VUL Glossary (English and Chinese)

A life insurance policy that puts lifelong death cover and an account into one contract, with the policy owner choosing the investments and bearing the risk. "Universal" means that premiums, sum assured and account can be adjusted against one another; "variable" means that the account value moves with the market value of the underlying assets, with no floor. Under the US regulatory approach it is treated as a security because the owner bears the investment risk (FINRA 00-44).

A permanent life policy whose account is credited at a rate declared by the insurer, usually with a guaranteed minimum rate. Premiums enter the account after charges, and the cost of insurance is deducted periodically. It differs from VUL in that the investment is carried by the insurer's general account: the owner does not choose the assets and does not directly bear market fluctuations.

Universal life in which account interest is calculated by a contract formula referencing the performance of an index (such as the S&P 500), commonly with a 0% floor, a cap and a participation rate. The owner does not hold the index constituents directly. It differs from VUL in that the return is set by a formula and not by actual holdings, and has a floor as well as a ceiling.

Singapore's regulatory term for a life policy whose benefits are linked to the value of the assets or units invested in, governed by MAS Notice 307. A retail ILP invests in the ILP sub-funds that the insurer provides; a high-net-worth VUL is also classed as investment-linked in law, but its underlying is a segregated custody account under a self-selected investment mandate.

Life insurance offered by private placement to accredited investors, with a segregated custody investment account as the underlying. It is often written by insurers in Bermuda, Luxembourg and similar centres, usually with a proportionately low death benefit and a high degree of customisation. It differs from a Singapore high-net-worth VUL mainly in the place of issue, the weight of the protection component and whether guaranteed benefits fall within the local PPF.

A whole life policy under which premiums go into the insurer's participating fund, which the insurer invests collectively and on which it declares bonuses each year. It has a guaranteed cash value and a guaranteed death benefit; the bonuses are not guaranteed. Investment control and most of the investment risk rest with the insurer, which is the most fundamental difference from VUL.

The balance of the VUL's underlying assets valued at market, after deducting charges that have fallen due; it is the base for calculating the administration charge and the net amount at risk. The account value is not guaranteed and may be lower than the premiums paid; some policy documents also call it the policy value.

The value a policy represents on surrender or when used as collateral. In Singapore consumer documents it is mostly used interchangeably with surrender value; in the CRS context a "cash value insurance contract" means a policy that has a cash value, and the insurer reports the year-end cash or surrender value.

The amount actually recoverable when the policy owner surrenders the whole policy: the account value less surrender charges, unpaid charges, amounts owed and liquidation costs. Because of surrender charges and front-loaded deductions in the early policy years, the surrender value is usually well below the account value and may be below the premiums paid.

The amount the insurer pays under the policy formula on the death of the life assured (for a multiple-lives policy, the last life assured). Two formulae are common in VUL: the higher of the basic sum assured and the account value, or the account value plus a fixed amount. Payment requires the policy to be in force, and amounts owed and fees due are deducted.

The amount of cover set at application and fixed by underwriting. It is the floor in the "higher of" formula and the starting point for the net amount at risk. On the Full Medical Underwriting route it can be set according to need, and some products allow it only to be reduced after issue; on the Guaranteed Issue Offer route it is usually a fixed amount.

The amount by which the basic sum assured exceeds the account value, that is, the death risk the insurer actually bears, and the base on which the cost of insurance is charged under the "higher of" formula. As the account value rises the net amount at risk shrinks, and as it falls the net amount at risk grows, with the cost of insurance changing accordingly.

The person or entity that holds the contractual rights under the policy and bears the obligation to pay premiums and charges; it may be an individual, a trustee, a company or a variable capital company. A high-net-worth VUL often allows several joint owners, one of whom is the Lead Policyholder, who signs the investment mandate and change requests.

The person on whose life the death benefit is payable. The policy owner and the life assured may be the same person or different people, but there must be insurable interest between every owner and every life assured. A VUL often allows several lives assured, and a life assured can be replaced on application after review by the insurer.

A policy written on two or more lives assured, usually paying only on the death of the last surviving life assured. It is commonly used in multi-generational arrangements, and the cost of insurance is calculated on a combined rate for the lives assured. Continuation and changes must keep meeting the policy conditions and be accepted by the insurer; they are neither automatic nor a permanent guarantee.

A person entitled to receive the death benefit. Nominations under Singapore's Insurance Act are either trust nominations or revocable nominations, and can be made only by an adult who is both policy owner and life assured. For entity-owned or jointly owned policies, beneficiaries are determined by the ownership arrangements, the trust deed or the will.

