Highlighting High Charges Behind Attractive Bonuses with Invest View
I was recently asked how to respond to an investment policy offering a 200% start-up bonus for a 30-year ILP — a feature that naturally looks very attractive to consumers at first glance.
But in this post, I’ll walk you through key points you can illustrate using tools like the Investment Illustrator, to show clients the full picture — and how, despite the flashy bonus, you can easily win the case with clarity, transparency, and proper comparison.
In this example, we’ll walk through a case study of an investment policy with a $6,000 annual premium and a 30-year minimum investment period to qualify for the 200% start-up bonus.
The plan is structured with two separate accounts:
The Initial Account, where premiums from the first 5 years are allocated, is subject to a 3.4% annual charge during the premium payment period.
The remaining 25 years of premiums go into the Accumulation Account, which carries a 1% annual charge throughout the entire policy term.
Initial Account Projection (Including 200% Bonus)
With the premiums split between two accounts, we’ll present their individual projected returns over 30 years, then combine the total value at the end.
This allows for a clear comparison against an alternative investment option to see what the final outcome could look like.
Fields Filled In
Initial Investment $12,000 (Representing 200% start up bonus to $6,000 premium)
Estimated Fund Performance at 6.5% (Based on 8% Illustration Minus 1.5% Fund Management Fee)
The projected amount at the end of 30 years is approximately $98,000
Accumulation Account Projection
With the first 5 years covered above, only 25 years remain in the policy term. This portion carries a reduced fee of 1% and no additional bonuses (as they’ve been reflected earlier).
Here's the estimated performance for this segment.
The projected value at the end of 30 years is approximately $320,000
Combining both account performances, the total projected value at the end of 30 years is approximately $418,000, excluding any one-off bonuses such as power-up incentives.
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It’s important to note that from this point onward, the Accumulation Account incurs a perpetual 1% annual charge.
With the account projected to reach $320,000 by the 30th year, this translates to nearly $3,000 in annual fees paid to the company if all conditions remain unchanged.
While a 1.1% loyalty bonus is offered from the end of the Minimum Investment Period (MIP), it is only applicable if no partial withdrawals have been made.
Comparison with Company A’s Plan
The comparison above highlights the impact of a shorter policy fee period versus charges applied throughout the full term.
While the initial fees may be higher, the end result shows a significant difference — with the estimated value reaching up to $500,000.
When comparing based on similar net performance after policy charges, the difference over 30 years is around $82,000.
For an annual investment of $6,000, that’s nearly 13 years' worth of premiums — a substantial gap.
This underscores the importance of conducting regular annual reviews, and we hope this breakdown gives you greater confidence in looking beyond high bonuses. With the right illustrations and clarity, consultants can still win the case.
