Request for advice on AIA policy

REQUEST FOR ADVICE

Hi, Tan.

Saw your blog. Just thinking you could be the right person to give me a piece of advice on insurance and saving for future.

I bought an AIA Investment Link Plan that has life coverage of $100k, critical illness of $50k and medical plan.

The annual premium is $1,800 and I took up AIA managed fund. I am not a person who can take risk and feel uncomfortable seeing unpredictable return in future.

From your point of view, is investment link plan a good choice of saving + insurance with tight budget? Do I have to pay until the policy matured? How could future economic performance affect my insurance plan? Is it adviseable to top-up or ad-hoc now since the unit price is still low?

I have consulted 2 AIA insurance agents but their only give minimum words on this. I sincerely hope that you can help me on this decision making as on whether I should keep the 3-year-old policy or surrender it for a traditional insurance.

R
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Dear R

Please read this FAQ on the Ideal plan (which is similar to the investment plan that you have bought from AIA):

FAQ on Ideal Plan

Here is another FAQ that explains about investment risk (it applies to the Ideal plan as well):

FAQ on Investment Risk

Generally, if you are investing for the long term, an investment fund is suitable. You should choose a large, well diversified fund to minimise the risk of poor performance of certain investments. If you invest for 10 years or longer, you will average out the good and bad years and get an attractive return.

Looking at your AIA policy, you should consider two points:

- what is the annual charge on the fund?
- what is the upfront charge to pay commission to the agent?

These two charges can take away a large part of your return. It can amount to several tens of thousand of dollars. There is an example in my FAQ.

I will ask my product specialist to contact you, in case you need further asssitance.

Tan Kin Lian