I believe people who are reading financial blogs and articles are mostly the financial practitioners. And many have voiced strong opinions that Investment Linked Plans (ILPs) are absolute junk. Well, I used to have a herd mentality that this was true, but now after some thought, I wish to challenge that.

First and foremost, whether something is bad or not must be compared in context relative to something else. Therefore, apples should not be compared to oranges. It is meaningless to compare insurance with fixed deposits and similarly ILPs with normal Regular Savings Plans (RSPs) or Buy Term Invest the Rest.

Comparing it against whole life (WL) and term insurance plans would not be absolutely appropriate as the objectives are not aligned. ILPs are generally a savings plan with an embedded yearly renewable term plan. So, unlike WL and term where protection is primary, ILPs’ protection is secondary. Hence, I …