As a parent, you would hope to plan for your children a better future. In planning for education funding, parents would look for different investment choices. Among all those investment options, have you ever thought that life insurance is a choice that parents could consider? Life insurance could be an investment that offers stable potential returns over the long term.
A survey in Hong Kong1 indicated that parents placed equal proportion of investment money into savings insurance and life insurance, investing 6% into each of the categories. This proportion, however, is far lower than money putting into securities and bank savings via current and fixed-term deposits, which total 88% of investment money. In addition, the survey also discovered that nearly 60% of respondents are worried about their own retirement life or the financial difficulties that the family might be facing if they suddenly die.
There are inevitable ups and downs in the financial market. To plan for education fund, parents should thus not rely solely on securities which are considered a high risk asset class. In addition, parents may also worry about the legacy arrangement of their wealth and they are worried their family members may not be able to sustain their wealth in the long run.
Although life insurance may not appear to be highly attractive in terms of investment return, it has certain advantage as a tool for asset allocation and inheritance. For instance, certain policy values can be paid out as regular payments and assigned proportions of such amount can be allocated to beneficiaries. This feature helps provide a stable income to ensure the family will not suffer from financial difficulty as a result of poor financial management. Life insurance can therefore serve as a mini-trust to provide asset allocation and related financial arrangements for the family.
Long-term protection for loved ones
Here is an example: When Mr. Zhang is at age 35, his son was born. Mr. Zhang then took out Prosperity Booster Insurance Plan 2 with Fubon Life Insurance insuring for his son. By paying a total premium of HK$4 million, and over a long period of time, the policy value is projected to increase to millions of dollars which enables Mr. Zhang to pay for the overseas university education fees for both his son and grandson, as well as to support the retirement funding for both himself and his son.
Protecting your family with a life insurance is not only an expression of love, but also it leads the family to a well prepared future. The choice of insurance plan is therefore important. Fubon Life’s Prosperity Booster Whole Life Plan 2 offers potential asset appreciation and helps achieve asset allocation and inheritance goals at the same time. The plan also allows unlimited change of insured persons2 and extend the protection to age 138 of the new insured, allowing the next generation to own the family wealth.
In addition, the plan can provide different premium payment periods of 3, 5 or 10 years. For those who choose to pay lump sum payment and pre-pay all future premiums, or for those whose policies have reached certain amount of nominated amount, a premium discount will be available3, offering an opportunity to maximize the potential wealth. Policyholders also have the flexibility to withdraw policy values when needed, or arrange to withdraw the surrender value or policy benefits by installments, offering the family regular income to avoid it from getting into financial difficulties.
*This article was published on the online news agency, Etnet, (etnet.com.hk) on March 13, 2019.
1 The information is based on an article as published by the online news agency EtNet (etnet.com.hk) on January 16, 2019. The article is titled “Citibank: A survey on selling savings insurance via internet indicated that respondents are worry about financial conditions (of the family) after death.”
2 Products are subject to terms and conditions.
3 Premium discounts will be reflected in the illustrative proposal.
For details on key product risks, product important information, investment policies and other important information, please refer to the Product Brochure.
(This is a translation only. The original article is written in Chinese and you may refer to the original version here for exact meaning).
