $1.95k, including with CI rider $100k. I do not need to surrender the Prudlink wholelife plan and its CI $100k.

This is now fully funded by my PLG1 policy bought with my Prudlink Cash withdrawal.

In other words, my ILP Prudlink is free and covered by my PLG1; The excess cash (from PLG1) which I bought Singlife Aviva $500k Termlife at lock-in lifetime premium of $1,250 p.a.  And I still have excess cash from my yearly nett PLG1 return.

In addition, my GE PLG1 adds a free Death coverage which grows from $150k to her lifetime:

Surrender value of $600k or Death benefit of $780k.

Unlike Prudlink ILP, my Traditional Manulife Wholelife has no cash value to withdraw. One can only surrender to cash the policy out.  

So, ILP gives me a success story to share.


In summary,

1.  Cash out from my ILP Prudlink wholelife insurance (no need to surrender the policy; not policy loan).  I still retain my wholelife coverage with Critical Illness coverage.

2.  Add a small tidy sum, buy a Leveraged Endowment.   It is into my Year-8 paying nett $3k to $4k annual payment.  Earns a Wholelife Death increasing coverage benefit and Growing Bequest sum.

3.  Excess annual payout further funds my Prudlink, and other Termlife premiums.

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I am no insurance agent.  But I was told ILP wholelife mortality charges beyond 60 will increase.   So, when one reaches 60-yo, re-think if you should continue it.

My opinion about buying wholelife insurance, minimise paying for the frill riders like Payor benefit; pay your premium annually, not monthly.  Buy Limited Pay, not wholelife premium payment.


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What I gain?

1. In terms of annual payout, I have a positive cashflow and free wholelife insurance coverage at $0 annual premiums for 3 policies:

a. Prudlink: $100k, with CI $150k!

b. Singlife Aviva TermLife $500k

c. PLG1 TermLife CI $150k & increasing

2.  My simple IRR from PLG1 is 1.61% p.a. (11% over 7-years); the first 4-years have no payment; first payout starts from Year-5.  

But no matter, having three free lifetime insurance, which started from a simple ILP Prudlink policy.

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