Insurance-Linked Policies (ILP) gets a lot of bad press. And if I had to offer my 5 cents, I guess I will also say the same. But, one has to put things into perspective. As an ignoramus who certainly wanted to build up a retirement fund, but being totally clueless about the stock markets and such, ILP can be extremely attractive. Certainly beats the comparatively far lower returns of 3-5% projected on endowment policies.
Following the Asian Financial Crisis, my insurance agent suggested buying several of these policies (in 1997/98) and topping them up along the way (2003). I didn't think much about what I had put in to these ILPs until several years later when I was consolidating my finances to buy a new house. Upon checking with my insurance agent, I discovered to my pleasant surprise that the ILPs had doubled in value! Although, one particular ILP was pretty much dead as it was invested into tech and biotech. Figures.
Withdrawing the "capital", the "profit" was left behind to continue to grow. From a psychological point of view, it was like free money working for you. The year: 2007. Luck was apparently on my side.
That piqued my interest. Even more so when I came across an article on the Sunday Times "Invest" section talking about investing in Unit Trust via the Internet.
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