The bank that safekeeps the assets underlying a VUL on the insurer's instructions, settles trades, and provides valuations and records. The assets sit in a dedicated account opened for the policy in the insurer's name, recorded separately from the insurer's general account. The credit and operational risk of the custodian is borne by the policy owner.

The party that proposes or executes investment decisions on the VUL account under the investment mandate. It may be the policy owner, or a licensed firm appointed by the owner and accepted by the insurer. An external manager must meet licence, jurisdiction and identity requirements, and its fees can be deducted from the account.

The document signed by the policy owner with the insurer (and the asset manager), setting out the asset classes the account may invest in, single-holding and asset-class limits, rating and liquidity requirements, prohibited assets and the cash ratio. All purchases must fall within this framework and be checked by the insurer before the custodian bank executes them.

An arrangement in which the investor authorises a manager to decide on purchases and sales within agreed limits without confirming each trade. Families that already have a DPM portfolio are often seen as candidates for a VUL discussion, because their assets are usually diversified, valued and custodied, and the owner is used to delegating.

A class of investor defined under section 4A of the Securities and Futures Act (SFA). An individual qualifies by meeting any one of three thresholds: net personal assets, net financial assets or annual income. The net personal assets threshold is S$2 million, with the primary residence counted for at most S$1 million (MAS FAQ, 2019-02-04). A high-net-worth VUL is usually issued only to AIs who have opted in.

A regime in force since 2019: a client who meets the AI thresholds must confirm in writing that the financial institution may treat them as an AI before they can be offered AI-only products and exemptions, and may withdraw at any time. Opt-in does not relieve the institution of its duty to assess suitability (MAS, 2025-02-05).

The interest, recognised in law, that an applicant has in the continued life of the life assured. Under Singapore's Insurance Act a life policy without insurable interest is void; relationships such as spouse and minor child are generally presumed to carry insurable interest, while a company in respect of key persons and a creditor in respect of a debtor must prove an economic interest. Section numbers are as in the current legislation.

In retail ILPs and in the US VUL context, a separate investment portfolio provided by the insurer among which the policy owner allocates premiums, valued by net unit price. A Singapore high-net-worth VUL generally does not use sub-accounts; it sets up a segregated custody account for each policy, which holds securities directly.

An account that the insurer opens at the custodian bank for a single VUL policy, recorded separately from other policies and from the insurer's own assets. The legal holder of the assets is the insurer, and the economic interest belongs to the policy owner under the policy. It lets the owner see holdings line by line and receive periodic statements.

Paying the premium with securities approved by the insurer instead of cash. The assets move from the original custodian into the policy's custody account and are credited to the account value at market value, without first being sold. Each asset must pass eligibility review, and transfer-out fees and tax consequences are borne by the policy owner.

The asset classes the investment mandate allows into the account, usually cash and equivalents, shares listed on major exchanges, investment-grade bonds, collective investment schemes authorised or recognised under the SFA, ETFs and structured products approved case by case. That a class is acceptable does not mean that a particular holding will be accepted.

Assets that the investment mandate expressly excludes, commonly derivatives, leveraged or inverse ETFs, crypto-assets, private equity and private debt, real estate and physical commodities, pledged or non-custodiable assets, sanctioned assets, and securities with a restricted connection to the policy owner. The insurer's current list governs.

A cap on the proportion of the account's net value that may be held in a single security, a single issuer or a single asset class, intended to limit the risk that the movement of an individual holding causes the policy to lapse. Listed-company shares concentrated in a founder's hands can therefore often be transferred in only in part, and the rest must be made up with other assets or cash.

The minimum proportion of the account that must be held in cash or cash equivalents so that charges can be deducted when due without forced sales of securities at a bad moment. Below that proportion there is a grace period to restore it, after which the insurer may sell assets under the policy terms. The ratio and grace period are as stated in the product summary.

The floor on account value needed to keep the policy in force, often the higher of a fixed amount and a percentage of the initial premium. Below it the policy owner must add cash or assets within the grace period, or the policy may be terminated. The amounts are as stated in the product summary.

The SFA's collective term for fund-type products. A scheme constituted in Singapore and offered to the public must be authorised, and one constituted overseas must be recognised. A VUL's investment mandate usually requires funds to be of these two kinds and to meet redemption-frequency requirements (MAS, updated 2026-10-05).

A collective investment scheme offered only to relevant persons under section 305 of the SFA (including accredited investors), or at a minimum of S$200,000 per transaction, and exempt from scheme authorisation or recognition and prospectus requirements (MAS, updated 2026-10-05). Whether it can be held in a VUL account is governed by the investment mandate.

