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Hong Kong people's life expectancy is increasing.
Guaranteed annuity income should not be overlooked — the difference between the highest and lowest is 28%
The tax-deduction effect significantly boosts returns
Compare the early guaranteed surrender values and death benefit provisions
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The critical 20 years after retirement: Comparing tax-deductible annuities from multinational insurance companies — guaranteed returns differ by 28%
When you’re young you can choose the lifestyle you like; if you want to keep having choices after retirement, it’s important to plan early. Years ago the government introduced Qualifying Deferred Annuity Policies (commonly called tax-deductible annuities, QDAP), offering tax incentives to encourage people to save while they’re young and prepare for retirement expenses. If someone wants to secure a steady income during the crucial 20 years after retirement, what product options are currently available on the market? Today 10Life compares three tax-deductible annuities offered by multinational insurers and finds that guaranteed returns can differ by as much as 28%.
Hong Kong people's life expectancy is increasing.
According to Census and Statistics Department data, in 2023 the average life expectancy in Hong Kong was 82 years for males and 88 years for females. If a typical person retires at 65, whether there is sufficient cash flow for the following 20 years is critical to maintaining quality of life.
Besides tax benefits, purchasing a tax-deductible annuity mainly allows the policyholder to make contributions while employed. During that period, the insurer invests to grow the amount, and when the policyholder reaches the specified age they can begin receiving annuity payments.
For retirement planning purposes, we assume a 45-year-old male policyholder, a 10-year contribution period, annual contributions of USD 7,800, total contributions of USD 78,000; annuity payments begin at age 65 with an income period of 20 years until age 85. We then compare tax-deductible annuities offered by large multinational insurers, including Sun Life 永明豐碩 Deferred Annuity, Manulife 宏利歲稅樂 Deferred Annuity and AXA 安盛「賞精彩」 Deferred Annuity.
Comparing insurance products is only meaningful under the same terms. If other large multinational insurers’ tax-deductible annuities do not have the same design—for example, the tax-deductible annuities from AIA and Prudential—we have not included them in this comparison.
Table 1: Contributions starting at age 45 for 10 years, total contributions USD 78,000, income period from age 65 to 85
Comparison of guaranteed and expected income for tax-deductible annuities
| 10Life Comparison of Tax-Deductible Annuities | Guaranteed Income (USD) | Expected Income (USD) | ||||||
| Ages 65–74 | Ages 75–84 | Total Income | Total Income as % of Premiums Paid | Ages 65–74 | Ages 75–84 | Total Income | Total Income as % of Premiums Paid | |
| Sun Life 永明豐碩 Deferred Annuity Plan | 71,880 | 71,880 | 143,760 | 184% | 93,921 | 104,746 | 198,667 | 254% |
| Manulife 宏利歲稅樂 Deferred Annuity | 59,640 | 59,640 | 119,280 | 153% | 109,820 | 109,820 | 219,640 | 281% |
| AXA 安盛「賞精彩」 Deferred Annuity Plan | 56,160 | 56,160 | 112,320 | 144% | 112,320 | 112,320 | 224,640 | 288% |
Note: 1. The above premium information is updated to October 10, 2024, and does not include the premium levy charged by the Insurance Authority. 2. Ranked by insurers' total guaranteed income (from high to low). | ||||||||
Guaranteed annuity income should not be overlooked — the difference between the highest and lowest is 28%
For many people, seeking stability in retirement and avoiding budget shortfalls, the guaranteed income portion of tax-deductible annuities becomes important.
Among tax-deductible annuities with an income period from age 65 to 85 (see Table 1), Sun Life's 20-year total guaranteed income is about US$144,000, accounting for 184% of the premiums paid, the highest among the three products; following closely are Manulife (US$119,000) and AXA (US$112,000), with a 28% difference between the highest and lowest (about US$32,000).
Tax-deductible annuities also include non-guaranteed income, which together with guaranteed returns form the "expected income", with AXA being higher. However, distributions of the non-guaranteed portion are affected by multiple factors, including the insurer's investment performance, dividend policy, economic conditions, etc., so the actual amounts are hard to predict.
Table 2: Contributions starting at age 45 for 10 years, total contributions of US$78,000, income period from age 65 to 85
Comparison of internal rates of return and tax effects for tax-deductible annuities over a 20-year income period
| 10Life comparison of tax-deductible annuities | Guaranteed IRR at maturity | Total guaranteed income as % of total premiums after tax deduction | Expected IRR at maturity | Total expected income as % of total premiums after tax deduction | ||
| Excluding tax deduction | Including tax deduction (at 17% tax rate) | Excluding tax deduction | Including tax deduction (at 17% tax rate) | |||
| Sun Life永明豐碩 延期年金計劃 | 2.5% | 3.2% | 222% | 3.8% | 4.3% | 307% |
| 宏利歲稅樂享 延期年金 | 1.7% | 2.4% | 184% | 4.2% | 5.0% | 339% |
| 安盛「賞精彩」 延期年金計劃 | 1.5% | 2.2% | 173% | 4.3% | 5.1% | 347% |
Notes: 1. If there is a one-year difference between purchasing the annuity and the tax deduction, when calculating the above internal rates of return, we assume the tax relief begins one year after the premiums are paid. 2. The Hong Kong Inland Revenue Department's marginal tax rates are 2%, 6%, 10%, 14% and 17%. The above assumes a tax allowance of HK$60,000 and calculates using the highest rate of 17%. However, the actual tax savings depend on individual circumstances and may differ from the amounts stated in the case. 3. The above premium information is updated to October 10, 2024, and does not include the levy on premiums charged by the Insurance Authority. | ||||||
The tax-deduction effect significantly boosts returns
Compared with ordinary annuities, the tax benefits of tax-deductible annuities are particularly attractive. Policyholders only need to take out a policy before March 31 each year (the end of the tax season) to obtain a tax deduction. The maximum deductible amount per year is HK$60,000; at the current top salaries tax rate of 17%, the actual tax saving is HK$10,200.
