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Insurance plans with savings element FAQ

1. What is insurance plan with savings element

An insurance plan with savings element is a life insurance product with a savings component. It generally emphasizes savings more than life protection. In the earlier policy years, the death benefit is usually just equivalent to the premiums paid. Some of these plans are participating policies. In addition to death benefits, it allows policyholders to withdraw cash value, such as non-guaranteed annual dividends and non-guaranteed terminal dividends, during the coverage period or upon maturity subject to policy terms and condition. This enables you to achieve your savings goals with a single policy while enjoying life protection.

2. What are the factors that should be considered when comparing against different insurance plans with savings element?

You may compare the following factors from different plans according to your own needs when choosing an insurance plan with savings element.

• Premium payment period and its risks
  Understanding the premium payment period is crucial when comparing insurance plans with savings element. Many insurances with savings element policies on the market offer short term to long term premium payment periods, such as 3, 5, or 10 years etc.
  Generally, insurance policies with savings element lock and levelized the premium rate during the premium payment period. If the policyholder is unable to pay the premium on schedule resulting in policy termination (commonly known as "policy lapse"), the policy cash value is typically lower than the premiums paid, resulting in significant financial loss.
  Therefore, before choosing long-term or short-term insurance plans with savings element, it is important to consider whether you have sufficient liquidity to cover future premium.
• Potential Returns
  The returns of insurance plans with savings element can be divided into guaranteed amount and non-guaranteed amount. Some insurance policies with savings element are participating policies, allowing policyholders to receive non-guaranteed dividends distributed by the insurance company, which directly affects the cash value of your policy.

3. What is the difference between "Guaranteed Return" and "Total Return"?

• "Guaranteed Return" refers to the return committed by the insurance company for policies with savings component when the policy being effective. This means that regardless of market conditions, the policyholder can receive a guaranteed cash value as a return. Insurance plan with savings element with higher portion of guaranteed return offers a relatively more stable return.

• "Total Return" includes both guaranteed and non-guaranteed return. “Non-guaranteed return” is not assured and depends on the investment portfolio chosen by the insurance company for the policy. This return can be subjected to fluctuations and uncertainties depending on market performance, potentially being higher or lower than expected.

4. What is the cash value of a policy?

The cash value of an insurance plan with savings element refers to the accumulated cash value that the policyholder can receive while the policy is effective, which includes the guaranteed amount and/or non-guaranteed amount. The policy cash value will be the amount that the policyholders or beneficiaries can receive upon maturity, surrender, or in the event of death.

The cash value of a policy is determined based on the calculation method designated by the insurance company, which includes deductions for the cost of insurance and investment returns etc. The cash value can fluctuate over the duration of the policy.

The surrender value refers to the amount that policyholder can receive from the insurance company if they terminate the insurance contract before the policy mature. This amount is usually the cash value minus any applicable surrender fees. The surrender value can be influenced by various factors, such as costs incurred from surrendering the policy before maturity, varying according to the insurance company's rules and the policy terms and conditions.

The content above is provided for general information purposes only and does not take account of your individual needs and circumstances. It should not be construed as an insurance advice and does not constitute any offer or any solicitation to offer or a recommendation of any insurance product(s). You should read the related product information on our website to understand the nature, features, risks and exclusions of the product(s) and determine if the above product(s) meets your needs and circumstances before proceeding with the application.