What is an Investment-Linked Insurance Policy (ILP)?
Under the CPF Investment Scheme (CPFIS), you can invest in various Investment-Linked Insurance Policies (ILPs).
An ILP is made up of an insurance component coupled with an investment fund managed by a professional fund manager. Insurers usually set up two or more sub-funds for each ILP with differing investment objectives to suit the risk appetite of different types of policyholders. These underlying ILP sub-funds are similar to unit trusts. The allocation of premiums across these sub-funds may be fixed by the insurer or decided by the policyholder, depending on the structure of the ILP.
The advantage of an ILP is that it effectively combines investments in a unit trust with purchase of insurance coverage. This is also its disadvantage. An investor might prefer a more flexible combination of insurance coverage and unit trust investment that is not offered by any of the ILPs included under the CPFIS.
