The Monetary Authority of Singapore (MAS) and the Life Insurance Association (LIA) have cautioned against the use of the term "capital guaranteed" in relation to investment-linked policies (ILPs), as part of efforts to curb misleading representations.
In recent months, some insurance agents and financial adviser representatives have used phrases such as “capital guaranteed upon death” when describing ILP death benefits, reported the Business Times Singapore.
The regulators noted that such wording may be used to appeal to investors’ preference for lower-risk products, particularly among seniors and pre-retirees, who appear to be key target groups.
ILPs may include a guaranteed portion in their death benefit, but they do not offer a capital guarantee.