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Chapter 7: ILP - Coggle Diagram
Chapter 7: ILP
Features
Sub-Fund switch done on
bid-to-bid basis
POSB (Purchase on Offer, Sell on Bid)
Premium Holiday
Benefit charges paid by
selling existing units
Top ups
Riders
Paid using either unit deduction or
additional premium payments
Benefits
Flexibility in coverage and premiums
Professional management
Affordable access to market
Diversification
Guaranteed insurability for
duration of plan
Premiums
Part used to buy
term insurance
Balance is invested into
ILP sub-funds
Allocation Rate
percentage of premiums
used to purchase units
Front-end loading
Some premiums used to
defray insurer expenses
Premium allocation increases
over time until 100%
Back-end Loading
Premium allocation is 100% at beginning
Surrender charges imposed to cover distribution
and administration costs upon policy surrender
Purpose
Investment
Savings
Protection
Pricing
Unit Price Computations
Forward pricing
Price only known on the next valuation date
Bid and Offer prices
Single pricing
initial sales charge deducted from premiums
then net premium used to buy
units based off single price
Types
Investment-Linked WL
Investment-Linked Annuities
Using CPF
savings
Only
single premium
ILPs or
recurrent single premium ILPs under CPFIS
Differences with UT
ILPs do not need trustees
or registars
Free-look
UTs
7 calendar days
Factors
Suitability
Not suitable for older people
Unlikely to continue premium payments
Short-term investment horizon
Higher premium cost
Fees and charges
Surrender charges
Percentage of cash value which
decreases from first year