You have probably heard of the infamous 2-in-1 shampoo and body soap product. What if you could do the same with investments and insurance?
Well, that 2-in-1 package is called an Investment-Linked Plan (ILP), offered by many companies in Singapore.
An investment-linked plan allows you to direct your premiums to pay for units of sub-funds. These units are sometimes sold to fund the insurance and other related charges. If you choose dividend-paying funds, you can also receive consistent payouts from your investments.
At the same time, this is an insurance policy, so it provides coverage for serious illnesses and offers payouts in the event of death. The extent of coverage, however, varies from product to product.
Many companies offer similar versions of investment-linked plans in Singapore, but with certain vital differences.
Hence, we have listed the best policies for each of the different categories in this article. We hope this will make it easier for you to choose the plan that best meets your needs.
By the way:
When was the last time you've done a proper investment plan or reviewed your investments?
In Singapore, having a proper investment plan could spell the difference between a rich quality of life for you and your loved ones and a not-so-good quality of life...
And people are starting to realize this.
Summary Table of ILPs
Best ILPs By Categories:
1. Best ILP overall:
Manulife InvestReady - Wealth (II)
Image credits: PRNewswire
The Manulife InvestReady - Wealth (II) is the overall best investment-linked policy in Singapore, with a good balance of offerings in most of the categories we will explore in the article.
It offers attractive welcome bonuses and loyalty bonuses, which are paid out when you continue the plan for more than 20 years.
This plan also offers a direct investment of your premiums into the chosen fund units. Furthermore, it boasts great flexibility in changing your basic premiums, topping up premiums, and withdrawing the accumulated dividends.
2. Best ILP by welcome bonus:
Some insurance companies in Singapore do offer a welcome bonus or initial bonus when you sign up for one of their investment-linked plans. Below is a list of some plans that include attractive bonuses as a percentage of the annual premiums.
A. Manulife InvestReady - Wealth (II)
As you may have realised, it is difficult to make a straightforward comparison between the welcome bonuses of all plans due to varying annualised premiums for each plan. However, with a bit of math, it is clear that Manulife InvestReady - Wealth (II) is the investment-linked plan that offers the best welcome bonus in Singapore.
B. AXA Wealth Accelerate
Image Credits: AXA
Another policy that has a different approach to welcome bonuses among investment plans in Singapore is the AXA Wealth Accelerate plan.
This plan is very attractive, as the welcome bonuses are given every year up to Year 5 (for 25-30 year plans). With this scheme, you could earn up to 200% of your premiums, paid over 5 years, for the 30 year plan.
3. Best ILP by flexibility:
A. Tokio Marine #goClassic
Image Credits: Tokio Marine
The life you have when you sign up for an investment-linked plan in Singapore will be vastly different from that a few years down the road when you are older. Therefore, the ability to make changes to your plan is paramount to making the most out of your plan at any stage of your life.
The #goClassic plan by Tokio Marine is, in our opinion, the better option when it comes to flexibility among investment-linked plans in Singapore as it offers all 3 of the options stated below at no extra charge.
Here are the 3 aspects we are looking at when assessing the flexibility of the plans:
a. Fund switching
The ability to switch funds is critical for those who want to have a hands-on approach to their investments. Markets are volatile thus, it is good to optimise your investments occasionally to ensure that you are making the best of the market.
For example, consider the situation where the sub-fund you chose is not performing up to expectations. At this point, it will help to swap out the fund you chose for one that is performing better and has better growth potential.
b. Premium holidays
Premium holidays are ways to pause your premium payments for your investment-linked plans in Singapore. This will come in handy when you are facing tight financial situations and are unable to fork out the monthly premiums.
This allows you to avoid losing your plan due to payment difficulties in the future, should you face unprecedented setbacks to your finances.
c. Premium top-ups
Let’s consider the situation where the sub-fund unit you chose is performing extremely well and you are expecting it to do way better in the future. Great! You made the right choice and you feel good about it.
However, with some idle cash in your account, you wonder if you can ride on the good performance of your sub-funds by topping up your premiums. If all goes well, that additional injection of funds could net you a significant amount of money over an extended period of time.
Well, the ability to do that is a premium top up and hopefully, the scenario above helps you get a better understanding of the importance of this option.
B. Great Wealth Advantage
Image Credits: Logo Surfer
Another plan which provides the best flexibilities is the Great Wealth Advantage plan by Great Eastern. This plan provide all of the 3 options that we have mentioned above.
