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Premium Allocation Charge
June 06 , 2012

Premium Allocation Charge is levied by insurance companies from your annual premium, before investing your money in the fund. It has nothing to do with the activity of allocating premium - it is used by the insurance company to pay the agent who sold you the policy. It is calculated as a percentage of the annual premium you pay, and is deducted every time you make premium payment.

Premium allocation charge can be as high as 40% for the first year, and are about 5% for third year and subsequent premiums. This money simply goes to fatten the agent's pockets - it is no surprise then that agents recommend these plans enthusiastically to you!

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