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6 Ways An Investment-Linked Policy Can Play a Part in Your Recession-Proof Strategy

Yen Joon

Yen Joon

Last updated 07 October, 2022

If you’re a young investor looking to invest during this volatile period with the protection that a life insurance offers, here’s how getting an Investment-Linked Policy (ILP) can help. 

With inflation hitting hard, cryptocurrencies crashing, and the stock market plunging to its worst performance in 50 years, it’s understandable that investors are leaning towards more stable investments. 

If you’re starting out on your investing journey and have reservations about investing in the stock market now, one way you can still invest in funds and have insurance protection is to invest in an investment-linked policy, or ILP


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What is an investment-linked policy and how does it work?

An ILP is a type of life insurance product that combines insurance coverage and investment into one policy. 

Like life insurance, an ILP offers financial security in the event of death to the life insured. However, it also offers the opportunity to accumulate wealth. 

In an ILP, the premiums that you pay are used to buy insurance coverage as well as invest in ILP sub-funds of your choice. These ILP sub-funds are managed by professional fund managers.

Most policies have portfolio funds that are designed based on your risk appetite, investment objective, and time horizon.

Like any other investment product, ILPs carry investment risks; your investments don’t provide guaranteed returns and will change according to the market’s performance.

However, no ILPs are alike; some come with higher insurance coverage and have a stronger insurance component with little flexibility in switching funds, while others are more focused on wealth accumulation and investment with lower insurance coverage.  

WEBULL_$140_BLOGARTICLE_800x250 (1)

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How does an ILP help to recession-proof your investment strategy?

1. It helps to spread your risk

The beauty of investing in ILPs is its flexibility to cater to investors with different risk appetites.  By investing in several ILP sub-funds such as equities and bonds, you have exposure to different types of securities. These are also spread across different industries and sectors.

Rather than putting your money in one investment, an ILP reduces your risk through diversification. If one of the funds performs poorly, the other funds can help to balance out the loss.

2. You can make changes to your ILP sub-funds based on your investment objectives

Most ILPs allow you to choose which funds you want to invest in, and you can base your decision on the fund’s investment objective and risk profile. This is helpful when your financial circumstances or risk tolerance have changed, and you want to switch funds based on your investment objectives. 

Etiqa’s Invest builder offers you free unlimited fund switching which means you can switch funds at any time at no extra cost. What’s more, you also enjoy access to top reputable investment funds that are usually only available to large institutional investors from S$250,000 to S$1 million per transaction. 

If you’re the kind of investor who prefers to take an active approach in managing your investment portfolio, the flexibility of making unlimited fund switching can help you to adjust your portfolios according to the market conditions.

3. You can make withdrawals without surrendering your policy

One of the benefits of ILPs is that you can make partial withdrawals without the need to surrender your policy.

The ability to liquidate part of your funds makes it especially useful when you need cash at short notice. For example, when you encounter financial difficulties or if there’s a sudden medical cost. 

With Etiqa’s Invest builder Life Contingency Benefit, you can make partial withdrawals at no charge1. The Life Contingency Benefit also allows you to take a break from making premium payments1 in the event that you’re diagnosed with a severe critical illness, Total & Permanent Disability, or suffer a loss of job. 

4. Have multiple bonuses to boost your investment returns

ILPs typically offer welcome bonuses to increase your investment gains over the long term. With Invest builder, you can enjoy a start-up bonus2 of up to 64% of the premium in your first two years of investment.

You’ll also receive an additional bonus2 of 0.1% p.a. of account value from policy year 6 to 10, and a loyalty bonus2 of 2.0% p.a. of account value from policy year 11 onwards. 

5. Ride out volatility over the long term

For ILPs with medium to long-term objectives, it is recommended to perform dollar-cost averaging through regular premium or top-ups. 

This approach of investing regularly means that you buy into the market regardless of whether the market is low or high. Over the medium to long term, you can average out short-term volatility and balance potential performance with your risk tolerance.

