Investment-linked insurance: Meaning, classification and advantages and disadvantages

1. What is investment-linked insurance?

Investment-linked insurance is a modern insurance product combining life insurance and financial investment, simultaneously brings two core values: financial protection against risks and profit opportunities from investment funds. 

This type of insurance not only protects participants against risky situations such as: death death or permanent total disability but also opens up opportunities to increase assets through investing in financial funds. Investment-linked insurance is especially suitable for those who want to find a long-term, safe but still profitable financial solution.

Operational mechanism of investment-linked insurance is built on dividing the insurance premium into two clear parts:

• Protection part: Used to protect participants against risks such as death or permanent total disability. If an insured event occurs, the insurance company will pay benefits to the participant or beneficiary according to the signed contract.
• Investment section: Used to invest in financial funds. The level of profit from this investment depends on the performance of the financial funds that customers choose and may change according to market conditions.

2. Classification of investment-linked insurance

Investment-linked insurance is currently classified into general life insurance and unit-linked insurance. Each type of investment-linked insurance has its own unique characteristics and benefits as follows.

Joint insurance kUnit-linked:

Universal life insurance is sproduct give allows participants to invest in Universal Life Funds managed by insurance companies. These funds usually Focus on investing in stocks, bonds and other financial instruments. When participating in universal insurance, customers will receive all profits and risks from these investments.

Although it is impossible to accurately predict profit levels, this type of insurance has an interest rate that is always guaranteed to be no lower than the interest rate committed to the insurance contract, helping to minimize risks for customers. This type is suitable for those who seek high profit opportunities from investment but can still protect financial stability.

Unit-linked insurance (Universal Life)

Unit-linked insurance is a product allows customers to invest in qThe unit-linked fund is established by the insurance company but does not commit to a fixed interest rate. The profits earned when participating in this type of insurance completely depend on the performance of the funds that customers choose.

Unit-linked insurance is highly flexible, allowing customers to adjust insurance premiums and investments according to personal financial needs and goals. This type of insurance is suitable for those who want to maximize profits from investment funds and are willing to accept market fluctuations.

Both types of insurance offer very good profit opportunities with different levels of risk and profit. Customers need to consider carefully before choosing the type of investment-linked insurance that is right for them.

3. Benefits and limitations of investment-linked insurance - Should you participate?

Investment-linked insurance is increasingly gaining interest and popularity thanks to the outstanding benefits that this type brings to participants:

• Combine financial protectionh and profitable investment: Not only does it ensure risk insurance benefits, this product also creates effective investment opportunities in financial funds, bringing attractive profits to participants in the long term.
• Be proactive and flexible in choosing investment funds and investment plans: Participants can freely choose investment funds that suit their personal financial goals, and change investment plans according to each stage's needs.
• Opportunities for long-term asset growth: With the right investment strategy, professionally managed by the insurance company, customers can achieve significant profits from stock and bond investment funds. and other financial funds.
• Investment risks can be controlled: Investment-linked insurance Allows participants to proactively choose investment funds and allocate capital flexibly, helping to minimize negative impacts from market fluctuations and maximize profits.
• Suitable for all subjects: Investment-linked insurance meets the needs of both those who want basic financial protection and those who are looking for long-term investment solutions to increase assets.
• Combine risk insurance benefits: In addition to investment benefits, investment-linked insurance also provides insurance benefits in the event of death or permanent total disability, helping the participant's family reduce the financial burden.

Besides the outstanding benefits mentioned above, investment-linked insurance also has some disadvantages that participants need to consider:

• Investment returns are not guaranteed: Profits from investment funds depend entirely on the market, which means that participants may face the possibility of losses.
• Cancellation of insurance contract before maturity: If the customer decides cancel the insurance contract Before the due date, the insurance company will not refund the entire premium paid, affecting the customer's financial plan.
• High cost and complexity: In addition to the basic insurance fee, participants also have to pay other fees such as: fee Initial service consulting, fund management fees, risk fees. These fees are calculated based on contract value, causing total costs to be higher than expected and reducing actual returns from investment.

Participating in investment-linked insurance depends on each person's financial goals and risk tolerance level. If you are looking for a comprehensive financial solution that both protects against risks and increases assets, this is a product worth considering. However, you need to make sure you clearly understand the operating mechanism, costs and risks related to this type of insurance before signing the contract. 

