Investment linked products in India

I met an actuary from India.

He told me that the regular premium investment linked products now sold in India have 95% allocation. This means that 95% of the premium is invested from the first month. Only 5% of the premium is used to pay commission to the agent.

Although there is a penalty on early termination, the amount of the penalty is small as the agent get a maximum commission of 30% in the first year.

I was surprised.

After being on the market for more than 15 years in Singapore, the investment linked products still have extremely high charges. More than 100% of the premium is taken away during the first two or three years. The exception is NTUC Income, where the charges are much lower than the market.

Consumers in Singapore are paying too much for their investment linked products. I hope that, when the consumers shop around for a better deal, the sales charges in Singapore can come down to a lower level.