LONG-term insurance-linked investments have come under fire from financial experts because of high commission charges and tough early redemption penalties.
The policies, which are typically unit trust investments with a life insurance component, are sold by most financial advisers despite mounting criticism.
The policies have a lifespan of up to 25 years and many include heavy penalties for early redemption. Commission charges vary, but the longer the plan, the higher the commission.
As a rule of thumb, on most 25-year plans close to 90 per cent of the first year's premiums go to pay the adviser's commission.
According to investment advisers Asia Pacific Financial Planning, there is no need to buy an investment wrapped up in an insurance product.
Director Steve Cumming said he advised clients to separate their investment and insurance needs. 'There's no reason to sell any investment wrapped up in an insurance product,' he said.