Insurance 101 — Hong Kong
What you actually need to know before reading a single quotation.
For information only. Not advice, recommendation, or solicitation. Data has not been independently verified — always verify directly with the authorised intermediary or fund provider before making decisions.
Main types of insurance
Pure protection for a fixed period (e.g. 10/20/30 years). Lowest premium, no cash value.
Lifetime cover with cash-value accumulation. Higher premium, partly an investment.
Lump-sum payout on diagnosis of covered illnesses (cancer, stroke, heart attack and more).
Reimburses hospital and surgical expenses. Certified VHIS plans qualify for HK tax deduction up to HK$8,000/year per insured.
Long-term savings or investment-linked products. Read the surrender charges and fees carefully.
Converts a lump sum into guaranteed periodic income, often used for retirement.
Determining the true cost of life insurance
Premium alone is misleading. The interest-adjusted cost method (利息調整成本法) is more accurate because it accounts for the time value of money.
- Surrender Cost Index (解約成本指數): the cost if you surrender the policy at the end of a period (e.g. 10 or 20 years), with compound interest taken into account.
- Net Payment Cost Index (淨付款成本指): the relative cost if death occurs at the end of a specified period and you do not surrender the policy.
You can run both on our cost-index calculator.
Who regulates this in Hong Kong?
Insurance products and intermediaries are regulated by the Insurance Authority (IA). MPF schemes are regulated by the MPFA. Always verify a salesperson's licence before signing anything.