When Ms Nancy Lim dabbled in stocks in her 20s and 30s, she learned some tough lessons. Like many novice investors, she lacked a deep understanding of the companies she invested in, leading to less-than-ideal outcomes for her savings. “You can’t pick stocks the way you pick groceries,” she said. “It was an unpleasant experience.”

The 55-year-old human resource director now takes a more diversified approach to investing and prioritises relevant insurance coverage as she steps into her “young senior” years. One of her recent decisions was investing in an investment-linked insurance policy (ILP) from Income Insurance.

This policy combines flexible investment with robust insurance protection – a balance that meets her evolving needs.

UNDERSTANDING ILPs AND THEIR EVOLUTION

ILPs combine insurance and investment into a single solution, offering a dual-purpose tool for wealth accumulation and life insurance coverage. Whether you are a young professional starting out or approaching retirement, ILPs could be a viable financial planning solution suited to your needs.

While ILPs have been in the market for a while, they have undergone significant evolution. Early ILPs were primarily protection-focused, emphasising life insurance coverage and carrying higher charges like mortality and morbidity costs to ensure financial security for loved ones. Today, investment-focused ILPs are gaining traction focusing more on growing investments while still providing essential coverage.

Whether they are investment- or protection-focused, today’s ILPs are designed with flexibility in mind to meet different needs. For example, unlike traditional endowment plans that lock funds for extended periods, ILPs such as Income Insurance’s Invest Flex and Invest Flex Vantage allow up to three charge-free partial withdrawals of up to 10 per cent of the policy value, subject to certain conditions being met, after three years, provided the policyholder has completed the minimum investment period (MIP) — the period during which they have chosen to pay regular premiums. This feature, known as the Life Events Withdrawal Benefit, offers financial agility for significant life events that may occur during the MIP, such as a wedding, starting a family, buying a home, or an unexpected hospital stay.

In addition, you can have the flexibility to take a premium holiday at no charge for up to 120 months from the fifth anniversary of the policy, subject to certain conditions.

A common concern with ILPs is the fees involved. To be transparent to consumers, insurers like Income Insurance offer clear documentation, including a product summary, policy conditions and policy illustration – so they can fully understand their policy and its benefits.

It was this flexibility and transparency that drew Ms Lim to choose Income Insurance’s Invest Flex Vantage plan. After discussing the risks and benefits with her financial advisor representative, Ms Lim felt confident in her decision to invest in the ILP. She also took the time to read the policy’s terms and conditions, ensuring she made an informed choice. “For me, it’s equally important to have investment and coverage,” she added.

PROTECTION AND INVESTMENT ACROSS LIFE STAGES

Income Insurance’s ILPs cater to individuals at every stage of life, from young professionals building their financial foundation to those planning for a secure retirement.

Take Ms Ariel See, 34, for example. A mother of two, the business development manager is exploring ILPs to expand her investment portfolio while ensuring her family’s financial security. With plans like Invest Flex, Ms See can safeguard her children’s future, and simultaneously invest and build her retirement nest egg. “It complements my existing insurance plans by providing investment growth potential alongside life coverage,” she said. 

As someone focused on long-term financial planning, she also prefers that professional fund managers handle her investments, rather than placing this responsibility on her family if she were to pass away. 

While she already holds other investments and term life insurance, she is interested in ILPs for their flexibility and potential returns. “Initially, I thought ILPs were too expensive, and I was concerned about the fees,” she admitted. “But after learning more, I realised that ILPs offer investment returns that could potentially offset those costs. That changed my perspective.”

For Ms Lim, the focus is on securing a steady income to supplement her retirement savings. The Invest Flex Vantage plan offers her possible dividend payouts with dividend paying funds¹ as early as the first policy year, providing a potential income stream to meet her retirement needs.

Beyond investment returns, Ms Lim also required sufficient insurance protection. With Invest Flex Vantage, she has gained coverage for terminal illness and death, ensuring her loved ones are financially supported in case of unexpected events. “Invest Flex Vantage suits my needs,” Ms Lim shared. “I like the dual objectives of ILPs – without both investment growth and protection, it wouldn’t align with my wealth journey.”

MAKING SMART DECISIONS TODAY FOR A SECURE TOMORROW

Both Ms Lim and Ms See are mindful that ILPs require ongoing attention to ensure they’re meeting their financial goals. Ms Lim stays in close contact with her financial advisor representative, regularly reviewing her policy’s performance. “I’ve been reviewing my coverage with my financial advisor representative (on a regular basis),” said Ms Lim. “Retirement planning, disability income protection and coverage for death, terminal illness and hospitalisation are key priorities for me.”

“I prefer to have professional fund managers manage my investments, so I don’t have to worry about it myself. I’ve been enjoying strong returns without the need to monitor my investments every other day. It has been a stress-free experience,” she added.

Meanwhile, Ms See keeps track of her reports from an earlier ILP she bought a decade ago. As her children grow, she is now considering a new ILP to further diversify her investments.

Both women advise investing as a way to accumulate funds for unexpected expenses. “Investing in an ILP is like an instalment plan for my medical bills but with the added benefit of returns, savings and investments. It’s essentially shifting funds from one account to another with potentially higher returns,” said Ms See. “Start saving as early as possible – even if it’s a small amount, it will accumulate into a big amount over time,” she concluded.