Whole Life, IUL, or Legacy Plans: What Drives the Difference in Returns?

In our previous article “Traditional, IUL, or Legacy Plans: Which Is Right For Your Legacy Goals?”, we introduced the three common insurance structures considered to pass wealth on to the next generation.

In this article, we take a closer look at how a decision should go beyond a headline projected value for these plans. The relevant questions include liquidity needs, ownership and succession features and how the policy fits with the family’s broader estate strategy.

A policy illustration is a starting point—not a forecast or a promise. In particular, non-guaranteed benefits in participating policies can be affected by investment performance, expenses and the insurer’s bonus-management approach.

Quick Recap: The Three Types of Life Insurance

	Traditional Whole Life with multiplier	Indexed Universal Life (IULs)	Legacy plans
Primary Benefit	High guaranteed lifelong protection and cash value accumulation with the option to boost coverage during working years.	Lifelong coverage with growth potential linked to global market indices and downside protection through a minimum interest rate floor, depending on the product.	Designed to support continuity of ownership and distribution to future generations. Comes with dedicated transfer tools such as policy splitting, secondary life assured, and staggered payouts, subject to policy terms. Some of these plans are offered on a guaranteed issuance basis.
Key Trade-off	Primarily designed around one insured and immediate family protection. Less suitable for intergenerational wealth transfer.	No guaranteed cash values and a potential lapse risk if index returns fail to cover monthly insurance charges. IULs will require regular policy reviews.	Higher lump-sum minimum premiums required with lower immediate protection leverage compared to whole life multiplier plans

1.     Behind the Numbers: Why Do Illustrated Returns Differ?

Asset allocation is one factor that can influence illustrated policy values, but it is not the only driver. The value shown in a policy illustration may also reflect the policy’s insurance charges, expense structure, guaranteed benefits, surrender-value design, bonus architecture and the insurer’s approach to managing its participating fund.

For this reason, an illustrated investment-return scenario should not be read as the policyholder’s net return on premium. A proper comparison separates:

• Guaranteed death benefit
• Guaranteed cash or surrender value
• Non-guaranteed bonuses or projected policy values
• Projected surrender value versus projected death benefit
• Policy charges, liquidity and break-even timing
• Succession and ownership features

Illustrated returns and insurer’s investment strategies:

	Traditional Whole Life with multiplier	Indexed Universal Life (IULs)	Legacy-focused plans
Illustrated returns	Generally lower at 3% or 4.25% p.a.	Dependent on account allocation between index or fixed accounts, and the indexes chosen.	Generally higher ranging from 4.2% to 7.5% p.a.
Investment asset strategy	Approximately 70% of assets are allocated to more conservative investments, such as fixed income, with the remainder in higher-risk assets.	Asset allocation is flexible, allowing you to choose between a Fixed Account and Index Account, with multiple index sub-accounts available within the Index Account.	Large proportion is allocated to riskier assets (up to 75%) with fixed income taking a smaller proportion of the overall investment asset strategic allocation

Across the three types of plans, traditional whole life plans with a multiplier option generally offer the lowest illustrated returns at around 3% to 4.25%. This is because such plans tend to adopt more conservative asset strategies, with approximately 70% of assets allocated to fixed income and around 25% to 30% to higher-risk assets. While this secures higher guaranteed payouts, long-term capital growth will remain modest.

In comparison, legacy-focused plans aim for maximum wealth growth and tend to allocate a larger proportion of their assets (up to 75%) to higher-risk assets. This higher allocation to growth-oriented assets allows insurers to project higher long-term potential returns, although these returns are not guaranteed and should not be interpreted as a guaranteed return or an expected investment outcome. Product design, bonus architecture, early liquidity features, expenses and the duration for which the policy is held can all influence projected values.

Indexed Universal Life (IUL) plans differ from other participating life insurance plans and do not participate in an insurer’s traditional smoothed fund. Instead, policyholders select their allocation between a Fixed Account and Index Sub-Accounts (e.g. S&P 500 or Nasdaq 100). Index-linked crediting is typically based on the performance of a chosen index strategy, subject to the policy’s crediting rules. These may include a cap rate, participation rate, and/or floor. A 0% floor, where offered, generally refers to the crediting rate for the relevant index-linked account. It does not mean that the policy’s account value, surrender value or death benefit cannot fall, because insurance charges and other deductions may continue to apply.

