Beginner’s Guide to Investment-linked Insurance Schemes in Hong Kong

Investment-linked plans combine the best of both worlds. It gives you protection through a life insurance but at the same time, it considers your premiums as an investment that will help you earn money through compound interest. In most cases, you get to choose where the money will be invested so it is aligned with your financial goals.

 

Some people would think that this is not a necessity. But getting a life insurance, while it may be enough for some, will not really give you the best return of your money. You want to take advantage of the economy of Hong Kong by getting a life insurance that you can invest at the same time.

 

The truth is, the insurance industry in Hong Kong is currently growing. According to the HKTDC.com, the gross premiums increase by 13.6%. This is a good indication that Hongkongers are more serious about insuring themselves for a more secure future. If you have the same sentiment, then an investment-linked plan is one of the options that you may want to consider. It hits two birds with one stone – giving you a life insurance policy and investment opportunities.

0

Why an investment-linked plan is a good idea

You may be wondering, why not just pay for a life insurance separately and have more freedom in selecting the investments that you will finance?

An investment-linked insurance is beneficial because of these reasons:

You can enjoy life protection and investment returns.

As mentioned, this type of plan hits two birds with one stone. In a typical life insurance policy, your beneficiaries will receive a fixed amount when you pass away. With this plan, you will get the same protection but with an ability to invest part of your premiums on investments. This will help you grow your personal net worth while feeling secure about your finances.

 

You get the opportunity to learn about investing.

Most of the time, you get to choose what type of investments you will use your premiums on. This is an opportunity for you to learn about the global market and other market fund opportunities. That way, you can educate yourself to invest outside the policy. You can take advantage of the experts that the insurance company will provide so you can make smart choices about your investments.

 

You are given flexible investment opportunities.

This will actually depend on the insurance company that you will partner with for your investment-linked plans. You can choose among different mutual funds – according to your risk tolerance.

 

You have more freedom to choose your premiums.

Usually, your investment opportunities will depend on how big your premiums are. Some insurance companies will use your premiums to fund investments and any profit will be used to pay for your insurance coverage while the rest will remain invested. In case you provide a bigger premium, you get to enjoy more investment opportunities.

 

While these benefits make investment-linked plans appealing, you have to remember that the return on investment cannot be guaranteed. Not only that, most insurance companies will not give you the same coverage as a standalone life insurance policy. You need to be honest about your insurance requirements. If you think that you need to get more in terms of life insurance, then an investment-linked plan is not for you.

 

3 Investment-linked plans in Hong Kong

According to the data from Info.gov, the insurance business is thriving in Hong Kong. For the past 5 years, the industry gained a 2-digit annual growth. Based on the data, investment-linked plans are included in the forerunners. In the previous year, this category experienced a growth of 30%.

 

With an industry that is obviously in demand, you can be assured that there are a lot of options available in Hong Kong. You just have to choose the right one that will help you meet your financial goals. Here are three investment-linked plans that you can check out in Hong Kong.

 

HSBC Life International Limited

The company offers an investment-linked plan that will give you a death benefit of HK$10,000. They will add either the account value of the policy or the total premiums that you paid less any withdrawal done (whatever is greater). This plan involves a premium payment of 5 years with a minimum investment of HK$36,000 a year (or HK$3,000 a month). In case you decide to en cash this policy, you will only be charged if it is done within the first 9 years since you started paying the premiums. This is the reason why this particular plan is best for those who are after a long-term investment return.

 

Prudential Hong Kong Limited

This insurance company offers three options when it comes to investment-linked plans. The first is called PRULink Single Premium Investment Plan that is denominated in the US dollar currency. It is a whole-life insurance plan designed for those between the ages 1 to 60 years. This plan only requires you to pay US$10,000 as a minimum payment. You can opt to pay more but that is entirely up to you.

The second option is the PRULink Portfolio Investment Plan. This is a regular premium investment-linked plan that is also a whole-life insurance plan. This is a great option for those looking for a long-term investment and a life coverage for only US$125 each month. You will be given the chance to choose the investments that you will use through their online portal. The third option, PRULink Capital Investment Plan. This is also a single premium plan that uses Hong Kong dollars and is offered with a life insurance for ages 19 to 70.

 

AIA Group Limited

The final insurance company on our list that offers an investment-linked plan is AIA. This company offers various investment-linked plans that will suit your personal financial goals as well. They have the Bonus Power Plan that offers an enhanced life protection for a whole-life term. It offers life assurance for those between 18 to 65 years old. Apart from this protection, you can also benefit from high returns – but only if you treat this as a long-term investment.

This plan also offers support in case you are diagnosed with a debilitating condition – as long as you meet the age range. It also offers flexible payment terms to make the premiums easier on your budget. Among the other plans that you should look into are the Bonus Power Plan and the Proactive Insurance Plan. These may appeal to your investment and insurance requirements – depending on your specific and personal circumstances.

 

Take note that there are other companies that offer investment-linked plans. You have to conduct proper due diligence to determine which of them can help you meet your financial goals.

Recommend0 recommendationsPublished in Hong Kong, Insurance
SHARE
Previous articleHas the Wage Gap in Singapore Really Been Closing?
Next articleWhy Are Women Making More Money But Are Still Financially Impaired

Abigail Wong is the Writer of The New Savvy.

She is a Singapore Management University 2nd year undergraduate specialising in Strategic Management. From Tampa, Florida, she possesses an International Baccalaureate diploma from C. Leon King High School, and previously held the position of Treasurer of the King High School Division of the French National Honour Society and the Science National Honour Society. Abigail is currently acting as President of the French Cultural Club for SMU International Connections, and as a Resident Advisor and Fire Warden for the SMU Residences at Prinsep.

Abigail is a Former Florida Science Olympiad Champion in chemical forensics and protein modelling, and former Health Occupation Student’s Association District Champion in clinical nursing.

In her free time, Abigail enjoys interacting and caring for animals. She has previously volunteered for the Humane Society of Tampa Bay as an Adoption Assistant.

@