4. Compare investment-linked insurance with other types of insurance

Compared to media insurance, investment-linked insurance is considered a more progressive and comprehensive type. The following is a comparison table of its features Investment-linked insurance and traditional insurance:

Each type of insurance is designed to meet different customer needs. Accordingly, traditional insurance will be suitable for those who prioritize absolute safety, stability and transparency with the desire to protect finances against risks and unexpected events. On the contrary, investment-linked insurance will be suitable for people with a stable financial background who want to both protect their finances and take advantage of opportunities to increase long-term assets through investment.

5. Instructions for choosing suitable investment-linked insurance

When choosing investment-linked insurance, you should carefully consider influencing factors such as personal goals, financial situation and your ability to accept risks to make an appropriate decision. Specifically:

• Identify personal goals: If you want both financial protection and profitable investment opportunities, investment-linked insurance is the right choice. If the main goal is financial protection or protection against unforeseen circumstances, a traditional insurance product may be a better choice.
• Assess your risk tolerance level: Investment-linked insurance can bring high profits, but also comes with the risk of loss. You should determine whether you have the financial and mental capacity to endure this risk in the face of market fluctuations.
• Choose a reputable insurance company: You should choose an insurance company that is highly reliable and transparent in managing investment funds. You can consult financial experts and former customers who have used and evaluated the quality of the insurance company's service.

6. Notes when participating in investment-linked insurance

Investment-linked insurance offers many attractive conditions for profitability, but the customer is the one who bears all risks and losses during the investment process. Therefore, in addition to choosing the appropriate investment-linked insurance product, you also need to keep in mind some important factors to protect your personal interests and achieve the following financial goals:

• Read the insurance contract carefully: Understand clearly the terms and regulations in the contract, especially factors related to risk, investment conditions of the insurance fund and terms of benefits and maturity conditions of the contract to avoid unnecessary misunderstandings later.
• Choose a suitable investment fund: Each investment fund has different strategies and risk levels. Please choose investment funds that suit your financial needs and risk tolerance, and carefully consider the profit potential of each fund. Consider carefully before investing in high-risk funds if you do not have much investment experience to avoid losses.
• Monitor investment performance periodically: Investment efficiency may fluctuate over time and depends largely on market conditions. Regular monitoring helps you evaluate the situation and make decisions to adjust investment packages accordingly.
• Learn more about fees: Check the effectiveness of related costs such as fund management fees, investment fees, and early withdrawal fees (if any) to ensure the investment is not affected by unforeseen costs.
• Consider contacting a financial professional: If you are not confident or do not understand the product clearly, please consult a financial expert. They will help you analyze details and make the most optimal decisions.

7. Participate in investment-linked insurance with SeABank

Southeast Asia Commercial Joint Stock Bank (SeABank) is one of the most prestigious and popular commercial banks in Vietnam. SeABank is always a pioneer in providing diverse and flexible financial products, meeting the increasing needs of customers. With strategic vision and close cooperation with Prudential, SeABank provides optimal investment-linked insurance solutions to both protect finances and effectively increase assets for customers.

PRU investment-linked insurance product – FLEXIBLE INVESTMENT

PRU – FLEXIBLE INVESTMENT is a unit-linked insurance product that helps you and your family feel secure against all risks, while opening up effective investment opportunities with a diverse fund portfolio.

• Invest and accumulate assets effectively: Customers have the opportunity to accumulate assets through 06 diverse PRUlink funds, managed by leading financial experts. Transparent investment portfolio and outstanding investment history, helping to optimize long-term profits.
• Comprehensive financial protection: Customers are guaranteed 100% of the insurance amount and all profits from the investment, protecting themselves and their families against all risks such as death or permanent total disability.
• Flexible and proactive: Customers can freely adjust their investment portfolio or protection benefits to suit their personal needs and goals, and at the same time flexibly withdraw money or increase contract value without constraints.
• Appreciate customers: SeABank has attractive incentive programs and gifts for new joining customers and customers maintaining long-term contracts, encouraging long-term commitment.

The team of consultants at SeABank is always dedicated and ready to advise and support customers in optimizing benefits from products. Choose PRU - FLEXIBLE INVESTMENT with SeABank to build a solid financial foundation for today and tomorrow!

If you want to find out more information about the unit-linked insurance product PRU - FLEXIBLE INVESTMENT at SeABank, please contact the Hotline or go to SeABank's nearest branches and transaction counters for detailed advice.

Investment-linked insurance is a flexible financial solution, combining protection and profit opportunities from investment funds. Hopefully the above article has provided useful information to help you choose the right insurance product to protect your finances and optimize your assets in the future.