A guide to investment-linked plan in Singapore

An investment-linked plan is a life insurance policy which provides a combination of protection and investment. Premiums paid by the policyholder are used for both life insurance protection and investment. This article is a short guide to help you better understand investment-linked plans (ILP). It is much easier than you think!


investment-linked plans


How does an ILP work?

 

The premiums paid by you in investment-linked plans (ILPs) are used to buy investment units in professionally managed investment-linked funds. Then, some of these units are then sold to pay for your insurance coverage and some administrative charges. When it comes time to make an insurance claim, the total amount paid out may vary depending on the sum assured and the value of the policy determined by the units in the funds.

 

While there are many ILPs available in Singapore, they are divided into two types:

 

Single premium ILPs:

 

With a single-premium ILP, you make a single, lump-sum premium payment. This saves you from having to pay premiums on a regular basis. Those with variable or unpredictable income, like business owners or the self-employed, may prefer single premium ILPs.

 

Regular premium ILPs:

 

Most Singaporeans are probably more familiar with this sort of ILP. This plan requires you to pay premium on an ongoing basis, usually once a month or once a year. Regular premium ILPs allow you to pay lesser upfront and invest consistently. It may also allow you to adjust the amount of insurance coverage you need. For example, you can pay less premiums when you need less coverage and vice versa.

 

Factors to consider before buying ILPs:

 

·         Future goals:

 

Prioritizing your goals is essential when purchasing an investment-linked plan in Singapore. Everyone wishes to provide the best of everything to their loved ones and their future. Your future goals may be buying a new house or giving your children the best education. This type of insurance plan would be ideal to help you accumulate wealth that can be used to meet your financial goals, while having the protection coverage you need

 

·         Risk:

 

Investment comes with risks. With the market being so volatile, there is a certain amount of risk you need to take when investing. If you are not opposed to handling little risk based on the market conditions, then you will be able to take on an investment-linked plan. 


Investment-linked plans


Why you should buy ILP?

 

·         Flexibility:

 

ILPs offer you the flexibility to adapt to your changing needs. With these plans, you can adjust your coverage according to your changing circumstances. You can also make top-ups to your investment or switch between funds to maximise or adjust your risk exposure. 

 

·         Wealth assure feature:

 

Another reason to purchase ILP is because of the first-in-market wealth assure feature. This unique feature allows you to lock in coverage at the peak of your policy value for death and disability. 

 

·         Transfer wealth

 

ILPs offer the opportunity to transfer wealth across generations. You have the flexibility to change the life assured up to three times for individually owned policies and unlimited times for corporate owned policies. 

 

These are all important factors of investment-linked plans (ILPs) in Singapore. Understand these considerations to determine whether or not this plan is suited to your needs




original source :-  A guide to investment-linked plan in Singapore

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