Compare the maturity returns of eight tax-deductible annuity products; the gap may be about 45%. Shop around before taking out cover.

Eligible Deferred Annuity Policy (QDAP, commonly known as a “tax-deductible annuity”) is one of the few financial products currently available to working people in Hong Kong that can offer both tax benefits and long-term returns. 10Life, a one-stop insurance comparison platform, has released its latest market survey comparing the internal rate of return (IRR, an indicator that reflects the average annual return) of eight popular tax-deductible annuity products in Hong Kong¹.

The survey found that, assuming a total premium payment of HK$300,000 by the policyholder², even after taking premium discounts and tax deductions into account, the difference in maturity returns between products remains significant. The gap between the highest and lowest guaranteed returns can be as much as HK$218,530, meaning the highest return is around 45% higher than the lowest. 10Life reminds consumers that, while making the most of tax-saving opportunities, they must choose products carefully in line with their personal financial goals. 

The 10Life actuarial team compared the performance of eight popular products, listed in alphabetical order, including AIA, AXA Hong Kong and Macau, BOC Life, China Taiping, Chubb Life, Generali, Prudential and Sun Life. We also assumed that the policyholder was aged 45, with a premium payment term of 5 years, a total premium of HK$300,000, and that annuity payments would commence from age 65 for a period of 10 years.

As at the publication date, insurers were offering premium discounts or cashback promotions at varying levels³. However, 10Life emphasises that while premium discounts can reduce the actual premium cost, the product’s underlying return structure is the key determinant of long-term performance. All return figures in this survey fully reflect the effect of premium discounts and tax deductions calculated at the highest tax rate of 17%, in order to present the most comprehensive returns.

In terms of maturity returns, the best-performing guaranteed return product was BOC Life, with a guaranteed IRR of 4.3% and a total guaranteed maturity income of HK$709,130^2,4,5  By comparison, the product with the lowest guaranteed return had a guaranteed IRR of only 2.5%, with a cumulative income of HK$490,600, a difference of HK$218,530 between the two. (See Table 1)

When non-guaranteed bonuses are included, the best-performing projected return product was Chubb Life, with a projected IRR of 5.2% and a projected total maturity income of up to HK$903,950^1,2,4,5; the product with the lowest projected return was HK$709,130, a difference of HK$194,820.

Tax-deductible annuities are medium- to long-term financial planning tools, and the best returns can only be achieved by holding them to maturity. However, with Hong Kong’s unemployment rate rising to 3.9% — a more than two-year high⁶ — and the economic outlook remaining uncertain, policyholders should assess their liquidity needs more carefully before taking out a policy, ensure they have sufficient emergency funds, and avoid being forced to surrender early and incur losses due to unexpected financial pressure.

The survey shows that if a policyholder surrenders in Year 5 (i.e. at the end of the premium payment period), some products are still in loss-making territory, but BOC Life performs the best. After accounting for tax deductions, both the guaranteed and projected IRR in Year 5 reach 4.1%, allowing guaranteed breakeven to be achieved relatively quickly. If held until Year 8, returns across all products begin to recover. At this stage, Chubb Life performs the best, with a guaranteed IRR of 4.6% in Year 8 and a projected IRR of 5.7%.

10Life stresses that the returns from early surrender are far lower than those from holding to maturity, effectively giving up most of the potential long-term annuity income. Policyholders should follow the principle of “affordable to pay, able to hold”, ensuring that premium payments do not place pressure on everyday living expenses. 

Policyholders may deduct up to HKD 60,000 of assessable income each year. Calculated at the highest tax rate of 17%, this can save up to HKD 10,200 in tax annually⁷. The tax-saving feature of tax-deductible annuities directly enhances the product’s return, and, together with premium discount offers provided by insurers, the actual entry cost can be further reduced. 

1. Choosing the right product matters more than rushing to meet a deadline: for the same HK$300,000 in premiums, the maturity payout can differ by as much as HK$210,000. However, do not make a hasty decision simply because the tax season deadline of 31 March is approaching.
2. Clarify the purpose of cover and assess liquidity: before taking out a policy, pay attention to the product’s “guaranteed breakeven period” to ensure you have sufficient emergency funds and avoid losses from early surrender. For long-term retirement planning, the focus should be on cumulative maturity income and the guaranteed return ratio.
3. Place importance on the guaranteed component: as a retirement planning tool, products with a high guaranteed proportion can provide more stable and reliable long-term income.

For more details, please visit 10Life Tax-Deductible Annuity Comparison Page, or you may also speak to a 10Life insurance consultant to learn more.

Notes

1. Expected returns include non-guaranteed components, such as bonuses. The actual amount paid may be higher or lower than expected, depending on the insurer’s investment performance and bonus policy. Guaranteed returns are not affected by the above factors.  
2. Assumptions: the policyholder is a 45-year-old non-smoking male, with a 5-year premium payment term and total premiums after discount of HKD 300,000 (converted on the basis of a USD-denominated policy), excluding the premium levy. The scenario assumes annuity income is received from age 65 for 10 years. Early surrender returns reflect the policy’s guaranteed/non-guaranteed cash value and have deducted any applicable surrender charges, if any.  
3. The insurer reserves the right to change the discount offer without notice. Discount information is sourced from the respective insurers’ official websites, as at 16 March 2026.  
4. All internal rates of return (IRR) and return amounts in this survey have taken into account: (a) the premium discount offers listed on the insurers’ official websites at the time of publication (if any); and (b) the tax savings arising from the policyholder being assessed at the highest tax band of 17% (i.e. the tax savings corresponding to the annual maximum deduction of $60,000 of assessable income). Minor discrepancies may arise after conversion; this is for reference only and the insurers’ information shall prevail. Return amounts are rounded to the nearest ten.  
5. Converted into HKD on the basis of a USD-denominated policy.  
6. According to data from the Census and Statistics Department of the Hong Kong SAR Government, the seasonally adjusted unemployment rate for November 2025 to January 2026 was 3.9%, the highest level since September 2022. Source: Hong Kong SAR Government press release (20 February 2026).
7. The actual amount of tax deduction depends on the individual policyholder’s assessable income and applicable tax band. This survey is based on the highest tax band of 17%; if a policyholder falls within a lower tax band, the actual tax savings and corresponding rate of return will be lower.
8. All tables are ranked by guaranteed internal rate of return, from highest to lowest.  

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.