- QDAP (Savings), focusing on the return of savings in the medium term (annuity income starts earlier than the general retirement age)
- QDAP (Retirement), focusing on mid- to long-term retirement planning (annuity income starts at retirement age. 10 or 20 years of income period can be selected)
- QDAP (Longevity), focusing on hedging longevity risk (annuity income starts at retirement age, annuity income for as long as possible)
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The structure of annuity products is complex, making it difficult for consumers to compare. 10Life actuaries set QDAP rating standards based on target segment, of making it easier to understand the QDAP scores for medium-term savings, retirement planning or hedging longevity risks. The 10Life scoring methodology considers different factors including guaranteed returns, projected returns, early surrender coverage and early death coverage. 10Life’s scoring methodology is transparent and open. You may find the detailed assumptions and scoring factors on the 10Life website.
- Minimum total premium of HK$180,000 and minimum premium payment period of 5 years
- Minimum annuity period of 10 years
- Annuity income to start at the age of 50 or above
- Disclosure of minimum to maximum Internal Rate of Return (IRR) of the product
- Clear presentation of the guaranteed and non-guaranteed annuity payment
- Clear separation of premium of all riders (e.g. critical illness, hospitalisation cash, etc.) from the QDAP premium
You may find the full details from GL19: Guideline on Qualifying Deferred Annuity Policy issued by IA.
- Understand the policy structure
- Assess your personal needs
- Compare internal rates of return
- Look at the fulfillment ratio
- Pay attention to the surrender value
*For further details, please visit the Insurance Authority website.
QDAP will accumulate the policyholder’s savings and convert into a stable income in the future. 10Life compares the returns of annuity products using Internal Rate of Return (IRR). Simply put, IRR can be understood as the annualised rate of return on investment.
According to the Insurance Authority, all QDAP product brochures must use a 45-year-old non-smoking male policyholder as an example to disclose the product IRRs. In addition, consumers can refer to the product brochure to understand the IRRs of the product under different payment periods, annuity start age and income periods.
IRRs can be guaranteed or projected. The guaranteed IRR is the return contractually guaranteed by the insurance company to the policyholder, while the projected IRR includes guaranteed and non-guaranteed returns. Non-guaranteed returns are affected by multiple factors such as the insurance company’s investment performance, profit sharing policy and the general economic environment, hence it is difficult to predict.
