People often say Hong Kong people have insufficient life cover. Do you know how much cover you need?

In recent years, the COVID-19 pandemic has ravaged the world, raising global awareness of risk. The general public has become particularly concerned about health and death protection. However, whole life insurance plans currently popular in the Hong Kong market remain primarily savings-oriented, with less emphasis on death protection. This is a cause for concern.

 

A research report by the Insurance Authority (the “IA”) shows that Hong Kong’s overall death protection gap is approximately HK$6.9 trillion, equivalent to a protection gap of up to HK$1.9 million per member of the working population. As a young family breadwinner, you may consider purchasing whole life insurance with a higher early death benefit multiple. Compared with other financial planning tools, such as savings-oriented whole life insurance, this can more effectively fill the protection gap.

 

 

Different stages of life require different types of protection. During the stage of building a career, the head of a household must care for his parents, spouse and children, while also making mortgage payments, preparing an education fund and even planning for unexpected medical expenses. If he were unfortunately to pass away, could his parents, spouse and children manage their living expenses independently? Would the property mortgage create an additional financial burden for them?

 

There are currently various tools for calculating the death protection gap (Note 1). These mainly review your income and the expenses required to support your family members, including your parents, spouse and children, while also taking into account factors such as personal liabilities, including mortgages, and savings. The tools then assume a scenario in which you unfortunately pass away and calculate the amount your family would need to maintain their existing standard of living.

 

After learning about their death protection gap using these tools, the head of a household may consider choosing whole life insurance with strong protection features. The CoverU Whole Life Insurance Plan (the “BOC Life Whole Life Plan”), underwritten by Bank of China Group Life Assurance Company Limited (“BOC Life”), offers a premium payment period of either 10 or 20 years. Premiums can be paid in instalments, while the plan caters for protection needs at important stages of life. In particular, it provides enhanced life protection at age 60 or below, with a guaranteed death benefit (Note 2) of up to 300% of the sum assured at the time of the insured’s death.

 

 

 

 

Take Sam, a 35-year-old non-smoking male who is at the stage of building his career, as an example. He is a bank manager and has a happy family of four. As the family breadwinner, he wants to create a stable and worry-free future for his wife and children. He therefore takes out the BOC Life Whole Life Plan, paying annual premiums of US$5,000 (approximately HK$39,000) (Note 7) over a 20-year payment period, with a sum assured of approximately US$150,000 (approximately HK$1.17 million).

 

If Sam unfortunately passes away at age 60 or below, the guaranteed death benefit (Note 2) under the BOC Life Whole Life Plan would be US$450,000 (approximately HK$3.51 million), representing 300% of the sum assured at the time of death.

 

If Sam passes away during the first policy year, based on the annual premium of US$5,000, the benefit multiple would be close to 90 times the total premiums paid. If he unfortunately passes away at age 40, during the fifth policy year, the benefit multiple would be close to 18 times the total premiums paid, as US$25,000 in premiums would have been paid.

 

 

If the insured unfortunately dies as a result of an accident during the first three policy years, or on or before the day on which the insured reaches age 60 or the policy anniversary immediately following that day, whichever is earlier, the BOC Life Whole Life Plan will pay an additional accidental death benefit (Note 3) equivalent to 30% of the sum assured at the time of the insured’s death.

 

 

In addition to placing importance on death benefits, the BOC Life Whole Life Plan can also accumulate wealth and provide stable returns, including guaranteed cash value, annual dividends and terminal dividends (Note 4). When Sam’s responsibility for supporting his wife and children has eased and his children have become financially independent, he can look forward to the harvest period of retirement.

 

Sam has two options for using this policy to enjoy life. First, he may consider surrendering the policy and withdrawing the full amount (Note 5). Alternatively, he may apply for a policy reverse mortgage plan (Note 6), converting the policy into a source of cash flow. Of course, Sam may also consider leaving the death benefit to his two beloved children when he passes away.

 

 

For the well-being of his family, in addition to taking out life insurance as a precaution, the head of a household must maintain good health in order to be his family’s world champion. Through insurtech, BOC Life and its partners have created the Live Young rewards programme (Notes 9 and 10), creating a new health ecosystem and encouraging users to establish healthy lifestyle habits to reduce their biological age.

 

The innovation of Live Young lies in the exclusive introduction of the five principles of the “Biological Age Model (BAM)”: steps, active calories, BMI, resting heart rate and sleep duration. Combined with innovative algorithms, the programme synchronises daily activity data in real time and calculates each day how much younger the user’s biological age is than their actual age as a result of healthy lifestyle habits.

