Author Bowtie Team
Updated on 2025-06-12
Disclaimer: This article is translated with the assistance of AI.
When you’re browsing insurance options online, you often come across debates on ‘savings insurance’ and ‘term insurance’. Savings insurance lets you recoup your premiums with interest after a set term, while term insurance focuses premiums on pure protection. Curious about which one fits your needs? Let Bowtie guide you through the pros, cons, and smart choices!
What is Term Insurance?
Term insurance refers to insurance without any savings component or cash value. Even if the policyholder does not make any claims during the coverage period, the premiums paid cannot be recovered.
Since this type of insurance focuses solely on providing protection, policyholders don’t have to pay extra for wealth accumulation. In contrast, savings insurance uses part of the premium for protection and part for investment, plus it involves higher commissions and fees for agents and companies. As a result, Term insurance premiums are relatively cheaper.
Although the coverage period for Term insurance is generally shorter than that of savings or investment-linked insurance, the premiums paid are mostly used for protection, which is why it’s also known as pure protection insurance. As long as the policyholder continues to pay premiums regularly to renew, coverage will remain in effect.
The most common types of Term insurance available today include VHIS , accidental insurance , Term CI , term life insurance , travel insurance, and overseas study insurance, among others.
Functions of Term Insurance
As the name suggests, Term insurance is pure protection insurance. When the policyholder encounters an incident within the coverage scope, they can claim the predetermined compensation amount from the insurance company.
Who is Term Insurance For?
Everyone’s needs vary, influenced by life stages, financial status, and existing coverage.
Yet, it is fair to say that Term insurance suits everyone. Bowtie will analyze different types of insurance needed for the following three hypothetical cases.
Case One: 21 years old, just graduated, unmarried
- Financial status: No need to support parents, have a full-time job (monthly salary HK$18K)
- Existing coverage: Standard company medical insurance, no other insurance
Bowtie recommends that if your situation is similar to Case One, you can purchase Bowtie VHIS Standard , Cancer Fighter 2M (HK$2 million coverage) and Term CI (HK$2.5 million coverage).
| Recommended Term Insurance | Why Buy It? |
| Bowtie VHIS Standard | Company medical insurance might not fully cover medical expenses, so the VHIS Standard plan provides extra protection without a heavy premium burden, making it an ideal top-up option. |
| Cancer Fighter 2M (HK$2 million lifelong coverage) | Cancer is the number one killer in Hong Kong, and many people abandon treatment due to high medical costs. Standard medical insurance might not provide sufficient coverage for cancer treatment. |
| Term CI (HK$2.5 million coverage) | Even young people can suffer from critical illnesses, which might make it hard to work. Term CI can help cover living expenses during illness. Under the same coverage amount, the premium for Term CI is 22 times lower than that of general savings Term CI 2 . |
* Above suggestions do not consider the insured’s assets and liabilities. If assets and liabilities are included, the coverage recommendations might differ.
- 1 Until the compensation reaches the lifetime limit
- * Based on a 21-year-old, non-smoking male estimation
- ^ A HK$1 million coverage amount is sufficient to cover most cancer treatment expenses within 3 years
- 2 Calculated based on the standard premium for a 35-year-old non-smoking male with $1 million coverage; Term CI: Data is the average of standard premiums for 3 term critical illness insurance products (5-year coverage) on the market as of September 1, 2020; Savings CI: Data is the average of standard premiums for 8 savings critical illness insurance products (18-20 year premium payment period) on the market as of September 1, 2020.
- 3 Based on a reinsurance company’s major illness survey in Asia from 2008-2012, cancer, coronary artery bypass surgery, heart disease, other serious coronary artery diseases, stroke, benign brain tumors, and kidney failure account for about 97% of critical illness insurance claims among Hong Kong women. The remaining 3% is derived from publicly available data collected by Bowtie through various sources and mathematical calculations, for general educational and reference purposes only.
- 4 Includes terminal illness, permanent total disability, inability to live independently, and major medical conditions—click here for details. * We calculated the required Term CI coverage based on monthly income, annual 3% medical inflation, and 24 months of medical expenses ($10,000 per month).
Case Two: 40 Years Old, Married
- Financial status: Needs to support parents and 2 children, is the family’s breadwinner, and has a full-time job (monthly salary of 38K)
- Existing coverage: A standard company health insurance plan, no other insurance
Bowtie suggests that if your situation is similar to Case Two, you could get Bowtie VHIS Standard , Cancer Fighter 2M (HK$2 million coverage), Term CI (HK$2.4 million coverage), and Bowtie Term Life (HK$5.6 million coverage).
