Understanding Terminal and Special Dividends
Learn about terminal and special dividends in life insurance and their role in enhancing coverage—key insights for better policy decisions.
What is Life Insurance?
The primary function of life insurance is to provide a lump-sum death benefit to the designated beneficiaries (who can be more than one) when the insured passes away, offering financial support to the beneficiaries and their families. The life insurance payout has no restrictions on its use and can be used to repay property mortgages and other debts, pay for long-term rent, support children’s education expenses, and more. In addition to general life coverage, life insurance products with a savings component available in the market can also provide wealth management and inheritance functions.
Comparing Term Life Insurance and Whole Life Insurance
Life insurance is broadly divided into two categories — Term Life Insurance and Whole Life Insurance . The Bowtie team recommends that you first compare these two insurance plans:
| Term Life Insurance | Whole Life Insurance | |
| Coverage Period | Monthly, annual renewal, every 5 years renewal, every 10 years renewal
Coverage up to the maximum insured age specified in the policy |
For life (or up to age 100) |
| Premium | Bowtie Term Life
HK$40 per month 1 |
28% higher than term life insurance premiums 2 |
| Death Benefit | Yes | Yes |
| Cash Value | No | Yes |
| Premium Structure | Level premiums / Annually adjusted premiums | Level premiums / Limited payment period |
| 🖊️Short Review | Although it does not provide cash returns, most of the premiums paid go toward life coverage, offering a higher leverage for protection. | Whole life insurance combines savings features, but under the same coverage amount, premiums are higher; surrendering the policy midway may result in losses.
However, if your budget allows, it is still a good option. |
- 1 Based on the standard premium for a 35-year-old non-smoking female insuring a HK$1,000,000 sum assured.
- 2 Within 20 years, the total premium for Bowtie Term Life is 28% less than the average total premium for term life insurance (20-year coverage period) on the market. This figure is based on the standard premium for a 35-year-old non-smoking female insuring a HK$1,000,000 sum assured; Data as of July 1, 2020, is the average of standard premiums for term life insurance (20-year coverage period) on the market (including term life insurance available online and an additional 8).
Term Life Insurance Premium Comparison
If you decide to purchase term life insurance, how much would the actual annual premium cost be? For example, we compare Bowtie with term life insurance plans from 6 other insurance companies in the market, using a 35-year-old non-smoking male insuring a HK$1,000,000 life insurance sum assured for reference:
| Insurance Company | 10-Year Average Annual Premium | Maximum Sum Assured | Maximum Coverage Age | Terminal Illness Coverage |
| Bowtie | HK$852
👍 |
HK$20 million
(No medical exam required for up to HK$8 million, with insured age between 18–45 years) 👍 |
100 years
👍 |
✅
Includes Last Wish Rider additional coverage, providing an extra HK$300,000 compensation for terminal illness cases |
| Company A | HK$1,595 | Approximately HK$3.75 million | 85 years | ✅
Advances 100% of the sum assured for terminal illness cases |
| Company B | HK$1,025 | HK$8 million
(Insured age between 18–45 years) |
100 years
👍 |
❌ |
| Company F | HK$986 | HK$8 million
(Insured age between 18–50 years) |
99 years | ✅
Advances 100% of the sum assured for terminal illness cases |
| Company W | HK$1,054 | HK$4 million
(Insured age between 18–50 years) |
85 years | ✅
Includes “Critical Illness Additional Coverage,” providing compensation for diagnosed specified critical illnesses (separate critical illness sum assured) |
| Company Z | HK$941 | HK$10 million | 86 years | ❌ |
| Company ZU | HK$1,260 | HK$3 million
(Insured age between 18–49 years) |
100 years
👍 |
✅
Advances 50% of the sum assured or HK$1 million for terminal illness cases, whichever is lower |
Why Do Customers Choose Bowtie Term Life?
Bowtie Term Life is highly supported by customers due to its high value for money, straightforward coverage, and targeted protection against death-related risks for the insured.
