Asia Edition: SG is obsessed with investment-linked policies (ILPs)

I am baffled by how many people living in Singapore have been pitched an Investment-linked insurance product. They are called plenty of names; ILP, ILAS, ILS, ULIP, they are essentially any product that has an insurance and investment vehicle linked together.

I will start by simply saying — don’t do it unless you understand it so damn well that you can explain it to the most financially illiterate person you know. It is very likely that if you follow that one simple rule — you will never buy it.

I have been an active personal investor in four countries now: US, UK, HK, and SG. Never has anyone outside of Singapore looked at my profile and advised me to buy an insurance product linked to an investment vehicle. In my short 2 years in SG, I have gotten sold this a dozen times.

I am not going to go into the details of what they are; they are excessively complex and there are plenty of articles out there that try to explain them. There are even more articles about people’s bad experiences!

I am more fascinated at why they are sold so much in Singapore and why people buy them.

Why advisors sell ILP’s

I asked a handful of advisors and was told that ILP’s have the highest commission earnings. I don’t think there is a need to dig too much into this. As a salesman, if you are going to get paid more to sell one product over another, it is likely you will take the…