VUL glossary: 73 terms, English–Chinese

A whole-of-life insurance contract whose cash value is held in a separate investment account, not in the insurer's general fund. The policyholder, or a manager the policyholder appoints and the insurer accepts, directs the investments and bears the result. The insurer provides the death benefit, administers the policy and deducts charges, but does not guarantee the account value. See the overview.

A permanent life insurance contract with flexible premiums and a cash value account that is credited with a rate set by the insurer. Insurance and administration charges are deducted from the account. Because the insurer carries the investment risk behind the credited rate, traditional universal life differs from a VUL, where the policyholder carries it.

A universal life contract that credits interest by a contract formula linked to an external index, usually with a floor and a cap or participation rate. The policyholder does not own index assets. Charges are still deducted, so the account value can fall even where a floor protects the credited rate. The mechanics are explained on iul.com.sg.

A policy combining life cover with an investment component. MoneySense (MAS, updated 2026-09-28) states that some units bought are sold to pay for insurance and other charges, that the policyholder bears the full investment risk and that no returns are guaranteed. A high-net-worth VUL is investment-linked in this sense, with the policyholder's own mandate in place of a fund menu.

A privately offered life insurance contract for sophisticated investors whose cash value sits in a segregated account with a custodian and an appointed manager. Carriers may be domiciled in Singapore, Bermuda, Luxembourg or elsewhere, and the regulatory regime and policyholder protection differ by jurisdiction. See VUL and PPLI.

A whole-of-life policy that shares in the insurer's participating fund through bonuses. MoneySense (updated 2026-09-28) states that the insurer bears the investment risk for guaranteed benefits, that the cash value comprises guaranteed benefits plus future non-guaranteed bonuses, and that only bonuses already declared are guaranteed.

Account value is the market value of the assets in the policy's account, and it is not guaranteed. Cash value is used in several senses. For Common Reporting Standard purposes, the IRAS e-Tax Guide defines it as the greater of the amount payable on surrender or termination, determined without reduction for any surrender charge or policy loan, and the amount the holder can borrow.

The amount paid on the death of the life assured, calculated by the formula in the contract, subject to the policy remaining in force and to its terms, and less any indebtedness and charges due. Common formulas are the higher of the sum assured and the account value, or the account value plus a fixed amount; the Product Summary states which applies.

The amount of protection written in the contract, which is the starting figure in the death benefit formula. It is a contractual amount, not an investment value, and under a higher-of formula it matters only while it exceeds the account value. A smaller sum assured generally means a smaller net amount at risk and lower cost of insurance.

The death benefit minus the account value: the part of the benefit that the insurer must fund from its own resources. It is the base on which cost of insurance is charged under a higher-of death benefit, and it shrinks as the account grows. When the account exceeds the sum assured, the net amount at risk under such a formula is nil.

An account that holds the assets of variable contracts apart from the insurer's general assets. 26 U.S.C. 817(d) describes a variable contract by reference to amounts allocated to an account segregated from the general asset accounts of the company. In an open-architecture VUL, segregation is typically carried out through a custody account whose legal terms are in the contract.

A pool of investments that unit-linked policyholders can choose. In a retail ILP the insurer offers a list, and LIA (2026-03-05) notes that a sub-fund may be managed by the insurer or by external fund managers. In an open-architecture VUL the policyholder's own mandate takes the place of the menu.

The person or entity that owns the policy, pays the premium and holds the contractual rights, such as appointing the manager, nominating beneficiaries within the rules and surrendering. It may be an individual or, with the insurer's acceptance, a trust or company. The Insurance Act requires insurable interest between the policyholder and the life assured.

The person whose death triggers the death benefit. The life assured may be different from the policyholder, which is why insurable interest matters. Some products allow more than one life assured and pay when the last dies; the Product Summary sets the number and the conditions.

The person who receives the death proceeds. Singapore's nomination framework under the Insurance Act has operated since 1 September 2009. A nominee can be named under a trust nomination or a revocable nomination, and the LIA guide (March 2026) says the policy owner must be the life assured and at least 18 to make a nomination.

The bank that holds the policy's assets in an account set up for that purpose, settles trades and issues valuations and statements. It does not decide what to buy or sell. The insurer decides whether a custodian is acceptable, and the custody agreement sets the terms of access.

A licensed firm, or in some structures the policyholder, that selects and executes investments within the mandate. The insurer typically assesses the manager's licence and jurisdiction, and a replacement is made by written application subject to the insurer's acceptance. The manager's duties and liability are set out in its own agreement with the policyholder, so read it to see whether the insurer takes any responsibility for the manager.

The written rules for the account: permitted and excluded assets, concentration limits, minimum credit quality, liquidity needs and who may give trading instructions. The insurer sets the framework and the manager works within it; a change to the mandate needs the insurer's acceptance. See investment options.

