A beginner's guide to investment linked plans
An investment linked plan (ILP) is a hybrid insurance product that combines life insurance along with an investment component. When buying life insurance, you might have had a friend or two recommend that you look into ILPs. If you are considering doing so, you may want to read this blog first as we give you an overview of what an ILP is. • How do ILPs work? When you sign up for an ILP, you get a choice between single-premium and regular premiums. The premiums that you pay are used to buy units in sub-funds that can potentially help you earn through their returns. A part of the premiums that you pay will be used for buying life insurance coverage. You can also switch between funds as your investment goals and risk appetite change. You also get the option of adjusting your life insurance coverage as your needs change. For instance, some insurers allow you to reduce your life insurance coverage all the way down to zero after a certain age (usually around 50 years).
• What are some of the benefits of an ILP? Taking an ILP can hold many advantages for you. Let’s take a look at some of these – Potential of larger returns ILPs have the potential of offering you higher returns when compared to other forms of saving, such as through insurance savings plans. While returns do depend on the performance of the sub-fund you have invested in, there is potential for wealth accumulation. Expert guidance When you sign up for an ILP, you get to take your pick from sub-funds that have been chosen and hand-picked by market experts. So, you can rest assure that you are getting a good chance of earning potentially higher returns. You also receive regular updates on the performance of the sub-funds so that you can keep track of what is happening with your investment.
Ability to switch between funds Finally, an ILP lets you switch between sub-funds as your risk appetite changes. This way, your plan always stays up-to-date with your evolving needs and expectations. Flexibility of coverage With an ILP, you can adjust your life insurance coverage. You can even reduce it to 0 after a certain age if you already have protection from either a whole life insurance or a term insurance plan. Do bear in mind that ILPs have associated fees and administrative charges. You would want to check on these details with your insurer before getting an ILP. We hope that the information in this blog will guide to towards finding a suitable investment linked plan in Singapore for your unique needs. You may also want to keep a life insurance plan too for added insurance protection while the ILP can serve your needs for building funds for the future. Do consider speaking with a financial consultant for help in selecting the right investment-linked plan. All the best!
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