An Investment-linked Insurance has an additional element of Wealth Creation on top of Wealth Preservation.
What is an investment-linked insurance plan?
An investment-linked plan is a life insurance plan that combines investment and protection. The premiums that you pay provide you not only with life insurance cover but part of the premiums will also be invested in specific investment funds of your choice. As a policyholder, you can choose how to allocate your insurance premiums towards protection and investment.
The insurance coverage provided would include death benefit, disability and critical illness.
The investment fund is divided into units of equal value. The prices of these units are published daily in the newspapers for you to track the value of your investments.
Unique features of investment-linked plan
As an insurance plan that combines investment and protection, investment-linked plans have the following unique features:
• You are given the flexibility to choose your own level of protection and investment.
• You can vary the amount of your premium payments or coverage according to your changing financial circumstances.
• You can choose from a wide variety of funds to invest in, depending on the level of risk that you are comfortable with.
• Investment in growth or equity-related funds may give higher returns than traditional life insurance plans over the long term. However, you have to bear in mind that higher returns come with greater risks.
Types of investment-linked insurance
What is an investment-linked insurance plan?
An investment-linked plan is a life insurance plan that combines investment and protection. The premiums that you pay provide you not only with life insurance cover but part of the premiums will also be invested in specific investment funds of your choice. As a policyholder, you can choose how to allocate your insurance premiums towards protection and investment.
The insurance coverage provided would include death benefit, disability and critical illness.
The investment fund is divided into units of equal value. The prices of these units are published daily in the newspapers for you to track the value of your investments.
Unique features of investment-linked plan
As an insurance plan that combines investment and protection, investment-linked plans have the following unique features:
• You are given the flexibility to choose your own level of protection and investment.
• You can vary the amount of your premium payments or coverage according to your changing financial circumstances.
• You can choose from a wide variety of funds to invest in, depending on the level of risk that you are comfortable with.
• Investment in growth or equity-related funds may give higher returns than traditional life insurance plans over the long term. However, you have to bear in mind that higher returns come with greater risks.
Types of investment-linked insurance
Understanding the risk
• Investment-linked plans, like other types of investments, involve exposure to investment risk. Since an investment-linked plan is linked to the unit price of an investment fund (managed by the insurance company), the total value of the plan fluctuates with the movements in the unit price.
• When the unit price falls, the value of your investment will also reduce and vice versa. You may realise a gain or loss when you sell your units. You may even get less than what you have invested.
• Past performance of the investment-linked fund’s track record can only be a guide to its future performance which is not guaranteed.
Important considerations in choosing the right plan
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