Features and risks

ILAS
Risks
Product features

You should read the offering documents (including the Product Key Facts Statement) and the Important Facts Statement to understand the features and risks of any ILAS product you are considering. Generally speaking, ILAS products have the following features and risks:

  • ILAS is a long term insurance policy issued by an insurance company. Your investments and insurance protection are subject to the credit risks of the insurance company.
  • ILAS is designed for investors who are prepared to hold the investment for a long term period. The surrender charge may be high if the policy is surrendered early. This could result in significant loss of the premiums paid. If you are not prepared to hold your policy longer than the minimum expected holding period, it may be better to purchase an insurance policy and make separate fund investments.
  • In general, ILAS products offer you a range of investment options to choose from and allow you to switch between these options where switching charges may be applicable. These investment options are linked to underlying/reference funds. But any investments made by the insurance company in the underlying/reference funds belong to the insurance company, not you. You just own the ILAS policy and your recourse is against the insurance company only.
  • The policy value (and return) of the ILAS is linked to the performance of the investment options you selected and thus there is a risk of capital loss. The assumed rate of return shown in the illustration document is an assumption for illustration purpose only, the actual return could fluctuate significantly or even become negative (i.e. losses). You should not rely upon the assumed investment return shown in the illustration document to make investment decisions.  
  • If the death benefit of the ILAS policy is linked to the policy value (e.g. Pure 105 ILAS), the death benefit can be very low when performance of the underlying funds corresponding to the investment options you selected is poor. The death benefit payable may be significantly less than your premiums paid and may not be sufficient for your individual needs.
  • Due to various fees and charges levied by the insurance company on the ILAS policy, the overall return on the ILAS will be lower than that of direct investments in the underlying/reference funds.
  • Upfront charge will reduce the amount of premium made available for investment, especially in the early policy years. In some cases, such fees could be significant.
  • Your ILAS policy may be entitled to a loyalty or special bonus if you meet certain conditions, such as maintaining the policy for a number of years.
  • Some ILAS products offer high level of life insurance protection. Insurance charges (cost of insurance protection) may increase significantly along the policy term due to the increasing age of the insured and/or the underlying funds corresponding to the investment options you selected are making loss. The cost of insurance protection will be deducted from the account value under your ILAS policy, which means that the amount available for investment under the policy will be reduced. Also some ILAS products with high level of life protection (e.g. Protection Linked Plan (PLP)) will no longer provide high level of life protection when the insured reaches the age of 65 (or any ages specified in the offering documents of the PLP), as a result the amount of death benefit payable may be significantly reduced.
  • Reduction or suspension of premium contribution (during premium holiday), or withdrawal from the policy, may significantly reduce the value of the ILAS policy while all fees and charges are still deductible. Poor performance of the underlying funds may further magnify the investment losses. If the value of the ILAS policy becomes insufficient to cover all the ongoing fees and charges, the ILAS policy may be terminated early and you could lose all the premiums paid and benefits.
  • The investment options available under an ILAS product can have very different features and risk profiles. Some may be of high risk. You should read the offering documents of the ILAS product and the underlying/reference funds involved for details of the underlying/reference funds’ investment objectives and policies, risk factors and charges, etc.
  • ILAS may be subject to foreign exchange risks as some of the underlying investments may be denominated in a currency which is different from that of the ILAS policy.