Investment-linked policies, or colloquially know as ILPs, are policies that combine both protection and investment. Its main draw lies in its flexibility and potential high returns, which comes with high risks as well. NTUC Income offers two ILP products: VivoLink and VivaLink.
We know what you’re thinking. No, VivoLink is not the name of the bridge to VivoCity. VivoLink is the sibling investment-linked plan (ILP) of VivaLink, which we reviewed in our previous article. In this article, fundMyLife examines NTUC Income VivoLink’s features and reviews it.
Disclaimer: we are neither endorsing nor hating on these products, nor ILPs in general. We believe that there’s a time and plan for everyone. As such, it is all the more important that consumers are aware of the pros and cons of these products.
What is it?
VivoLink is a regular premium ILP. The plan pays the basic benefit or cash-in value (whichever is higher) in the event of death or total and permanent disability (TPD) before the age of 70. VivoLink also pays the basic benefit or cash-in value in the event of diagnosis of dread disease, or critical illness.
The death benefit depends on your age range when you die, i.e. the younger you are the higher the payout is. In the case of accidental death or TPD, the amount received is higher compared to the same age bracket. Restrictions apply to accidental deaths and TPD, i.e. you’d get a lower payout if risky activities or occupations caused the death or TPD.
This is a list of selected features of the plan that we thought were interesting/unique. Other information like calculation of benefits can be found here.
#1 Retrenchment benefit
One thing that stood out in the plan was the retrenchment benefit. If you have not been able to find employment for three months, you can choose not to pay the premiums for a maximum of 24 weeks. Your coverage is not affect during this. Note: you must have paid a minimum of six months’ premiums.
#2 Extensive range of funds
One draw is that you can choose from a wide range of funds. You can invest in as many funds as you need to, provided that you can set aside a minimum amount for each fund that you put in. Choosing VivoLink also gives you access to NTUC Income’s very own Aim Series. The Aim Series funds are a mix of equities, bonds, and alternative assets such as commodities and property. It is composed of five different funds: 1) Aim Now, 2) Aim 2025, 3) Aim 2035, and 4) Aim 2045. As its name suggests, you can choose the fund based on the target year that you need it. For example, if you want the money in 2045 you choose Aim 2045. Besides the amount of time, the funds also differ in risk profiles. Aim Now has the lowest risk profile whereas Aim 2045 has the highest.
#3 Policy loan
As opposed to its sister plan VivaLink, you can apply for a policy loan if you are unable to pay the premiums. The current policy loan amount (as of May 2018) is either 50% of the total cash value of the policy, or 80% of the net investment amount – whichever is lower. The interest rate of the loan is set at 5.5% p.a. If the amount of the loans and interest is more than the cash value of the policy, all benefits will stop.
There is no discount for paying annually, and as such for cash flow purposes it might be a good idea to go for monthly payment instead of yearly where you pay a lump sum.
The retrenchment benefit is useful for those who stand a high chance of retrenchment/unemployment. PMETs are at high risk of being retrenched. While older professionals are at risk of being retrenched, younger workers are not spared as well. Besides the retrenchment benefit, VivoLink has other features that allow temporary respite for customers who cannot pay the premiums. For example, policy loans help deal with the matter temporarily. It’s a crutch, and it’s dangerous to depend too much on a crutch.
One thing – there are no riders available for this plan. However, the plan does cover death, TPD, and dread disease/critical illness. Compared to other plans, dread disease/critical illness usually comes as a rider to a main life insurance plans. While there is dread disease/critical illness coverage, you do not have the option of adding an early critical illness rider. You will have to supplement it with other early critical illness plans out there. In addition, riders that waive premiums are also unavailable so you must take note of that too.
All in all, VivoLink is relatively more flexible in investment due to a larger pool of funds, but is less so for protection compared to its sibling ILP. The critical illness coverage in the base plan offsets the lack of riders.
Fun fact: Muslims can consider NTUC Income’s offerings because NTUC handles Shariah-compliant funds in Singapore. The Takaful Fund is one of the special funds in NTUC Income that invests in global equity markets via Shariah-compliant instruments.
That’s all folks! We hope that you understand VivoLink a bit better now. It is an interesting product that may or may not suit you, depend on your financial planning portfolio.
However, if you’re still unsure what you need, why not head on over to fundMyLife and ask our curated pool of financial advisers? Alternatively, you can check out our curated pool of individual advisers and ask them questions directly.
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