Effect of deduction

Hi Mr. Tan

I purchased a ILP 10 mths ago. Based on the postings in your website so far, it seems like ILP is highly unrecommended. Now, I realize I didn't really understand the meaning of effect of deductions.

Based on the plan projected for me (below), after 25 yrs, will I get a decent return? i.e, if the return is good (9%), will I get a lump sum of 111700?

Another thing is my agent told me that at end of 25 years, I can actually stop putting in money and then use the bonus or dividends to pay and cont to earn? Is this true, so can I get the 417200 then? I am feeling quite lost, please help me, thanks.

REPLY

It is not realistic to expect a gross yield of 9% in the future. I suggest that you take the average between the yield of 5% and 9%.

More important, you should study the effect of deduction. If the deduction takes away 2.5% from the gross yield, then it is an expensive policy.