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Life Insurance
Explore life insurance in Hong Kong with LFSINSURANCE. As a trusted broker, we specialize in providing tailored policies that offer comprehensive protection for you and your loved ones, ensuring financial security and peace of mind in the face of life’s uncertainties.
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What is it?
life insurance Hong Kong pays out a lump-sum payment as a death benefit to your beneficiaries in the event of your death as the life insured.
There are two common types of Life Insurance:
Term Life Insurance is a pure protection product, and as such, there is no cash value/ investment element in the plan. The sum assured/ death benefit is paid out in the event of the insured’s death if it occurs within the policy’s term. You set the term and cover at the outset, and if you survive to the end of the policy’s term, the premium and cover cease without value.
This is the most straightforward and inexpensive form of Life Insurance.
Whole Life Insurance is permanent, and part of the premium funds the life protection benefit, while a portion funds a cash value build-up over time. As with term life insurance, it also pays out the death benefit to your named beneficiaries.
The premium is higher than a term life insurance policy, but whole life insurance is better suited for those who may need access to savings and as a legacy planning tool for future generations.
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Who should consider it?
Many people only start thinking about coverage when they have responsibilities, such as a family or a mortgage, to fund.
However, it would help if you considered the following:
As you get older, coverage will be more expensive.
You cannot guarantee your health – an adverse medical history could present problems with insurability.
You are almost certainly going to need cover at some point.
Financial burden left on your dependants
The time to protect yourself and your loved ones is always now.
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Cover levels
Cover levels depend on individual circumstances. The two main types of life insurance have different sub-categories that can be tailored to your needs.
For example, you can tailor your life insurance to match the outstanding mortgage on your property or properties. This can be done with a level-term (life assurance) policy in which the payout is fixed. Or you can place a decreasing term policy, in which the amount of cover decreases over time in line with the outstanding balance on a standard repayment mortgage.
Other important questions to consider:
Any death tax/ inheritance tax liability
Number and age of children
Education needs of children
Are you the primary breadwinner
Legacy (nest egg needs)
Outstanding loans or debts
Existing life insurance or investments that would pay out in the event of your death
| Current annual income |
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| Do you have minor children? |
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| Any debts, such as mortgage? | |
| Recommended Life Insurance Cover |
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How much does it cost in Hong Kong?
Life Insurance premiums are calculated on an annual basis. The below are premium prices for the year 2024, prepared for non-smoker policyholders, with a US$1m sum assured:
man
30 years old, term of 30 years = US$1,170 annually
40 years old, term of 20 years = US$1,430 annually
50 years old, term of 10 years = US$2,070 annually
woman
30 years old, term of 30 years = US$990 annually
40 years old, term of 20 years = US$1,160 annually
50 years old, term of 10 years = US$1,600 annually
Case Study
As much as we all like to think that “it’ll never happen to me,” the reality is that the future is uncertain. It’s important to consider how your family would cope financially in the event of your sudden death or a serious illness.
Consider the Implications for Your Family:
- Financial Dependence: If your spouse relies on your income, how would they manage financially if you were to fall seriously ill or die?
- Children’s Future: If you have children, would they be able to complete their education if your earnings were no longer available?
A Tale of Two Scenarios: The Importance of Life Insurance
The Smith Family
Tom Smith, 45 years old, British, lives in Hong Kong with wife Anne and two children.
Tom’s financial situation:
Annual salary: USD 250,000
Liabilities Rent: USD 60,000 p.a.
Tuition fees: USD 32,000 p.a.
Family expenses: USD 90,000 p.a.
Savings USD 68,000
Let’s consider an imaginary scenario, in which, unexpectedly, Tom passes away for a heart stroke at age 45 and leaves his family behind.
Without Life Insurance:
Tom’s unexpected death was a challenging time for his wife Anne and their children. On top of grieving her loss, Ann was burdened with financial worries. She covered the funeral costs and day-to-day expenses from the savings Tom had left, but the long-term financial strain – continuing the children’s education, paying rent, and maintaining their standard of living – weighed heavily on her shoulders. Eventually, the high cost of living in Hong Kong became unmanageable, and Anne decided to move back to their home country to seek support from extended family.
With Life Insurance:
Tom’s death was an equally difficult time for Anne and the children. However, thanks to careful insurance planning, their emotional struggles were not exacerbated by financial difficulties. Tom’s life insurance policy paid out a lump sum, which helped Anne cover rent, school fees, and plan for the children’s future education and her retirement. She was able to manage the family’s finances without urgently needing assistance from extended family and maintained the standard of living that Tom had worked hard to provide. Recognising the security that Tom’s life insurance brought to their family, Anne now has her own Life and Critical Illness insurance policy to ensure her children are protected in the event of her death or serious illness.
The Crucial Importance of Life Insurance
The importance of having a life insurance policy cannot be overstated. Your loved ones will be grateful that you took out a Life and Critical Illness insurance policy, which ensures they can continue living their lives even when you’re not there to share it with them.
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