A wealth accumulation tool, investment-linked policies may take some time for many to understand, especially with its extreme fund flexibility coupled with unexpected additional fees. Let us help you break it down!

What is an Investment-Linked Insurance Plan (ILP)?

An Investment-linked insurance policy (ILP) is a policy that has life insurance coverage and investment components. Most policies contain various packaged funds with diversified risks for consumers to choose from according to their risk appetite. These respective funds would have various sub-funds in stocks, bonds, and more. Premiums paid by a consumer would be used to pay for units in the sub-fund of their choice. Some allow consumers to choose their own sub-funds, while others, like Great Easter’s GREAT Series 10, have pre-allocated packaged funds for consumers to choose. When needed, some of these units purchased may be sold to pay for other charges, such as management charge fees. The management…