By: Chuin Ting Weber, CFP, CFA, CAIA
CEO & Chief Investment Officer, MoneyOwl
The ILP debate has moved beyond cost-benefit comparisons with other investment solutions to the question of safeguarding Singaporeans’ basic retirement security.
Both advisory standards and public education matter.
This is no longer a niche issue. ILPs now account for the bulk of new life insurance sales, more than participating and non-participating plans.
Plus, the sales pitches coming to light are deeply concerning.
1. The “capital guarantee upon death” pitch
There are strict laws and regulations governing the use of the terms “guarantee” and “capital guarantee”. A guarantee is an unconditional and irrevocable promise to meet an obligation. No insurer can make this promise on an ILP. If the insurer becomes insolvent, there is no guarantee. More fundamentally, poor investment performance can deplete policy value and even lead to policy lapse.
Nor can a precisely defined legal term be turned into an oxymoron by making it conditional, such as “capital guaranteed upon death”. The word “guarantee” carries powerful psychological weight and can create a false sense of safety for ordinary consumers.
2. “Dividend ILPs” as substitutes for CPF Full Retirement Sum (FRS)
Dividend ILPs are sold with promises that align well with our psyche: high and immediate passive income (versus having to wait until age 65 for CPF LIFE), participation in historically strong market growth, and a bequest to loved ones of no less than the premiums paid.
What is less well understood is that ILPs also impose risks. Unsustainable dividend rates and recurring costs, together with sequence-of-returns risk, market risk and credit risk, can erode the nest egg that produces income streams.
The pernicious outcome is running out of money before running out of life — the very risk that our internationally acclaimed CPF system has been painstakingly designed to remove.
For the everyday Singaporean, without at least the foundation of the FRS to provide for basic living expenses, all other retirement aspirations — such as bequests and higher returns — are castles built on sinking sand.
Singapore is an international financial centre built on trust and high standards, and this must include advisory practice in the mass market. It is good that consumers are now aware that claims of “capital guarantee upon death” are unacceptable.
More needs to be done to help Singaporeans understand both CPF LIFE and “substitute” instruments such as ILPs more fully. In the coming months, MoneyOwl will do more to unpack these issues in a simplified and practical way. Do sign up for our mailing list to receive information on our upcoming tools and webinars.
Reference: The Business Times articles by Genevieve Cua on 2 June 2026 and 3 June 2026, also available on the National Library Board app. The latter refers to an earlier article by Christopher Tan.
