Savings Insurance Comparison

In Hong Kong, terms such as “savings insurance”, “savings plan” and “savings life insurance” are often used to describe similar products — life insurance policies with a savings element.
The terminology may differ between banks and insurers, but the basic structure is similar: you pay premiums, the insurer manages the assets, and the savings insurance plan builds guaranteed and/or non-guaranteed cash value while providing life protection.

It depends on your needs.

If you want to set aside money for several years and prefer a guaranteed component, a guaranteed savings insurance plan may be worth considering.

If your priority is higher return potential and you are comfortable with market volatility, other investment options may be more suitable.

The key is to balance risk, return and liquidity. You should also keep enough cash for emergencies to avoid having to surrender the policy early and potentially make a loss. You can also review what to consider before buying savings insurance.

The key consideration is when you expect to need the money.

If you may need it within five years, short-term savings insurance may offer more flexibility. For goals that are 10 years or more away — such as overseas education, retirement or wealth transfer — a long-term savings insurance plan gives your money more time to grow through compounding and non-guaranteed bonuses.

IRR reflects both the amount and timing of your premium payments and returns.

When comparing savings insurance plans, use the same policy currency and the same target year. Comparing a USD policy directly with an HKD policy, or a 5-year IRR with a 20-year IRR, would not be a like-for-like comparison.

It varies significantly by product.

Some short-term savings insurance plans may break even within one to two years, while long-term policies can take more than 10 years.

Before buying a plan, check its guaranteed and non-guaranteed cash values at the point when you are likely to need the money.

Yes. During the early policy years, the surrender value may be significantly lower than the total premiums paid.

Some insurance savings plans can therefore result in a substantial loss if surrendered very early. Consider your cash flow and short-term liquidity needs before committing to a policy.

Fixed deposits generally have shorter terms, often from one month to 12 months. Early withdrawal usually means losing interest rather than principal.

Higher deposit rates may also come with conditions such as new-fund or new-customer requirements, and the rate available when the deposit matures may change.

Short-term savings insurance can lock in returns for several years and usually includes life protection, but early surrender may result in a loss of principal. Which is more suitable depends on your time horizon, liquidity needs and return expectations.

Savings insurance is mainly designed to build up wealth over time. You may access the policy value at maturity, at a chosen target year or through withdrawals.

An annuity is mainly designed to provide regular income, usually from a specified age for a fixed period or for life.

In simple terms, saving insurance focuses more on accumulation, while an annuity focuses on regular income. The two can also be used together for retirement planning.

Standard savings insurance is generally not tax-deductible in Hong Kong.
Only qualifying products, such as Qualifying Deferred Annuity Policies (QDAP) and eligible Voluntary Health Insurance Scheme (VHIS) policies, may qualify for tax deductions under the applicable tax rules.

A long-term savings insurance plan often includes non-guaranteed bonuses as part of its projected return.

The actual amount paid may vary depending on the insurer’s investment performance, bonus policy and market conditions. Projected returns are therefore estimates, not guaranteed outcomes.

You can also review the insurer’s dividend fulfilment ratio to see how its actual non-guaranteed dividend or bonus payments have compared with previous illustrations.