Life Insurance - HELP!

[luxeicon]

Hi! New to HK and this forum.

I am looking for some advice in relation to getting life insurance, and i will explain my circumstances below. We've met with a couple of brokers and agents and seem to be getting more and more confused (perhaps not the right word, but maybe unsure of what to put our money in) with all the products/choices. I hope that there may be certain members here who are in a similar situation to us and can share their opinion/experiences...

We are a married couple in our early 30's - both in professional jobs - no kids but planning to have 1st next year. We both have good health coverage from work, so outpatient care is not a concern. Also we happen to be HK perm. residents, so have affordable access to government hospitals if necessary. Whilst we earn a combined salary of US$8500 per month, we don't have any debt, but also don't have much in savings (<US$20k). Obviously in planning our first child, we are reviewing our expenses and figure that we can save roughly US$3,200 a month without too many sacrifices.

We want to purchase life insurance policies that will help us to save for retirement and/or further education for our child. Ideally there should be some sort of critical care coverage and the policy should be agressive in terms of capital growth (not looking to buy term policies). We figure we can pay roughly HK$2000-3000 a month in premiums for both policies (one for me and my wife).

A couple of questions...

- Is that a realistic amount in terms of monthly premiums for two policies - how much coverage can you get for that?

- Is anyone in a similar situation to us that can share details of the insurance that they have or their experiences? Very very much appreciated.

- Does anyone have any good references for agents and brokers who can demystify the whole thing for us and can provide us with HONEST and OBJECTIVE advice? A few of the agents that we met know less about insurance than we do!

- In addition, we'd also like to start investing around HK$5000 a month - ideally low risk, steady return, for the long term - any suggestions?

Thanks for your help!

[PDLM]

Is there some reason why you link life insurance and savings?

Personally I have a separate life insurance (part of my mortgage package), and savings scheme.

By the way, all Hong Kong residents have the same access to government health care - being permanent makes no difference at all.

[luxeicon]

Hi, Practically every broker we met has only presented a combined life/savings scheme - haven't really been shown any other options!

Do you mind sharing a few details on your insurance and savings plans?

I was under the assumption that everyone has access, but for Perm HK Residents it was provided at a negligable cost, whilst other residents need to pay standard prices - is that the case?

Is there some reason why you link life insurance and savings?

Personally I have a separate life insurance (part of my mortgage package), and savings scheme.

By the way, all Hong Kong residents have the same access to government health care - being permanent makes no difference at all.

[KnowItAll]

>> Practically every broker we met has only presented a combined
>> life/savings scheme

Because thats where they make their commissions. The commissions are low on products that don't involve savings.

Drop the guys at Kwiksure a line ( Kwiksure - Online Insurance Supermarket ) and ask them very specifically for life only.

[PDLM]

No -all HK residents pay the same price for hospital services. Details at the "Fees & Charges" link here: Hospital Authority

On insurance, actually on reflection I realise that I declined the life insurance offered by HSBC when I took out my mortgage. I have some life insurance through my employer's healthcare plan, but otherwise I decided that I have sufficient savings not to need any more.

But HSBC, for example, will simply sell you a 10 year life insurance policy of HK$500K through their online banking service (assuming you are aged under 40, which I'm not so it won't show me the pricing). If you want more cover than that then there's a number to call for a custom quote.

For savings plans there are a myriad to choose from. Your situation is substantially different from mine, so there's not much point in me telling you what I do. But broadly, if financial advisers were any good at investing they would all have got rich and retired - but that's not what they do. As KIA says they make their money of the commissions from your investment, not based on how good their advice turns out to be. So my attitude is to spend a little time and effort reading up on the subject and then to make your own investments in some appropriate mixture of stocks, bonds, funds, time deposits, etc.

[KnowItAll]

>> whilst other residents need to pay standard prices

Not the case. All residents can get free access.

By the way, it is usually not worth the wait. We know someone who was told that their angiogram would take six months to schedule.

[Flat Hunter]

..I was under the assumption that everyone has access, but for Perm HK Residents it was provided at a negligable cost, whilst other residents need to pay standard prices - is that the case?

ALL HKID card holders resident in HK pay the same rate.

[PDLM]

By the way, it is usually not worth the wait. We know someone who was told that their angiogram would take six months to schedule.

OK, but I know someone who went from initial contact through diagnosis (of cancer) through major surgery in 10 days (at a total all-in cost, including 10 days of recovery in hospital, of HK$1000)

[freeier]

concurr, split protection and investment.

fallacies are like : its a waste to pay for insurance and not getting anything back after 30 years.

what you have gotten is a peace of mind of the 30 years.
anyway if you count how much you would have paid in an investment linked insurance plan, and how much you get back, then you'd realize investing them yourself even in a simple global balance fund or bond fund would pay you more.

one plan that i have always recommended people is something called decreasing term. i.e when you insure yourself today the notional might be 1mil HKD. but it would slowly decrease and at the end of 30 years your coverage is maybe only 50k hkd.

you might ask, is 50k hkd in 30years time enough. but think about it this way, the most important part you need to insure is your current liability. i.e. if something happens to you now, you would need to have the 1m HKD for your wife to comfortably pay the mortage/rent and put your kid to university (over 20 years).
in 30 years time, your kids have grown up, you have saved your 3000usd per month for that period ... just those savings alone is 1mil USD. if anything happened to you then, just be contented with your 30 years of fulfilling life and say bye bye to the grown up kid!

why i mentioned this ? well, this policy is the most fitting of everyone. but insurance company rarely let you know they even have something on this. why ? imagine, for a person at 30y.o. versus at 60y.o., how would they make money insuring your life ? the premium will obviously be much higher later part of your policy (which in technical terms lead to other impact of pricing)...

so there you see. not everythign insurance company or agent pushes are good products. they meet some needs, but doing it yourslef wiht proper numeric planning would give you much better cost effectiveness.

[luxeicon]

So would the general opinion be to split savings & investments from life insurance?

In that case would a term life policy with a partially refundable premium at the end of the policy be a good bet?