As seen from the comparison table in the previous section, Bowtie Term Life offers extremely competitive premiums, with the maximum coverage age reaching up to 100 years, which is the highest among similar products mentioned. Regarding the sum assured level that many customers care about, Bowtie has been responsive to feedback, currently providing existing customers with up to HK$20 million* in coverage, the highest level among pure online life insurance in Hong Kong.
Additionally, Bowtie has added the Last Wish Rider supplementary coverage for life insurance policyholders diagnosed with a terminal illness, offering an extra HK$300,000 in compensation for eligible insured individuals, which is a unique and practical feature in the market.
- * Only available for Bowtie Term Life customers; applicants need to undergo a medical examination and financial underwriting process
What Factors Should You Consider When Purchasing Term Life Insurance?
When comparing different term life insurance products, you can evaluate the plans offered by various insurance companies from 8 key aspects:
1. Premium
Premium
The compensation conditions for term life insurance from each company are quite similar; if the insured passes away during the coverage period, the beneficiary receives 100% of the sum assured. Therefore, the premium is a crucial factor to consider, especially for long-term expenses. After all, life insurance is often needed for decades to protect families and debts, such as property mortgages.
From the premium comparison in the previous section, for a 35-year-old man purchasing term life insurance with a HK$1 million sum assured from different companies, the average annual premium over 10 years can vary by up to 47% (Bowtie vs. Company A). In other words, for similar term life insurance products, the total premium cost over 10 years could differ by over HK$7,000! Moreover, if the policyholder needs several million in life insurance coverage, the premium gap would be even larger.
Furthermore, using a HK$1 million sum assured as the benchmark, we will directly compare five popular life insurance options in the market to make it easier for you to see the differences at a glance:
- * With HK$1 million as the sum assured benchmark. Age refers to the actual age, not the next birthday age. The above prices are for non-smokers of that age, updated as of March 10, 2024, and are for reference only. For accurate quotes and product details, please inquire with the respective insurance companies.
2. Coverage Amount
Coverage Amount
The choice of sum assured is very important for the financial protection of the family. Similarly, we continue to compare the pure term life insurance plans of 7 insurance companies, covering the minimum and maximum sums assured, so that everyone can understand the flexibility of sums assured offered by different companies:
| Minimum Sum Assured (HKD) | Maximum Sum Assured (HKD) | |
| Bowtie | $200,000 | $20,000,000* |
| Company A | Not specified | Approximately HK$3,750,000 |
| Company B | $250,000 | $8,000,000 |
| Company F | $200,000 | $8,000,000 |
| Company W | $100,000 | $4,000,000 |
| Company Z | $100,000 | $10,000,000 |
| Company ZU | $100,000 | $3,000,000 |
* Subject to underwriting and medical examination. Without a medical examination, the maximum sum assured can reach HK$8,000,000.
3. Coverage Period
Coverage Period
Term life insurance, as the name suggests, provides life coverage for a specified period, so policyholders can also consider the “coverage period.” Generally, the monthly premium remains unchanged during the coverage period, and the market commonly offers 1-year, 5-year, 10-year coverage periods, with some policies even providing up to 30 years.
For example, with Bowtie Term Life , the coverage period is one year. Although the premium may be adjusted after one year, Bowtie’s application system displays the estimated premiums for the next 5 years for reference before the policyholder makes payment, allowing them to plan their budget accordingly.
4. Application Age
Application Age
Application age is another important factor for term life insurance . Different insurance companies may have different restrictions on application age, with most setting the eligible age between 18 and 65 years old :
| Minimum Application Age | Maximum Application Age | |
| Bowtie | 18 | 65 |
| Company A | 16 | 70 |
| Company B | 18 | 65 |
| Company F | 18 | 65 |
| Company W | 18 | 60 |
| Company Z | 18 | 65 |
| Company ZU | 18 | 70 |
5. Convenience of Policy Management
Convenience of Policy Management
Whether an insurance company provides a convenient online policy management system is an important consideration factor, because term life insurance has a simple product design. If quoting, applying, underwriting , and even claiming protection advice can be done online, policyholders can save a lot of time.
