ILP FAQ: investment-linked policies in Singapore

Both. Legally it is a life insurance contract; economically, the policyholder bears the investment risk. Premiums buy units in one or more sub-funds, some units are sold to pay insurance and other charges, and the rest stay invested. MoneySense notes that ILPs usually have no guaranteed cash value and that you can lose the entire value of your investment (updated 28 September 2026).

A sub-fund pools premiums from policyholders and invests in a portfolio of assets. It may be managed by the insurer or by external fund managers (LIA guide, March 2026), and many feed into an underlying unit trust. Under MAS Notice 307, sub-funds follow investment guidelines drawn from the Code on Collective Investment Schemes and are valued every business day. Your contract, however, is with the insurer, not the fund.

Not for new policies. Under the LIA sub-fund pricing standard (MU 78/20), all ILPs use single pricing at net asset value from 8 October 2021; paragraph 74A of Notice 307 requires insurers to follow that standard. Older policies may still use dual pricing, where the offer price exceeds the bid price; LIA describes the spread as usually less than 5%. Check your policy terms and the insurer's fund price page to see which applies.

A policy ends when its units are no longer worth enough to pay insurance and other charges. Insurance charges usually rise with age, falling unit prices mean more units must be sold, and units are still sold during a premium holiday. LIA requires illustrations to state that the policy value may drop to zero and that topping up can prevent a lapse.

Three layers. At policy level: premium charge, policy fee, surrender and partial-withdrawal charges and switching fees. At cover level: insurance charges paid by cancelling units. At fund level: management fees and other expenses already reflected in the unit price. MoneySense notes that fees and charges may not be guaranteed and are subject to change.

For ILPs issued from 8 October 2021, MAS Notice 307 requires insurers to combine upfront deductions other than insurance charges into a single "premium charge" and bars the term "premium allocation rate". Older policies may still use it: an allocation rate of 20% means only S$200 of a S$1,000 premium buys units (MoneySense example).

No. Notice 307 excludes insurance charges, brokerage and transaction costs, performance fees, foreign exchange gains and losses, loads on underlying funds and withholding tax from the expense ratio. To estimate the total cost of an ILP you must add policy-level charges and insurance charges to the expense ratio.

A market nickname, not a regulatory term, for an investment-oriented ILP whose death benefit is commonly the higher of 101% of premiums paid (less withdrawals) and the account value. Cover is thin and the policy behaves much like a fund held inside an insurance wrapper. The exact formula varies, so check the Product Summary. A protection ILP instead sets a separate sum assured.

No. Illustrations show 0%, a higher rate currently capped at 8% and a lower rate currently capped at 4% (subject to the latest LIA circulars). LIA's current template (28 July 2026) states the rates are before fund management charges and do not represent upper or lower limits on performance; they are neither floors nor expected returns. Illustrations must also show a 0% column, which reveals how charges alone erode the policy. Since 1 February 2014, single-premium investment ILPs have not carried an illustration at all, unless death and critical illness cover is at least 150% of the single premium.

Yes, but only single-premium policies (since January 2001). Under the CPF Investment Scheme you must be 18 or over and may invest OA savings above S$20,000 and SA savings above S$40,000; new investors complete a Self-Awareness Questionnaire (CPF Board, 27 August 2026). Sales charges were removed from 1 October 2020, and expense ratios are capped by risk class, from 0.35% to 1.75% of NAV (CPF Annex D, March 2022).

At least the interest you give up. From 1 October to 31 December 2026, the OA earns 2.5% a year and the SA 4% a year, plus extra interest on the first S$60,000 of combined balances, of which up to S$20,000 can come from the OA (CPF Board, 15 September 2026). Whether an ILP beats that after all charges is uncertain.

SRS funds can buy only certain life insurance products, subject to limits (MOF, 15 April 2026); operator banks describe these as single-premium products with capped cover, and the exact multiple should be checked against current operator terms. Withdrawals after the statutory retirement age are 50% taxable (IRAS, 3 September 2026). IRAS excludes ILPs where investment is a fundamental consideration from Life Insurance Relief (10 August 2026). This is not tax advice; cross-border readers should seek advice locally.

ILPs are unlisted specified investment products, so since 1 January 2012 intermediaries must assess whether a retail customer has the knowledge or experience to understand them before making a recommendation. If you do not pass but still wish to buy, the intermediary must give you advice; execution-only sales are not allowed (MAS, 28 July 2011).

On 15 May 2026 MAS decided that ILPs will require a standardised Product Highlights Sheet and be classified as complex products. Mandatory advice for complex products will be removed, but "selected clients" (as already defined in Notice FAA-N16 since 29 December 2025: any two of aged 62 or over, not proficient in English, or education below GCE O or N level) must still receive advice unless they pass the CKA and opt out. Legislative amendments will be consulted on later, so no start date has been set.

Not necessarily. Life policies have a 14-day free-look period from receipt of the policy documents (MoneySense, 11 May 2026). For ILPs, the refund is adjusted for changes in the market value of the investments; for most insurers it is the lower of premiums paid and the value of the investments, less medical and other expenses (LIA guide).

Only guaranteed benefits. The Policy Owners' Protection Scheme caps aggregated guaranteed sums assured at S$500,000 and guaranteed surrender values at S$100,000 per life assured per insurer. Benefits tied directly to the value of the underlying sub-fund assets are not covered because they are not guaranteed (SDIC, accessed October 2026).

MAS told Parliament on 25 September 2025 that FIDReC received an average of 83 ILP cases a year in 2017–2024, about 0.06% of ILPs sold, and 211 cases in 2024, or 0.1%. You can take an unresolved complaint to FIDReC within six months of the institution's final reply; adjudication awards are capped at S$150,000 per claim for claims filed from 1 July 2024.

That comparison alone should not decide it, because premiums already paid are a sunk cost. Compare the surrender value you would actually receive after charges, the charges still to come if you keep the policy, whether you still need the cover, and the cost and insurability of replacing it. The Chinese page on existing policies sets out a step-by-step framework.