Unit-linked insurance nowadays become a most popular life insurance product which offer more flexibility to policyholder in choosing investment instrument rather than traditional life insurance product. The investment options vary, started from the most secure instrument such as cash fund to the highest risk ones like equity or stock exchange instruments. The period of unit link insurance also can varies, but usually it takes minimum 5 year renewable contract. The minimum and maximum age of policyholder at the inception date of insurance is also usually stipulated in policy conditions.

A certain percentage of premium paid out by policyholder will be applied to buy investment units which such premium can be paid out in at once cash payment or yearly regular payment. The benefit for life protection is usually set up for more than 100%, for example 150% from total premium paid out by policyholder. So, if the policyholder dead within the period of cover, the beneficiary will receive death benefit or sum insured has been mentioned in policy schedule or certificate.

In the unit-linked policies with use unit trust basic, most funds use two price category namely “offer price” and “bid price”. The first one is the price at which units are obtained by policyholder when he make a premium payment. The second is the price of the units obtained when he make a cash withdrawal. So, the policy can be cash at anytime which the surrender value is the total value of units at the bid price on the day of withdrawal.

In the unit-linked insurance, you must know all of the important matter before you take decision in buying this product. One of them is about when and how you can withdraw your investment fund. One insurer may stipulate the minimum policy age is 3 years before the investment fund can be withdrawn, and other insurers may establish in a few years. Ask your insurer what other requirements should be fulfiled on the withdrawal procedures. Also, it must be an important notice related to the costs emerged inline with policy withdrawal. Because this product is a combined one between life protection and investment, there are several types of costs must be paid by policyholder, started from management fees, investment fee, top-up fee, switching fee, redemption or withdrawal fee, and so on.

As you must bear your own risk on investment fund, you must ask to insurer about the detailed information about their product. Look for any provisions given and how far they offer flexibility in managing your fund. Use the free look period given by most of the insurers to learn and read the policy conditions, include premium payment schemes, claim procedures, and management expenses. If needed, compare it with other similar products before you choose the best option.        

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