Unit-linked products : are we ready?

Inflation has reminded us of how the purchasing power of a fixed amount of life cover can be eroded. Due to the stringent regulations imposed upon the insurance funds of conventional (hereon used interchangeably with traditional) insurance products, the rate of return earned on these funds are rather limited. With this in mind, conventional insurance contracts seem to be inadequate in providing a comprehensive life cover. It is of little wonder that, in recent years , Singapore's insurance industry has been decidedly keener about unit-linked products. The purposes of this paper are to provide the reader with a basic understanding of the unit-linked concept and to serve as a basis for future study on the development of unit-linked products in Singapore. It would be extremely presumptuous to expect unit-linked products to be successful in Singapore just because they are successful in other countries. Indeed, there are many factors to be considered before a conclusion can be reached. In this paper, we will attempt to highlight the main factors and thereafter, evaluate how Singapore fare with respect to them. It should be noted that Singapore's unit-linked market is still in its infancy. Hence, there is hardly any track record to talk about, let alone evaluate. Necessarily, we relied mainly on published literature and interviews with professionals in the industry to write our paper. It is hoped that our paper has served its intended purpose.BUSINES