Investment-Linked Insurance Policy (ILP) in Singapore

How much insurance coverage do I need?

There is no universal figure. Appropriate coverage depends on your dependants, outstanding liabilities, income, the period you want protected, and the coverage you already hold.

A structured discussion usually maps out four things: what would still need paying, for how long, who depends on your income, and what already exists.

• Outstanding mortgage and other loans
• Years of income replacement your dependants would need
• Children's education commitments
• Medical and critical illness exposure
• Coverage already held personally or through employment

What types of coverage are usually discussed?

Commonly: life insurance, critical illness coverage, hospitalisation insurance, and disability or income protection considerations.

Each addresses a different risk. Hospitalisation cover deals with medical bills; critical illness cover deals with the income and lifestyle disruption of a serious diagnosis; life insurance addresses what your dependants would face if your income stopped permanently.

Product details, exclusions and waiting periods vary. Always read the policy contract and product summary for the specific terms.

What is an investment-linked insurance policy (ILP) in Singapore?

An investment-linked insurance policy (ILP) combines life insurance cover with investment in one or more sub-funds. Premiums buy units according to the policy's allocation rules, and units or policy value may be used to meet insurance and other charges; the exact mechanics depend on the specific policy.

The policy's cash value depends on the value of its underlying sub-funds after applicable charges. The death-benefit structure can include guaranteed and/or investment-linked components depending on the policy, so check the Product Summary, Policy Illustration and Policy Contract rather than assuming the full death benefit moves with fund performance. Non-guaranteed values are not promised outcomes and may be lower than illustrated.

Some ILPs offer premium flexibility, such as changing contributions, taking a premium holiday or making top-ups, subject to the specific policy terms. Flexibility does not remove investment risk or charges, so check the product contract and illustration for what is actually permitted and what happens if contributions are reduced or paused.

• The minimum and maximum sum assured, and how insurance charges are deducted
• Which investment sub-funds are available, and that their performance is not guaranteed
• What the policy value could be in years 1, 5 and 10, and early surrender charges
• Whether premium flexibility could leave the policy under-funded if markets fall

When should I review my insurance?

Review when your circumstances change — marriage, a child, a home loan, or a material change in income or needs — and review periodically even when there has not been a major life event.

A review does not require replacing anything. Existing policies should never be replaced without proper analysis of what would be lost.