Why 55-year-old chose to include investment-linked plans in her retirement portfolio

For the past decade, Ms Nancy Lim, 55, has been carefully strategising for retirement.

With the aim of stopping full-time work at the age of 60, she has been working closely with her financial advisor representative and investing her savings to create passive income streams for her retirement. 

The human resources director, who is single, understands that disbursements from her CPF Life will only begin when she’s 65.

“From now till I’m 65, which means the next 10 years, I have this ‘marathon’ to run where I steadily build up passive income streams from my insurance savings plans and investment-linked plans,” she says.

“My overarching objective in retirement planning is to have a new income stream starting at different points in my life – ideally every year, if not a time interval of about two to three years apart,” adds Ms Lim.

Income stream from first policy year

Ms Lim’s latest addition to her portfolio is an investment-linked plan (ILP) from Income Insurance which allows her to enjoy a potential income stream in the form of dividends from dividend-paying funds from the first policy year. 

Called Invest Flex Vantage, the new policy complements her other plans with Income Insurance that may start providing payouts when she is older. These include Invest Flex Vantage, an ILP that is geared towards generating potentially higher investment returns, that could provide a stream of income ten years from now.

“One of the reasons why I chose Invest Flex Vantage is that it offers me the flexibility to take a break from paying premiums or take a premium holiday as and when I need to from the fifth year onwards,” she says.

Ms Lim’s discipline stems from personal experience. Having seen both her parents outlive their savings while battling dementia in old age, she wants to make sure she remains financially secure throughout her retirement years.

She has plans to travel the world and hopes to be able to continue pursuing her hobbies, which include playing the cajon, a drum-like instrument, well into her later years.

Ms Lim says she chose to purchase her plans from Income Insurance as the company offers a wide range of insurance products, including ILPs. Her personal financial advisor representative from Income Insurance, Mr Elvin Phua – who has been with her for more than 10 years – has also been very helpful throughout her financial planning journey.

How Invest Flex Vantage works

Invest Flex Vantage allows policyholders to invest in a range of funds that potentially pay dividends, depending on the asset class or fund selection. This is a useful feature for those preparing for retirement like Ms Lim.

Partial withdrawal of money that has been invested will not result in charges when a specified life event occurs, even if this takes place during the Minimum Investment Period (MIP). MIP refers to the period the policyholder has chosen to pay regular premiums. For withdrawals after MIP, there will be no charge. In addition, policyholders have the flexibility to take a premium holiday at no charge for up to 120 months from the fifth policy anniversary subject to certain conditions.

In Ms Lim’s case, she has chosen an MIP of five years. She exercised the future premium option to pay 24 months premium in advance so she does not need to worry about paying the premium for the next two years. After the fifth policy year, she would have the option of a premium holiday

She says: “I always plan for the worst-case scenario. If for whatever reason I need to suddenly stop working and take a premium holiday, I will not be subjected to this unnecessary pressure of having to continue paying my premium.”

Invest Flex Vantage also caters to those who want ILPs which generate returns that they can withdraw after a short period, based on certain conditions, such as a minimum value of units worth S$500 per withdrawal and maintain a minimum value of units worth $1,000 after each withdrawal.

Says Mr Dhiren Amin, chief customer officer at Income Insurance: “When gathering feedback from customers about investment-linked plans, we found that they want to be able to encash their policy at a younger age, and not have to wait too long before they receive payouts.”

Benefits of ILPs

In Singapore, most ILPs involve regular premium payments, often on a monthly or annual basis. Most of the premiums are put into funds that can potentially generate higher returns compared to regular insurance plans that offer a guaranteed minimum return.

A part of the premiums goes towards insurance coverage, and ILPS such as Invest Flex Vantage offers death or terminal illness benefits.

As hybrid products that combine long-term wealth accumulation  and protection, ILPs are especially helpful to people who want to build their nest eggs but don’t have the time or inclination to manage multiple financial assets.

Policyholders should note that while Income Insurance selects fund managers based on their strategies and past performances, the returns from ILPs are not guaranteed. 

Mr Amin says: “Financial advisor representatives are crucial to selling and servicing ILPs as many consumers feel they do not have the expertise to assess their own risk appetite and pick funds. This is why we invest so much in selecting and training the advisors.”

Having one’s savings managed by experts is another attraction.

“While I do read up on stock and shares related news, I am not professionally trained to read the stock market. As such, I’ll rather pay a management fee to the professional fund managers and let them do the investing for me,” adds Ms Lim.

Learn more about how you can tap Income’s investment linked-plans to prepare for retirement.

Footnote

¹ Dividend refers to the distribution of certain funds that have a distribution option that Income Insurance may declare. Distributions are not guaranteed. If the distribution amount for a fund meets the minimum amount Income Insurance tells the policyholder, the policyholder can choose to receive all future distributions from that fund as payouts.

Distributions may be made out of the income and/or capital of the sub-fund. Any payout of distributions from the capital of the sub-fund may result in an immediate reduction of the net asset value per share/unit. Please refer to the policy conditions for further details on the declaration of distributions, reinvesting distributions, and the applicable terms and conditions.

Disclaimers

This information is not to be construed as an offer, recommendation, solicitation or advice for the subscription, purchase or sale of any investment-linked plan (ILP) sub-fund. The information and descriptions contained in this material are provided solely for general informational purposes and do not constitute any financial advice. It does not have regard to the specific investment objectives, financial situation, and particular needs of any person.

Investments are subject to investment risks including the possible loss of the principal amount invested. Before committing to the minimum investment period, you may want to consider how long is your investment expectations or needs and whether you are able to keep up with the premium payment should your financial situation changed. Past performance, as well as the prediction, projection or forecast on the economy, securities markets or the economic trends of the markets are not necessarily indicative of the future or likely performance of the ILP sub-fund. The performance of the ILP sub-fund is not guaranteed and the value of the units in the ILP sub-fund and the income accruing to the units, if any, may fall or rise. A product summary and product highlights sheet(s) relating to the ILP sub-fund are available and can be obtained from your insurance advisor or online at income.com.sg/funds. A potential investor should read the product summary and product highlights sheet(s) before deciding whether to subscribe for units in the ILP sub-fund.

The precise terms, conditions and exclusions of the insurance plans are specified in the policy contracts. All our products are developed to benefit our customers but not all may be suitable for your specific needs. If you are unsure if this plan is suitable for you, we strongly encourage you to speak to a qualified insurance advisor. Otherwise, you may end up buying a plan that does not meet your expectations or needs. As a result, you may not be able to afford the premiums or get the insurance protection you want. Buying a life insurance plan is a long-term commitment on your part. If you cancel your plan prematurely, the cash value you receive may be zero or less than the premiums you have paid for the plan.

Protected up to specified limits by SDIC.

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

Information is correct as at Jan 30, 2025

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