Buying an ILP: from financial needs analysis and CKA to policy issue and annual review

The process at a glance

The seven steps

1. Step 1: confirm goals, time horizon and budget

   The LIA guide puts purpose first: do you want investment, protection or both? If you need only one of these, compare other tools as well; if you only need protection, for example, consider term life.

   • Documents: a list of existing policies (with sums assured and premiums), monthly income and spending, emergency funds, liabilities and CPF/SRS balances.
   • Time: done on your own, usually before the first meeting.
   • Who: you; where family protection is involved, ideally together with your spouse.
   • Common sticking points: treating an ILP as short-term savings; an investment horizon shorter than the sub-funds' suggested holding period (LIA guide: ten years or more for equity funds); not setting aside enough emergency funds first.

2. Step 2: financial needs analysis and Customer Knowledge Assessment (CKA)

   First complete a financial needs analysis (FNA) with the representative, setting out your investment goals, risk appetite and time horizon; the representative should record the basis for any recommendation. You must also complete a Customer Knowledge Assessment (CKA): since 1 January 2012 MAS has required intermediaries to carry out a CKA before selling unlisted Specified Investment Products to retail customers, and ILPs fall into this category. You can pass through relevant educational qualifications, professional finance qualifications, relevant work experience, at least six relevant transactions in the past three years, or by completing the ABS-SAS e-learning course and passing the quiz (MoneySense); a CKA outcome is currently valid for one year.

   • Documents: identity document, employment and income details, an overview of assets and liabilities, and records of past investment experience.
   • Time: usually one meeting; more complex cases need several.
   • Who: you provide the information; the licensed representative carries out the assessment.
   • Common sticking points: incomplete information leaves the recommendation without a proper basis; if you do not pass the CKA but still want to buy, the representative must provide advice, and execution-only sales are not allowed; overstating investment experience to close the sale faster.

3. Step 3: choose the product type, sum assured and sub-funds

   This step decides whether the policy is investment- or protection-oriented, single or regular premium, the size of the sum assured and which sub-funds to use. Before you apply, you should receive the financial needs analysis, the Product Summary, the policy illustration (for some types) and Your Guide to Life Insurance, plus a Product Highlights Sheet (PHS) for each sub-fund (LIA guide).

   • Documents: the Product Summary (all charges and their maximums), the PHS for each sub-fund, and the policy illustration (where applicable).
   • Time: take the documents home to read rather than deciding in a hurry at the same meeting.
   • Who: you decide; the licensed representative explains the product features, benefits and risks.
   • Common sticking points: looking only at the column with the highest rate of return in the illustration — that rate is an illustrative cap, not an expected return, and you should first check when the 0% column reaches zero; the illustration you saw differs from the final proposal; the sub-funds' risk category does not match your time horizon. The differences between the two types of ILP are covered in 101 ILPs and protection ILPs, and you can work through The 15-point checklist before buying an ILP item by item.

4. Step 4: application, health declaration and underwriting

   The higher the sum assured on a protection ILP, the stricter the underwriting; investment-oriented ILPs have a small protection component and usually simpler health questions, as set out in the proposal form.

   • Documents: the proposal form, a health declaration, a medical examination report where required, and a tax residency self-certification (insurers are reporting financial institutions under the Common Reporting Standard).
   • Time: simplified underwriting is quick; if a medical examination is needed it can take several weeks.
   • Who: you complete and sign truthfully; the insurer's underwriting team assesses; the representative helps submit.
   • Common sticking points: failing to disclose past medical history, which can affect future claims; if underwriting adds a loading, reread the updated illustration before deciding; cross-border readers' tax residency declarations may involve several jurisdictions (Singapore, Hong Kong, mainland China), so it is advisable to obtain professional advice locally.

5. Step 5: signing, payment and source of funds

   The payment method determines which accounts and procedures you need. Once the premium is received, sub-fund units are bought at the next calculated unit price (forward pricing).

