Triggered by a comment to draw a chart of mortality charges within Investment-Linked Policy (ILP) whole life insurance plans, I went back to my table and plotted a pretty chart. This is based on female and non-smoker charges.
From the chart, the line starts to curve at 30 years old, so I enlarged the scale from 1 to 40 years old to get the following chart.
In general, the first 6 years have a slightly higher mortality charge. Hence, the most optimal point to start if after 6 years old, if the intention is pure investment purposes. Lowest premium is at 10 years old.
Hypothetically, not that I am encouraging you to believe me, ILPs might suit the profile of babies, starting from 1 year old. If you are curious to know how much cash value could potentially be accumulated, theoretically, I had compiled a small chart based on present values. This assumes a benefit sum assured of $100,000 for death, $100,000 for critical illness and $100,000 for early critical illness.
All benefit illustration excludes sales charges and admin fees which are variable across a person's life time. While the cash values are eye popping, this exercise shows that the product could have some potential baby customers.
As a parent of a 4 year old daughter, I will not buy this product for my 4 year old either. My reason is that the margin (minimum 5% + 5% sales charge = 10% returns over 95 years) is not sufficient for my low-risk appetite. Historically, assets like properties, gold and blue chip shares make a better investment for a 95-year horizon. $100,000 will probably be only worth $100 by then?
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