There are so many different types of insurance, each with different features and coverage. Using factors that matter most to the consumers, 10Life breaks down complex insurance products into scores and rankings to allow comparisons. Based on personal needs, consumers can compare the products within a particular product type.
Whole Life Savings Insurance (sometimes referred to as “Participating Whole Life Insurance”) offers both savings elements (with guaranteed and non-guaranteed returns) and life coverage (i.e. death benefit). While all products offer whole life coverage, some products have higher death coverage element, and some focus more on wealth accumulation. The premium is usually level with limited payment term. 10Life rates the products based on the guaranteed returns, projected returns and death benefit multiples.
Qualifying Deferred Annuity Policy (QDAP) satisfies the Insurance Authority (IA)’s criteria on deferred annuity products. The policyholder of QDAP can enjoy tax deductions on the premium up to a limit of HK$60,000 deductible per year. Both the product break-even year and the rate of return can be enhanced if tax savings are considered, particularly for policyholders with high marginal tax rates. 10Life rates the products based on mainly the returns, assuming the policyholder starts paying premium at age 45.
Qualifying Deferred Annuity Policy (QDAP) satisfies the Insurance Authority (IA)’s criteria on premium, payment period, annuity income period and disclosures. The policyholder of QDAP can enjoy tax deductions on the premium paid. 10Life rates the products based on mainly the returns and income period, assuming the policyholder starts paying premium at age 45 for retirement planning purpose.
Voluntary Health Insurance Scheme (VHIS) mainly covers the hospitalisation costs incurred by the insured. The VHIS policyholder can enjoy tax deductions on the premium paid. The VHIS Standard plan is based on the minimum standards prescribed by the government such that products across insurance companies have almost the same terms. The VHIS Flexi plan is built upon the Standard plan by providing higher coverage through higher benefit limits or adding supplementary major medical. Similar to the product structure of mass market medical insurance, most VHIS plans have coverage limits on certain cost categories. VHIS is annually renewable with premium based on the age of the insured, and claims are on a reimbursement basis. We compare products based on the estimated coverage ratios under various medical scenarios, where the medical expenses are adjusted according to the room type (e.g. ward, semi-private) admitted at a Hong Kong private hospital.
Medical Insurance mainly covers the hospitalisation costs incurred on a cost reimbursement basis. The policy is renewed annually with premium based on attained age of the insured. Most products have coverage limits on certain cost categories, while some products are based on “full coverage” structure. We compare the products based on the coverage ratios under different common medical scenarios, the medical expenses of which are adjusted accordingly based on the room type (ward/ semi-private room) admitted at a Hong Kong private hospital.
Medical insurance mainly covers hospitalization expenses, and the policy is renewed on an annual basis. People who prefer the best in class medical services in private hospitals can opt for private plans. Some of these plans have maximum coverage limits on certain medical expense categories, while others offer “full coverage” on individual medical expense categories with an overall annual limit. Some plans also offer a choice of geographical locations of hospitals covered, and also a choice of deductibles. 10Life compares the medical insurance products (private room) in the market based on medical coverage and auxiliary benefits.
Whole Life Critical Illness (“CI”）Insurance mainly covers life threatening diseases. Many current products cover also early stage, minor and juvenile diseases, and the coverage amount differs based on the severity of the illness. A fixed lump sum benefit is payable if the insured is diagnosed with a pre-defined illness. 10Life rates the products based on the value and terms on Cancer, Heart and Stroke benefits, as these diseases make up of over 90% of critical illness claims in Hong Kong. Based on age 35 non-smoking insured, US$150,000 basic sum assured with 20-year (or closest equivalent) premium payment term.
Term Critical Illness (“Term CI”) Insurance mainly covers life threatening diseases over a fixed time period. A fixed lump sum benefit is payable if the insured is diagnosed with a pre-defined illness. Term CI insurance products are usually with fixed premium and coverage term of 1, 5 or 10 years, mostly with guaranteed renewability up to a certain age. 10Life rates Term CI products based on the coverage under the major diseases including cancer, heart disease, stroke and other critical illnesses, and in case of death. Some products in the market cover only the top 3 critical illnesses (cancer, heart, stroke) and others cover a number of major critical illnesses.
Term Life Insurance (also known as “Pure Life Insurance”) usually has lower price (premium) and higher leverage (death benefit multiple) compared to Whole Life Insurance. A lump sum death benefit is paid to the beneficiary if the insured dies within the benefit period. The premium varies by issue age, premium term and benefit term. There are limits on the renewal age and coverage age. 10Life scores the term life products based on the coverage value, including the price and the terms.
Personal Accident Insurance provides a lump sum benefit upon accidental death and disability, while some products also cover medical cost reimbursement for hospitalisation, physiotherapy and/or bone-setting due to accidents. Premium is based on the occupation class of the insured and the policy is usually annual renewable 10Life rates the products based on the coverage value (benefit multiple) under different benefit categories, as well as the number of common high risk sports covered.
Deferred Annuity is usually for those at wealth accumulation age – premium is paid for a period of time for accumulation before annuity income starts. A deferred annuity product that satisfies the Insurance Authority (IA)’s criteria can be qualified as Qualifying Deferred Annuity Policy (QDAP). 10Life rates QDAP and other deferred annuity products here, assuming the policyholder starts paying premium at age 45 for retirement planning purpose
Immediate Annuity is designed for the pre-retirees, with the Government Annuity by HKMCA being an example. The policyholder usually pays a large sum of premium at retirement, in exchange for steady annuity income starting soon after. 10Life assumes the policyholder starts paying premium at age 65 (or nearest).