2.     Side-by-Side Comparison: What Does USD 150,000 Get You?

To illustrate how these structural differences play out over a lifetime, the table below compares plans for an Age 30 Non-Smoker Male with a lifetime outlay of USD 150,000 or SGD 195,000.

	Traditional Whole Life with multipliers	Indexed Universal Life (IULs)	Legacy plans
Premium payable	SGD 9,784 / year (Premiums payable for 20 years)	USD 150,000 Single Premium	USD 150,000 Single Premium
Total Lifetime premiums	SGD 195,696	USD 150,000 (SGD 195,000)	USD 150,000 (SGD 195,000)
Guaranteed death coverage (Age 85)	SGD 675,000	-	USD 157,500 (SGD 204,750)
Projected death coverage (Age 85)	SGD 675,000	Up to USD 955,600 (Up to SGD 1,242,280)	USD 580,203 - 1,227,282 (SGD 754,263 - 1,595,466)
Guaranteed death coverage (Age 100)	SGD 337,500	-	USD 162,300 (SGD 210,990)
Projected death coverage (Age 100)	SGD 337,500	Up to USD 1,017,687 (Up to SGD 1,323,993)	USD 1,152,723 - 3,488,853 (SGD 1,498,539 - 4,535,508)

For avoidance of doubt, this comparison assumes a total lifetime premium of USD 150,000 or SGD 195,000 if the policy does not allow for USD-denomination. A conversion of 1:1.3 has been used to convert USD to SGD for the purpose of this comparison table.
Quotes are generated on 1 and 30 September 2026 for an age 30 non-smoker male on an age last birthday (ALB) basis and are indicative only and used solely for illustration purposes. Projected death coverages are extracted from the respective policy illustrations and are non-guaranteed.

• Highest guaranteed death benefit: Our comparison of the three types of plans found that traditional whole life plans with a multiplier option consistently provide the highest guaranteed death benefit, making them a strong option for those prioritising certainty of coverage.
• High upfront coverage: IULs provide immediate, high-leverage coverage upfront, but projected values may plateau or decline in later years as age-based insurance charges increase.  Policy values and death benefits may be affected by index crediting, policy charges, cost-of-insurance deductions, allocation choices, withdrawals and the need for ongoing policy review.
• Highest projected death benefit: By age 100, the legacy-focused whole life plans show the highest projected death benefits in the illustrations. This is partly driven by their higher illustrated returns and the compounding of bonuses over the longer policy duration. However, the projected death benefit should not be confused with the projected surrender value, as the amount payable upon surrender may be lower than the death benefit.

3. IUL vs. Legacy Plans: Which Fits Your Estate Goals?

If your focus is intergenerational transfer, narrowing your decision between an IUL and a Legacy Plan comes down to leverage vs. certainty.

• Choose an IUL if: You want higher coverage leverage in the early to mid-policy years, index-linked growth potential, and flexibility in choosing index allocations, and are comfortable with regular policy reviews to monitor charges.
• Choose a Legacy Plan if: You have a long horizon and prefer a more hands-off Participating Fund structure, high long-term cash values, Day-1 surrender liquidity of around 80% to 85% for single-premium plans, and legacy-planning features such as policy splitting or the inclusion of secondary life insureds.

4.     Deep Dive: Legacy Plans

Legacy plans offer features designed for legacy and intergenerational wealth planning, such as policy splitting, changing the life insured, inclusion of secondary life insureds, death benefit instalment, and contingent policy ownership. They can generally be divided into two types, with different illustrated returns: (1) plans with reversionary and terminal bonuses, and (2) plans with terminal bonuses only.

Reversionary bonuses, once declared and added according to policy terms, may become guaranteed; terminal bonuses are generally non-guaranteed and may be payable only at specified policy events.