However, not all insurance companies offer a simple application process and policy management system. Some companies still rely on intermediaries for sales, so policyholders must contact insurance agents or brokers, or even become customers of a specific bank, to get an initial quote or submit an application.
For example, with Bowtie, the pioneering online underwriting system allows policyholders to apply anytime and anywhere, instantly know if they are covered and the required premium, and manage their policies after logging in. Even without creating an account, you can use the premium calculator and personalized protection recommendation tool to get an initial quote and calculate how much coverage you need.
| Bowtie | Other Insurance Companies | |
| Application Process | Apply directly online | May require application through intermediaries or becoming a bank customer |
| Underwriting | Answer a few questions online | May require a medical examination and provision of health documents |
| Quotation | Get an initial quote without creating an account | May need to contact intermediaries for an initial quote |
| Coverage Calculator | Available | Need to meet with intermediaries to get recommendations |
6. Exclusions
Exclusions
According to the Insurance Authority’s study manual , it is mentioned that “in life insurance, unless in the case of suicide exclusion clauses or accidental death insurance benefits riders, the cause of death is not very important.” Therefore, most insurance companies in the market only include one exclusion: suicide within a short period. Most companies set the period at 12 to 24 months .
If an insurance company adds other “ exclusions ” , such as high-risk activities or occupations, you need to consider whether this life insurance plan is suitable for you.
7. Flexibility in Changing Coverage Amount
Flexibility in Changing Coverage Amount
Life protection needs change with different stages of life, so policyholders should compare the flexibility of changing the sum assured in different life insurance policies.
Some insurance companies allow policyholders to change the sum assured at certain ages or important life stages, and according to Bowtie Term Life’s policy provisions , policyholders can freely change the sum assured , with the terms stating: “You can notify us at least thirty (30) business days before the next renewal date to request a change in the sum assured.”
8. Claims Procedure
Claims Procedure
Whether for life insurance or other insurance products, the claims process is the most important aspect. If the insured unfortunately passes away, beneficiaries need to file a claim, and a clear and simple claims procedure can help them receive emergency financial assistance as soon as possible.
When choosing an insurance company, it is recommended to check online for a claims page, whether the website explains the claims procedure, or lists the required documents. Additionally, life insurance beneficiaries are usually the insured’s close relatives, who are already dealing with grief and handling many post-death matters; if the company offers online claims options , beneficiaries can complete the claims process more conveniently and receive compensation quickly.
Factors to Consider When Buying Whole Life Insurance
When comparing whole life insurance products, you need to additionally consider the premium payment period , investment returns , and fees :
1. Premium Payment Period
Premium Payment Period
The premium payment period for whole life insurance ranges from 20 to 30 years. Before purchasing, you must assess whether you have sufficient idle funds for payments, as whole life insurance is like a mortgage—defaulting could result in losing all or part of your principal.
2. Investment Returns
Investment Returns
In simple terms, whole life insurance works by using the policyholder’s premiums for investments. If the insurance company profits, it will share a portion of the profits with you.
Investments involve risks, and there are no guaranteed profitable options. Before purchasing, ask your intermediary if the whole life insurance offers “guaranteed returns,” what the returns are, and take time to compare other market investment options, such as real estate, bonds , stocks, etc., to see which investment tool suits you best.
3. Fees
Fees
Whole life insurance premiums are relatively expensive because they involve investments, and part of the premium may cover intermediary commissions. If the policyholder cancels during the payment period, the insurance company could incur losses. Therefore, interrupting the policy might lead to principal loss, and the company may charge additional fees. Before purchasing, understand if the policy terms mention extra fees or miscellaneous charges to avoid turning savings into losses.
