Recently, MAS issue a consultation paper with the purpose of greater disclosure of investment-linked policies. Although the consultation paper is technical in nature, everybody should read.
In one of its proposal is to standardise the disclosure of fees. there are 4 layers of fees to be disclosed and I reproduced the graphic to highlight these layers:
Another proposal is to combine the Premium Allocation Rate and the sales charge/bid-offer spread into a single fee called the ‘single entry charge’.
I am very sure after you see the graphics above, you probably fainted for a few minutes before recovering. Just by looking at the above graphics, I think it does not take a genius to figure it out that people should avoid investment-linked policies (ILPs). This being said, there are some single premium investment-linked policies that are very similar to unit trusts and does not have so many layers of fees.
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