Investment-linked versus participating life insurance policies
ILP or par policy—which deserves your premiums? Compare investment exposure, bonus mechanisms, and flexibility to make a decision you won’t regret in 20 years.
Last updated 22 April 2026
Key takeaways
Investment-Linked Policies (ILPs) and participating life insurance policies both have investment components
ILPs do not have any guaranteed cash value, while participating policies have a portion that is guaranteed
With ILPs, you bear all the investment risk
Both investment-linked insurance policies (ILPs) and other life insurance policies with cash value, such as participating whole life and endowment policies, have investment components.
However, there are important differences between the two. Use this table to compare the two types:
Insurers may choose to smoothen bonuses to avoid large fluctuations in bonus declared year on year.
This means that the returns from your policy will not necessarily track the ups and downs of investment markets.
Comparison between ILP and participating plans
ILPs | Participating whole life and endowment plans |
|---|---|
Investment mandate: Premiums are invested in one or more sub-funds. Each sub-fund has its own investment objective. | Investment mandate: Premiums go into the insurer’s participating fund. Insurer decides how the fund will be managed. The fund’s performance depends on its investment performance, claims experience and expense levels. |
Bonuses: There are no bonuses. The ILP’s value depends on the performance of the sub-funds you invest in. | Bonuses: Bonuses depend on the performance of the fund. Only bonuses that have been declared by the insurer are guaranteed. |
Returns track the ups and downs of investment markets? Yes. Returns are directly linked to the value of the sub-funds. | Returns track the ups and downs of investment markets? Depends. Insurers may smoothen bonuses to avoid large fluctuations in bonus declared year on year. |
Cash value: You may withdraw the full cash value or make partial withdrawals. Charges may apply. Early surrender/termination of the policy may result in a cash value that is less than the total premiums paid. | Cash value: Cash value takes a few years to build. You may withdraw the full cash value or make partial withdrawals. Early surrender/termination of the policy may result in a cash value that is less than the total premiums paid. |
Are cash values guaranteed? No. The ILP's value depends on the performance of the sub-funds. | Are cash values guaranteed? Cash value will comprise guaranteed benefits and future non-guaranteed bonuses. Bonuses that have been declared by the insurer are guaranteed. |
Investment risk: You bear the investment risk. | Investment risk: For guaranteed benefits, insurer bears the investment risk. For non-guaranteed benefits, you bear the investment risk. |
Premium breakdown: The amount of premium used for insurance coverage, charges and buying units are separately identified in the Product Summary, Policy Illustration and Policy Contract. | Premium breakdown: The amount of premium used for insurance coverage, charges and buying units are not separately identified in the Product Summary, Policy Illustration and Policy Contract. |
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