An investment-linked insurance plan is a life insurance that combines investment and protection. Your premiums provide not only a life insurance cover, but part of the premiums will also be invested in specific investment funds of your choice. You get to choose how to allocate your insurance premiums towards protection and investment.
 
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  Once you have decided on buying an investment-linked insurance plan, you have to consider factors such as:

the amount of investment the choice of either single or regular-premium plan types of funds; and the level ofprotection you need
 
     
     
  Here are a few things that you must consider when buying an investment-linked insurance plan:  
 
Protection cover
The premium that you pay provides insurance coverage for death and total permanent disability. With additional premium, you can also be covered for certain critical illnesses and other options.
 
Fees and charges
There are various types of fees and charges which will reduce the value of investment.
 
Cash value accumulation
Regular-premium investment-linked plans may not accumulate adequate cash value during the early policy years. This means that if the policy is terminated during the early period, you may not get back any investment value.
 
Right fund to invest
You are given a choice of investing in various funds. Funds that are invested mainly in equities will involve higher risks than those invested in fixed income securities or bonds. For example, you may choose a growth fund that invests in equities, a more secure fund in bonds and other fixed interest investments, or a combination of the two.

Some insurance companies offer Islamic funds, which are invested in accordance with Shariah principles.
Fund switching
Should you feel that you have made the wrong choice or you would like to change the profile of your investment portfolio, you are allowed to switch your units from one investment fund to another.

Most companies allow one switch per year without any fee. For additional switches, a processing fee of up to RM100 may be charged.
 
     
 
 
You will be provided with two prices: the offer price for selling units and the bid price for buying them back, much like unit trusts. The difference between the offer and bid prices is called the bid/offer spread and is usually expressed as a percentage of the offer price, normally around 5%.  
 
 
Like buying unit trusts or shares, there are several types of fees charged when you buy an investment-linked insurance plan:
 
 
Initial charge
This is paid at the inception of a policy to cover the administration costs such as policy issuance and marketing.
 
Fund management fee
This is the fee charged for managing the investments of the funds and is directly charged to the investment-linked funds account.
 
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Policy fee
Fee to cover the ongoing administration costs of the regular-premium plan and is usually charged by deducting from the units.
 
Other charges
These will be deducted from the units of your investment account, and include charges for the basic life insurance cover and other add-on rider benefits. The amount to be charged will depend on the level or type of insurance cover chosen, as well as other factors such as your age, sex and smoker status.
 
     
     
  You should receive at least an annual statement on the status of your investment-linked insurance plan, showing all transactions or charges during the period, from your insurance company.  
     
     
 
     
 
The investment-linked insurance is more than just a life insurance policy.These benefits are bolstered by the performance of your investment portfolio. Claiming your policy at the right time can see your benefits go beyond original projections, and vice versa.

For specific details on how you or your beneficiaries can claim your investment-linked insurance, contact an insurance company or their agents. They will be able to guide you through the process and offer good advice as to the options available to you.
 
 
 
 
 
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For more details, please download our booklet on investment-linked insurance or contact a licensed insurance company for assistance. In this booklet, you can find more information about the types of investment-linked plans available in Malaysia as well as advice on lodging complaints.