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Long-term savings insurance comparison! AIA, AXA, Manulife and Prudential products may differ by 60% in expected returns over 30 years.
Many long-term savings insurance products currently available in the market allow premiums to be paid in a lump sum, including single-premium and prepayment arrangements, for long-term savings of up to 20 or even 30 years or more. They may appeal to people with spare funds or those dissatisfied with low bank interest rates. This time, 10Life compares the key long-term savings products offered by four major insurance companies—AIA, AXA, ManulifeManulife and Prudential. Which “seed” can grow into a tree bearing the highest returns?
Hong Kong people often unexpectedly receive a lump sum of money—perhaps from a family inheritance or the proceeds from selling a property. They may consider long-term investments, such as long-term savings insurance paid for with a single premium. These products are generally regarded as suitable for people with specific long-term financial goals, such as funding their children’s future education, retirement planning or even passing assets on to the next generation.
This time, 10Life compares AIA’s Bonus Power Vantage (referred to as AIA Abundant Future), AXA’s Wealth Ultra Savings Plan (2-year payment term) (referred to as AXA Prosperity Advance), ManulifeManulifeManuGrand Saver 2 (referred to as Manulife Abundant Honour) and Prudential’s Evergreen Growth Saver PlusII (referred to as Prudential Evergreen Growth), based on three key factors: the expected return rate under the basic scenario, the expected return rate under the pessimistic scenario and the bonus philosophy.
Overall, all four products require a lump-sum payment—apart from AXA Prosperity Advance, for which the second-year premium is prepaid in the first year, the other insurance products are paid for by means of a single premium.
1.Comparison of expected returns under the basic scenario: the best and worst differ by nearly 60%
Expected returns are an important consideration for long-term savings insurance. Using a total single premium of US$125,000 as an example (assuming US$1 equals HK$8, equivalent to HK$1 million), 10Life compares the expected return rates of the four products over different policy terms under the basic scenario.
After 20 years, policyholders of AXA Prosperity Advance are expected to receive HK$2.734 million, including principal and interest, representing an expected internal rate of return (IRR) of 5.16%, the highest among the four insurance products. The expected amount for Manulife Abundant Honour is HK$2.309 million, more than HK$400,000 lower than AXA Prosperity Advance, with an expected IRR of 4.27%.
The difference in expected returns becomes even more apparent after 30 years. Among the four products, AXA Prosperity Advance is expected to provide HK$5.893 million, including principal and interest, after 30 years, with an expected IRR of 6.09%; Manulife Abundant Honour is expected to provide only HK$3.781 million—a difference of as much as HK$2.11 million, or nearly 56%!
Figure 1: Comparison of expected returns of the four insurance products under the basic scenario (assuming a single premium of HK$1 million)
Notes:
1. The above information was provided by 10Life and updated as at 30 September 2021. It is for reference only and does not constitute sales advice;
2. The insurance products are listed in alphabetical order according to the English names of the insurance companies;
3. The basic scenario refers to calculating the expected policy value based on investment returns assumed under current investment return assumptions;
4. Insurance levies have not been taken into account.
5. The figures for AXA Prosperity Advance do not include the accumulated interest on prepaid premiums in the premium reserve account.
2.Expected returns under the pessimistic scenario: the difference is close to 33%
Some policyholders may be concerned that the returns of these insurance products may not be as attractive as expected if market conditions deteriorate. We can compare the expected return rates of the four products under the pessimistic scenario to assess which product has greater “resilience” when investment returns are lower than assumed.
Again using a total single premium of US$125,000 (HK$1 million) as an example, after 20 years, AXA Prosperity Advance is expected to provide HK$1.847 million, including principal and interest, under the pessimistic scenario.
After 30 years, Prudential Evergreen Growth demonstrates the greatest resilience, with an expected amount of HK$3.171 million, including principal and interest, followed by AXA Prosperity Advance (HK$2.946 million), Manulife Abundant Honour (HK$2.635 million) and AIA Abundant Future (HK$2.385 million). The difference between the highest and lowest amounts is HK$786,000, or approximately 33%.
Figure 2: Comparison of expected returns of the four insurance products under the pessimistic scenario (assuming a single premium of HK$1 million)
Notes:
1. The above information was provided by 10Life and updated as at 30 September 2021. It is for reference only and does not constitute sales advice;
2. The insurance products are listed in alphabetical order according to the English names of the insurance companies;
3. The pessimistic scenario refers to calculating the expected policy value based on investment returns lower than current investment return assumptions;
4. Insurance levies have not been taken into account.
5. The figures for AXA Prosperity Advance do not include the accumulated interest on prepaid premiums in the premium reserve account.
3.Bonus philosophy: Prudential and AXA offer greater transparency
Insurance companies pool policyholders’ premiums into a participating fund to generate investment returns, deduct investment losses and claims, and take factors such as the renewal rate into account. The remaining profits are distributed to policyholders.
Insurance companies differ in the quality of their disclosure and transparency regarding their bonus philosophy. Prudential Evergreen Growth clearly states that, as a matter of policy, it will distribute 90% or more of the distributable profits to policyholders, while the remaining 10% or less is retained by the insurance company. AXA Prosperity Advance likewise clearly discloses its bonus policy, with the relevant bonus allocation being 90% and 10%.
A transparent bonus policy is fairer to policyholders. AIA Abundant Future and Manulife Abundant Honour do not specify the proportion of distributable profits, resulting in relatively lower transparency.
Table 3: Disclosure of distributable profits by insurance companies under their bonus philosophies
| Insurance product | Allocated to policyholders | Allocated to insurance company |
| AIA Bonus Power Vantage | Not specified | Not specified |
| AXA Wealth Ultra Savings Plan (prepayment) | 90% | 10% |
| Manulife ManuGrand Saver | Not specified | Not specified |
| Prudential Evergreen Growth Saver PlusII | At least 90% | Up to 10% |
| Notes: 1. The above information was provided by 10Life and updated as at 30 September 2021. It is for reference only and does not constitute sales advice; 2. The insurance products are listed in alphabetical order according to the English names of the insurance companies; | ||
Aggressive long-term savings insurance products tend to place greater emphasis on total returns. Policyholders should assess them based on the expected return rates under both the basic and pessimistic scenarios. They should also pay attention to whether the product’s bonus policy is transparent and fair.
There are also other long-term savings insurance products on the market that place greater emphasis on guaranteed returns, which is another important factor for policyholders to consider before taking out a policy. 10Life will conduct a detailed analysis and comparison of this factor in the future.
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.
Oscar
Content Team
身為10Life編輯團隊的一員，主力研究各種保險產品比較、拆解保單條款及索償細節，並與10Life持牌顧問緊密合作，致力將複雜術語轉化為易明分析，讓大眾更了解各種保險產品。
Oscar
Content Team
身為10Life編輯團隊的一員，主力研究各種保險產品比較、拆解保單條款及索償細節，並與10Life持牌顧問緊密合作，致力將複雜術語轉化為易明分析，讓大眾更了解各種保險產品。
Disclaimer
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