The insurer's document describing the product's features, which MoneySense (updated 2026-05-11) lists among the documents to read. For a high-net-worth VUL it is the primary source for minimum premium, age bands, charges, surrender schedule and mandate parameters, none of which this site publishes.

A short disclosure document. MoneySense (updated 2026-05-11) lists a Product Highlights Sheet for the sub-fund of an investment-linked plan. Whether a high-net-worth VUL with a bespoke mandate comes with one depends on the product and the documents the insurer issues.

A projection of policy values under assumed rates of return. It is a hypothetical scenario, not a forecast or a promise, and it must be read with the 0% column and the assumptions about charges. A projection that omits asset-level custody and management fees will overstate net results.

The legal document that sets out the terms, including definitions, charges, termination, the death benefit formula, the mandate and the free-look clause. Where marketing material and the contract differ, the contract governs. Read it, together with the Product Summary, before signing and again before the free-look period ends.

A charge calculated as a percentage of premium paid, deducted from the account or the premium. The Product Summary states the percentage and how additional contributions are treated; MoneySense (updated 2026-09-28) lists the related premium allocation rate for retail ILPs.

A recurring charge for issuing and maintaining the policy, often set as a percentage of the initial premium and applied for the early policy years only. It is separate from the administration charge. As with all policy charges, it may not be guaranteed and can be revised on notice (MoneySense, updated 2026-09-28).

An ongoing charge for administering the policy, usually calculated as an annual percentage of the account value and deducted periodically for as long as the policy is in force. Because it scales with the account, it is a drag on returns in every year, including years when markets fall.

The charge for the death cover, calculated from the net amount at risk or, under some formulas, from a fixed amount, and from factors such as age, sex and smoking status. MoneySense (updated 2026-09-28) notes that insurance charges rise with age and are usually funded by selling units.

A charge deducted if the policy is surrendered, or partly surrendered, within a stated period, usually expressed as a declining percentage of the initial premium. MoneySense (updated 2026-09-28) lists surrender charges among ILP fees, and LIA (2026-03-05) warns of significant charges in the early policy years.

A charge applied when money is taken out of the account without surrendering the policy, often beyond a free allowance. A withdrawal can also reduce the sum assured or the net amount at risk, depending on the formula. Check the Product Summary for allowances, minimum amounts and the effect on cover.

The fee that the custodian bank charges for safekeeping assets, settling trades and reporting. It is agreed with the bank, not deducted as a policy charge by the insurer in the same way, and it reduces net returns. Ask whether it is billed to the account or to the policyholder.

The fee the investment manager charges, commonly as a percentage of assets or a performance-based amount, as agreed in the manager agreement. It is an asset-level cost outside the insurer's policy charges, and the insurer has no control over it. Retail ILPs show a fund management fee within the sub-fund.

The difference between the price at which units or securities can be bought and the price at which they can be sold. MoneySense (updated 2026-09-28) says the spread on investment-linked policy units is usually around 5%. In an open-architecture VUL, dealing costs instead arise at the broker, custodian or manager level.

The share of each premium that is used to buy units. MoneySense (updated 2026-09-28) explains that upfront deductions can reduce it, and that it typically rises over time, sometimes above 100% through bonus units. In a high-net-worth VUL the corresponding mechanics are the premium charge and the asset transfer terms.

Guaranteed benefits are amounts the contract promises, such as the death benefit formula while the policy is in force. Non-guaranteed items include account value, illustrated returns and future charge levels. MoneySense (updated 2026-09-28) states that ILPs have no guaranteed cash value. See guarantees and risks.

An assumed rate used to project values in an illustration. Where an LIA-format ILP illustration is issued, the upper rate is currently capped at 8% and the lower rate at 4% (LIA member update, undated; accessed 2026-10-22). These are hypothetical scenarios, and actual results may be lower than the lower rate or even the 0% column.

A third illustration column showing values if the investment return is zero. LIA requires it in LIA-format ILP illustrations (regular-premium ILPs and protection-oriented single-premium ILPs), with a statement that the policy value may fall to zero and the policy end; investment-oriented single-premium ILPs have had no LIA illustration since 1 February 2014, so ask the insurer for a 0% projection where none is issued (LIA member update, undated; accessed 2026-10-22). It shows how long the account can absorb charges without market gains.

The termination of a policy while the life assured is alive because the account cannot cover charges or minimum requirements and the shortfall is not cured. MoneySense (updated 2026-09-28) warns that units may not be enough to pay the charges. A lapsed policy pays no death benefit.

