Investment-linked policies have recently become attractive for investors who want to protect their income and earn passively at the same time.
With Investment-linked Insurance Policies, you can invest in stocks, bonds, and other money markets while making sure that no matter what happens to you, your loved ones will be protected by life insurance benefits. You get the best side of the peace of mind that life insurance can give you and the passive income that other investments can provide.
Investment-linked Insurance Policies may be called different many things around the world and they may somehow work differently. Investment-linked Insurance Policies are one of the choices for investors in Singapore.
Here are the things you need to know about Investment-linked Insurance Policies.
What are Investment-linked Insurance Policies?
Investment-linked Insurance Policies are a mixture of what insurance policies and different investment vehicles can give you. Investing in Investment-linked Insurance Policies allows you to buy investment units of your choice using the premiums you pay for your life insurance policy. Some of the gains from selling these investment units will be used to pay for the life insurance part of your plan.
Basically, Investment-linked Insurance Policies make your money work as you sleep and keep your income protected at the same time.
When you invest in Investment-linked Insurance Policies, you will see your invested money grow, and you can have the peace of mind for your loved ones. When you pass away, they will get the sum assured, the value of the Investment-Linked Insurance Policy units, or a combination of both, whichever is higher at the time of death.
To help you find out if you would need to invest in Investment-linked Insurance Policies, here are four reasons why you should.
The sub-fund your money is invested in depends on your risk profile and investment objectives.
When you invest in Investment-linked Insurance Policies, you have more control over the placement of your money. It is your money, so it is best to put it in a fund that best fits your character as an investor and as a person with financial goals. Some funds fit risk takers while some fit conservative investors. Some are great for those who are aiming to have a good retirement while some are better for those who are planning to use their investments for their estate tax. Different situations call for different solutions. The same goes for investing in Investment-linked Insurance Policies.
Remember: Investment-linked Insurance Policies should solve a problem or a goal. Do not invest in a plan that will not achieve the financial goals you have set.
The insurance coverage and investment mix are flexible and may be fitted according to your financial needs.
Speaking of goals, this next reason is one of the main selling points of Investment-linked Insurance Policies. Investment-linked Insurance Policies are very flexible. Since it should address an issue or a financial goal, the overall look of the investment vehicle will be created according to your current situation and to your goals.
If you are a 20-year old woman, and you want to grow your money for retirement, it would not be a financially smart move to invest your money in a fund best suited for a 65-year old retiree preparing for his granddaughter’s future.
The premium you pay for Investment-linked Insurance Policies will be dependent on you. You can set your budget with these considerations: You would not want to invest too much in life insurance, especially if you already have an existing life insurance policy.
At the same time, you would not want to expose too much money in particular markets. Investing in Investment-linked Insurance Policies gives you the opportunity to mix correctly and match your investments so that it will help you reach your goals.
You may add more to your investments, withdraw from your account, and switch from one sub-fund to another.
With Investment-linked Insurance Policies, top-ups, withdrawals, and fund switching are possible.
Want to add more money for the purpose of buying more investment units? Go for a top-up with Investment-linked Insurance Policies.
Want to withdraw some of your gains so that you can re-invest them? No problem, you can.
Want to transfer some of your money to other funds because of the current market situation? Sure.
Investment-linked Insurance Policies allow you to do these, which make it a very attractive investment opportunity for those who are on a budget but may receive money for future top-ups, are planning to re-invest some of the yields on the account, and would like flexibility regarding going with the crucial situations of the markets.
You may request for Premium Holidays.
Investing in Investment-linked Insurance Policies allow having Premium Holidays wherein you can take a break from paying your premiums without having to let go of your policy. The terms and conditions of Premium Holidays depend on what’s stated in your policy contract.
How do I get an Investment-Linked Policy?
If you want to get an Investment-Linked Insurance Policy, browse through reputable companies and see which one works best for you. More than the product, look for a licensed advisor who will truly serve you and give you what you need to achieve your financial goals.
Just like any other investment, take the time to study Investment-linked Insurance Policies. Due diligence is the key to successful investing.
She was nominated and selected for FORTUNE Most Powerful Women conference in 2016 (Asia) and 2015 (San Francisco, Next Gen).
Anna has 10 years of experience in the financial sector and is currently a Director in Tera Capital. Her previous work experience includes positions at Citigroup, United Overseas Bank, a regional role in Business Monitor and a boutique private equity firm based in Shanghai. She graduated from Singapore Management University (Finance and Quantitative Finance).