Compare ILAS and funds

ILAS
Fund

Whether an ILAS product or direct investment in a fund is an appropriate choice depends on your financial objectives and circumstances. It is important, however, to know the differences.

ILAS
(An insurance policy offering both life insurance protection and investment options)
Funds
(Funds are purely investment products and have no insurance element)
Your status as a consumer

You are a policyholder of an insurance contract and have contractual rights and obligations vis-a-vis the insurance company under the contract.

Designated beneficiary(ies) would be entitled to a death benefit which is calculated by reference to the account value, total premiums payable or total premiums paid depending on the type of ILAS products.

You are a unitholder/shareholder of the fund.

You have proprietary interest in the fund which will become part of your estate if you pass away.

Ownership of underlying assets

The insurance company, being the ILAS issuer, owns the underlying assets.

You do not have any right over the underlying/reference funds. Any recourse is against the insurance company. You have a legal claim over the value of the policy.

You own the fund which, in turn, owns the underlying assets of the fund. Your ownership right is in proportion to the units held by you to the total number of units in the fund.

You may lay claims to the fund units you hold.

Segregation/independent custody of underlying investments
While the insurance company owns the underlying assets, these assets are, by law, kept in a separate account and can only be used to meet the claims of ILAS' policyholders or beneficiaries. Such assets are not maintained by independent trustees/custodians at arm's length from the insurance company. Underlying investments of a fund are generally held by an independent trustee/custodian on behalf of the fund.
Investment term
An ILAS is designed for people with a long-term investment horizon and the ability to afford payment of the entire premium payment term. The investment term is more flexible.
Determination of investment return

The return in respect of the investment options is determined by the insurance company pursuant to the policy provisions.

An ILAS' performance may or may not make reference to the performance of the underlying/reference funds corresponding to the investment options you select, depending on the terms and conditions of the ILAS.

The return is generally based on the fund's performance.

A fund's performance is usually calculated by reference to the net asset value of all underlying investments of the fund.

Typical fees and charges

Policy level:

  • Platform fees (including upfront charge and ongoing platform fee)
  • Cost of insurance protection
  • Early surrender charge
  • Withdrawal charge


Underlying/reference funds level:

  • Management fee
  • Performance fee (where applicable)
  • Trustee and custodian fee

Fund level:

  • Subscription fee
  • Management fee
  • Performance fee (where applicable)
  • Redemption fee (where applicable)
  • Switching charge (where applicable)
  • Bid-offer spread (where applicable)
  • Trustee and custodian fee
Key risks you may face

Policy level:

  • Credit risk of the insurance company
  • Early termination risk
  • Risk on insurance benefit


Underlying/reference funds level:

  • Counterparty risk
  • Market risk
  • Management risk
  • Foreign exchange risk
  • Interest rate risk

 

Fund level:
  • Counterparty risk
  • Market risk
  • Management risk
  • Foreign exchange risk
  • Interest rate risk
Penalty for early surrender/redemption
Charge or penalty may be incurred upon early surrender, partial withdrawal, termination of the policy or suspension of/reduction in premium. This may result in significant or total loss in principal and other benefits under the policy e.g. death benefits and bonuses, especially in the early years of the policy. Some funds may charge a redemption fee, which is a certain percentage of your redemption amount.
Cooling-off period
You are entitled to a cooling-off period during which you may cancel the policy to get back your original investments subject to market value adjustment. There is no post-sale cooling-off period for funds.