ILP Update July 2011

Having reached three years for my ILP, it was useful for me to take stock of where it currently stands. The reason for this is simple: in Year 1, a hefty penalty is imposed where only 15% of premiums paid is allocated to investment, this increases to 60% in years 2-3 and to 102% from years 4-6, thereafter from year 7 onwards, 105% is allocated to investment.


Looking at the graph plotted for premiums paid (blue) and amount allocated to investment (red), one can see the change in gradient of the red line to reflect the higher percentage in years 2-3 compared to year 1. What is disappointing to me is that the green data points for cash values are not consistently above the red line. This means that after deducting all expenses, the fund is not yet making money for me. For now I am continuing to monitor. After all, with the Europe and US debt situations not being healthy, this has had a toll on equity markets which have been pretty range-bound.

Ultimately, I would hope for the green points to go above the red line first and then the blue line over the long run. Only time will tell if these ILPs are worth it for private investors like myself.