In my experience, 100% of the premium for a Unit-Linked Insurance Plan goes to something called an acquisition fee. Different insurance sellers appear to explain it differently:
- The least transparent do not mention it.
- The next least transparent refer to all charges (including the acquisition fee) as investment.
- The most transparent refer to it as the insurance component.
So where does that money actually go?
I feel it is a scam meant to cover marketing costs. The insurance part, where money paid by the customer is used by the insurance company to reinsure the customer, is a separate fee. After paying 100% of first year money to acquisition costs, the customer balance is actually less than 0; that credit is then deducted from their 3rd year premium.
Am I correct here?