 

 

 

 

 

The Live Young rewards programme’s mobile application (App) does more than record healthy lifestyles. Each day, the “age reduction results” are automatically converted into points (“Daily Age Reduction Rewards”), which can be used to redeem electronic shopping vouchers from major partner merchants, including Watsons, PARKnSHOP, FoodPanda and HKTVmall, or donated to charity (Notes 9 and 10).

 

 

 

 

 

 

 

 

Live Young combines gamification, a platform, public welfare and social elements, encouraging users to adopt a healthy, age-reducing lifestyle together with their families. Everyone can currently download and activate the Live Young rewards programme and register as a member free of charge (Notes 9 and 10).

 

BOC Life policyholders, including policyholders of the BOC Life Whole Life Plan, can automatically become premium members and enjoy all the functions of the Live Young rewards programme, including the “Daily Age Reduction Rewards”, which have no expiry date (Notes 9 and 10).

 

As a final reminder, from now until 30 June 2022, successful applicants for the BOC Life Whole Life Plan can enjoy an 8.33% discount on first-year premiums. Please refer to the product webpage for details. The offer is subject to the terms and conditions.

 

1. Such as the IA’s Death Risk Protection Assessment Tool.

2. The death benefit is equal to the sum assured on the date of the insured’s death, plus any additional death benefit, if applicable, any accumulated annual dividends and interest, and any terminal dividend, less all amounts owing under the policy and any outstanding premiums due, if applicable. Please refer to the policy documents and terms issued by BOC Life for details.

3. The additional accidental death benefit only applies to insured persons aged 18 to 60 at entry. The accident must be the direct, sole and only cause of death and must result in death within 180 days of the accident and before the policy’s coverage terminates. If the insured is covered under more than one policy of this plan, the aggregate additional accidental death benefit under all such policies is limited to Renminbi 300,000 / Hong Kong dollars 300,000 / US dollars 37,500 per insured person. BOC Life will pay this maximum aggregate benefit only once in respect of all such policies. Please refer to the policy documents and terms issued by BOC Life for details.

4. The BOC Life Whole Life Plan is a participating policy. Annual dividends, if any, and the accumulation rate, as well as terminal dividends, if any, are not guaranteed and may be adjusted from time to time. Past performance is not an indicator of future performance. The actual amount payable may be higher or lower than illustrated, and BOC Life reserves the right to make changes at any time. If the policyowner chooses to withdraw annual dividends, if any, and/or accumulated interest, if any, the withdrawn annual dividends and/or accumulated interest will no longer form part of the total cash value and total death benefit of the policy, and the total cash value, surrender value and total death benefit will be reduced accordingly. Annual dividends, if any, for the first policy anniversary will begin to be paid after the premiums for the second policy year have been paid in full. Terminal dividends, if any, may be paid upon surrender on or after the tenth policy anniversary or upon the insured’s unfortunate death.

5. If the policy is surrendered early, the cash value payable to the policyowner may be lower than the premiums paid. The surrender value is equal to the guaranteed cash value plus any accumulated dividends and any applicable terminal dividend, less any amounts owing.

6. The BOC Life Whole Life Plan is an eligible life insurance plan under the policy reverse mortgage programme, applicable only to policies denominated in Hong Kong dollars and US dollars. This does not mean that an application submitted under the policy reverse mortgage programme will be approved. Eligibility is based on the product features. Therefore, when applying for a policy reverse mortgage loan, both you and your policy must continue to meet all eligibility requirements of the policy reverse mortgage programme. BOC Life is not responsible for determining whether a policyowner is suitable or eligible to apply for the policy reverse mortgage programme. If you have any questions, you should seek advice from professional advisers. The policy reverse mortgage programme is operated by HKMC Insurance Limited, a wholly owned subsidiary of The Hong Kong Mortgage Corporation Limited. For details of the policy reverse mortgage programme, please refer to the website of The Hong Kong Mortgage Corporation Limited.

7. The above premiums do not include the premium levy charged by the IA. The actual premium amount is determined at the discretion of Bank of China Group Life Assurance Company Limited.

8. The above information is provided by BOC Life and updated as at 29 April 2022. It is for reference only and does not constitute an offer to sell. The product information does not contain all the benefits and features of the insurance product. The designated insurance plan is subject to its policy terms. For product features, contents, terms, conditions and exclusions, please visit the BOC Life website and refer to the relevant product brochure and policy terms.

9. The “Live Young” rewards programme is exclusively provided and managed for members of the “Live Young” rewards programme by ReMark, an insurtech company under the French reinsurance group SCOR.

10. For details of the “Live Young” membership, rewards programme, activities, points rewards, terms and conditions and other information, please refer to the latest announcements on the official “Live Young” website at www.boclife.com.hk/tc/liveyoung.