Over the past few months, some insurance agents and financial adviser (FA) representatives have used the term “capital guaranteed upon death” to refer to the death benefit of ILPs. This is an attempt to appeal to Singaporeans’ penchant for safer investments, especially among seniors and pre-retirees who seem to be the main targets.
The death benefit - of ILPs typically has a guaranteed component, but there is no capital guarantee. Some advisers have also sought to persuade prospective clients to fulfil only half of the Full Retirement Sum (FRS) in their Central Provident Fund (CPF) Life accounts – which means satisfying only the Basic Retirement Sum (BRS) – and to invest the other half in an ILP.
According to the proposition, the combined income from CPF Life (BRS) and the ILP wuld offer a higher eventual monthly payout than the individual stands to receive had he or she fulfilled the FRS. For CPF members turning 55 in 2026, the BRS is S$110,200 and the eventual monthly payout at 65 is estimated at S$950. The FRS is S$220,400, and the expected monthly payout S$1,780.
The product in question was an ILP apparently issued by Etiqa and FWD. FWD has disavowed such marketing approaches.
MAS said it expects FA reps to “act honestly and in the interest of customers when providing financial advice”. “Sales materials, including those for product comparison, must be accurate and clear. Key product features, risks and charges must be disclosed in a manner that does not mislead the customer. MAS said consumers who have concerns about how a product was marketed to them should approach the financial institution that the salesperson represents.
The term ‘capital guaranteed upon death’ is not industry-recognized and does not appear in ILP standard documentation. Consumers should not be misled into believing their capital is protected from market risks when it is not.
The Financial Industry Disputes Resolution Centre (Fidrec) said it received 160 claims relating to ILPs last year, compared with 211 in 2024 and 55 in 2023.
