Investment and insurance are the two things working adults should be concerned about, so a product that combines the two sounds exactly like what a prudent person needs, right? Not quite. Imagine buying a meal from your favourite fast food restaurant and it costs more than buying the burger, fries and drink separately. Doesn’t make sense? That’s basically what happens when you buy a regular premium investment-linked policy (ILP).

Double payment of fees

When you purchase a $1,000 per year policy, you incur fees mostly in form of distribution costs. These are charges that come out of your premium to pay your agent and their manager(s). Fair enough. When you invest $2,000 a year, you tend to pay sales charges or brokerage fees, and pay anywhere between 0.5 to 5%, depending on what exactly you’re investing in. That’s fair too. When you buy a $3,000 annual premium ILP, as much as 80% to 90%...