Medical Financing: Can You Fully Self-Fund Medical Insurance Premiums?
What is Medical Financing?
Medical Financing is a strategy often recommended by insurance intermediaries to policyholders. It means that when purchasing health insurance , the policyholder also buys a long-term life insurance policy with a savings component . The purpose is to use the dividends from this savings life insurance policy, which are distributed and compounded over time, to pay for future health insurance premiums . Many insurance intermediaries claim this arrangement allows policyholders to “stop paying” for their health insurance policy after a certain period.
Benefits of Medical Financing
Medical financing , as described by insurance intermediaries, has the benefit of allowing policyholders to “stop paying” for their health insurance policy after a certain number of years (e.g., 15 or 20 years). It’s important to note that most health insurance policies require annual renewal , and their design rarely provides lifetime or long-term medical coverage after a specified payment period.
Under the medical financing arrangement, the long-term savings life insurance accumulates dividends over several years. After the specified period, the policy’s guaranteed and expected returns can pay for or subsidize the health insurance premiums, ensuring that policyholders do not have to worry about losing medical coverage due to insufficient financial resources after a certain number of years or upon retirement.
This strategy sounds quite appealing, so it’s not uncommon to see social media posts with titles like “Continue Coverage After Stopping Health Insurance Payments” or “Stop Paying for Medical Policy After 15 Years,” which attract many comments from people interested in learning more.
Netizens' Views on Medical Financing
Some LIHKG users believe that medical financing recommendations can be misleading and may ultimately fail to subsidize health insurance premiums. One user even conducted a calculation experiment to demonstrate that the strategy might not support health insurance expenses after age 65.
Another LIHKG user bluntly stated that the claim of “stopping payments” for health insurance through medical financing is deceptive, as the rate of premium increases for health insurance and the fulfillment rate of dividends from savings policies are both unknowns.
Not all netizens are against medical financing. Various users on BabyKingdom believe that such arrangements can help subsidize future health insurance expenses or even “stop payments” for health insurance.
4 Limitations of Medical Financing
Is medical financing a viable option? Or is the devil in the details? The Bowtie team won’t make a definitive judgment, but we would like to point out that there are indeed the following 4 major limitations in implementing medical financing:
The premise for medical financing to work is having a savings life insurance policy, a health insurance policy, and several years of accumulation, meaning this arrangement is inevitably “pain first, gain later.” Policyholders still need to pay the premiums for both policies with real money in the early stages. This may be burdensome for young people just starting their careers or those with lower incomes.
Additionally, savings life insurance policies generally have a “breakeven year” in their design. Cashing out or surrendering the policy before this time is likely to result in a loss for the policyholder, highlighting the financial flexibility limitations of medical financing arrangements.
The calculations for medical financing are generally based on premium data for different ages in the health insurance premium table, as well as the annual guaranteed and expected returns from the savings life insurance. The amount of savings life insurance to purchase is calculated on this basis. However, this calculation must consider factors for health insurance premium adjustments , simply put, the premium increase rates for health insurance over the coming decades.
Health insurance premium adjustments are influenced by the loss ratio (reflecting past client claims) and medical inflation . Even if the insurance company’s loss ratio is stable, medical inflation remains a global trend. Willis Towers Watson’s 2025 Global Medical Trends Survey Report indicates that Hong Kong’s expected inflation rate in 2025 is 9.8%, and after subtracting general inflation, medical costs will still rise by 7.5%.
It is an undeniable fact that medical inflation will drive health insurance premiums upward in the long term, so whether the returns from the savings life insurance policy can keep up with health insurance expenses remains uncertain.
The concept of medical financing is to accumulate dividends through a savings life insurance policy. Under the compounding effect, after several years, the annual dividend returns from the policy are used to pay or subsidize health insurance premiums. It’s important to note that the returns from savings life insurance can generally be divided into guaranteed returns and expected returns ( non-guaranteed returns ), with the former typically accounting for a smaller proportion than the latter.
The non-guaranteed returns are actually determined by the insurance company based on market conditions, profits, and claims. Situations where non-guaranteed returns “shrink” have occurred (as seen in the dividend fulfillment rates of major insurance companies), leading to a longer “breakeven period” for policyholders. This may mean that the time to achieve “stopping payments” for health insurance needs to be extended, or the amount of dividends available to subsidize health insurance expenses decreases.
As mentioned earlier, health insurance premiums are highly likely to increase due to medical inflation, and the returns from savings life insurance also carry uncertainty. Therefore, to achieve a truly effective medical financing arrangement, it may be necessary to purchase a savings life insurance policy with a larger premium amount and select a health insurance product with relatively basic coverage and lower premiums.
Although medical financing may to some extent subsidize policyholders’ future health insurance expenses, truly “stopping payments” for health insurance completely requires very accurate predictions and calculations regarding savings insurance returns and health insurance premium adjustments. The result may require consistently higher savings insurance contributions to enhance the reliability of this strategy.
Buy High-Value Medical Insurance Over Financing
Whether you believe in the strategy of medical financing or have already prepared to create future passive income through other financial tools, purchasing an affordable and comprehensive Medical Insurance is still the most practical move, without worrying that premiums will become astronomically unaffordable as you age.
Take Bowtie as an example. As a pure online insurance company, we have always been committed to providing high value-for-money pure protection insurance products. We compare the Bowtie VHIS Standard Plan with a similar plan from traditional Insurer A . Let’s see how much cheaper it is to choose Bowtie pure online VHIS?
Bowtie vs Insurer A VHIS Standard Plan
Individuals aged 65 to 80* who take out insurance with Bowtie can save HK$93,708* compared to taking out Insurer A ‘s VHIS Standard Plan. Since both products are VHIS Standard Plans , the coverage is almost the same, so we recommend comparing the premiums.
| Age | Insurer A
VHIS Standard Plan Annual Premium |
Bowtie
Annual Premium |
Difference |
| 65 | HK$10,965 | HK$7,452 | HK$3,513 |
| 66 | HK$11,374 | HK$7,812 | HK$3,562 |
| 67 | HK$11,898 | HK$8,172 | HK$3,726 |
| 68 | HK$12,474 | HK$8,544 | HK$3,930 |
| 69 | HK$13,070 | HK$8,952 | HK$4,118 |
| 70 | HK$13,681 | HK$9,384 | HK$4,297 |
| 71 | HK$14,528 | HK$9,816 | HK$4,712 |
| 72 | HK$15,455 | HK$10,212 | HK$5,243 |
| 73 | HK$16,397 | HK$10,632 | HK$5,765 |
| 74 | HK$17,389 | HK$11,028 | HK$6,361 |
| 75 | HK$18,143 | HK$11,484 | HK$6,659 |
| 76 | HK$18,919 | HK$11,820 | HK$7,099 |
| 77 | HK$19,738 | HK$12,036 | HK$7,702 |
| 78 | HK$20,615 | HK$12,168 | HK$8,447 |
| 79 | HK$21,506 | HK$12,552 | HK$8,954 |
| 80 | HK$22,418 | HK$12,792 | HK$9,626 |
- #For a 30-year-old insuring Bowtie Pink (Ward) – HK$80,000 Deductible
- *Based on male non-smokers aged 65 to 80, data as of December 29, 2025.
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