Key Messages:
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An ILAS is a life insurance policy (Note) issued by an insurance company (ie, the ILAS issuer). It provides you with life insurance coverage plus investment features offering investors exposure to different markets and asset class, typically via certain selected "underlying or reference funds", corresponding to the investment options of your choice.
As an insurance product
Created by insurance companies which are regulated by the Insurance Authority, ILAS are insurance products first and foremost. Given the investment-linked nature of an ILAS, the value of the death benefit payable is typically linked to the performance of the underlying or reference funds corresponding to the investment options you selected. Thus, the life coverage of an ILAS is subject to investment risks, market fluctuations and may be significantly less than the premium(s) paid.
Any potential investor of ILAS must understand the features of the subject ILAS, including the insurance coverage (which may be minimal) and the different death benefit options, properly before deciding whether to invest in the ILAS or not.
As an investment
An ILAS offer investors a range of investment options from which to select and the value of the ILAS is determined by the ILAS issuers based on the performance of the underlying or reference funds corresponding to the investment options selected. Such underlying or reference funds may include:
- retail funds authorized by the SFC pursuant to the Code on Unit Trusts and Mutual Funds (UT Code) and
- other portfolios (not authorized under the UT Code) that are internally managed by the ILAS issuer on a discretionary basis.
Note: Falling within the meaning of class C linked long term insurance business, as defined in Part 2 of the First Schedule to the Insurance Companies Ordinance.