Savings Insurance Overview

Savings insurance policy is a form of life insurance with a high degree of savings element and a very limited life-protection element.

There are a variety of savings insurance products in the marketplace. You can evaluate the following factors to identify the plans that best suit your needs:

Policy Term

Short term plans generally have policy period of 3-5 years and provide guaranteed payouts according to benefits illustration in the policy document.
Long term endowment plans generally provide both guaranteed and non-guaranteed returns. Insurers will declare dividends/bonuses as non-guaranteed returns to policy holders annually based on their investment strategies and performance, claim experience, the operational costs and profits allocated to their own shareholders. Policy holders can refer to fulfillment ratios published annually by insurers for past performance.

Premium Terms: Single Premium or yearly installments.

Break-even period

Most long-term savings plans provide very low guaranteed returns and as a result the guaranteed break-even period can be quite long. Policy holders will incur significant financial losses when surrendering the policies early.

Policy Currencies

Primarily in US Dollars, HK Dollars and RMB.

Some insurers will allow policy holders to switch policy currencies over the lifetime of the policies to cater the needs of those who plan to study or relocate overseas.

Investment Strategies

Insurance companies will invest premiums collected in a variety of assets such as equity, bond and real estate according to the strategies defined in the policy documents to generate returns. Generally the more aggressive the strategies, the more the expected long-term returns.

One can refer to the fulfillment ratios report published annually by insurers for their past performance.

Legacy Planning

Some insurers will allow unlimited change of insured option and contingent insured option without affecting the cash value of the policy to facilitate legacy planning for future generations.

Summary

In addition to the factors listed above, one should consider own’s objectives, including the protection needs and financial situations holistically before committing to a life insurance policy to ensure it best fits your needs.

Please feel free to Contact Ever Wealth if you are interested to learn more.

Last update: 26th May 2022