Sun Life’s maturity-guaranteed internal rate of return (IRR) before tax is 2.5%; after the tax deduction the IRR reaches 3.2%, the highest among the three products (see Table 2); as for the expected IRR, it will further increase after the tax deduction, with the three products’ returns ranging between 4.5% and 5.1%.
In fact, using the current top salaries tax rate of 17% and treating the tax deduction as an effective premium reduction significantly increases the ratio of guaranteed income to premiums after tax deduction. For the two products cited, Manulife’s rises from 153% to 184%, and Sun Life’s from 184% to 222%.
Compare the early guaranteed surrender values and death benefit provisions
Assuming the tax-deductible annuity is contributed from age 45 for 10 years, and is planned to be received from age 65 to 85, if an unforeseen event occurs before the annuity is paid out and the policyholder needs cash and surrenders early, how much can be retrieved?
Comparing 3 products (see Table 3), if contributions finish at age 55 and the policy is surrendered immediately, the policyholder is guaranteed to get back 84% to 90% of the premiums paid. If surrendered at age 65, all products guarantee breakeven, with Sun Life guaranteeing a return of 138% of premiums paid.
Table 3: Comparison of early guaranteed surrender values and death benefits of tax-deductible annuities
| 10Life comparison of tax-deductible annuities | Early guaranteed surrender value as % of premiums paid | Early guaranteed death benefit as % of premiums paid | ||
| At age 55 | At age 65 | At age 55 | At age 65 | |
| Sun Life永明豐碩 延期年金計劃 | 90% | 138% | 100% | 138% |
| 宏利歲稅樂享 延期年金 | 84% | 106% | 100% | 106% |
| 安盛「賞精彩」 延期年金計劃 | 90% | 108% | 101% | 108% |
Note: 1. The premium data above are updated to 10 October 2024 and do not include the premium levy charged by the Insurance Authority. | ||||
As for the policy's early guaranteed death benefit, if the insured unfortunately dies at age 55 (the 10th policy year), the beneficiary will receive at least a guaranteed death benefit equal to 100% to 101% of premiums paid. If death occurs at age 65 (the 20th policy year), Sun Life guarantees a death benefit of up to 138% of premiums paid.
In summary, for policyholders seeking a stable retirement, when choosing a tax-deductible annuity it is most important to pay attention to whether the guaranteed returns are competitive; you should also compare early surrender or death provisions. For a detailed comparison of the above tax-deductible annuity products, you can visit 10Life's Product Decoder.
Note:
1. This article was prepared by 10Life using market information collected from various sources for general reference only. It does not consider any individual needs or suitability and should not be regarded as sales advice. Before purchasing, consult a licensed insurance adviser to discuss the insurance solution that suits you, and rely on information provided by the insurance company.
2. The premium data above are updated to 10 October 2024 and do not include the premium levy charged by the Insurance Authority.
3. Last updated: 25 October 2024.
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.
Last updated: 2 Feb 2026
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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10Life Product Comparison and 10Life Insurance Ratings are developed by 10Life Financial Limited, an authorised insurance broker company licensed with the Insurance Authority under License Number FB1526. 10Life Product Comparison and 10Life Insurance Ratings are developed for generic customer segments using mathematical calculations based on product information, facts and data, and are not influenced by any partnerships with or fees received from insurance companies. Any information on 10Life Platform ("10Life Information"), including but not limited to Product Comparison, Product Ratings, Blog Articles are intended for general education purpose and reference only. None of the 10Life Information is intended, nor should they be considered or relied upon, as regulated advice, insurance, financial, investment or professional advice, recommendation, approval, endorsement, invitation or solicitation in respect of any insurance, financial or investment products. 10Life Information does not take into account your individual needs. Reading 10Life Information should not be considered as conducting a suitability assessment, and is not sufficient to form the basis of any decisions to purchase any insurance products. You should rely on information authorised by insurance companies, carry out your own research and/or seek independent advice from licensed intermediaries before purchasing any insurance products or making any insurance decisions. While reasonable effort is used when collecting, validating and updating 10Life Information from various channels, none of 10Life Group and its subsidiaries, affiliates, agents, directors, officers and employees will be responsible for any liability, claim or loss arising from or associated with you using 10Life Information. No warranty, representation or guarantee is given by 10Life Group and its subsidiaries on the accuracy, completeness and timeliness of the information. If you have any questions on 10Life Product Comparison and 10Life Insurance Ratings, please email us at enquiries@10life.com
