LIFE INSURANCE (INCLUDING PROTECTION RETIREMENT PRODUCTS)

Life insurance generally provides a lump sum of cash after the death of an individual (ie the insured), or incapacity due to an accident or illness. Some of the main types of life insurance are briefly described below:

Term life insurance

Term life insurance only provides a lump sum payment (also known as a “death benefit”) after the death of the policyholder / insured. This type of insurance does not provide dividends or savings, but simply provides coverage against death. Term life insurance has a fixed term, such as 10 or 20 years, after which the policy contract will expire if no claims are made during the insurance period.

Whole life insurance

Whole life insurance provides a lump-sum payment upon the death of the policyholder / insured, or the termination of the policy. It usually covers an extended and variable period (usually until the policyholder / insured reaches the age of 100 ) as long as the premium is paid. The premium for whole life insurance is usually a fixed amount based on the age of the insured at the time of entry and does not increase over time. Unlike term life insurance, which may come due without any payment being made, whole life insurance must eventually payout. As a result, the premiums for whole life insurance are usually higher than those for term life insurance. Some whole life insurance policies (called “participating policies” or “participating policies”) pay dividends to policyholders because the insurance company shares better-than-expected results with policyholders. The premium of this participating policy is generally higher than that of a non-participating policy.

Savings life insurance

Savings life insurance provides a lump-sum payment upon the death of the policyholder / insured after the expiration of a specified period of coverage (usually 5, 10, or 20 years), or before that. Therefore, it brings savings to the insured and also protects life insurance.

Annuity

An annuity is a retirement planning tool that helps policyholders turn accumulated savings into stable income over some time. There are many types of annuities, one of which is the deferred annuity metal. During the accumulation period, the policyholder regularly pays premiums over a specified period. When the annuity receiving period is reached, the assured can receive the annuity regularly during the period.

To encourage citizens to voluntarily save for retirement, the government has provided taxpayers with deferred annuities listed as ” Qualifying Deferred Annuity Policy ” ( ” QDAP “) by the Insurance Authority since 2019. Tax deduction benefits. The policyholder (as a taxpayer) can claim a tax deduction for his qualifying deferred annuity premiums, subject to a total deduction capped at HK$ 60,000 per year of assessment.

Investment-linked life insurance

ILAS is a life insurance policy with an investment component that provides policyholders with both life protection and investment options (usually a fund). The policy value is determined based on the performance of the “underlying or reference fund”. The policyholder owns the investment-linked life insurance policy; the underlying assets of the investment-linked life insurance (usually the underlying or reference funds) are owned by the insurance company.

Employees’ Compensation and Mandatory Provident Fund ( MPF )

After the Mandatory Provident Fund Scheme ( MPF ) for retirement protection came into effect on December 1, 2000, both employers and employees should understand their respective rights and obligations.