Author Bowtie Team
Updated on 2025-06-03
Disclaimer: This article is translated with the assistance of AI.
In recent years, insurance companies have rolled out various savings insurance options, offering more ways for people to build their savings. Yet, many newcomers have questions like: Which type fits me best? What should I watch for before buying? How risky is it? The Bowtie team has compiled actuaries’ advice into 7 essential questions for beginners!
What Are My Goals for Buying Savings Insurance?
The market offers a wide variety of savings insurance products, so you may start by considering your insurance goals to find the one that suits you best. Are you looking to earn stable returns in the short term? Or do you want to invest long-term while also getting life protection? Understanding the goals behind your purchase can help you clarify the savings products you truly need.
Types of Savings Insurance Plans | |
| Investment-Oriented | Protection-Oriented |
| Savings Life Insurance, Life Insurance Plans with Guaranteed Income, Annuity Plans, Universal Life Insurance | Life Insurance, Critical Illness Insurance |
Savings insurance can generally be divided into Investment-Oriented and Protection-Oriented categories. Investment-oriented products typically include Savings Life Insurance, Life Insurance Plans with Guaranteed Income, Annuity Plans, and Universal Life Insurance, while protection-oriented ones mainly consist of Life Insurance and Critical Illness Insurance.
If you want to earn stable returns in the short term , consider Savings Life Insurance, which is similar to a fixed deposit, with a policy term generally under 15 years. This plan uses time to accumulate guaranteed cash (premiums), allowing you to earn maturity benefits when the policy ends—it’s a conservative and stable option.
If you’re aiming for immediate liquid cash in the short term , go for Life Insurance Plans with Guaranteed Income, which are more like bonds. They provide regular interest-bearing guaranteed cash reserves after the policy starts, though the premium payment period is longer, often 5 years or more.
If you’re planning for long-term savings toward retirement, opt for Life Insurance Plans with Guaranteed Income or Annuity Plans. These will regularly disburse money after you retire, ensuring you have enough savings for your golden years.
Do I Need Life or Critical Illness Coverage?
Whether it’s investment-oriented or protection-oriented savings insurance, both include some level of coverage. Before buying savings insurance, think about whether you need Life or Critical Illness coverage. If you already have these protections and just want to save, you might be better suited for investment-oriented products like Savings Life Insurance or guaranteed cash reserves, which offer less emphasis on protection.
If you need that coverage while also saving, choose protection-oriented options like Life Insurance and Critical Illness Insurance.
Do I Want Someone to Invest for Me or Invest on My Own?
If you’re not familiar with the investment market and prefer someone to handle it for you, purchasing savings insurance is a good choice. The insurance company will invest your principal into specified asset portfolios for growth. At the end of the policy term, you can withdraw the policy value (guaranteed return) and bonuses (non-guaranteed return) as your total return.
However, letting the insurance company invest for you can reduce transparency in the investment process , including details on their strategies, the assets invested, actual gains or losses, and how much of the return is distributed to you. So, if you have some investment experience, it’s often more efficient to invest yourself and add basic Life or Critical Illness coverage separately.
How Long to Lock Funds in Savings Insurance? Surrender Risk Explained
Products with stable and high returns naturally lack flexibility , and have lower liquidity . Long-term savings insurance often includes a fund lock-in period. If the insured needs to access or withdraw the premium during the policy period without wanting to incur losses, they must wait until the guaranteed break-even period, which could be 10 years, 20 years, or more.
Furthermore, if the policy lapses or is surrendered before the guaranteed break-even period, the insured not only fails to receive any returns but also loses part of the premium. Therefore, before purchasing savings insurance, consider whether you have sufficient liquid funds to handle unexpected events, and try not to surrender the policy before the guaranteed break-even period.
Referencing Past Dividend Realization Rates
Dividend Realization Rate is used to measure the credit risk of the insurance company. It assesses whether the promised dividends have been paid as expected in the past. Since non-guaranteed returns are usually linked to investments like stocks and bonds in the plan, to measure the realization rate of non-guaranteed returns, you can refer to the past dividend realization rates of major insurance companies.
