Fees and charges of ILAS products

ILAS products have different fees and charges, some of which are related to the insurance protection and others are related to the administration of the investment platform offered and other services. You can refer to “What are the fees and charges?” section of the ILAS Product Key Facts Statement (KFS) for details.

ILAS products generally have various types of fees to cover the insurance company’s costs for providing insurance protection (generally referred to as cost of insurance protection), costs of administration and other related services such as handling investment transactions and communications with investors (generally referred to as platform fees). Besides, early surrender or withdrawal charge may also be levied upon early policy surrender or partial withdrawal from the ILAS policy.

• Platform fees

  There are two components of platform fees*:

  1. Upfront charge: for some ILAS products, up to a certain percentage of each of the premium paid by the policyholder will be deducted upfront as charges. These upfront charges, which may be more significant in the early policy years, may substantially reduce the amount of premia available for investment and therefore lowering the surrender value as well as the death benefit of the ILAS policy.
  2. Ongoing platform fee: they are deducted from policy value regularly while the policy is in effect by redeeming units of investment options.

  _{* The names and deduction mechanism of the platform fees may vary among different ILAS products.}

• Cost of insurance protection (COI)

  COI is the insurance charge payable by the policyholder to the insurance company for the insurance coverage provided under the ILAS policy. The insurance company will generally deduct the COI from policy value and this will reduce the amount available for investment and thus affecting the return of your ILAS policy. Depending on various factors including the level of insurance coverage, the COI varies from one ILAS policy to another. You should note the following:

  1. Some ILAS policies provide higher insurance coverage. Accordingly, their COI may be higher than those with low insurance coverage for including extra benefits payable at the death of life insured. Likewise, policies with higher insurance coverage tend to have higher total policy charges since policyholders need to pay more for the insurance protection. Apart from the personalised benefit illustration documents, ILAS policies with an embedded high level of insurance protection will provide a Supplementary Sheet of Benefit Illustration Statement is to illustrate the effect of policy charges (including COI) on the amount available for investment.
  2. The COI will increase with the age of the life insured and may increase significantly at the later years of the policy.
  3. The COI may increase significantly if the underlying investments of the policy concerned are making losses.
  4. The COI may vary depending on individual circumstances (e.g. age, gender and smoking habit of the life insured and the level of insurance protection selected).

  If the policy value is insufficient to cover all the ongoing fees and charges, the ILAS policy will be terminated early, and you could lose all your premiums and benefits.

• Charges on early surrender or partial withdrawal

  As ILAS is a long term life insurance policy and the policyholder is typically expected to hold it throughout the policy term, there may be a surrender charge or withdrawal charge of up to a certain percentage of the policy value (or other bases depending on the feature of the ILAS policy or the withdrawal amount) in case the policyholder surrenders the policy or partially withdraws during the policy term.

  Surrender or withdrawal charges may be high if a policyholder surrenders or withdraws in the early policy years (e.g. the first five years of the policy term). As such, the amount obtained net of surrender charge may be significantly less than the premiums paid or the actual withdrawal amount may be less than expected. In such cases, the policyholder may also lose the entitlement to any bonus provided by the ILAS policy.

Underlying/reference funds corresponding to the investment options have separate fees and charges on top of the policy charges of an ILAS policy. They include management fee, performance fee (where applicable), switching charge (where applicable) and trustee and custodian fee. Such fees/charges are payable to external fund management companies, and will be deducted and reflected in the unit price of the underlying/reference funds. You should refer to the offering document of the underlying/reference funds for these charges.