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Your questions answered
A Universal Life (UL) plan is a type of life insurance that provides savings with protection components tailored to the policyholder’s needs. The plan accumulates an account value, which grows based on credited interest rates and it depends on the performance of the underlying funds. The account value will be used to fund for insurance protection and policy fees and charges.
An Investment-Linked Plan (ILP) is a type of life insurance product that combines insurance protection with investment elements, where part of your premiums is used to purchase units in investment-linked funds that are managed by the insurance provider. The total investment value of the policy depends on the performance of the investment-linked funds and it will be used to fund for insurance coverage and policy fees and charges.
A traditional life plan is a type of life insurance product that provides life coverage, and fixed savings or regular income. Traditional life plan focuses on stability which is ideal for those who prefer lower risk, predictable returns, and disciplined savings.
Here’s a side-by-side comparison to help you understand the differences:
Category |
Investment-Linked Plan (ILP) |
Traditional Life Plan |
Universal Life Plan |
What is it? |
A plan that aims to provide both life coverage and potential wealth growth through investment-linked funds. |
A plan that focuses on fixed savings or to receive regular income with protection elements.
|
A plan that provides savings and regular income with protection elements; where the plan accumulates with account value that grows based on credited interest rates. |
Type of Returns |
Returns depend on the investment-linked fund’s performance. |
Returns are typically lower, but stable. |
Crediting rates depend on the performance of underlying funds. |
Flexibility |
Flexibility to withdraw your money when in need, or top up/switch your funds at any time to increase your investment. |
Terms are usually fixed. |
Terms are usually fixed. |
Can I add riders for more comprehensive protection? |
Yes, riders can be added to enhance coverage and protection. |
Yes, riders can be added to enhance coverage and protection. |
Yes, riders can be added to enhance coverage and protection. |
A savings and investment plan is a financial product designed to help you grow your wealth while protecting your future. It encourages regular savings and channels part of your funds into investments, allowing your money to potentially grow over time.
Common types of investment-linked insurance
There are two types of investment-linked insurance, namely:
Single Premium
You typically pay a lump sum amount of money to purchase units in a fund. A larger portion of the premiums can be invested to generate returns.
Regular Premium
You pay your premiums on a regular basis, be it monthly, quarterly, half-yearly or yearly. A smaller portion of the premium (in comparison to the Single Premium) is allocated for investment during the earlier years of the policy due to higher initial charges.
ILPs entail some level of risk, given their dependency on market conditions for the investment portion.
We recognise that navigating these complexities can be challenging. In addition to understanding your financial situation and future investment needs, determining suitable plans adds another layer of complexity.
That's why our Life Planning Advisors are here to assist you in navigating this process. Book a free consultation session with our Life Planning Advisors to get started.
The information provided in this article is for general reference only. This article is not intended to be a substitute for professional investment advice and/or medical advice, diagnosis, or treatment. Great Eastern Life Assurance (Malaysia) (GELM) and its affiliates assume no responsibility for any loss or any actions taken based on the information provided in this article.