More About Investment-Linked Policy
What is insurance?
According to an article published on Investopedia.com, an insurance refers to “a contract, represented by a policy, in which an individual or entity receives financial protection or reimbursement against losses from an insurance company. The company pools clients’ risks to make payments more affordable for the insured.” More About Investment-Linked Policy in Singapore
What is an Investment-Linked Policy (ILP)?
An investment-linked insurance policy is a policy that has both life insurance coverage as well as investment components tied together within one plan. The premiums an individual pays can be used to purchase a certain unit of funds from a provided list of choices.
These can subsequently be sold off to pay for insurance and other miscellaneous charges, while the rest remain invested. Investment-Linked Policies provide an individual with protection in the event of a death or in cases of total and permanent disability.
In general, there are two types of ILPs. Namely, ‘single-premium ILPs’ and ‘regular premium ILPs’.
In the former scenario, you will have to pay a lump sum premium to purchase units in a sub-fund. Usually, most single premium ILPs provide lower insurance protection than regular premium ILPs.
For regular premium ILPs, you will have to pay premiums on an ongoing basis. Regular premium ILPs may allow you the flexibility to change the level of insurance coverage you deem you need.
It is advisable to keep in the back of our minds that taking on Investment-Linked Policies can be a very risky thing to do. This is largely due to the fact that should your sub-funds perform poorly, the cash value of an individual’s policy can be badly hit.
Additionally, your insurance premiums for the ILP will be increasing as you get older. This also means that much of your premium will have to be pushed to maintaining your coverage plans. Consequently, this will result in a reduction of the premium that goes towards purchasing sub-fund units.
All in all, if an insurance protection is what seems more relevant and needful rather than a plan to accumulate your wealth, perhaps, a term or whole life policy should better suit what you are looking for.
However, if you are on the lookout for a plan to help you grow your existing funds, perhaps the first may make sense but it would be advisable to study all areas in relation to the field.
With so many insurance providers, schemes and coverage differences out there, coming to a decision alone can be a pretty daunting task. With that being said, are you on the lookout for some advice on what to do when it comes to the topic of insurance or investment-linked policy?
Could use some help or professional guidance on the issue of insurance or investment-linked policy? Wondering what’s the next step to take? Read on below!
At TN Advisory Group, our services and expertise can be used to assist interested parties in relation to the various fields of finance. Some of these sectors include investment, insurance, retirement, corporate pensions, group employee benefits, business continuation, as well as general insurance purposes.
If you wish to know more about investment-linked insurance policy or any other enquiries, please contact us through Whatsapp or Email to schedule an appointment. We will get back to you as soon as possible.