For example, if 30-year-old Ashton signs up for a 15-year Invest builder plan with a monthly premium of S$500, below is the amount he’ll receive if he surrenders his policy when he’s 65 years old:

Monthly premium S$500 X 12 = S$6,000
15% start-up bonus^ (first year) S$6,000 X 15% = S$900
7% start-up bonus^ (second year) S$6,000 X 7% = S$420
6th to 10th policy year 0.10% per annum of account value^
11th year onwards 2% per annum of account value^
Projected total payout when he’s 65 years old S$491,281*

^Subject to applicable terms and conditions.*Note that the above example is based on an investment rate of return of 8% per annum. If the investment rate of return is 4% per annum, the payout will be S$167,426 instead. Like most investments, the returns are non-guaranteed, and depend on the performance of the selected funds. 

6. Insurance coverage during the policy term

As mentioned, ILPs also provide insurance coverage. Invest builder also provides death coverage to the life insured, and a lump sum payment will be given to your beneficiaries.

The death benefit payable is the higher of 105% of net premiums3 or account value after deducting any outstanding amounts. The account value is the value of all your units less any applicable fees and charges. 

Investment made easy with Etiqa’s Invest builder

Etiqa’s Invest builder makes it easy for you to choose an investment plan. 

Not only could you get multiple bonuses from your investment, you’ll also get to invest in a variety of top-tier institutional and retail funds that are carefully selected and managed by reputable regional and global professional asset managers. 

You also don’t have to worry about hidden charges; the fees are described upfront so there’s full transparency.

Lastly, if you sign up with Invest builder by 31 September 2022, you’ll get to enjoy an exclusive promo of an additional 5% bonus top-up2 on your first year premium! 



1Please refer to policy contract for terms and conditions.
2Applicable terms and conditions apply.
3 Net premium refers to total premium paid plus total top-up(s) less any partial withdrawal(s).

Information is accurate as at 22 August 2022. This policy is underwritten by Etiqa Insurance Pte. Ltd. (Company Reg. No. 201331905K).

Invest builder is an Investment-linked Plan (ILP) which invests in ILP sub-fund(s). Investment in this plan is subject to investment risks including the possible loss of the principal amount invested. The performance of the ILP sub-fund(s) is not guaranteed and the value of the units in the ILP sub-fund(s) and the income accruing to the units, if any, may fall or rise. Past performance is not necessarily indicative of the future performance of the ILP sub-fund(s).

A funds summary and product highlights sheet(s) relating to the ILP sub-fund(s) are available and may be obtained from us via A potential investor should read the product summary, funds summary and product highlights sheet(s) before deciding whether to subscribe for units in the ILP sub-fund(s).

As buying a life insurance policy is a long-term commitment, an early termination of the policy usually involves high costs and the surrender value, if any, that is payable to you may be zero or less than the total premiums paid. You should seek advice from a financial adviser before deciding to purchase the policy. If you choose not to seek advice, you should consider if the policy is suitable for you. This content is for reference only and is not a contract of insurance. Full details of the policy terms and conditions can be found in the policy contract.

This policy is protected under the Policy Owners’ Protection Scheme which is administered by the Singapore Deposit Insurance Corporation (SDIC). Coverage for your policy is automatic and no further action is required from you. For more information on the types of benefits that are covered under the scheme as well as the limits of coverage, where applicable, please contact us or visit the Life Insurance Association (LIA) or SDIC websites ( or

This advertisement has not been reviewed by the Monetary Authority of Singapore.

This article was written in partnership with Etiqa. 

Read these next:
Guide To Investment-Linked Policies (ILP): What You Need To Know
How To Build Sustainable Retirement Income With Your CPF Money
7 Popular Types Of Investment In Singapore (And Tips To Use Them For Optimal Gains)
What Are Fixed Income Investments, And How They Fit Into Your Portfolio
5 Ways To Invest Money That Are Better Than Buying Toto

In my past life, I was always broke because of a lack of financial literacy. Now, I publish a few posts every week* on personal finance to help you manage your money better. *I mean, I’ll try


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