II. Types of Life Insurance and Annuity 人壽保險及年金的種類

The three traditional types of life insurance are term insurance, which covers death within a set period only; endowment insurance, which pays on death within the term or on survival to maturity; and whole life insurance, which covers the life insured for life. They differ in length of cover, conditions for payment, savings element and premium level.

Term Insurance · Endowment Insurance · Whole Life Insurance

Universal life insurance separates premiums, interest, the cost of insurance and expenses, and lets the policyholder adjust premiums and cover within the policy terms, while a unit-linked long term policy ties its value to the unit prices of investment funds. The key difference is investment risk: a universal life account grows at a rate declared by the insurer, usually with a guaranteed minimum, whereas the unit-linked policyholder bears most of the investment risk.

Universal Life Insurance · Unit-Linked Long Term Insurance

An annuity turns a lump sum or a series of premiums into regular income, mainly protecting the annuitant against longevity risk: living so long that savings run out. A pension is an arrangement that provides retirement income, delivered in Hong Kong mainly through MPF and occupational retirement schemes, and annuities can complement these.

Annuities · Pensions

Individual insurance assesses each life separately and issues a separate policy to each policyholder. Group insurance covers the members of an eligible group under one master policy and is underwritten mainly on the characteristics of the group as a whole.