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【Income Strategy】Which short-term savings insurance offers guaranteed returns higher than fixed deposits? (Updated August 2021)
The novel coronavirus (COVID-19) has brought significant uncertainty to the global economy, prompting the Federal Reserve to implement unlimited quantitative easing. The Chairman of the US Federal Reserve, Jerome Powell, recently stated that monetary policy would remain accommodative for a considerable period. In this low-interest-rate environment, bank fixed deposits offer little excitement, with even lower rates unless they are new fund deposits. While stocks and funds remain actively traded, past performance is not indicative of future returns, and prices can fluctuate. For instance, the Hang Seng Tech Index, popular among equity investors, has been trending downwards since February, even plummeting by over 44% at the end of July, testing investors' risk tolerance. For conservative investors, are there any low-risk tools in the market that also guarantee stable returns? At this juncture, short-term savings insurance offered by insurance companies may be worth considering.
Comparing Short-Term Savings Insurance
Short-term savings insurance focuses on guaranteed returns, with policy terms typically ranging from 3 to 5 years, slightly longer than bank fixed deposits. However, policyholders can lock in a stable guaranteed return rate over several years, which remains attractive to income-focused investors. 10Life closely monitors short-term savings insurance products available in the Hong Kong market, offered by insurers such as Blue Cross, BOC Life, China Taiping, Hang Seng Insurance, Well Link Life, and YF Life. Below is a summary of their return performance:
Chart 1: Comparison of Short-Term Savings Insurance Products (August 2021)
| Insurance Product | Contribution Period | Policy Term | Minimum Total Contribution (USD) | 5-Year Guaranteed Internal Rate of Return (IRR) | Total Contribution $20,000 5-Year Cash Value1 | ||
| Blue WeSave 高息儲蓄保E1 (限量發售) | 1 Year | 5 Years | $10,0002 | 3.50% | $23,7602 | ||
| Well Link Life 立橋人壽 喜盈於「息」特級儲蓄保障計劃 | 1 Year | 8 Years | $2,500 | 3.18%3 | $23,389 | ||
| Blue WeSave 高息儲蓄保E1 | 1 Year | 5 Years | $4,000 | 3.10% | $23,300 | ||
| Well Link Life 立橋人壽 喜盈於「息」特級儲蓄保障計劃 | 3 Years | 8 Years | $2,500 | 3.05%3 | $22,564 | ||
| China Taiping 中國太平 愛．快蓄 | 3 Years | 5 Years | $12,500 | 2.79% | $22,337 | ||
| BOC Life 中銀人壽 目標三年網上儲蓄保險計劃 | 1 Year | 3 Years | $5,000 | 2.34% | $21,434 | ||
| Blue WeSave定息儲蓄保 S3 | 1 Year | 5 Years | $4,000 | 2.31% | $22,418 | ||
| Hang Seng Insurance 恒生保險 五年儲蓄人壽保障計劃 | 2 Years | 5 Years | $1,800 | 2.30% | $22,151 | ||
| YF Life 萬通保險 保證回報儲蓄計劃 | 1 Year | 5 Years | $10,000 | 2.30% | $22,408 | ||
| Notes: 1. Assuming a total contribution of USD 20,000, the guaranteed cash value at maturity is expressed as a rounded figure. 2. Blue Cross WeSave High-Interest Savings Insurance E1 (Limited Offer) is only available with a fixed premium of USD 10,000. Each eligible applicant can purchase up to two policies, with a maximum total contribution of USD 20,000. 3. The policy term for Well Link Life Joyful Savings Plus Plan is 8 years. The above calculation assumes the cash value upon surrender at the end of the fifth policy year. If the policyholder holds the policy until maturity, the guaranteed IRR at maturity can increase, reaching 3.33% for the prepaid version and 3.28% for the 3-year contribution version. 4. The policy currency of the above products is USD. 5. The above information is updated as of 2 August 2021. | |||||||
For more details, please visit the ‘Product Decoder’ on the 10Life website:
- Compare Short-Term Savings Insurance (USD)
- Compare Short-Term Savings Insurance (RMB)
- Compare Short-Term Savings Insurance (HKD)
Stable and Guaranteed Returns with Short-Term Savings Insurance
Short-term savings insurance typically involves a lump-sum prepayment or contributions over 1 to 3 years, with policy terms generally spanning 3 to 5 years. Upon maturity, the insurance company pays out a guaranteed cash value. 10Life calculates the annualised guaranteed internal rate of return (IRR) based on the entire cash flow. The above products (with policy currency in USD) offer a guaranteed IRR of at least 2% at maturity.
With unlimited quantitative easing, interest rates continue to decline, and short-term savings insurance products with a 5-year guaranteed IRR above 3% are gradually being withdrawn from the market, becoming increasingly rare. Currently, only products from Blue Cross and Well Link Life remain, with Blue Cross WeSave High-Interest Savings Insurance E1 (Limited Offer) offering the highest return at a guaranteed IRR of 3.5% at maturity (use promo code: E110LIFED3P5, promotion valid until 31 August this year). The standard version of Blue Cross WeSave High-Interest Savings Insurance E1 offers a 3.1% IRR. Additionally, Well Link Life’s savings plan with a prepaid premium option (i.e., lump-sum payment) provides a guaranteed IRR of 3.18% upon surrender in the 5th year, though the policy term is 8 years, with an IRR of 3.33% at maturity.
Applying for Short-Term Savings Insurance: In-Person or Online
The main appeal of short-term savings insurance is its guaranteed return. For insurance companies, the profit margin on these products is low, which is why they are not heavily promoted by major brand insurers or advisors. As a result, the selection of short-term savings insurance products in the market is limited, often available only in restricted quantities or to existing clients. Furthermore, with ongoing global uncertainties and sustained US quantitative easing, insurance companies may withdraw these products at any time, and any new short-term savings insurance products launched may offer lower guaranteed return rates.
In light of the COVID-19 pandemic, social distancing has become the new norm. In fact, some of the short-term savings insurance products mentioned in this article allow customers to apply online, with the entire process from application to payment completed digitally. Of course, for short-term savings insurance offered by traditional insurance companies, customers still need to approach insurance brokers or advisors. For more details, visit the ‘Product Decoder’ on the 10Life website to compare short-term savings insurance products.
- Compare Short-Term Savings Insurance (USD)
- Compare Short-Term Savings Insurance (RMB)
- Compare Short-Term Savings Insurance (HKD)
Notes:
1. The above information is provided by 10Life and updated as of 2 August 2021. It is for reference only and does not constitute sales advice.
This English version of this article has been generated by machine translation powered by AI. It is provided solely for reference purposes. In the event of any discrepancy or inconsistency between this translation and the original Chinese version, the Chinese version shall prevail.
10Life Editorial Team
Our team of professional content researchers focussing on insurance
10Life Editorial Team
Our team of professional content researchers focussing on insurance
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