Why investment-linked policy sales have surged even as complaints rise

SINGAPORE: Sales of investment-linked policies (ILPs) have more than doubled in three years, even as claims over alleged misrepresentation and inadequate disclosure keep climbing.

Weighted new business premiums – a measure of new sales – have risen for three consecutive years after falling in 2022 amid rising interest rates and market volatility, said the Life Insurance Association (LIA).

They reached S$2.88 billion (US$2.2 billion) in 2025, up from S$1.31 billion in 2022, said the association’s executive director Chan Wai Kit.

“This represents growth of approximately 120 per cent over three years, including a 27.8 per cent year-on-year increase in 2025,” he said.

Over the same period, claims related to ILPs at the Financial Industry Disputes Resolution Centre (FIDReC) rose from 42 in 2022 to 164 in 2025. This included a spike in 2024, which saw 211 claims. 

The industry mediator saw 104 claims in the first half of 2026, compared with 61 in the same period a year earlier.

The claims generally centre on allegations of market conduct, such as misrepresentation, inadequate disclosure of information about ILPs or inappropriate financial advice.

Over the years, the profile of complainants has shifted towards older age groups, said FIDReC chief executive Eunice Chua. Claims from those aged 61 and above made up 35 per cent of the total in the first half of 2026, up from 7 per cent in 2022.

Mediation sessions showed that many consumers lack a good understanding of the product, often assuming it is similar to traditional insurance or that returns and capital are guaranteed. 

Some are also unclear about the fees and charges or the premium commitment term.

WHY HAS DEMAND INCREASED?

Two design changes to ILPs account for much of the recent growth, said Alex Lee, president of the Singapore Actuarial Society.

Traditional policies balanced protection and investment, requiring customers to complete lengthy health underwriting questionnaires, he said. Newer ones carry only minimal death cover, so they can be issued with few or no health underwriting questions.

The “welcome bonus” that many newer ILPs offer may also have spurred sales, said Mr Lee, referring to extra units in the fund that are given to the customer when they first purchase the policy, so they are holding more than they paid for.

He noted, however, that the bonus is typically funded through higher charges in the early years and comes with a minimum investment period.