Considering that Case Two is the family’s breadwinner with quite a bit on their plate financially, Bowtie has these handy suggestions.
| Recommended Term Insurance | Why Get It? |
| Bowtie VHIS Standard | Company health insurance might not fully cover medical costs, so Bowtie VHIS Standard offers extra protection Given the financial responsibilities as the family’s breadwinner, the standard plan won’t break the bank—it’s a smart top-up to company insurance |
| Cancer Fighter 2M (HK$2 million lifetime coverage) | Cancer is Hong Kong’s top killer, and many skip treatment due to costs—standard insurance might not cut it With finances in mind, we didn’t suggest Cancer Fighter 3M , as premiums are higher. But Cancer Fighter 2M still covers cancer recurrence nicely |
| Term CI (HK$2.4 million coverage) | As you get older, critical illnesses become more likely, and they can make working tough—Term CI helps with living expenses during illness For the same coverage, Term CI premiums are about 22 times lower than typical savings CI plans 2 |
| Bowtie Term Life (HK$5.6 million coverage) | Since Case Two supports parents and 2 kids, an untimely passing could hit the family hard, so a term life policy is a wise move For the same premium, Bowtie’s Term coverage is about 40 times higher than standard savings life products |
Note: The above recommendations do not consider the insured’s assets and liabilities. Including them might change the advice.
- 1 Until the compensation reaches the lifetime coverage limit
- * Based on a 40-year-old, non-smoking male estimate
- ^ A HK$1 million coverage amount is sufficient to cover most cancer treatment expenses within 3 years
- 2 Calculated based on the standard premium for a 35-year-old non-smoking male with $1 million coverage; Term Critical Illness Insurance: Data is the average of standard premiums for 3 term critical illness insurance products (5-year coverage period) in the market as of September 1, 2020; Savings Critical Illness Insurance: Data is the average of standard premiums for 8 savings critical illness insurance products (18-20 year premium payment period) in the market as of September 1, 2020.
- 3 Based on a major illness survey conducted by a reinsurer in Asia from 2008-2012, cancer, coronary artery bypass surgery, heart disease, other serious coronary artery diseases, stroke, benign brain tumors, and kidney failure account for about 97% of critical illness insurance claims among Hong Kong women. The remaining 3% is derived from publicly available data collected by Bowtie through various sources and mathematical calculations, for general educational and reference purposes only.
- 4 Includes terminal illness, permanent total disability, inability to live independently, and major medical conditions; click here for details.
- * We calculated the required critical illness coverage based on monthly income, 3% annual medical inflation, and 24 months of medical expenses ($10,000 per month).
- * Our actuaries estimate that monthly living expenses for adults and children (25 years or younger) are approximately $8,200 and $6,300 respectively. We also used $17,500 as the rent estimate. Finally, we calculated the overall life insurance coverage needed based on these expenses and an annual 3% inflation rate.
Case Three: Married, 67 Years Old
- Financial Status: No need to support parents or children (children have stable income and family), Retired
- Existing Coverage: No company medical insurance, has a basic medical insurance, Term CI (HK$2 million), and Bowtie Term Life (HK$4 million)
| Insurance Recommendations for Term Products | Why Buy It? |
| Bowtie VHIS Standard | After retirement, without company medical insurance, even with a basic medical plan, coverage might not be sufficient. Therefore, we recommend adding a VHIS Standard plan for adequate protection. |
| Cancer Fighter 2M (HK$2 million lifetime coverage) | Cancer is the top killer in Hong Kong, and many people abandon treatment due to unaffordable medical costs. Standard medical insurance, or even VHIS, might not fully cover cancer treatments Considering Case Three is retired with no fixed income, we didn’t suggest Cancer Fighter 3M , as premiums would be higher. But Cancer Fighter 2M still covers cancer recurrence effectively |
| Term CI | Since Case Three already has HK$2 million in critical illness coverage, there’s a solid safety net if a critical illness occurs, so we don’t recommend another policy. However, at the same coverage level, Bowtie’s term critical illness insurance premiums are about 22 times lower than typical savings critical illness plans 2 Additionally, Bowtie’s Term CI is only available for individuals aged 65 or below. |
| Bowtie Term Life | With HK$4 million in existing life insurance, beneficiaries are already well-protected in case of passing. Given that the children have stable incomes, the coverage amount might not need to be HK$4 million; reducing it could lower premiums and ease financial burdens Additionally, Bowtie’s Term CI is only available for individuals aged 65 or below. |
Note: The above recommendations do not consider the insured’s assets and liabilities. Including them might change the coverage suggestions.