Can You Use RMB or USD for Savings Insurance? Understanding Internal Rate of Return
Besides Hong Kong dollar savings insurance, some savings insurance plans on the market can actually be purchased with foreign currencies, with RMB and USD being the most common, and some also offer GBP, AUD, etc., as the policy currency. Their entry fees (i.e., minimum premium amounts), policy terms, and internal rate of return (IRR) will vary.
The following table compares common policy terms and entry thresholds for short-term savings insurance in HKD, RMB, and USD:
| Savings Insurance (Currency) | Policy Term | Entry Threshold |
| HKD | 3 years / 5 years | Lower |
| RMB | 3 years / 5 years | Higher |
| USD | 1 – 8 years | Higher |
Does a higher Internal Rate of Return (IRR) mean higher returns?
In terms of returns, RMB savings insurance typically has a higher Internal Rate of Return (IRR) compared to other currencies, but you shouldn’t forget about the RMB exchange rate risk before purchasing. If calculated in HKD, the actual premiums, surrender values, bonuses, and more for RMB savings insurance will change according to the exchange rate. When the policy matures, if the RMB depreciates and its value drops, your actual return when converting back to HKD will be less than expected.
In other words, if you plan to buy savings insurance in foreign currency, you need to first predict the currency’s trend over the next few years to see if it has appreciation potential for you to earn interest and capital gains.
Given that savings insurance effectively locks in your funds, if you already have investment experience, you could first buy a pure life insurance and critical illness insurance, then use the rest of your funds for investments. This way, you can protect yourself and your family while making your money work harder to beat inflation.
How to Prioritize the Protection You Need?
Everyone should decide on the type of protection based on their own needs, considering factors such as age, health, family responsibilities, long-term or short-term financial goals , and more.
No one should overlook basic health and life protection, such as Voluntary Health Insurance and Cancer Insurance . Because getting sick or hospitalized for a serious illness is unavoidable, having Voluntary Health Insurance and Cancer Insurance can help you and your family avoid large medical expenses in unexpected situations, easing financial burdens.
If your family responsibilities are greater, you must prioritize Cancer, Life, and Medical Protection as soon as possible to minimize family losses in case of unfortunate events. The table below provides a reference priority order for different individuals’ protection needs:
(For reference) Priority Order for Different Individuals’ Protection Needs | |
| Example 1: | |
| Ms. Wu, 21 years old, university student | 1) Voluntary Health Insurance , 2) Cancer Insurance , 3) Savings Protection |
| Example 2: | |
| Mr. Lee, 35 years old, planning to get married | 1) Voluntary Health Insurance , 2) Life Protection, 3) Cancer Insurance , 4) Savings Protection |
| Example 3: | |
| Mrs. Chan, 56 years old, with two children | 1) Voluntary Health Insurance , 2) Cancer Insurance , 2) Life Protection, 3) Savings Protection |
- * Examples are for reference only; actual situations need to be assessed based on individual circumstances.
Other Topics
Blood HealthBowtie StoryBusinessCancerChinese MedicineCovidCustomer ReviewDeathcareDental HealthDigestive HealthDoctor SpecialistsDrugsEar, nose, and throatEndocrinology & DiabetesExercisingEye HealthFinanceFood & NutritionGroup Medical InsuranceHealthHealth GlossaryHeart HealthHospitalsHot TopicsImmigrationKidney HealthKids HealthlearnLiver DiseaseLung & RespiratoryMedical Check UpsMen’s HealthMental HealthNervous SystemOrthopedicsOutpatient ServicesParentingPhysiotherapyPress ReleasePrevention/VaccinationProduct PhilosophyRealtyRheumatic DiseaseSeniors HealthSkin IssueSymptomsTreatment PlanUrologyWomen’s Health