HKMC Retire 3: How To Plan For Stable Retirement Income?

“ HKMC Retire 3 ” refers to The Hong Kong Mortgage Corporation Limited (HKMC) , which offers the Hong Kong Annuity Plan , Reverse Mortgage Programme , and Policy Reverse Mortgage Programme .

The common goal of the “ HKMC Retire 3 ” is to ensure applicants receive a stable income after retirement – essentially helping retirees “create their own steady pension.”

Hong Kong Annuity Plan is underwritten by the Hong Kong Annuity Company under HKMC. The idea is to convert a lump-sum cash payment (the premium) into a stable, lifelong cash flow. Once you pay the premium, as long as the policy is in force, you’ll receive a guaranteed monthly annuity amount for life as a steady income.

Anyone holding a Hong Kong permanent resident identity card and aged 60 or above can apply for the Hong Kong Annuity Plan without needing a medical examination .

The minimum coverage for this plan is $50,000; the maximum is $5 million.

The policy includes a guarantee period, starting from the date the premium is paid, until the cumulative guaranteed annuity amount paid reaches 105% of the premium paid. During the guarantee period, you can surrender the policy; after it ends, there’s no surrender value, but the annuity recipient can still continue receiving the guaranteed monthly annuity amount.

One of the perks of annuities is that they’re suitable for most retirees – unlike the other two options (Reverse Mortgage and Policy Reverse Mortgage), which require leveraging more valuable assets for cash.

Lump Sum Premium vs. Guaranteed Monthly Annuity

Hong Kong Annuity vs Private Annuity: Key Differences

Besides the public Hong Kong annuity plan, many insurance companies in the market offer various types of annuity products, including immediate and deferred annuities. Private annuities generally accept younger individuals for coverage, allowing for lump-sum or instalment premium payments, so they can start retirement planning earlier. Plus, eligible deferred annuity premiums may even be tax-deductible.

However, policyholders should note that private annuity income is divided into “guaranteed” and “non-guaranteed” portions. The final return on the non-guaranteed part could be higher or lower than the expected investment return outlined in the benefit illustration document. Additionally, the annuity term is worth paying attention to – if it’s too short, it might not fully offset longevity risks.

How Annuities Can Help Pay for Medical Insurance Premiums

Annuities provide a steady cash flow for retirees, and while it’s important to focus on the returns, you can actually use part of your monthly annuity income to cover medical insurance premiums. This way, you won’t be left with zero protection for healthcare costs after retirement.

Wondering what the most cost-effective medical insurance is for retirement? Check out Bowtie’s recommendations!

The Reverse Mortgage Scheme, commonly known as reverse mortgage, is operated by the Hong Kong Mortgage Corporation’s subsidiary, the Mortgage Insurance Company. It’s designed for individuals aged 55 or above to use their self-occupied residential property in Hong Kong as collateral to obtain a reverse mortgage loan from a lending institution. Borrowers can continue living in the property without having to move out until the end of their lives. The scheme allows up to three applicants to apply jointly, with the property being no more than 50 years old and having no resale restrictions or rental (rental must meet specific conditions).

Through this arrangement, borrowers can choose a fixed annuity period (10, 15, or 20 years) or a lifetime one, receiving a fixed monthly annuity that converts the property’s value into a steady cash flow. Alternatively, they can opt for a lump-sum loan, and in most cases, borrowers don’t need to repay it during their lifetime. Keep in mind, though, that factors like property value, applicant age, annuity period, and mortgage interest rate will affect the monthly annuity amount. Interest rates offer both floating and fixed options.

After the borrower passes away, the estate heirs can choose to fully repay the loan to redeem the mortgaged property; otherwise, the lending institution will sell the property to settle the loan, with any remaining balance returned to the heirs. If there’s a shortfall, it’s covered by the Mortgage Insurance Company.

Property Value and Monthly Annuity Amount

Reverse Mortgage on Policies plan is also operated by HKMC’s subsidiary, the Mortgage Insurance Company, and works on a principle similar to the Reverse Mortgage Explained , except that the collateral shifts from residential property to a life insurance policy with no investment components, allowing individuals aged 55 or above with a Hong Kong ID to borrow from a lending institution.

Borrowers can opt to receive an Annuity over a fixed period (10, 15, or 20 years) or for life, until the Life Insurance policy matures; alternatively, they can take a lump-sum loan, and generally, there’s no need to repay it during their lifetime. The monthly annuity amount is determined by factors like the borrower’s age, gender, annuity period, and the death benefit value of the life insurance policy. Interest rates offer both floating and fixed options.

Upon the borrower’s death, the loan is settled in full using the death benefit from the policy. If any balance remains after settling the loan, Estate beneficiaries can claim it; if the death benefit falls short of covering the full loan, the beneficiaries aren’t required to cover the shortfall, as it’s absorbed by the Mortgage Insurance Company.

Examples of Monthly Annuity Amounts for Reverse Mortgage on Insurance Policies

Reserve Medical Insurance Budget in Reverse Mortgage or Policy Reverse Loan

Whether in a lump sum or as an annuity, these arrangements are designed to ensure you have enough money to cover daily living expenses after retirement. Just think about it—a serious illness could wipe out your reverse mortgage loan or annuity income! Even without company medical insurance after retirement, you should prepare a medical safety net for yourself.

In fact, retirees can set aside a portion of the loan or annuity income from reverse mortgage or policy reverse loan as a budget for medical insurance, to avoid losses due to the lack of any medical coverage after retirement.

What’s the most cost-effective medical insurance for retirement? View Bowtie’s suggestions now!

As explained above, the “ HKMC Retire 3 ” help retirees create a steady income stream to handle the financial risks of longevity. Besides these three, we’ve already touched on the fourth treasure earlier. That’s right, it’s medical insurance (also known as VHIS). A comprehensive medical insurance policy can cover your medical expenses after retirement, and its importance is on par with the three treasures.

Imagine this: A sudden injury or illness in retirement could easily cost tens of thousands to over a hundred thousand in surgery expenses ; if you’re unlucky enough to get cancer , the ongoing treatment costs could be enormous.

Of course, the estimates above are just for reference, but annual treatment costs can roughly add up to over a million dollars. Without early preparation, you might end up “watching the mountain crumble” and dipping into years of savings; even with annuity income from the ” HKMC Retire 3 ,” it could disrupt your original financial plans or fall short of covering medical expenses.

Planning for medical coverage is best done sooner rather than later, as most people are healthier and have fewer medical records when they’re younger, making it easier to pass the insurer’s underwriting process. On the flip side, if you wait until health issues arise, you might face extra premiums through loading , or in the worst case, your application could be denied.

So, before mapping out your retirement, it’s wise to secure the right medical protection early. When retirement rolls around, opting for the ” HKMC Retire 3 ” to provide thousands to over ten thousand dollars in annual income can cover daily expenses while supporting or subsidizing VHIS , making for a truly comprehensive retirement strategy.

Once you realize retirees have lost company health coverage and might not have a steady income, we recommend getting:

Bowtie VHIS Flexi Regular ＋ GHK Wellness Package (add-on for $200 per month) (also known as Bowtie VHIS Flexi Regular + GHK Plan ).

The reason is straightforward:

Bowtie provides a premium calculator so you can estimate the monthly premium for Bowtie VHIS Flexi Regular based on factors like age, gender, and smoking habits, then simply add $200 for the GHK Wellness Package to get your total monthly premium.