- 1 Until the compensation reaches the lifetime coverage amount
- * Based on a 64-year-old, non-smoking male estimate
- ^ HK$1 million coverage is sufficient to cover most cancer treatment expenses within 3 years
- 2 Calculated based on the standard premium for a 35-year-old non-smoking male with $1 million coverage; Term CI: Data is the average of standard premiums for 3 term critical illness insurances (5-year coverage period) on the market as of September 1, 2020; Savings CI: Data is the average of standard premiums for 8 savings critical illness insurances (18-20 year premium payment period) on the market as of September 1, 2020.
- * We calculated the required critical illness coverage based on monthly income, 3% annual medical inflation, and 24 months of medical expenses ($10,000 per month)
- * Our actuaries estimate that monthly living expenses for adults and children (25 years or younger) are approximately $8,200 and $6,300 respectively. Additionally, using $17,500 as the rent estimate. Finally, we calculated the overall life insurance required amount based on the above expenses and 3% annual inflation.
Term vs Savings Insurance
Term insurance is ideal for those seeking comprehensive coverage, on a tight budget, or who know how to invest on their own, while savings insurance suits individuals with solid financial means who aren’t savvy investors and prefer stable, conservative options.
However, products with steady and high returns naturally lack flexibility and have lower liquidity . Long-term savings insurance often includes a lock-in period for funds, so if the policyholder needs to access or withdraw the premiums during the policy term without wanting to incur losses, they must wait until the guaranteed break-even period— which could be 10 years, 20 years, or more.
What’s more, if you can’t hold out until the guaranteed break-even period and have to stop payments and surrender the policy, not only do you miss out on returns, but you also lose part of your premiums. So, before opting for savings insurance, think carefully about whether you have sufficient liquid funds to handle unexpected events, and try to avoid surrendering before the break-even period.
Policyholders should decide based on their own needs:
| Term | Savings | |
| Premium | More affordable (For example, with life insurance, the average monthly premium for term life insurance is generally HK$134 4 ; Bowtie Term Life monthly premium is HK$40 4 ) | More expensive (For example, with life insurance, the average monthly premium for savings life insurance is generally HK$1,615 4 ) |
| Premium Calculation | Mostly progressive, with premiums increasing annually | Mostly level, with fixed premiums per period |
| Coverage (Under the same coverage amount) | Higher and more comprehensive | Lower |
| Coverage Period | Mostly term renewable (If you’re insuring with VHIS, since this product offers guaranteed renewal, the coverage period can be just as long or even lifelong) | Long coverage period or even lifelong |
| Contribution Flexibility | Higher | Lower |
| Cash Value | None | Yes |
| Application Method | Offline and online | |
- 4 Calculated based on the standard premium for a 35-year-old non-smoking female insuring a $1 million coverage; Term Life Insurance: Data is the average of standard premiums for term life insurance (20-year coverage period) on the market as of July 1, 2020 (including term life insurance available online and another 8); Savings Life Insurance: Data is the average of premiums for 8 savings life insurance policies (20-year premium payment period) on the market as of July 1, 2020.
Myths About Term Insurance
Misconception 1: Does Term Insurance Not Guarantee Renewal?
Whether insurance guarantees renewal depends on the insurance company’s terms, not the product type.
For example, Bowtie VHIS although it’s a term insurance, customers pay premiums monthly, but since the contract specifies “guaranteed renewal until age 100,” the insurance company cannot refuse coverage due to changes in age or health unless the policyholder cancels it voluntarily, up to age 100.
Misconception 2: Is No Claim Equivalent to Wasting Premiums?
Remember, buying insurance isn’t about growing wealth; it’s about managing risks effectively.
Policyholders pay premiums to transfer risks to the insurance company. This way, if an incident within the covered scope occurs, you can make a claim to provide financial protection for yourself and your family.
If you’re buying savings insurance just to avoid “losing out,” I have to point out that these policies are generally more expensive. For instance, with Term CI , Bowtie’s premiums for the same coverage are more than 20 times cheaper than other savings critical illness insurance 5 . If you switch to term insurance and invest the savings from lower premiums, you might end up with even better returns.
Misconception 3: Can’t Afford Term Insurance After Retirement?
The biggest advantage of term insurance is its high flexibility, allowing policyholders to request a reduction in coverage based on their needs, thereby lowering premiums to a manageable level.
On the other hand, as you get older and your financial situation improves, you might consider switching to insurance plans with floor fees to reduce your everyday insurance expenses.
- 5 Calculated based on the standard premium for a 35-year-old non-smoking male insuring a $1 million sum assured; Term CI: The data is the average of the standard premiums for 3 term critical illness insurances (5-year coverage period) in the market as of September 1, 2020; Savings Critical Illness Insurance: The data is the average of the standard premiums for 8 savings critical illness insurances (18-20 year premium payment period) in the market as of September 1, 2020.
Related Articles
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