The higher range of credit ratings given by credit rating agencies, generally BBB- and above for S&P and Fitch, and Baa3 and above for Moody's. A VUL's investment mandate often requires bonds to be investment grade; the minimum rating is as stated in the insurer's documents.

The assumed annual return used in a policy illustration to project future account values. It is neither a forecast nor a promise. The LIA member undertaking requires the illustration for a protection-oriented single-premium ILP to show a higher, a lower and a 0% scenario together, with a statement that the policy value may fall to zero and the policy terminate.

A one-off deduction at payment, as a percentage of the premium paid, to cover sales and issue costs. Some high-net-worth products allow the percentage to be agreed within a range, and waive it on top-up premiums up to an annual allowance. The percentage is as stated in the product summary.

A charge deducted periodically in the first several policy years, calculated as a fixed amount or a percentage of the initial premium, to cover policy set-up and early administration costs. It differs from the administration charge in that its base is different and it is usually payable only for a set number of years.

A continuing charge deducted from the account periodically (commonly quarterly) at an annual percentage of the account value, to cover policy administration, valuation and statement costs; usually payable for life. The higher the account value, the larger the amount in absolute terms.

The charge the insurer makes periodically for bearing the death risk, calculated as the net amount at risk (or, under GIO, the fixed sum assured) multiplied by a rate that depends on the life assured's age, sex, smoker status and place of residence. The rate rises with age (MoneySense, 2026-09-28) and is the largest deduction from the account at older ages.

A charge deducted on full surrender as a percentage of the initial premium, levied only in the first several policy years and falling year by year to zero. A similar charge may apply when partial withdrawals exceed the free allowance. The period and percentages are as in the policy terms.

Taking part of the account value out during the policy term. There is usually a minimum amount per withdrawal and an annual allowance free of charge, with a charge on any excess. Under the FMU formula a withdrawal may reduce the basic sum assured correspondingly, and the minimum cash holding and minimum account value must still be met after the withdrawal.

Adding cash or approved assets to the account after issue, which requires the insurer's acceptance. The usual rule is that no premium charge applies up to an annual allowance and a percentage is charged on any excess; a top-up does not usually increase the basic sum assured.

Fees paid to the custodian bank and the asset manager respectively, calculated under the policy owner's agreements with them and deductible directly from the account. They do not appear in the insurer's table of charges but erode the account value just the same, and must be added when comparing total cost.

The application route in which the sum assured and rates are fixed through a medical examination, health questionnaire and financial underwriting. It usually allows a higher sum assured, pays the higher of the sum assured and the account value on death, and includes an advance payment on terminal illness; the cost of insurance is charged on the net amount at risk.

The route under which a policy is issued without a medical examination or health underwriting, with a fixed and lower sum assured, a death benefit often equal to the account value plus a fixed amount, and usually a higher maximum entry age. What is guaranteed is acceptance, not investment results; the account value may equally be lower than the premiums paid.

The process by which the insurer assesses whether the sum assured applied for is in proportion to the applicant's assets, income and protection needs, in order to prevent over-insurance and confirm the source of funds. The maximum premium and sum assured of a high-net-worth VUL are set by financial underwriting, which usually requires proof of assets and source-of-funds documents.

A provision for early payment of part of the death benefit when the life assured is diagnosed with a terminal illness with a life expectancy of not more than a set period (commonly 12 months). In a VUL it usually applies only on the FMU route; the amount paid is the net amount at risk, subject to a cap, and the basic sum assured is reduced accordingly after payment.

Termination of the policy because the account value cannot cover charges, falls below the minimum account value, or the cash holding is not restored within the grace period; cover ends on termination. A VUL has no investment floor, so its lapse risk is higher than that of products with a guaranteed cash value, which is why illustrations must state that the "policy value may fall to zero".

The right to cancel a policy within 14 days of receiving the policy documents, which all life insurers in Singapore offer (MoneySense, 2026-05-11). Cancelling a VUL during the free-look period is usually settled at account value less underwriting, tax and liquidation costs, so the amount returned may be less than the amount paid in.

The legal act by which the policy owner transfers all or part of the policy rights to another (for example to a bank as security for a loan, or to a trustee as policy owner), which must be notified to and registered by the insurer. An assignment revokes a revocable nomination; once the policy is charged, exercising rights such as cancellation in the free-look period requires the assignee's consent.

Applying during the policy term to add, remove or replace a life assured. The new life assured must have insurable interest with the policy owner, be within the age range and pass the insurer's review; the cost of insurance is recalculated for the new life assured, and the waiting period for exclusions generally restarts.

