Author
Bowtie Team
Updated on
2025-05-28
Disclaimer: This article is translated with the assistance of AI.
In Hong Kong, intermediary commissions can take up a significant portion of your premium. How Much of Your Insurance Premium Actually Goes to Coverage? Let us break down how commissions work and explores ways to maximize your investment in insurance coverage while minimizing unnecessary expenses.
Current Status of Hong Kong Insurance Commissions
According to the independent strategic consulting firm Quinlan & Associates’s survey report , the company estimates that 160 insurance companies operating in Hong Kong had insurance intermediary (including insurance brokers and agents) commissions plus sales costs amounting to HK$61 billion in 2021.
This figure does not include billions of Hong Kong dollars in bancassurance sales collaboration fees, as well as over HK$3 billion in sales support expenses invested in brokers and agents. Sales support expenses include: sales training, license renewal fees, marketing expenses specifically for insurance intermediaries, and networking events (such as insurance intermediaries ).
Currently, there are about 110,000 licensed insurance agents in Hong Kong. Based on the estimated HK$61 billion in commissions for 2021, this means each agent’s annual commission income could reach up to HK$550,000 😱.
How Are Insurance Commissions Calculated In Hong Kong?
Following the average commission income for intermediaries, let’s explore the commission mechanisms for various policy types.
According to local media citing reports from senior industry insiders, the commission splits for different policy types that agents can receive are as follows:
| Policy Type | Commission Split Ratio |
| Life insurance policies with investment components | First-year commission up to 50% of the premium;
then it decreases annually, dropping to just 1% in the 7th and 8th years |
| Lump-sum pure investment policies | Commission is 2% to 3% of the total investment amount |
| Savings policies | Commission is about 10% of the premium |
| Basic insurance such as medical policies | Commission is about 10% of the premium,
but requires after-sales services such as responding to inquiries, arranging claims, and organizing medical services |
Based on the above commission mechanisms, it is clear that policies with investment or savings components can provide agents with higher commissions , with annual commissions reaching up to 50% of the premium. This shows that insurance companies offer greater incentives for agents to sell investment-type life insurance compared to products like medical insurance.
The following chart uses a real Life Insurance policy as an example to calculate the actual commission figures:
| Life insurance product | F company’s whole life insurance
(Rated 9/10 by 10Life) |
| Contribution period | 25 years |
| Annual contribution | 4000 USD (approximately HK$31,200) |
| Total contribution | 100,000 USD (approximately HK$780,000) |
| Average death benefit for ages 35-54 | 483,291 USD (approximately HK$3,770,000) |
| First-year agent sales commission estimate
(Calculated at 50%) |
2000 USD (approximately HK$15,600) |
From the numbers, if you insure with the above product, you need to contribute over HK$30,000 annually, and approximately HK$15,600 of the first-year premium is estimated as the agent’s commission, while the average Death benefit during ages 35-54 is approximately HK$3,770,000.
Using the same Life insurance sum assured of HK$3,770,000 as the benchmark, how much would the premium be if you insure with Bowtie Term Life ?
We assume the policyholder (non-smoking male) starts insuring at age 30 and renews continuously until age 54. The total premium expenditure over 25 years, as well as the annual premiums at ages 30, 35, 40, 45, 50, and 54, are listed as follows:
| Life insurance product | Bowtie Term Life |
| Insured sum assured | HK$3,770,000 |
| Annual premium | HK$1,704 – 10,236 (depending on age) |
| Total premium expenditure over 25 years (Bowtie Term life) | Approximately HK$110,000 |
| Total premium expenditure over 25 years (F company’s whole life insurance policy) | Approximately HK$780,000 |
For the same 25-year life insurance contribution period and the same HK$3,770,000 assured (during ages 35-54), insuring with Bowtie Term Life save 86% (nearly HK$670,000) in premiums!
How to Ensure Your Premiums Are Fully Utilized for Coverage?
Bowtie Term Life has a high cost-performance ratio, primarily because we do not have intermediaries and do not need to pay sales commissions. Moreover, Bowtie Insurance has no investment or savings components, which saves you more money, and you can manage your investments and savings yourself.
Bowtie uses technology to effectively reduce management and administrative costs, ensuring that every dollar of your premium is invested in coverage as much as possible.
Besides Life Insurance, other Bowtie insurance products can only be purchased online, which allows us to direct premiums as much as possible towards coverage.
Although we do not have intermediaries, it does not mean we lack service. We have a professional customer service team who, since they do not receive sales commissions, can provide more objective advice to potential customers, helping you select the appropriate coverage, truly embodying Bowtie’s No Commission, Pure Recommendation philosophy.
Sources
- 1 Quinlan & Associates – Survey Report
- 2 HK01 – Over 60 Billion in Annual Commissions! Unraveling the Mystery of High Value in Policies
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