The ILP Debate: Why Singaporeans Struggle With Financial Product Decisions November 27, 2025

Recent discussions in Parliament and data from the Financial Industry Disputes Resolution Centre (FiDReC) have shed light on a deeper issue: many Singaporeans struggle to make confident decisions when it comes to choosing financial products — especially more complex ones.

At a glance

• ILP complaints have surged: The Monetary Authority of Singapore (MAS) reported that FIDReC handled 211 investment-linked policy (ILP) complaints in 2024 — a sharp increase from 55 complaints in 2023 ¹.
• The ILP debate is longstanding: Some say ILPs cost too much and are too complex; others defend their benefits, like tax and estate planning flexibility.
• But the real issue lies elsewhere: many people simply do not have a clear, structured way of evaluating which product suits them.
• A solution exists: The Facilitating Decision-Making (FDM) methodology, first introduced in the Insurance and Financial Practitioners Association of Singapore Journal, offers a practical, client-friendly framework that helps investors and advisers make decisions together in a clearer, more transparent way.

Why ILPs Are Back in the Spotlight

Investment-linked policies (ILPs) have always been debated, but a recent rise in sales, followed by a significant spike in complaints, pushed the topic back into the public spotlight and into Parliament.

The events culminated in a public exchange between two industry voices, financial educator Christopher Tan and adviser Trishita De Mello. Christopher contended that ILPs combine high costs with complex structures, making them unsuitable for most investors. Mello, however, countered that Christopher’s argument unfairly misleads and oversimplifies ILPs.

Both arguments have their own merit. But beneath the debate lies a simpler truth: many investors simply cannot connect what they read in product disclosures with how the product actually works in real life.

Even though ILPs made up only a small portion of all policies sold in 2024, the surge in complaints shows that many Singaporeans still misunderstand what they are buying ². This is not just a “product problem” — it’s a decision-making problem.

Why Financial Decisions Feel So Hard

Part of the challenge is that today’s suitability checks rely heavily on human judgement. They help rule out clearly unsuitable products, but they do not give people a structured way to compare options.

This means:

• advisers try their best to guide clients using experience and intuition
• clients often struggle to understand trade-offs between one plan and another
• both sides may walk away with different interpretations of the same explanation

For example:

It’s easy to say term insurance is not suitable for funding a child’s university fees. But if a client asks, “Should I pick an endowment plan? An ILP? Or invest separately?”, there’s no standard, easy-to-follow way to examine the differences.

As products get more complex, so do misunderstandings ³.

A Framework for Clarity: FDM

This is where the Facilitating Decision-Making (FDM) methodology comes in. FDM provides the structure that many clients and advisers have been missing.

FDM takes what good advisers already do in their heads — comparing factors, weighing trade-offs, and explaining choices — and turns it into a transparent process that clients can clearly follow.

The methodology involves:

• identifying meaningful and relevant factors such as potential returns, risk, liquidity, tax implications, legal considerations and client specific requirement such as ESG or Shariah compliance
• assigning weights to each factor, forcing both client and financial adviser to prioritise trade-offs
• scoring potential strategies such as ILPs, term-plus-investment combinations, or pure fund platforms — on the identified factors on a scale of 0 to 10, with financial advisers providing a rationale for each score

While the ratings may be inherently subjective, each one can be accompanied by a brief explanation from the financial adviser outlining the rationale. The sum product scores are then tallied to see how closely each option aligns with what the client actually values.

This transparent and reviewable framework fosters trust between both parties, invites challenges or clarification, and provides clients with meaningful co-ownership of the process.

What Financial Planning Often Misses

FDM also acknowledges that the best strategy can change over time. Market shifts and evolving client priorities mean that product suitability is contextual, hence there is no ‘best plan of all time’; only the ‘best at that point in time’.

With a structured process like FDM, clients are not tied to a one-time decision. Instead, planning becomes an ongoing partnership where decisions can be reviewed and updated using the same transparent framework.

A Call for Clearer Conversations

The recent scrutiny around ILPs is not just about ILPs themselves. It reflects a deeper industry challenge: helping clients understand how recommendations are made.

A structured approach like FDM can elevate industry clarity by ensuring recommendations can be explained, reviewed, and improved over time.

It empowers both advisers and clients to look beyond product features and focus on what truly matters — clarity, confidence, and informed decision-making.

The Takeaway: The Best Plan Is the One You Understand

Financial planning does not need to feel intimidating.

When both adviser and client follow a clear framework, decisions become easier, clearer, and more aligned with real-life goals.

Products may change. Markets may change. Life will certainly change.

But with a structured approach to decision-making, you can always find the “best plan for you — at this point in time”.

Contributor:

Isaac Fang
Portfolio Manager (Dual Licence)
Phillip Securities Pte Ltd (A member of PhillipCapital)
http://bit.ly/TTPisaac

References:

• ^[1] https://www.mas.gov.sg/news/parliamentary-replies/2025/written-reply-to-parliamentary-question-on-investment-linked-policies
• ^[2] https://www.fidrec.com.sg/_entity/annotation/7aae5aed-95a7-ef11-b8e9-6045bd22652a
• ^[3] https://www.straitstimes.com/business/concerns-raised-over-investment-linked-plans-as-demand-for-them-goes-up-in-singapore
• ^[4] https://www.businesstimes.com.sg/opinion-features/investment-linked-insurance-products-complexity-label-long-time-coming