Technical Savings and Investments Information

RISKS OF INVESTING IN INVESTMENT-LINKED POLICIES

Performance of investment funds is not guaranteed and may go up and down. Since the values of investment-linked policies are directly related to the performance of their underlying investments, the poor performance of the chosen investments can potentially reduce the values of the policies. As such, while the potential yield of investment-linked policies may be higher than that of traditional policies, they can also be lower depending on the performance of their underlying investments.

The other risk is that unlike investment into normal investment funds, investment- linked policies have an additional time factor to be considered. The policies are usually established for a pre-determined period with a lifespan of at least 5 years as the initial costs to insurers are heavily stacked at the beginning of the term. Thus, as discussed previously, early redemption of these policies will be subject to very high encashment charges because of the deduction of fees and charges to cover the upfront expenses of the insurance company.