Investment-linked Insurance Policies: Another Opportunity for You to Grow Your Money

Okay, so you can finally feel your cold hard cash in your hands. You want to make sure that it is safe, so you consider keeping it in your trusted bank. Then you realise that you would rather have it grow as you sleep. You would rather make your money work for you so that you would not have to work for your money forever.

What are your options?

Well, you can go for stocks. However, then again, you would want your money to grow and protect your income as well. How about life insurance? Oh, but you already have one. You even have two! Okay, okay… why not get the best of both worlds and invest in Investment-Linked Insurance Policies instead?

Different Benefits & Types Of Investment Linked Insurance (ILPs)

What are Investment-linked Insurance Policies?

ILPs are a mixture of what insurance policies and different investment vehicles can give you.

When you invest in ILPs, your regular payments will be used to buy investment units of your choice. When these units are sold, some of it are used to pay for insurance while some remain invested. What happens when you do this? The money you invested grows as you sleep and it pays for your insurance as well.

ILPs make sure your money works for you and keeps your income protected.

When you invest in ILPs, 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 ILP 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 ILPs, here are four reasons why you should.

Life Insurance In Singapore – Insurance 101

The sub-fund your money is invested in depends on your risk profile and investment objectives.

Your hard-earned money will not just go to a random fund which the fund manager deems best for you. It is your money so it should go to a fund that’s best for your character. Some investments are best for risk takers while some are best for conservative investors. Some investments are better for those who are just starting their families while some are better for those who are building their retirement funds.

Investing in ILPs gives you the opportunity to solve financial needs according to your character as an investor and according to your objectives. These opportunities may not be provided by your life insurance policy alone.

ILPs 101 : What are Investment-Linked Insurance (ILPs) ?

The insurance coverage and investment mix are flexible and may be fitted according to your financial needs.

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.

With ILPs, you can choose how much of your premium will be used for your life insurance and how much will be used for your investments. This plays well with your other existing investments. You would not want to have too much invested in your life insurance, and you would not want to have too much of your money exposed in particular markets as well. Investing in ILPs will give you an opportunity to mix and match your investments according to your current investment portfolio and needs.

You may add more to your investments, withdraw from your account, and switch from one sub-fund to another.

ILPs are so flexible that it allows top-ups, withdrawals, and switching.

For example, you started investing in ILPs at age 20 with a limited budget. Every year, you get a bonus from work that you would not want to put in the bank since you know that it would not grow there. Instead, you choose to place your bonus in your existing ILP as a top-up. Your top-up will be used to purchase more investment units. Sweet!

As time passes, you will see your money grow. You would wish, “Man, I wish I can withdraw some of this money.” Guess what? You can! As long as you keep the minimum requirement in the account, your investment will continue to grow even if you withdraw from your account for emergencies or re-investments.

We all know that the markets are not always stable. There will be times when it is best to put most of your money in money markets, and there will be times when it is best to place them in equities. Good thing that ILPs allow sub-fund switching. You can put your investments in a fund one day and switch them to another fund another day if you deem it necessary for the optimal growth of your investment. This has got to be one of ILPs best trait. It basically gives you a chance to ride market booms and get out when you have to.

You may request for Premium Holidays.

Investing in ILPs 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.

Just like any other investment, take the time to study Investment-linked Insurance Policies. We’ll be posting more about ILPs here on TheNewSavvy.com for your professional financial advice needs.

What Kind Of Insurance Do You Need?

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C.E.O @ The New Savvy
Anna Haotanto is passionate about finance, education, women empowerment and children’s issues. Anna has been featured in CNBC, Forbes, The Straits Times, Business Insider, INC and The Peak Singapore. 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).