The investment-linked policy is probably one of the worst type of investment that is sold to a consumer in Singapore. Here are the reasons:

• The consumer takes the investment risks, without any commensurate return
• The consumer is locked into the policy due to the excessive upfront charge
• The insurance company levies a high fee to manage the investments
• The insurance company is not good at investing the funds (generally)

With all of these negative factors, why are consumers investing in these policies? They are given bad advice by the financial adviser, who pushes the product to earn a fat commission. Some financial advisers tell lies to mislead the consumer. Other advisers are quite naive about the nature of these products and sincerely believe, quite wrongly, that they are helping the client to get a better yield compared to CPF.

Many investment linked polices have a reduction of yield of 4% ......