A floor, set by the contract, below which the insurer may require a top-up or end the policy. It may be a fixed amount or related to the initial premium. The Product Summary defines it; it differs from the cash buffer, which is about liquidity, not total value.

The minimum proportion of the account that the mandate requires to be held in cash or cash equivalents, so that charges can be paid without forced sales. The proportion is set per product. If the buffer is breached, the insurer may require a top-up or sell assets under the contract.

The period after a shortfall notice during which the policyholder can top up the account or otherwise cure the default before termination or forced sales. Its length is stated in the policy contract and may differ for a minimum account value breach and for a cash shortfall.

A period in which a policyholder can cancel a new policy. MoneySense (updated 2026-05-11) states that all Singapore life insurers grant 14 days from receipt of the policy documents, with premiums refunded less medical and other expenses paid. How a market-linked policy is settled is for the contract to state.

An underwriting route that guarantees acceptance of the life assured without medical underwriting, not the investment result. The protection amount is often smaller or fixed, and the death benefit formula can be the account value plus a fixed amount. The account value can still fall below the premium paid.

An underwriting route in which the insurer assesses the health and, where relevant, the financial position of the life assured before acceptance. It can support a higher sum assured than a guaranteed issue route. Terms, age bands and medical requirements are in the Product Summary.

The risk that exchange-rate movements change the value of assets, charges or the death benefit in the policy currency. It arises when the asset currencies differ from the policy currency, or the policyholder's home currency differs from both. The mandate and the policy contract do not remove this risk.

The risk that the insurer, the custodian bank, the manager or an issuer of the assets fails or defaults. The Policy Owners' Protection Scheme covers guaranteed benefits only and does not protect account value; ratings and regulatory designations are not guarantees. See structure.

Paying the premium by transferring eligible securities in kind instead of cash. The insurer and custodian must accept each asset against the permitted list, and a valuation date is agreed. Tax consequences of the transfer depend on the transferor's tax residence and the assets, and need advice. See investment options.

The assets the mandate allows the account to hold, typically cash, listed equities, bonds, funds, ETFs and some structured notes. Assets outside the list, such as derivatives, leveraged ETFs, private equity, real estate, crypto-assets and pledged assets, are commonly excluded. The Product Summary and mandate state the list.

A cap, set in the mandate, on how much of the account can be held in one security, issuer or asset class. Limits keep a single holding from dominating the account. A transferred single-stock portfolio may need to be reduced before or after transfer to fit the limits.

A pooled investment vehicle such as a fund. MAS (updated 2026-10-05) states that a CIS offered in Singapore must be authorised, or if constituted outside Singapore recognised, by MAS; restricted schemes offered only to relevant persons or at a minimum of S$200,000 per transaction are exempt from those requirements.

An arrangement in which the manager decides trades within the mandate without asking the policyholder to approve each one. In a VUL the insurer may still review assets and trades against the mandate. DPM, advisory and execution-only arrangements have different regulatory consequences, so check the manager's licence and terms.

Access to the custody account that lets the policyholder see holdings, valuations and statements without being able to place trades or move assets. Whether it is offered, and who may see the account, is set by the custodian and the insurer.

A structure in which the policyholder is not limited to the insurer's own fund range: a custodian holds the assets and an appointed manager invests them under a mandate. It contrasts with a retail ILP fund menu. Open architecture widens choice and also moves more responsibility to the policyholder.

A class of investor defined in Securities and Futures Act section 4A. For an individual (as at 2026-10-22): net personal assets above S$2 million, net financial assets above S$1 million, or income of at least S$300,000 in the preceding 12 months. The primary residence counts towards the first test up to S$1 million (MAS, 2025-02-05).

The step in which an individual expressly chooses to be treated as an accredited investor. The Securities and Futures (Classes of Investors) Regulations 2018 took effect on 8 January 2019 (MAS FAQ, 2019-02-04). Opting in reduces some regulatory safeguards, but MAS has said it does not remove the institution's suitability duties.

A review of a customer's knowledge and experience of investment products, which MAS Notice FAA-N16 requires of financial advisers and their representatives for complex products. Whether and how it applies to an accredited investor or to a given product depends on the Notice's text, which should be checked directly.

The duty of an institution to match a recommendation to the customer's profile, risk tolerance and knowledge, regardless of accredited investor status (MAS, 2025-02-05). The MAS Fair Dealing guidelines, FSG-G04, took effect on 2024-05-30 and apply to all financial institutions.

The interest a policyholder must have in the life assured at the time the insurance is effected. Under section 146(1) of the Insurance Act 1966 (formerly section 57) a life policy without it is void, and the Act presumes it for a spouse, a child or ward under 18 and anyone on whom the owner is wholly or partly dependent. MAS said in 2009 that the Act would be amended to allow policies in respect of trusts. Confirm how it applies to a trust, company or family office.

