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Investment Linked Assurance Scheme (ILAS) in Hong Kong

8-min read

Updated on 2026-4-9

Author：AIA Content Editorial Team

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In Hong Kong, the Investment Linked Assurance Scheme (ILAS) combines life protection with investment features, allowing policyholders to select from a range of funds and build a portfolio that aligns with their financial goals. Because the policy value is linked to market performance, an investment-linked assurance scheme can offer flexibility and potential returns, but they also involve investment risk that the policyholder should fully understand before applying.

What Is an Investment Linked Assurance Scheme (ILAS) ?

In Hong Kong, an investment-related life insurance plan is commonly known as an Investment-linked Assurance Scheme (ILAS). This type of policy combines life insurance protection with investment features. By the end of 2021, in-force investment-linked business premiums in Hong Kong had reached HKD55,035 million, accounting for 11.8% of total individual life business. New premiums for investment-linked policies in 2021 also reached HKD30,663 million ¹.

Four Key Features of Investment Linked Assurance Scheme (ILAS)

An investment-linked assurance scheme (ILAS) includes a cooling-off period. During this period, you may cancel the policy and receive the original investment amount and applicable fees paid, subject to market-value adjustments based on investment movements.
Under an investment-linked assurance scheme (ILAS) policy, both the policy value and death benefit are directly linked to the performance of the selected underlying investments.
Under an investment-linked assurance scheme (ILAS), the policyholder selects investment options from a range of available choices, and the investment risk is borne by the policyholder.
Upon surrender, the account value of an investment-linked assurance scheme (ILAS) will fluctuate in line with market performance. It may be lower than the total premiums paid, and surrender charges may apply.

According to the Insurance Authority , investment-linked assurance scheme ILAS plans share a common feature: a portion of premiums is used to purchase funds linked to investment options (e.g., equity funds, bond funds, money market funds, and venture capital funds)¹. Different asset classes carry different risk-return profiles. Generally, higher potential returns require higher risk.

In Hong Kong, an investment-linked assurance scheme must be approved by the Insurance Authority and recognized by the Securities and Futures Commission. These policies are regulated under both the Insurance Companies Ordinance and the Securities and Futures Ordinance². Only authorized insurers are permitted to underwrite Investment-linked life insurance policies, strengthening customer protection.

Premium Structure of an ILAS (Investment Linked Assurance Scheme)

Charges under an Investment-linked life insurance plan (i.e., ILAS) generally fall into two categories: (1) policy charges and (2) fund charges³.

Policy Charges

Policy charges are fees deducted to cover insurance costs, administrative expenses, and policy management. These are often paid by deducting investment units and may include:

Cost of Insurance (COI): Covers death benefits and other insurance benefits. COI is typically determined by factors such as age, gender, smoking status, and sum insured.
Policy Fee / Premium Charge: Generally covers policy administration, distribution, and product planning costs.
Administration Fee: Pays the insurer's administrative expenses; it may be a fixed amount or a percentage of premiums or account value.
Surrender Charge: Depending on the ILAS product, charges may apply when the policy is surrendered.

Fund Charges

Fund charges are collected by the fund management company and are reflected in the unit price (not paid separately). They may include:

Fund Management Fee: A fee charged for managing the linked fund, typically a percentage of fund value.
Other Administration Fees: Administrative fees charged by the fund manager.

Key Considerations Before Buying Investment Linked Assurance Scheme (ILAS)

Different life insurance products are designed to meet different financial needs. Before purchasing an investment linked assurance scheme, it is important to clearly understand the benefits, fees, and risks of the investment-linked assurance scheme structure, and make decisions based on your financial goals and risk tolerance.

Key characteristics include:

Alignment with personal financial objectives: Under ILAS, policyholders can select different investment options to build a portfolio and switch options as goals or market conditions change.
Special bonuses may apply: Some Investment-linked life insurance plans offer additional bonuses if certain conditions are met (e.g., long-term policy bonuses).
Market risk is involved: Since an investment-linked assurance scheme links policy value to investment performance, policyholders bear the risk. Poor performance may reduce policy value.
Longer commitment: ILAS policies are typically designed for long-term coverage. Early surrender may lead to higher surrender charges.

