Living Policy give poor value

Someone asked me why I now advise against the Living policy - when I previously encouraged its sale as CEO of Income.

When Income kept its expenses low and distributed its bonuses fairly to policyholders, its Living policies and other products gave good value, compared to similar products in the market.

I bought two Living policies during the past years. Recently, I found to my great disappointment, that the cash value on one of the policy has still not reached the breakeven point after 12 years. This was due to the bonus cut during the crisis years.

Although the investment yield has improved significantly (with an average yield of 7.8%), the bonus cuts have still not been restored.

In fact, the cash value is far short of the "asset share" of my policy. The asset share is computed based on the premiums paid and investment income earned, less the actual expenses of the policy.

If insurance companies continue to treat their policyholders unfairly, incur high expenses and give a poor cash value that is is far below the "actual experience", I have to advise people to avoid all life insurance products - except for term insurance.

Life insurance is not a means for agents to earn high commissions and insurance companies to earn high profits, by giving a poor deal to customers.