Have you ever wondered if your insurance policies could do more than just protect you? What if they could also grow your wealth over time?

As someone who has spent more than 20 years helping Singaporeans navigate their financial journeys, I often hear this question: “Is an Investment Linked Plan (ILP) worth it?” It’s a smart question—and one that deserves a clear, practical answer.

Backed by my education from NUS Business School and decades of real-world experience, I’ve helped clients from all walks of life—young professionals, new parents, business owners—make informed decisions that align with their goals.

In the article, I’ll walk you through everything you need to know about ILPs in Singapore, from how they work to whether they truly make sense for your financial future.

Let’s explore the truth behind ILPs—beyond the marketing brochures—and find out if one might be right for you.

Quick Takeaways

• ILPs combine life insurance protection with investment opportunities.
• They are suited for long-term investors who can handle market ups and downs.
• Flexibility in premiums and fund switching are major benefits.
• Charges can reduce returns significantly if not managed wisely.
• Professional guidance is essential to determine if an ILP fits your strategy.

What is an Investment Linked Plan (ILP)?

An Investment Linked Plan (ILP) is a hybrid financial product that provides both life insurance coverage and investment in the funds marketplace. A portion of your premium pays for insurance, while the rest is invested in sub-funds of the investor’s choice. ILPs are regulated by the Monetary Authority of Singapore (MAS), ensuring transparency and consumer protection.

Unlike traditional whole life plans, investment linked insurance allows your investment value to grow (or shrink) based on fund performance. This makes them attractive for those aiming for wealth accumulation while maintaining essential protection.

Understanding Different Types of ILPs

When exploring investment linked policies, it’s important to understand that types of ILP structures are available to meet diverse needs. Regular premium ILPs involve consistent monthly or annual payments, making them ideal for systematic wealth building. Alternatively, single premium ILPs allow you to invest a lump sum upfront, which may be suitable for those who have received an inheritance or bonus.

Many insurers offer a welcome bonus when you first purchase the policy, providing additional units in the chosen investment funds. This bonus typically ranges from 1-5% of up to your initial premium, giving your investment a head start.

How Does an ILP Work in Singapore?

Here’s how a typical ILP functions:

• Premium Allocation: Your premiums are split between insurance costs and investments.
• Fund Choices: Choose from a range of unit trusts across sectors and regions.
• Flexibility: Adjust your premiums or switch funds as your needs evolve.
• Investment Risk: Returns are not guaranteed and depend on market performance.

The investment portion of your premium purchases units in selected investment funds, while the insurance component provides coverage throughout the policy term. You can monitor how your fund value performs and make adjustments as needed.

For example, a young professional investing consistently over 20 years might benefit from dollar-cost averaging—smoothing out market volatility while growing their investment. The coverage term can be structured to align with a specific timeline, such as until retirement age.

Pros and Cons of ILPs

ILP vs Term Insurance: Which is Better?

Term Insurance offers pure protection at lower costs, while investment linked policies ILPs bundle protection with investment opportunities. If you’re just starting out and want to grow your wealth while maintaining some insurance coverage, an insurance plan like an ILP might appeal to you.

However, if you prefer to separate insurance and investments, a combination of term insurance and standalone investment plans may offer better control and transparency. The choice depends largely on your financial goals and risk tolerance.

Understanding ILP Charges and Cash Values

ILPs come with various charges that can affect your investment returns:

• Policy Fee: A monthly administrative fee.
• Insurance Charges: Based on age and coverage.
• Fund Management Fees: Vary depending on the sub-funds chosen.
• Surrender Charges: May apply if you exit early.

Understanding these fees is critical because they directly impact the value of your investment over time. The cash values of your policy represent the surrender value at any given point, which part of reflects your accumulated investment gains minus applicable charges and fees.

Fund managers play a crucial role in managing the underlying investment funds, and their expertise can significantly influence your returns. When selecting investment products, consider the track record and philosophy of the fund management team.

Maximizing Your Investment Goals Through Strategic Planning

To align your investment goals with your ILP strategy, consider these approaches:

ILPs can be particularly effective when you maintain a long-term perspective. The policy term should match your investment horizon, whether that’s 10, 20, or 30 years. During this time, you have the flexibility to make top ups when you have extra money available, accelerating your wealth accumulation.

The ability to pay additional premiums gives you control over your investment pace. Many policyholders find that regular top-ups during bonus seasons or salary increases can significantly boost their fund values over time.

Best Investment Linked Plans in Singapore (2025)

While the best ILP depends on your needs, here is a detailed comparison of five popular insurance plans from Manulife:

(Always consult a financial advisor for tailored recommendations.)

Who Should Consider an ILP?

ILPs are suitable for:

• Young professionals aiming for long-term wealth.
• Parents saving for children’s education.
• Individuals comfortable with market risk.
• Those seeking to invest in both protection and growth simultaneously.

They may not be ideal for those nearing retirement, seeking guaranteed returns, or needing short-term liquidity.

How to Maximise Your ILP’s Potential

• Top-up regularly to benefit from dollar-cost averaging.
• Review annually with your advisor.
• Switch funds when necessary to match your risk appetite.
• Use premium holidays strategically during tough times.
• Monitor fund performance and consider rebalancing your portfolio.

What I Tell My Clients

Over the decades, I’ve seen ILPs help disciplined investors reach milestones like funding a child’s university education or retiring earlier than expected. But I’ve also seen the pitfalls of underestimating risk or over-committing financially. That’s why personalised advice matters.

An ILP is not a one-size-fits-all solution. For some, it’s a powerful wealth accumulation tool. For others, it could be a mismatch. The key lies in understanding your own goals, timeline, and risk profile—and having an experienced advisor walk the journey with you.

Final Thoughts

An Investment Linked Plan in Singapore can be a powerful financial tool—but only when used strategically. If you’re considering an ILP, take the time to evaluate your risk tolerance, financial goals, and long-term strategy.

Want to know if an ILP is right for you? Let’s have a chat and create a financial roadmap tailored to your dreams. With the right plan in place, you’re not just protecting your future—you’re investing in it.