In view of this, the following three key considerations should be noted before purchasing an investment linked assurance scheme (ILAS):

The Product Can Be Complex

Compared with other insurance products, the investment linked assurance scheme (ILAS) requires basic financial knowledge to understand the product mechanics. Customers with limited investment experience may find it challenging to fully understand how an investment-linked assurance scheme works, which could lead to decisions that affect long-term outcomes.

For investors who place a stronger emphasis on protection, the market now offers Protection Linked Plans (PLP) under the regulatory framework. These plans strengthen life protection before age 65. Death benefits are typically set at 150% or more of total premiums paid, making them suitable for young families or those planning retirement.

If needed, consult an AIA financial planning advisor. A licensed insurance intermediary can explain ILAS and help you understand whether Investment-linked life insurance suits your needs.

Policy Terms May Be Detailed and Lengthy

Regulators require ILAS products to disclose detailed fees and charges, including investment option charges⁴.

As a prudent policyholder, you should carefully review the structure and fees of different investment-linked assurance scheme (ILAS) products. If you have any questions, consult your insurance intermediary or the issuing insurer to fully understand the ILAS plan before deciding whether it is suitable for you.

Returns Are Not Guaranteed

Many people mistakenly assume that an investment-linked assurance scheme (ILAS) guarantees high returns. In reality, like other investment products, returns can rise or fall—meaning policyholders may not only incur financial losses but could also affect the level of life protection provided by the policy. As ILAS returns are non-guaranteed, potential gains may be higher than those of other insurance plans, but they may also be lower than the total premiums paid, depending on the selected investment portfolio and overall market performance.

How to Apply for an Investment Linked Assurance Scheme (ILAS)

The industry and government regulatory authority place strong emphasis on proper sales practices for investment-linked assurance scheme products, to ensure customers understand what they are buying.

If you wish to purchase investment-linked assurance scheme ILAS, you should meet a qualified, licensed insurance intermediary and complete the required suitability assessments. According to the Insurance Authority, this includes a Financial Needs Analysis (FNA) to evaluate insurance needs, financial situation, and premium affordability. If Investment-linked life insurance is considered suitable, you must also complete a Risk Profile Questionnaire (RPQ) to assess whether the product and investment options align with your objectives and knowledge/experience ⁵. If the required documents are not completed properly, the insurer may decline the application in accordance with regulatory requirements.

Meet AIA's professional team today to achieve your long-term financial goals through thoughtful planning.

Investment Linked Assurance Scheme (ILAS) FAQ

There are many types of policies available in the market, each with different features and risk levels, and they suit people with different insurance goals and affordability. Before purchasing an investment-linked assurance scheme (ILAS), it is advisable to clarify your personal needs and carefully read the product's nature and the risks involved before making a decision.

An investment-linked life insurance policy is generally suitable for customers who have both life protection and investment needs. Before buying an investment-linked assurance scheme (ILAS), the insurance intermediary will typically conduct a financial needs analysis and a risk profile questionnaire to assess whether the customer is suitable.

No. Completing the financial needs analysis (FNA) is a mandatory step in assessing product suitability. Under the guidelines, if a customer refuses to provide the required information, the insurance intermediary will not be able to comply with regulatory requirements and therefore cannot recommend any ILAS product. The insurer may also reject the application. This requirement is intended to ensure that the recommended policy genuinely meets your protection needs and premium affordability.

Takeaway

💡Premium charges for an investment-linked assurance scheme (ILAS) are generally divided into policy-level charges and investment-linked policy/fund-related charges.

💡Compared with other insurance products, ILAS typically has a more complex product design.

💡Every life insurance product has its own pros and cons. Before purchasing investment-linked life insurance, you should carefully review the relevant sales documents.

💡Before buying an investment-linked policy (ILAS), customers must complete a Financial Needs Analysis (FNA) and a Risk Profile Questionnaire (RPQ).

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This information is for general reference only and does not constitute sales advice, product recommendations, or service offers. Before purchasing an insurance product, customers must complete a financial needs analysis. AIA does not guarantee the accuracy and completeness of the content and information provided. AIA reserves the right to pursue legal action and seek compensation for any infringement and/or legal issues.