17th July, 2026

ILPs are back in the spotlight

Investment-Linked Policies (ILPs) have made their way back into the news recently — and not always in the best light. Articles highlight rising complaints, high costs, and questions over whether they’re worth it.

The truth? ILPs aren’t “bad” products. They’re just often misunderstood — and like most financial tools, they can be powerful in the right situations, but problematic if used wrongly.

Not all ILPs are built the same. Broadly, there are two camps

Protection-focused ILPs

  • Provide higher insurance coverage, with options to add riders like CI, ECI and TPD

  • Premiums pay for both protection and investments.

  • Flexibility is a strength: Protection ILPs allow you to adjust your sum assured as life stages change. When responsibilities are higher — for example, raising a young family — coverage can be raised. Later, as protection needs reduce (kids economically independent, mortgage paid), the sum assured can be lowered. This reduces the charges deducted for insurance, leaving more of your money invested. In other words, the plan can evolve with you, instead of becoming a drag.

  • Premium holidays: One of the under-discussed features is the premium holiday. It’s designed to give breathing room when cash flow is tight — you can pause premium payments without immediately losing coverage. But it is not the same as turning your plan into a “limited pay.” Charges continue to be deducted from your account value, and if left unmanaged, this can silently shorten your policy’s lifespan. Used correctly, it’s a safety net; misunderstood, it can be a costly mistake.

 

Accumulation-focused ILPs

  • Built mainly as investment vehicles. Insurance coverage is kept at the bare minimum (just enough for the policy to qualify as insurance).

  • Most of your money goes straight into chosen funds, with flexibility to switch between them.

  • Some accumulation ILPs even allow premium waiver riders — which means if something happens to you, the investment contributions continue on your behalf. For long-term wealth goals, that’s a powerful safeguard.

Features clients often overlook

Fund switching: Almost all ILPs today allow you to move between funds, often at no cost. This flexibility lets you adapt as markets change.

So, are ILPs “bad”?

Not really. The issue is less about the product and more about how it’s used, and whether it matches the client’s needs.

  • For families seeking strong protection with flexibility, a protection ILP can fit — but it requires active review.

  • For those focused on long-term investment growth, accumulation ILPs can play a role — especially if paired with thoughtful features like premium waiver riders.

It’s actually about suitability.