One day, I was shocked to discover how ILP works.
ILP is actually consists of two parts:
- Protection part
- Investment part
This has very serious implication in the bear market. During the bear market, more and more units in the Investment part are sold to pay for the monthly premium for protection; but when the bull market returns, too bad you will have lesser remaining units in the Investment part to profit from the rising unit price.
I finally woke up and realized how the protection part was rapidly eating into the remaining units of the Investment part and can seriously deplete the investment value over multiple bear markets. So I bite the bullet and terminated the ILP at loss.
So my advice ...
1. If you do not have any ILP, do you really want to buy?
2. If you already own such policy, you may want to review it.