winpieTaiwan-focused

Investment-Linked Insurance vs ETF

Investment-linked insurance is heavily marketed in Taiwan as a 'protection + investment' combo. But its expense layers — first-year front load, ongoing account management fee, cost-of-insurance charges — severely erode long-term returns. This tool compares same-contribution accumulation side by side.

Inputs

Both strategies invest the same amount for a fair comparison.

Investment-linked insurance (ILI) parameters

ILI policies often charge a 30–100% front-end load in year one, plus ~1–2.5% in ongoing expenses. Check your policy terms.

ETF parameters

Broad-market ETFs are typically 0.03–0.5% (VT 0.07%, 0050 0.35%, VTI 0.03%).

Results (after 20 years)
ILI balance
NT$3.68M
ETF balance
NT$4.37M
Difference
ETF ahead by NT$685.6K(+18.6%)
Total contributed: NT$2.4M

Calculation: contributions compound each year at the gross return minus the product's expense ratio. Under ILI, only 70% of the first-year contribution is actually invested due to the front-end load. This is a simplified model — real ILI policies also include cost of insurance, surrender charges, and policy administration fees, so the gap is usually larger.

Balance growth comparison

Typical long-term difference: 20-year accumulation gap of 30–60% favoring direct ETF investing. See Investment-linked insurance pitfalls for a detailed breakdown.

Better alternative for most: separate protection (term life insurance) + investment (low-cost ETF). Cheaper, more flexible, better returns.

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