Single Premium Plan Comparison:

	AIA Platinum Infinite Wealth II	Manulife Signature Legacy Growth	Manulife Signature Legacy Harvest	Singlife Heritage Reserve
Bonus architecture	Reversionary bonus and Terminal bonus		Terminal bonus only
Day 1 surrender value	80%	80%	85%	85%
Capital Guaranteed	At end of policy year 7	At end of policy year 7	At end of policy year 14	At end of policy year 14
Policy Split, Change of life insured, and Secondary insured feature	Yes	Yes	Yes	Yes
Death benefit instalment option	No	No	Yes, spread the death proceeds from 2 to 10 years	Yes, spread the death proceeds for up to 10 years
Contingent Policy Owner Option	No	No	Yes	Yes
Projected Illustrated Rate of Returns	4.25% and 6.25% p.a.	4.2% and 6.2% p.a.	5.25% and 7.50% p.a.	5.25% and 7.50% p.a.
For a USD 500,000 single premium:
Guaranteed cash value at the end of policy year 50	USD 772,000	USD 692,850	USD 529,770	USD 541,000
Illustrated cash value at the end of policy year 50	Total at 4.25%: USD 2,291,755 Total at 6.25%: USD 6,918,047	Total at 4.2%: USD 2,547,580 Total at 6.2%: USD 6,475,488	Total at 5.25%: USD 3,834,952 Total at 7.5%: USD 11,509,017	Total at 5.25%: USD 3,842,413 Total at 7.5%: USD 11,629,513

Quotes are generated on 1 and 30 September 2026 for an age 30 non-smoker male on an age last birthday (ALB) basis.. Projected death coverages are extracted from the respective policy illustrations and are non-guaranteed. Quotes and returns displayed above are indicative only and used solely for illustration purposes.

Why Do Plans with the Same Illustrated Returns Yield Different Values?

Even when two plans illustrate at identical fund performance rates (e.g., 5.25% and 7.50% p.a. for Manulife Signature Legacy Harvest and Singlife Heritage Reserve), their net payouts differ over time ($11.51 million vs. $11.63 million at Year 50). This $120,496 variance is driven by two factors:

• Effect of Deductions: Singlife Heritage Reserve maintains lower ongoing operational and policy expense deductions. This results in a lower Effect of Deductions To-Date as compared to Manulife Signature Legacy Harvest and results in a higher net compounding yield (up to 7.17% p.a. at Year 120 for Singlife Heritage Reserve vs. 7.12% p.a. for Manulife Signature Legacy Harvest).
• Upfront Feature Charges: Manulife Signature Legacy Harvest includes an embedded surrender value booster benefit that enhances liquidity during the first 5 policy years. However, because part of the initial outlay funds this liquidity feature, less capital compounds in the early years. This means that while you are paying USD 500,000 for the policy, a portion of this (USD 12,000 in this scenario) goes towards paying for this booster benefit.

Making Sense of the Differences

Traditional whole life, IUL and legacy-focused plans have different structures, investment strategies and bonus mechanisms, which can result in differences in guaranteed benefits and illustrated returns. Understanding what drives these differences can help you assess the trade-offs and determine which type of plan aligns with your protection needs, intergenerational goals and broader estate strategy. If you would like to explore the options in greater detail, speak with our insurance specialist for a complimentary review of your needs, objectives and legacy plans.

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• Traditional, IUL, or Legacy Plans: Which Is Right For Your Legacy Goals?
• Read This Before You Buy an Indexed Universal Life (IUL)
• Residing in Singapore Here’s what you need to know about your health insurance
• Your Insurance Portfolio, Reimagined: One dashboard.Greater clarity.

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Disclaimer:

Returns displayed in this article are indicative only and used solely for illustration purposes.

The views and opinions expressed herein do not reflect or represent the official views, positions, or policies of any insurer(s) and shall not be construed or relied upon as such.

All materials and content found in this article are strictly for information purposes only and should not be considered as an offer or solicitation to transact in any product. This article is not a contract of insurance.

Insurance products are underwritten by the respective insurance partners and distributed by iFAST Financial Pte Ltd (“iFAST”). You are advised to review the specific terms, conditions and exclusions in the relevant policy contract.

You are advised to read the key product documents, including (but not limited to) the product summary, before deciding whether the product is suitable for you. You should consider carefully if the products you are purchasing are suitable for your financial objectives, experience, risk tolerance and other personal circumstances. If you are uncertain about the suitability of a product, please seek advice from a financial adviser before making a decision to purchase the product.

While iFAST and its third-party providers strive to provide accurate and timely information, there may be inadvertent omissions, inaccuracies, and typographical errors. Opinions expressed herein are subjected to change without notice.

The comparisons and opinions provided are based on publicly available data/information and are intended to provide a general overview of the insurance products discussed. These comparisons do not cover all available products and may not fully illustrate every aspect of the products discussed.

Purchasing a life insurance policy is a long-term commitment, and early termination may involve significant costs. The surrender value, if any, may be zero or less than the total premiums paid.

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