The scheme administered by the Singapore Deposit Insurance Corporation. It covers guaranteed benefits only, up to S$500,000 of guaranteed sum assured and S$100,000 of guaranteed surrender value per life assured per insurer; investment-linked benefits tied directly to net assets are not covered (SDIC, accessed 2026-10-22).

An insurer whose failure MAS considers could disrupt Singapore's financial system. MAS published its inaugural list on 2023-09-21, the framework applies from 1 January 2024, and a 25% capital add-on applies. The designation is a supervisory measure and not a government guarantee of any insurer or policy.

The Financial Industry Disputes Resolution Centre, an independent body that resolves disputes between consumers and financial institutions. Its Terms of Reference admit individuals, sole proprietors, small businesses, charities, trustees and insureds, set a S$150,000 per-claim adjudication limit for claims filed on or after 1 July 2024, and exclude cases relating solely to investment performance; filing is free (FIDReC, accessed 2026-10-22). Larger companies are outside its scope, and the institution must be a subscriber.

The origin of a customer's and beneficial owner's entire body of wealth, according to the Guidelines to MAS Notice 314 (2025-07-01). It differs from source of funds, which is the origin of the money used in a particular transaction. Insurers ask for documents evidencing both.

An individual with a prominent public function, and often a family member or close associate, for whom anti-money-laundering rules require enhanced customer due diligence. The Guidelines to MAS Notice 314 (2025-07-01) apply enhanced measures to high-risk categories including PEPs. Expect extra documentation if you or a related party is one.

The OECD standard for automatic exchange of financial account information. IRAS states that Singapore has exchanged information since September 2018, that Reporting SGFIs file by 31 May, and that the Amended CRS takes effect on 1 January 2027, with exchanges expected from 2028 (updated 2026-09-09).

An insurance contract that has a cash value, which falls within CRS reporting when issued by a specified insurance company. The IRAS e-Tax Guide (2026-08-11) states that the Reporting SGFI must report the cash value or surrender value of the account as at calendar year-end.

A US law under which foreign financial institutions identify and report US accounts. IRAS (updated 2026-08-11) describes the Singapore reciprocal Model 1 intergovernmental agreement regulations, in force from 1 January 2021, under which Reporting SGFIs carry out due diligence on US financial accounts and file returns by 31 May.

A declaration given to the financial institution stating each country in which a person is tax resident, with tax identification numbers. Residence is decided under each country's own rules; for Singapore, IRAS applies tests that include 183 days of presence in the previous calendar year (updated 2026-04-27).

Broadly, a US citizen, a US tax resident including a green card holder, or a US-organised entity, although definitions differ across FATCA, the insurance diversification rules and estate tax. Whether you are a US person for each purpose is a question for a US tax adviser, and it can change the whole analysis of a Singapore policy.

A US federal tax principle. In Revenue Ruling 2003-91 the IRS held that a variable contract holder was not treated as owner of the underlying assets where the holder could not select or recommend particular investments and the sub-accounts were not publicly available. It applies to US persons and is not a Singapore rule.

A US tax test under 26 U.S.C. 817(h): if a variable contract's account is not adequately diversified, the contract is not treated as life insurance for US tax. Treasury Regulation 1.817-5(b)(1) sets limits of 55% in one investment, 70% in two, 80% in three and 90% in four. These are US tax rules for US persons.

For UK Inheritance Tax, a person resident in the UK for at least 10 of the last 20 tax years. From 6 April 2025, foreign assets owned outright by such a person are within charge, and a person who leaves remains in scope for a minimum of 3 and a maximum of 10 tax years (HMRC IHTM47020, updated 2026-04-07).

A nomination under the Insurance Act framework in which proceeds are held on statutory trust. The LIA guide (March 2026) says it can only name a spouse and/or children, that the owner loses ownership rights over the policy, that proceeds are generally protected from creditors on bankruptcy, and that it cannot be changed unilaterally.

A nomination that the policy owner can change at any time without the nominees' consent and that, according to the LIA guide (March 2026), can name any legal entity. The owner keeps full ownership, and the guide records no creditor protection for it. Only a policy owner who is the life assured can nominate, so check ownership structures first.

The transfer of the policyholder's rights under a policy to another party. Where the product allows it, it needs the insurer's acceptance and has legal and tax consequences, and it can affect nominations and succession arrangements. Take legal advice before assigning a policy, especially to or from a trust or company.

A tax on estates at death. IRAS states that Estate Duty was removed in Singapore for deaths on and after 15 February 2008 (updated 2026-03-09). Removal in Singapore does not affect estate and inheritance taxes of other countries, such as the US or UK, which may apply depending on residence, citizenship and asset location.