Pure life insurance plans are luring a higher number of people in Hong Kong compared to the policies having saving features, as depicted by the trend in 2008.
A survey has revealed that in 2008, customers in Hong Kong shifted from life insurance policies providing saving features to pure life policies, as reported by TMCnet.
The survey conducted by HSBC group showed that last year, the number of new pure life insurance and term life policies in Hong Kong escalated to 18% of overall new life policies sold, compared to 7% rise in 2007. The number of life policies with saving features declined 38% of the total new life products sold, against 51% in 2007. Also, the penetration of conventional products such as pure and term life insurance policies in Hong Kong’s insurance market rose from 12% in 2007 to 16% in the previous year.
The demand for conventional life insurance products in Hong Kong escalated in 2008 mainly due to people’s inclination towards more fundamental and reasonable insurance policies. Even the financial crunch in 2008 could not restrain people to purchase life insurance policies as part of long-term investment or retirement plans.
To address the changing preferences and requirements of customers, professionals in the insurance sector and other financial institutions are continually exploring the potential of new insurance products. Considering the rapid market growth, there is an immense demand for highly capable contenders.
Further, people, particularly those having 10 to 30 year investment plans, have realized that they are not required to abandon their targets of wealth management, waiting for the current economic conditions to improve. Those desiring to accumulate long-term wealth may probably find appealing investment opportunities once the market gets back on track, especially those with monthly investment plans.
Investment-linked products will continue to retain their status of long-term wealth accumulation products. On the other hand, annuities, which too are designed to meet the long-term saving objectives, are suitable for people who want double benefit of future income as well as protection.
According to a Research Analyst at RNCOS, “Insurance will continue to lure people in Hong Kong as a better option of long-term saving and wealth accumulation, regardless of present market environment. However, market instability, lower rates of interest and slow economic growth will lead into a decline in the net worth, which, in turn, will lower the family protection. Consequently, the need for a more basic and reasonable protection plan will be felt.”
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