Dividend Options 紅利選擇

Nature of Policy Dividends 保單紅利的性質

Policy dividends apply only to participating policies. They are the part of the insurer's divisible surplus that is distributed to policyholders. A non-participating policy pays no dividends, so it has no dividend options.

Surplus depends mainly on whether the insurer's actual experience is better than its pricing assumptions, including mortality, investment returns and expenses. Dividends are not guaranteed benefits: once declared, the current dividend can be applied under the chosen option, but neither future declarations nor their amounts are assured.

In Hong Kong, insurers must make the difference between guaranteed and non-guaranteed benefits clear to customers. A benefit illustration is not a promise. Customers can also refer to the fulfilment ratios published by insurers to see how non-guaranteed benefits were actually paid in the past, although past results do not indicate future performance.

Cash and Premium Reduction 收取現金與扣減保費

The cash option is the simplest: the insurer pays the declared dividend directly to the policyholder. The money leaves the policy and does not increase the cover or the policy values.

Premium reduction uses the dividend to offset the next premium, and the policyholder pays only the balance. For example, with an annual premium of HK$20,000 and a dividend of HK$3,000, the policyholder pays HK$17,000. Because dividends vary, the balance may change each year, and failure to pay it can still have the usual consequences of an unpaid premium. If the dividend exceeds the premium due, the excess is generally paid in cash or dealt with under another option.

Accumulation at Interest and Buying Extra Cover 累積生息與購買額外保障

Accumulation at interest leaves the dividend with the insurer to earn interest at a rate set by the insurer, which is generally not guaranteed. The policyholder can usually withdraw the accumulated amount at any time. Anything not withdrawn is paid together with the policy benefit on death, maturity or surrender. This option does not raise the sum insured.

Paid-up additions use each dividend as a single premium to buy extra paid-up insurance at the life insured's age at that time. No further premiums are due on it, and evidence of insurability is usually not required. The additions generally provide the same type of cover as the basic policy, have their own cash value and may also earn dividends. Because they generally carry little or no expense loading, they usually cost less than separately purchased cover.

One-year term additions use the dividend to buy extra death cover lasting one year, which suits a person wanting a low-cost, short-term increase in protection. The cover ends when the year expires and generally has no cash value. Some insurers set a purchase limit, such as the policy's cash value, with any excess dealt with under another option.

Choosing and Changing Options, and Related Bonus Types 選擇、更改及相關紅利類型

The policyholder normally chooses an option when applying for the policy. If no choice is made, the default stated in the policy applies. The options available vary by insurer and product, so the policy terms are decisive.

The policyholder can generally apply to change the option later. If the change would increase the insurer's death risk, such as moving from cash to paid-up additions or one-year term additions, the insurer may require evidence of insurability. This stops people whose health has worsened from adding cover, which would be anti-selection.

Some participating policies add bonuses to the policy benefits instead of giving the customer an annual cash dividend to apply. A reversionary bonus, once declared, is added to the basic sum insured and is paid on death or maturity, while early surrender gives only its cash value. A terminal bonus is generally considered only when the policy ends or matures, and it is not guaranteed.