A year-by-year table of account value, surrender value and death benefit produced by the insurer before sale, on assumed rates of return and current charges. The LIA member undertaking permits an illustration only for protection-oriented single-premium ILPs and requires higher, lower and 0% scenarios; all figures are assumptions, not promises.

The product summary sets out the policy's benefits, charges, exclusions and terms; the PHS extracts the key features and risks in a standard format. With the policy contract, they are the basis for judging charges and guarantees; every reference on this site to "as stated in the product summary" means these documents.

Singapore's central bank and integrated financial regulator, responsible for licensing and supervising insurers, financial advisers and the capital markets, and issuing the investment-linked policies notice (Notice 307), the recommendations requirements (FAA-N16) and the Fair Dealing guidelines. Being regulated by MAS does not mean that MAS guarantees the value of a policy.

The trade association of Singapore's life insurers, which publishes industry statistics, policy illustration standards (including the member undertaking on ILP policy illustrations) and consumer guides on medical underwriting and nomination of beneficiaries. LIA's new-business statistics distinguish only investment-linked, participating and non-participating business; VUL is not shown separately.

A scheme administered by the Singapore Deposit Insurance Corporation (SDIC) that protects policy owners if a licensed life insurer cannot meet its obligations, and applies automatically to policies issued in Singapore. It covers only guaranteed benefits and is capped per life assured per insurer (S$500,000 guaranteed sum assured and S$100,000 guaranteed surrender value for individual life policies); benefits tied to underlying net assets, such as a VUL's account value, are not covered.

The assessment that intermediaries have had to carry out since 2012 before recommending specified investment products that are not listed (including investment-linked policies) to retail customers, to confirm that the customer has the knowledge or experience to understand the product's risks and features (MAS, 2011-07-28). Whether it applies to Accredited Investors is as in the current text of MAS Notice FAA-N16.

FSG-G04, a MAS guideline in effect since 2024-05-30, requiring the boards and senior management of all financial institutions to be responsible for fair dealing outcomes for customers, and applying to insurers and financial advisers. It is one of the bases for the position that Accredited Investor status does not remove the suitability assessment.

On 2023-09-21 MAS published the first list of four D-SIIs (the Singapore life insurance entities of AIA, Income, Prudential and Great Eastern), to which higher regulatory requirements apply. The designation reflects the intensity of supervision and does not mean that the government guarantees policies.

One of the ways of nominating under Singapore's Insurance Act. Only a spouse and/or children can be nominated; once made, the policy owner loses ownership of the policy and cannot change the nomination unilaterally, and in bankruptcy the proceeds are generally protected from creditors (LIA nomination guide, 2026-03). It can be made only by an adult who is both policy owner and life assured.

A nomination that can be changed or revoked at any time and can name any individual or company, with the policy owner keeping all policy rights. An assignment of the policy revokes it. Since 2024-01-02 it can be made through the insurer's online channels (LIA nomination guide, 2026-03).

The standard for automatic exchange of financial account information promoted by the OECD. Singapore has exchanged information since September 2018, and reporting financial institutions must report to IRAS by 31 May each year; the amended CRS applies from 2027-01-01 (IRAS, updated 2026-09-09). A cash value insurance contract is a reportable account.

A CRS term for an insurance contract that has a cash value. Singapore's CRS regulations make licensed insurers that issue such contracts specified insurance companies, which must report account holder information and the year-end cash or surrender value (S 621/2016; IRAS CRS e-Tax Guide). A VUL is such a contract.

A document completed by the policy owner at application and account opening, declaring the tax residence jurisdiction and tax identification number; it is the basis for CRS and FATCA reporting. It must be updated when status changes; US person status also triggers FATCA reporting and, at some insurers, restrictions on acceptance.

An arrangement in which a bank loan, secured on the policy and other approved assets, pays part of the premium. Hong Kong's IA and HKMA have applied specific supervisory requirements since 2023-01-01 (including the IFS-PF key information statement); in Singapore banks handle it under their own credit policies. Banks generally do not put self-directed-mandate VULs on their lists of financeable policies; see the premium financing page.

Revolving credit from a private bank secured on a portfolio of marketable securities other than the policy; assets already transferred into a VUL account cannot be pledged again. Terms and risks are covered on the sister site privatebank.hk.

A Singapore fund company form that must be managed by a permitted fund manager. It may apply to be a VUL policy owner, but insurable interest and compatibility with tax incentives must be verified beforehand. See the sister site vccfund.sg.