Money makes the world go around and many people make their wallets bigger through investing, but do you know how it works? When it comes to investing your money it’s super important that you understand everything that’s going on. Are you ready to put your IBIP knowledge to the test?

Take the quiz down below and see how well you do. 

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Whether you’ve scored a zero or got everything right, here are some key things you should know before starting your investing journey. 

First up, you should know that IBIPs are usually bought through insurance companies, brokers, agents, or banks. The aim of this financial product is to provide life insurance cover against a specific risk and at the same time to give you an investment opportunity.

When you invest in an IBIP, you’re not only buying life insurance but you are also investing your money in order to potentially make a profit.

What does this mean? This is because the value of the investment component of the product fluctuates according to the prevailing market conditions at that point in time.   

IBIPs may be tricky to understand if you’re not familiar with financial markets, so make sure that you get any relevant information you may need before you invest. This should be obtained from your service provider. 

Make sure that you are given a KID (Key Information Document) before you purchase any product. This three-page long consumer-friendly document will contain all the essential information you need to take a more informed decision. The KID, being a standardised document, will also allow you to easily compare products with similar features from different providers. 

This information includes a further explanation of how your IBIP works, the kinds of investors this product is good for, the main risks you are exposed to, and any related costs that come with this product’s purchase. 

When it comes to investing, keep in mind that the payout you get at the end of the maturity may amount to less than the amount you initially invested. 

Another thing you need to know about an IBIP is the fact that the maturity value of any IBIP is dependent on the market movements. Since these fluctuations might move in or against the investors’ favour, purchasing an IBIP carries a significant amount of risk. 

Visit the Malta Financial Services Authority website to get more familiar with IBIPs and learn how you can make more informed financial decisions by following their consumer education campaigns.

Tag someone who wants to start investing!