I learnt from the talk as well, and would like to share it here.=) On how to make investment link product. It is not a high risk policy.People need it because they need protection and at the same time they want some of their money to be invest with not much hassle.Hence the customer got 2 in 1 products.
When a customer buy an investment link product, your consultant would normally asked you and suggest you which fund that you preffered. Is it a high risk investment with high returns or low risk investment with average returns. An Aggressive Diversified fund like Growth Fund put their strategic assets allocation mostly 70%-80% in equities, fixed income securities & liquid assets-25% and other assets - 5%. The majority of the total return is likely to be in the form of capital gain by way of increases of unit price or by creation of additional units (bonuses) after the end of each distribution period.If you fancy a high returns figure and dont mind the risk, this is a fund that surely suitable for you.If not, better stick to a balance diversied fund or Conservative Diversified fund which gives you average returns . Also the risk is between low to average.
while some fo you might ask:
May i know what is the difference between tranditional insurance and
investment link insurance in terms of advantages and limitation.i've compare my
insurance package with my friends. Mine is tranditional where i have to pay a
fix amount till the end of policy (if not mistaken)while most of my friend buy
investment link insurance. i found that normally their payment is cheaper than
mine for same coverage, let's say 200K life insurance.Next, a friend told me
that she only need to pay for 20 years, after that she no need pay for the
insurance but she'll still be under protection.
The reply is:
A traditional insurance policy is one that guarantees you level premiums and returns (in most cases) based on age of entry. It may be slightly more expensive (if it includes critical illness coverage) but usually serves as a form of forced savings. As it usually comes with cash value, after a while you can allow the cash value to pay off your insurance charges at the expense of your returns.A investment linked policy on the other hand is a good choice to provide high protection at an affordable premium and is usually what is called as a complete package plan which can be customised to individual needs.
Traditional and ILP both have their benefits.ILP you can get big protection in young age with cheap premium. However, when we are getting older, the insurance charges will increase drastically. Thus, if you were paying quite a low premium for that, your cash value inside the policy might not sufficient to cover the insurance charges and riders.Traditional policy might be more expensive compared to ILP. However, the premium is fix because it do not have insurance charges for that. Another benefits is that the death benefits will continue to increase with age. Lets say you buy 100k protection at age 30, the amount of protection will increase with the cash value and it might reached 400-500k, and with the same premium you pay. Like me i bought a life insurance at age 1 about RM20 per month, now i still paying RM 20 per month and the protection is massive.Besides, traditional and ILP both have premium holiday. Means you still can do the same thing as your friend after paying for a certain years. After all, Traditional or ILP is both depends on your needs.
Insurance charges are charges that they charge on your protection and also riders attached. Lets say RM 100 monthly now and his age is 25. Insurance charges and commission will be deducted from the RM 100 and the left will be used to buy units for investment. Because his age now, his insurance charges will be lower than the premium, and therefore you can see some growth in your cash value as there are money left to buy investment units. However, insurance charges might increase with your age just like medical card. You can still continue to pay RM 100 premium, but if the insurance charges is more than RM 100 a month, then company will sell off your units to pay the insurance charges. So now, you can still pay RM 100 BUT your cash value will decreases consequentially until there are no more investment unit in your policy. That time, you can choose to pay higher premium or lapse your policy. That's why its better to pay higher premium now to build up your cash value.ILP:
Traditional :
Well, this may be a typical questions for someone who decides to buy Insurance:
Hi all, i hv few question to ask b4 buying a new policy, am considering of buying 'all in 1' type:
1. Ist a reliable agent a main point to consider?
2. How to justify if d agent told u the premium of ILP is fixed, no more worry increasing of premium in future, is this believable? anything in the policy agreement can prove thier words?
3. For term stand alone medical card, heard most of ppl claim that no guarantee renewal, i mean if u claim the illness b4, when next year renewal, the insurance company usually will not cover the claim illness or else they will increase ur premium for the coverage. Is this a main point to consider if choosing a stand alone medical card, no matter which insurance co.
4. i wanted to buy a policy with life, CI, TPD & rider of premium waiver, plus some savings and medical card(R&B RM150), option of buying ILP (all in 1 policy, benefits in premium waiver if something happened, but disadvantage of lower project return, risk of premium increase) or traditional type (Life+CI+TPD+higher of guarantee savings/returns) + stand alone medical card(disadvantage of no guarantee renewal & premium may increase after certain year)
5. for ILP, how do we know the fixed/standard rider, which mean different agent may apply different rider into the plan with different additional premium.(for example, a ILP, different agent with the same insurance co. will quote different charges, how do v choose the right rider to meet out needs?), what is the basic rider for a ILP?
6. Period of Term until age 70/80/99yrs is consideration point?
7. For ILP, the coverage of Life must be greater than CI?Sincerely need yours advise or opinion, tq
The answers:
1. 70% on product and 30% on agent. Because life insurance is to protect you. If agent does not service, you can do yourself in their headquarters although it'll be a bit troublesome.
2. From the illustration you see i ILP is fixed. Because ILP works on unit cancellation, and the cost of insurance is not guaranteed, and if the performance of the fund is not so good in the future, you may need to top up to get your ILP working. To see how it works, pls attached a copy of the illustration of your ILP proposal and I'll teach you how.
3. There are life stand alone card and general stand alone cards. Life cards are normally guaranteed renewable up to a whatever age the card expires. For general cards, it is normally not guaranteed renewable.
4. Take note when you buy a traditional policy with premium waiver because a premium waiver will normally waive the basic death portion. The riders ie. CI or Medical Card or PA premiums u still need to pay. Traditional policies will be priced higher for the same coverage as compared to ILPs, but the advantage is you'll have consistent returns at the end. ILP on the other hand will be cheaper in price but returns are not guaranteed. So my advice is, how much protection you need and what is your budget, then only decide what policy to get.
5. Look at their sales illustration and ask them what every rider means. Yes you are true that different agents from the same company may give you different riders at different prices. But you don't need to worry because you may not need all of them. The rule of thumb to choose ILP is to look at the cash values projected at the end of 30 yrs. If the cash value is zero at say 25th year, then you will have a tendency to top up. Again this is based on illustration basis maybe 3% to 8% every year. This only serves as a guide. It may go higher or lower depending on the economy.
6. For life and CI, the term is normally 100. For med card is normally 70, 81 and 100. So on the med card, do look for every pros and cons, meaning if a card can cover you up to 100, but lacks this and that, then whats the point? Again in M'sia, the sick age shall be in the region of 50+ to 70+. So judge this for yourself.
7. No not true. Depend on which company. For Great Eastern, AIA and ING, the life must be greater or equivalent because their CI rider will deduct a portion from them when a claim is made. For Allianz and Pru, you will have the option to seperate out the CI rider meaning if claim CI, it wont affect the life portion. These are the companies that i've gathered information so far by reading their policies. GE, AIA and ING may have new riders, so agents from these companies do confirm ok.
