The Insurance Trap I Fell into after Starting My First Job

I still remember where I was when I got my first full-time paycheck.

I had just stepped out of the office and sat down at a coffee shop near Raffles Place. I opened my banking app, and for the first time, the numbers looked real. Solid. Like I had officially crossed into adulthood.

“Wah, I can finally afford nicer things now,” I muttered under my breath. It wasn’t a lot of money, but it was mine. Hard-earned just after completing my National Service. That small moment felt like I had unlocked something. A new phase of life.

A few months later, a friend messaged me to catch up over coffee. We hadn’t spoken in a while, so I was looking forward to the meetup. The first part of the conversation felt warm and casual, just like old times. But about twenty minutes in, he started his sales pitch.

He wanted to sell me an investment-linked policy (ILP).

“You get insurance and investments in one,” he explained, sketching visuals to explain the product. “Protection and growth. Two birds with one stone.”

I didn’t know much about insurance back then. I had just started working. The pitch sounded logical. I didn’t want to look blur or uninformed, and honestly, I trusted him. He was a friend, and he seemed to know what they were talking about.

In our second meetup, I signed up.

The insurance premium for the ILP was $200 a month. I treated it like a responsible adult expense. Something you were supposed to have once you started working.

Years passed. The deductions continued. And I never questioned it. At least not until I began diving deeper into personal finance and insurance planning. The more I learned, the more questions I had about my policy. What exactly was I covered for? What were the returns like? And how much of my money had actually been invested?

That’s when I realised the problem with ILPs.

At $200 a month, that meant I had paid $2,400 in my first year. However, the many layers of costs and commissions ate away a large chunk of my premiums before it even had a chance to grow.

It explained a lot. Why the pitch had felt so smooth. Why there was so much urgency to sign. And why I wasn’t shown simpler alternatives like buying term insurance and investing separately.

To be fair, not all ILPs are bad, but I can only think of very few use cases where the product makes sense. But for someone just starting out, who doesn’t understand how fees and charges work, it’s rarely the best first step.

The truth is, I didn’t understand what I was buying. I just wanted to do the right thing. I thought I was being responsible. But what I really needed was something much simpler. Affordable term insurance to protect my income, and low-cost investments I could actually understand.

Looking back, that ILP wasn’t just a financial product. It was my first real lesson in how money works. And how little most of us are taught before we start earning it. I surrender my ILP because it did not make sense to keep paying the premiums for another decade and pray that the expensive investment portfolio would breakeven. I took the loss, and learnt from the lesson.

Since then, I’ve met many others who walked the same path. Fresh grads eager to start their financial journey, only to realise years later that they had signed on for something they didn’t fully understand. Some held on, hoping it would work out. Others surrendered their plans and took the loss. Either way, it left a sour taste.

If you’re just starting work and someone offers you an all-in-one policy, pause and ask yourself this: Do I understand what I’m buying? And who really benefits if I sign?

If I could speak to my younger self, I’d say this.

You don’t need to mix insurance and investments in one product just to feel like you’re doing the responsible thing. Learn the basics. Understand your needs. And never be afraid to ask questions.

And if you’ve already bought something you don’t fully understand, don’t panic. You’re not alone. But it might be worth taking the time to review what you have and explore if there’s a better way forward.

Because financial freedom starts with clarity. Not complexity.

And if you feel that you don’t know anyone who can provide you with the right information to make an informed decision, contact me to arrange a meeting with a salaried insurance specialist who doesn’t earn any commission from reviewing your insurance policies.