However, the only drawback of this plan relative to the above mentioned plan by Tokio Marine is that, premium holidays are chargeable up until the 10th policy year.
4. Best ILP by dividends:
Tokio Marine #goTreasures
The choice to reinvest or cash out your dividends is an attractive offering for those who wish to use their investment-linked plans as an additional source of income.
If you are more fond of the returns from dividend stocks and don’t really require insurance coverage, maybe investing in dividend stocks directly could be the thing for you.
If you do decide to invest in them, check out our list of the best dividend stocks that you may want to invest in.
5. Best ILP by fees:
Manulife InvestReady - Wealth (II)
With reference to the summary table at the start of this article, it is very clear that the Manulife InvestReady - Wealth (II) is the investment-linked plan that charges the least fees in Singapore for the 20-year plan at 0.7% per year after the minimum investment period.
The cost of taking up an investment-linked plan in Singapore is often overlooked as most would solely consider just the amount of premiums that need to be paid. However, there are often fees that are usually tucked away in fine print at the end of brochures for the plan.
Hence, it is important to be aware of these fees and choose a plan with the least fees as they can add up over an extended period of time to a significant amount.
6. Best ILP by coverage:
A. Prudential PRUSelect Vantage
Image Credits: Prudential
This investment-linked plan by Prudential offers one of the most extensive ranges of riders in Singapore. Riders are additional options that enhance your coverage.
Some of the supplementary options include the Early Stage Crisis Waiver. This option will waive future premiums for a certain period of time upon the diagnosis of early or intermediate stage medical conditions.
Another option is the Crisis Waiver III, which waives future payments upon diagnosis of one of the 35 critical illnesses covered by the company.
The Payer Security III is another unique offering which waives your child’s policy payments when you require coverage for death, permanent disability or critical illnesses.
B. AXA Pulsar
The AXA Pulsar is another plan which provides one of the best coverages among investment linked policies in Singapore.
The key feature of this plan is the Life Replacement Option (LRO). This options allows you to essentially replace the life insured by the plan.
This option will be very critical in unfortunate situations when for example a parent passes on earlier than expected. With an LRO, the insured person can be changed to that parent’s child, from that point onwards.
If you are, however, expecting even more coverage and more options, maybe the right product for you would be a term insurance plan and not an investment-linked plan.
But if you are convinced that investment-linked plans are right for you, you should consider the risks involved in investments before you buy a plan in Singapore.
Markets are especially volatile in this period due to factors such as extreme government fiscal policies in response to rising inflation. Other factors include supply chain disruptions due to events like the war in Ukraine.
These events have a direct impact on the markets and thus the value of your plan, hence it is vital to consider this before buying an investment-linked plan in Singapore.
If you are, however, unsure of how much risk you can afford to take, fret not as Techiya has the perfect solution — a risk calculator to better know your risk profile.
7. Best ILP by lowest premiums:
NTUC Income VivaLink
Image credits: NTUC Income
When you pick a plan, the most fundamental thing to consider would be the premiums you will have to pay. You must be ready to part with a significant amount of cash every month, hence choosing the plan which requires the least premiums is vital.
The NTUC Income VivaLink plan’s premium starts from $100 a month, thereby offering one of the lowest premiums for investment-linked plans in Singapore.
This plan also offers guaranteed insurance coverage for the first 10 policy years regardless of the cash value. This means that you will be guaranteed a payout when the situation calls for it, regardless of how the market performs and how much you have paid in terms of premiums.
Therefore, even with a low premium, this policy is a worthy one, thus breaking the stereotype that you only get what you pay for.
We hope that this article has given you greater awareness of your options when it comes to investment-linked plans in Singapore. Each plan has something unique to offer, so hopefully, you can identify the plan that best suits your needs.
You could, however, be confused as to which plan to choose, or maybe you are still unsure what exactly you need in terms of investments and insurance in Singapore. If that sounds familiar to you, what you need is a financial advisor to address your queries.
You won't be alone if you consider a financial advisor as around 61% of Singaporeans reportedly consult one, so there’s no need for hesitation.
Contrary to their reputation for pushy sales tactics, financial advisers help new investors cut through the noise.
They can arrange your investments and build a financial plan that helps ensure you will sustainably meet your financial goals. With regards to investment planning, they do the following:
Identify your current life stage
Identify your goals, needs and wants
Find out how much you will need for each need, wants, and goals
Plan how you can achieve these goals
Build and optimise your financial investments
To help you take control of your personal finance, Techiya offers a free comprehensive and personal financial assessment worth over $200 for individuals; don’t miss out on this!