Difference between ILP and par fund

Hi Mr Tan,

I have read your useful explanation about the par fund. It seems that the policyholder is at the mercy of the insurance company. If the par fund has high expenses or reduces the bonuses, the policyholder has no choice.

Is there a better option for the investor?

--------------------

REPLY:

It is better to invest in an investment linked fund (ILP) or a unit trust. The fund manager can only spend up to the specified charges in the fund. These charges are transparent and have to be reported.

Due to its transparency, the charges have to be reduced (due to competition). This helps the investor to enjoy lower charges and get a better return.

A ILP or unit trust is likely to give a better return to the investor, compared to a par fund.