Find The Right Investment-linked Plans To Achieve Your Dreams

Written by Iris Lee Illustration by Michelle Leong

Everyone has financial goals. However, for many, these goals remain goals because they have no clue how to work towards achieving them.

It’s not impossible to be financially capable to buy a home, send your child to university, or even retire at the Caribbean — if you know the tools to help you achieve them.

One way to grow your money, and yet safeguard your hard-earned savings at the same time is through an investment-linked insurance policy (ILP). An ILP gives you the best of both worlds by is providing you with life protection and also investment.

Here’s how it works – when you purchase an ILP, the premiums you pay are divided into life insurance protection and investment units. The investment portion is invested into professionally managed investment-linked fund(s), and just like any investments, they do not provide guaranteed returns.

There are two types of investment-linked plans – single-premium and regular-premium. The main difference between the plans is the allocation of premiums.

A single-premium plan requires a single lump sum premium payment that can be invested immediately to generate a potentially higher return. However, it typically comes with lower insurance protection.

Regular-premium plans on the other hand, require periodic premium payments and usually come with higher insurance protection. One benefit from periodic payments is that it provides dollar-cost averaging benefits, which may help stabilise your investment in the event of any market turbulence.

However, because a smaller portion of the premium is allocated towards investment during the initial years of the policy, returns may be lower than a single-premium plan at the beginning.

The decision between choosing a single-premium or a regular-premium plan will depend on your personal financial situation, goals and preference.

The beauty of it is that it gives you the flexibility to vary the level of insurance coverage and investment based on your personal finances and different life stages. The question is, which ILP do you need and how can they help you achieve your goals.