10Life QDAP (Savings) Scoring Methodology

1. Overview

Guaranteed Return

Including the guaranteed annuity income, the score is based on the guaranteed cashflows upon policy maturity or surrender at age 60.

Projected Return

Including the projected annuity income, the score is based on the projected cashflows upon policy maturity or surrender at age 60.

Early Surrender Value

Based on the guaranteed cash value received upon surrendering the policy at specified years.

Insurer Fulfilment

The score is based on the dividend fulfilment by insurers reported in 2023.

2. Score Weighting

Score	Weighting
Guaranteed Return Score	60%
Projected Return Score	15%
Early Surrender Coverage Score	20%
Insurer Fulfilment Score	5%

3. Assumptions

Age 35 and 45 male
5- to 10- year payment period
Annual contribution USD 7,800 (equivalently HKD 60,000)
Annuity commencement: age 50 / 55 / 60 / 65
Annuity period: 10 / 20 years or above 20 years

4. Guaranteed Return Score Details

Insurers are obligated to pay the guaranteed income as a living benefit to the policyholder. 10Life calculates the guaranteed cash flow by considering the premium paid and guaranteed income in the scenarios that the policy is terminated or surrendered at age 60.

10Life calculates the present value (PV) of income received versus premium paid discounted by the risk-free rates assuming the policy commences today. Risk-free rates of different currencies are determined by the long-term yields of the respective government bonds.

USD: United States Treasury Bonds
HKD: Hong Kong Exchange Fund Notes

The risk-free rates may be updated from time to time to reflect changes in the market.
The Guaranteed Return Score is calculated by the ratio of PV of income received and PV of premium paid at age 60, compared against the benchmark.

Ratio at age 60 =	PV (Guaranteed income received at age 60)	， using risk free rate as discount factor
	PV (Premium paid)

5. Projected Return Score Details

Some products offer a non-guaranteed income for the policyholder in the policy projection, which is subject to change by the insurer. 10Life calculates the projected cash flow by considering the premium paid and projected income in the scenario that the policy is terminated or surrendered at age 60.

10Life calculates the present value (PV) of income received versus premium paid discounted by the market rates assuming the policy commences today. Risk-free rates of different currencies are determined by the long-term yields of the respective government bonds.

USD: United States Treasury Bonds
HKD: Hong Kong Exchange Fund Notes

We then use the Capital Asset Pricing Model (CAPM) to derive market rates of the respective currency. The risk-free rates and market risk assumptions may be updated from time to time to reflect changes in the market.

The Projected Return Score is calculated by the ratio of PV of income received and PV of premium paid at age 60, compared against the benchmark.

Ratio at age 60 =	PV (Projected income received at age 60)	， using market rate as discount factor
	PV (Premium paid)

6. Early Surrender Coverage Score Details

While the intended use of QDAP (Savings) is not for early cash-out, there may be cases where an urgent unexpected use of cash is required after purchasing the product or tax reduction is not suitable anymore. 10Life calculates the Early Surrender Coverage Score based on the guaranteed benefit per premium paid in the following scenarios:

Issue age 35, Male
1. Surrender at the 5th policy year
2. Surrender at the 10th policy year
3. Surrender at the 15th policy year
4. Surrender at the 20th policy year

*The Early Surrender Coverage Score is based on the average of these 4 scenarios.

Issue age 45, Male
1. Surrender at the 5th policy year
2. Surrender at the 10th policy year

*The Early Surrender Coverage Score is based on the average of these 2 scenarios.

Guaranteed benefit per premium paid is calculated by the following formula.

Guaranteed benefit pre premium paid	=	(Guaranteed income received (if any) + Guaranteed cash value )
		Total premium paid

7. Insurer Fulfilment Score and Fulfilment Ratio Insurer Details

Insurer Fulfillment Score is subject to the following factors:

Average fulfilment ratio
Proportion of fulfilment ratios reaching 70%
Experience factor

Updated on 06 Jan, 2025.

Disclaimer

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