Traditional ILPs were used to be popular in an era where consumers flocked to hybrid policies that provided both insurance protection and investment returns. However, the cost also meant that customers saw their premiums increasingly get eroded by insurance charges as they got older, with less left for investment. Today, to appeal to the younger generation, many insurers have introduced pure-investment ILPs, with no (or minimal) insurance charges. But are these really worth your time?

The problem with older ILPs

Traditional ILPs were launched as a hybrid policy providing both insurance protection and investment returns, in response to an era where consumers valued 2-in-1 or even 3-in-1 solutions. However, what was less known was the technical details of how those ILPs were designed to work i.e. your premiums are used to buy into units of sub-funds (investment funds), and then sold to fund the cost of your insurance charges, which naturally go up as you get older....