Met my Insurance Agent yesterday and he managed to convince me to sign up for the very same policy called the AIA Pro Achiever 3.0 that I had to cancel last year.
It's an Investment Linked Policy (ILP) and those policies do not have a good rep on the internet because compared to regular investment routes, an ILP has very high management fees, and traditional ILPs are also laden with a lot of extra fees that are weaved into it that will actually generate a lot of commission for the Insurance Agents, which is why so many agents are pushing it to their clients and why so many people online who are aware of how it really works and also know how to invest on their own are so against it.
My agent assured me during our meeting that what he is selling me is not the same as the one that scummy agents sell for the sake of their commission, but is supposedly one that only focuses on generating wealth for the client, like a proper investment plan.
So I got it because I figured I do need to invest my money to let it grow for my old age, since one of my Savings Plans was going to reach it's maturity, I will have one less policy to pay for, so why not just throw that amount that I would have set aside for that savings plan into this Investment Plan and then add a bit more to let it do it's job. I wasn't prepared last time, but I thought I will mentally prepare myself this time for how much I will be putting in.
He recommended me to put in at least $400 per month, which was like $50 less than last time, so I agreed....
...and he told me to put that much because the welcome bonuses are better in the amount is at least $400 per month, or $4,800 per year, anything lesser and it wouldn't really be ideal, sounds fine, so I agreed.
I didn't think too much after that and was feeling quite pleased with myself that I am actually doing something with my money, investing it and letting it grow, I have heard from my boss about how he has rich friends now who are just enjoying life because they had invested so much money in the past and are now reaping the rewards from it, so I was just imagining myself 20 to 30 years down the road, being able to withdraw all the money that has accumulated and patting myself on the back, but as the day went on, I kept thinking about the amount and I started getting more and more uncomfortable with the plan, something just didn't feel right, and it was the very same feeling that I felt when I first bought it last year, I was investing way too much.
I am not only paying $400 for that Investment Plan, I also have another Investment Plan that I am pretty much stuck with because surrendering that will have a penalty fee that isn't worth it, that Investment Plan is already sapping $250 every month.
Investment Plans aside, there is also the Insurance side, which I am paying a whopping $400 for per month, I honestly think I might have too much coverage as well because a good rule of thumb I have read online is that you should only set aside about 10% of your take home salary for Insurance, I am hoping to earn enough for $400 to be my 10%, but I am nowhere near that amount, which means I should be paying only about about $200 per month for my insurance coverage.
Once I calculated everything, I was actually forking out $1,100 per month on my policies with him, against a $2,800 salary, that is way too much. I calculated how much I will need for food and travel, that came up to about $1,300, which only leaves me with $400 for my personal savings and random splurges.
My plans to travel to Switzerland will have to be cancelled with that measly amount I am able to save every month, I can forget about planning any travel trips because majority of that money that could fund for any trips will have to go into the Investment Plan, an Investment Plan that I will not be able to touch until 10 Years later, and the rest will have to go into my Renovation Fund.
When I read about the Investment Plans on Platforms like Reddit, the common consensus is almost unanimous, and that is to not take on that plan because the Management Fee is very expensive, using a Robo-Advisor like Endowus, you will be charged a Management Fee of 0.4% of what you have invested, but if you decide to invest with the Insurance Company, they will be charging you a Management Fee of 3.6%, that is 9 times more than Endowus.
That means if I were to put in $4,800, the Insurance Company will take $172.80 as part of their Management Fee, ,and I am guessing part of that goes to my Agent, and here is another reason why so many people are against this Investment plan...
1. You will NOT be able to access the funds for the next 10 years, whatever you have invested will be locked away.
2. If you are unable to continue the investment because of some lifestyle changes, say you have a baby and need to redirect that money to take care of that baby or if you get fired from a job and have no income to spare, choosing to surrender the investment policy before the 10 year mark will not entitle you to whatever has been accumulated, instead, you will only get a portion of it the more premature the surrender...
... Full Surrender Charge Rate is essentially the penalty you will have to pay if you choose to end it prematurely, so let's say I suddenly have some lifestyle change on my second year and I decide I want to back out, so I surrender the policy.
This is how Insurance works, so it shouldn't be any surprise that they also implement this in their Investment Policies.
If I were to put $4,800 with Endowus on the other hand, I am charged only $19.20 for my Management Fee, and I have constant access to my funds at anytime.
1. I can choose not to top up if I am ever tight on cash.
2. I can choose to pull out if I ever decide not to continue the investment at anytime.
I have so much more freedom to do what I want to do with MY MONEY and am able to do what I feel right with it, honestly, if I am investing with Endowus, I will probably not touch the funds unless I can see my money grow elsewhere at a much faster rate, which it did when I let the money generate interest in my UOB One account. I ended up getting like a few hundred dollars over a span of a few months, which was great.
I have reached out to my agent since to share with him my decision to cancel the plan for a second time and even listed my reasons why I wanted to cancel it, he told me it wouldn't be ideal to cancel it because I don't really have any proper investment plan with him and that it would be good to continue with the policy for when I retire.
I reiterated that I am simply not comfortable with the amount I am putting in and even told him how much I would be left with monthly if I actually continued with the policy, he then offers me a suggestion to lower the amount to just $200 per month instead of cancelling the entire policy, which I was a bit uncomfortable with because I want to cancel the policy. I told him I would rather put that money in a Robo-Advisor than continue the Investment Link Policy, he then told me he will arrange for a Zoom call to help me with it, which I was really confused by.
A Zoom Call to do what? Help me cancel the policy or help me invest using the RoboAdvisor? The latter has nothing to do with him at all and the last time he cancelled my policy, I didn't have to do any Zoom Call at all, so I asked him why I need to do a Zoom Call to cancel the plan and he just leaves me on read.
That was at 11.35am.
At 4.30pm, I send him a follow up message a to remind him to help me cancel the policy, told him I was appreciative of his intentions behind offering me the policy again, but that I am just not comfortable continuing with it.
He reads the message half an hour later and doesn't acknowledge it. It's now almost 9pm and he still hasn't acknowledged my message, he just left me on read.
My brother and I share the same advisor, so I did ask my brother if our agent had recommended him the ILP before, he told me he hasn't, which I think is proof that my agent probably just sees me as a gullible idiot who will buy anything he recommends, and I was a gullible idiot until last year when he did this shit to me, it just pisses me off that I actually fell for it again this year.
Anyways, I took an advice from a friend and have decided to just attempt to cancel the plan through AIA directly via their virtual agent tomorrow. This will definitely leave a really bad taste in my mouth if I end up actually having to cancel it on my own. I am honestly quite pissed off that my agent decided to just go radio silent on me after I questioned him about why we needed a Zoom meeting to cancel the plan, but I think after this, he will probably not want to call me out for lunch anymore to discuss my policies, would be really awkward for you to pretend you care about my well being when the shit that you have doing (or not doing) proves otherwise.
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