   Source of funds	Preconditions	Key points
   Cash	No additional requirements	Single or regular premium
   CPF Ordinary Account (OA)	Aged 18 or above and not an undischarged bankrupt; OA balance above S$20,000; a CPF Investment Account with DBS, OCBC or UOB	From 1 October 2018, new investors must complete the Self-Awareness Questionnaire (SAQ)
   CPF Special Account (SA)	SA balance above S$40,000; no CPF Investment Account needed; not applicable to members aged 55 and above, whose SA has been closed	Higher-risk ILPs are not included in the SA investment range
   SRS	An account with an SRS operator bank	MOF limits the insurance that can be bought with SRS, including single-premium and coverage-multiple requirements, subject to the SRS operator bank's terms

   CPF thresholds and SAQ requirements follow the CPF Board page (updated 27 Aug 2026); since January 2001, CPFIS has accepted only single-premium ILPs (LIA guide).

   • Documents: the signed proposal form and payment authorisation; CPF Investment Account or SRS account details.
   • Time: cash payment is quick; opening a CPF Investment Account or SRS account for the first time takes extra time.
   • Who: you sign; the insurer processes payment; the CPF agent bank or SRS operator bank transfers the funds.
   • Common sticking points: the CPF balance is below the threshold or the SAQ has not been completed; wanting to use CPF for a regular-premium ILP (not accepted); overlooking the opportunity cost of CPF interest, covered in Buying an ILP with CPF or SRS. For selected clients (or clients of selected representatives), paragraph 41K of FAA-N16 requires a document review and call-back before the transaction is completed.

6. Step 6: receive the policy documents; 14-day free-look period

   All life insurers offer a 14-day free-look period, counted from the date you receive the policy documents (MoneySense). ILP refunds are adjusted for market value: most insurers pay the lower of premiums paid and the investment value, less costs such as medical examination fees, and you must give written notice within the period (LIA guide).

   • Documents: the policy contract, Product Summary, PHS, policy illustration (where applicable) and a copy of the proposal form.
   • Time: 14 days from the date you receive the policy documents.
   • Who: you check each item; if anything is unclear, ask the representative or the insurer for a written reply.
   • Common sticking points: assuming you will always get a full refund during the free-look period (if markets fall, it may be less than the premiums paid); not noting the date the documents were received; not checking the sum assured and sub-fund allocation.

7. Step 7: statements, annual review and rebalancing

   Regular-premium ILPs, and protection-oriented single-premium ILPs that meet the 150% threshold, receive a policyholder statement once a year (within 30 days of the policy anniversary); other ILPs in principle receive one monthly (MAS Notice 307, paragraph 35). The LIA guide suggests reviewing statements with your representative to check that the policy and sub-funds still meet your needs.

   • Documents: policyholder statements, sub-fund semi-annual and annual reports, and the latest Product Summary and PHS.
   • Time: at least once a year, plus a separate review whenever your income, family or retirement plans change.
   • Who: you take the lead, with help from the original representative or another licensed adviser.
   • Common sticking points: watching only the unit price and not how many units are sold each year to pay charges; discovering switching fees only after the free switches are used up; not knowing the complaints route — complain to the insurer first, and you can apply to FIDReC within six months of the final reply (rules in ILP regulation). How rebalancing and switching work is covered in Regular investing and rebalancing in an ILP, and what to do once you hold a policy in Already holding an ILP.

Additional arrangements for vulnerable and selected clients

Current rules (FAA-N16, from 29 December 2025). A person who meets any two of the following three criteria is a "selected client": aged 62 or above; not proficient in spoken or written English (or the language used in the sale); and educational attainment below GCE "O" or "N" level. A selected client must be accompanied through the sales process by an eligible trusted individual, unless the client waives this in writing (paragraphs 10A–10D), and a document review and call-back must take place before the transaction is completed (paragraph 41K).

The 15 May 2026 decision (pending legislation). MAS decided to classify ILPs as complex products and to remove the mandatory advice requirement for complex products, while selected clients must still receive advice (unless they pass the CKA and opt out); the CKA and the Customer Account Review will be merged into a single CKA that no longer expires once passed. These arrangements require legislative amendments and have no confirmed start date; until they take effect the current rules apply. The full picture is set out in ILP regulation.

If you would like this interpreted for your own circumstances, you can register your needs through the contact options on this site.