Every investment vehicle has its pros and cons, including the Investment-Linked Insurance Policy. When finding the proper investment for you, you must do your part and research everything you can – all the good and the bad things.

There are a lot of appealing pros for Investment-Linked Insurance Policies which are especially beneficial for young professionals. These are some of the reasons which make Investment-linked Insurance Policies a good investment to add to your portfolio:

You can choose where your money will go to

With the option to chose which sub-fund your money goes to, you can pick which sub-fund suits you best and monitor its performance on a daily basis. The returns of your investment depending on the value of the assets in the fund.

If the markets are good, you are gaining money

The returns are linked to the sub-funds’ performance. Therefore, your money is directly affected by the market’s uncertain and constantly changing movements.

Fund-switching, withdrawals, and top-ups are allowed

When you feel uneasy about the market’s current situation, you can simply transfer some of your money to more conservative funds. Investment-linked Insurance Policies also allow withdrawals and top-ups, which gives you the flexibility to re-invest your money in other investment accounts or to maximise the potential of your investment by buying more investment units.

Insurance Questions to Ask Your Financial Consultant

It exposes you to different types of investment funds

Investing in Investment-linked Insurance Policies widens your investment portfolio and diversifies your risk. Below are some of the common funds offered in Singapore:

What are the Pros and Cons in Investing in Investment-linked Insurance Policies?

Equity Funds aim to increase your capital within 5-10 years. They are in publicly listed companies and is ideal for investors with medium to high-risk appetite.



Income, Fixed Interest, and Bond Funds are invested in government securities, corporate bonds, and other fixed-income instruments. These markets allow your money to grow in a matter of four years or more. This is suitable for more conservative investors with a medium risk appetite.

Cash Funds, also called Money Market Funds, are mostly invested in cash, bank deposits, and other money market instruments. With an investment horizon of up to three years, this is perfect for those with really low-risk appetite.

Balanced Funds offer a variety of equity investments and fixed interest instruments. This is good for people who can be risky but also aim for stability.  Its investment horizon is more than 4 years.

Geographically Specialised Funds are funds that cover investments particularly restricted to individual countries or region. Investors with really high-risk appetites can go for this one for the long term. Its horizon is at ten years.

Investment-linked Insurance Policies’ returns are not guaranteed

With the value of your investment directly linked to the movement of the market, the risks are higher.

Simply put: if the market is bad, your investments will go down. If the market is good, your investments will go up. You must take note, however, that the past performance of a sub-fund does not necessarily reflect its future performance. Plus, you get the option of switching your funds when the market makes you feel uneasy.

The units you have purchased may be insufficient to cover your insurance fees.

It is part and parcel of life to grow old and be less immune to sickness. Therefore, insurance companies label you as a riskier client. To lessen this risk, insurance companies ask for higher fees for older policyholders – even if you keep the same coverage.

This means that every year, even if you are paying the same amount of money for your policy, your premiums can buy fewer investment units to pay for your higher-costing insurance charge.

This is especially risky for those whose accounts combine a high insurance coverage and a sub-fund that isn’t performing well because the cash value may not be enough to pay for the life insurance coverage’s charges. To fix this, you may either raise your premium payment or lessen the insurance coverage.

When planning to invest in anything, remember to take time to study and understand what you are deploying your money to.

Read more about Investment-linked Insurance Policies in Singapore here.

6 Investment Risks Every Investor Should Know


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Founder @ The New Savvy
Anna Haotanto is the Advisor (former CEO) of The New Savvy. She is currently the COO of ABZD Capital and the CMO of Gourmet Food Holdings, an investment firm focusing on opportunities in the global F&B industry. She is part of the founding committee of the Singapore FinTech Association and heads the Women In FinTech and Partnership Committee. Anna is the President of the Singapore Management University Women Alumni. Anna invests and sits on the board of a few startups. Anna is also part of the Singapore Chinese Chamber of Commerce & Industry Career Women’s Group executive committee. Anna’s story is featured on Millionaire Minds on Channel NewsAsia. She hosts TV shows and events, namely for Channel NewsAsia’s “The Millennial Investor” and “Challenge Tomorrow”, a FinTech documentary. Anna was awarded “Her Times Youth Award” at the Rising50 Women Empowerment Gala, organised by the Indonesian Embassy of Singapore. The award was presented by His Excellency Ngurah Swajaya. She was also awarded Founder of the Year for ASEAN Rice Bowl Startup Awards. She was also awarded the Women Empowerment Award by the Asian Business & Social Forum. Anna has been awarded LinkedIn Power Profiles for founders (2018, 2017), Tatler Gen T, The Peak’s Trailblazers under 40 and a nominee for the Women of The Future award by Aviva


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