{"id":6495,"date":"2024-02-11T00:14:00","date_gmt":"2024-02-11T00:14:00","guid":{"rendered":"http:\/\/www.investollo.com\/?p=6495"},"modified":"2024-02-22T07:18:08","modified_gmt":"2024-02-22T07:18:08","slug":"beat-singapore-banks-interest-rate-investment-linked-insurance-policy","status":"publish","type":"post","link":"https:\/\/www.areyouready.sg\/beat-singapore-banks-interest-rate-investment-linked-insurance-policy\/","title":{"rendered":"How to beat your Singapore banks interest rate with Investment Linked Insurance Policy"},"content":{"rendered":"\n
Key Takeaways:<\/strong><\/p>\n\n\n\n Can Investment-Linked Insurance Policies beat the interest rates offered by Singapore banks?<\/strong> In the pursuit of higher returns than traditional savings, Investment-Linked Insurance Policies (ILPs) emerge as a compelling option. These hybrid financial products not only provide life insurance coverage but also offer the opportunity to invest in a variety of funds. With the potential to outpace bank interest rates, ILPs warrant thorough consideration and understanding, aligning with one’s financial objectives and appetite for risk to truly capitalize on their benefits.<\/p>\n\n\n\n Investment-Linked insurance is often suggested to us by insurance agents as one of the best investment tool available out there – it combines investment and insurance into one product. But, is it really as good as they claim it to be?<\/span><\/p>\n\n\n\n What is an Investment-Linked Insurance Policy (ILP)?<\/b><\/p>\n\n\n\n It is an <\/span>insurance product<\/span> that <\/span>contains<\/span> an <\/span>investment<\/span> element and <\/span>insurance<\/span> (protection) element. Although there is a \u201cprotection\u201d element in the policy, there are also ILPs that does not contain the \u201cprotection\u201d element, in which case, all premiums paid goes into investing. There are also policies that allow flexibility in altering the proportion of money that goes into each amount.<\/span><\/p>\n\n\n\n There are 2 types of ILP, namely the Single premium ILPs and Regular premium ILPs.<\/span><\/p>\n\n\n\n How does it work?<\/b><\/p>\n\n\n\n For every dollar of insurance premium you pay, a portion of it goes into the protection element and the other portion of it goes into the investment element of it. The protection part protects you against risks that you insured yourself against, just like a normal life or health insurance. The investment money is then used to invest in stocks, bonds, REITs, and other assets to generate a return. The creation of ILP is used to attract people who wish to obtain both protection and investment returns at the same time.<\/span><\/p>\n\n\n\n Pros of ILP<\/b><\/p>\n\n\n\n Cons of ILP<\/b><\/p>\n\n\n\n AXA currently offers an ILP that covers medium to long term horizon – the AXA Optimus. Something unique about this ILP is that it can be used purely as an investment tool to unlock access to restricted funds. This means that 100% of your premium contributions can be channeled into the investment component. You can also freely switch between funds managed by AXA, switching to better performing funds when available.<\/span><\/p>\n\n\n\n While many of us worry that such investment\/savings plan would often lapse if there are no regular stream of premium paid in the event of a job retrenchment. AXA Optimus allows the holder to receive up to SGD 9,000 per Policy under their Involuntary Unemployment Benefit. This would certainly help to tide over tight cash flow situations and assist on the premium payments for a period of time.<\/span><\/p>\n\n\n\n In addition to all the benefits listed, AXA Optimus also allows regular withdrawal of the investment returns that you receive. Nothing beats having cold hard cash in your pockets. This option is subjected to conditions and can only be allowed after the Premium Payment Term.<\/span><\/p>\n\n\n\n At the lowest plan, an average annual yield of 2% will be more than sufficient to cover the fees and charges on the ILP (not the premiums paid). 2% is an achievable investment goal, any returns above 2% is a return on capital (or premiums paid).<\/span><\/p>\n\n\n\n On the first year, you will receive bonus fund units of up to 180% of the premiums paid. Meaning for every $1 you put into the ILP, you get $1.80 worth of fund units (this is an over-simplification because there are costs involved, but the general idea is there). This bonus 80% will definitely jump start your investment journey<\/a> and provide you with a higher return on investments.<\/span><\/p>\n","protected":false},"excerpt":{"rendered":" Key Takeaways: Can Investment-Linked Insurance Policies beat the interest rates offered by Singapore banks?Yes, Investment-Linked Insurance Policies (ILPs) have the potential to beat the interest rates of Singapore banks by combining life insurance coverage with investment opportunities. However, it’s important to carefully assess the risks and returns, as well as to consider your financial goals […]<\/p>\n","protected":false},"author":1,"featured_media":6496,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[7,11,13],"tags":[81],"_links":{"self":[{"href":"https:\/\/www.areyouready.sg\/wp-json\/wp\/v2\/posts\/6495"}],"collection":[{"href":"https:\/\/www.areyouready.sg\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.areyouready.sg\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.areyouready.sg\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.areyouready.sg\/wp-json\/wp\/v2\/comments?post=6495"}],"version-history":[{"count":1,"href":"https:\/\/www.areyouready.sg\/wp-json\/wp\/v2\/posts\/6495\/revisions"}],"predecessor-version":[{"id":8319,"href":"https:\/\/www.areyouready.sg\/wp-json\/wp\/v2\/posts\/6495\/revisions\/8319"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.areyouready.sg\/wp-json\/"}],"wp:attachment":[{"href":"https:\/\/www.areyouready.sg\/wp-json\/wp\/v2\/media?parent=6495"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.areyouready.sg\/wp-json\/wp\/v2\/categories?post=6495"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.areyouready.sg\/wp-json\/wp\/v2\/tags?post=6495"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}\n
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Yes, Investment-Linked Insurance Policies (ILPs) have the potential to beat the interest rates of Singapore banks by combining life insurance coverage with investment opportunities. However, it’s important to carefully assess the risks and returns, as well as to consider your financial goals and risk tolerance before investing.<\/p>\n\n\n\n
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\n\n\n\n <\/td> Single premium ILPs<\/span><\/td> Regular premium ILPs<\/span><\/td><\/tr> Payment<\/span><\/td> One lump sum<\/span><\/td> Yearly or monthly payment<\/span><\/td><\/tr> Insurance Coverage<\/span><\/td> Lower coverage<\/span><\/td> Higher coverage<\/span><\/td><\/tr> Investment<\/span><\/td> Bigger portion of the money goes into investment<\/span><\/td> Smaller portion of the money goes into investment<\/span><\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n \n
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