Characteristics of Investment-linked Long Term Insurance Policies 投資相連長期保單的特點

Premium Rating and Charge Disclosure 保費率的基礎與收費披露

Premium rates for life insurance or annuities depend mainly on three factors: the cost of insurance; expenses covering distribution and operation, with provision for contingencies and the authorised insurer's profits; and interest or investment earnings. Distribution and operating costs both belong within expenses; treating them as two of the three main factors would leave out investment earnings.

All fees and charges under an investment-linked policy are made known to the policyholder. This transparency helps explain how premiums are used, but it does not mean that the policy is free of charges or that every dollar of premium is invested.

Net Premiums, Separate Accounts and Fund Choice 保費淨額、獨立賬戶與基金選擇

After applicable charges, such as the cost of insurance and expenses, the remaining premium is invested in the policyholder's chosen investment fund accounts. These accounts are separate from the insurer's general assets or investments; separation alone does not guarantee investment returns.

Policies generally offer a choice of funds, such as money market, equity and bond funds, with different investment strategies. Being available under the same policy does not mean that the funds follow the same strategy or produce the same performance.

For calculations, follow the deduction and pricing method stated in the question. For example, if the entire amount remaining after charges buys units at a stated price, units purchased equal the investible amount divided by the unit price; if policy value is calculated solely from the units held, it equals the number of units multiplied by the current unit price.

Investment Risk and the Minimum Guaranteed Death Benefit 投資風險與最低保證身故賠償

The policyholder receives all investment gains and bears all investment losses arising from the chosen funds. As the underlying fund values change, policy value also changes, so benefits such as the death benefit, annuity payments or cash value are affected by investment performance.

The minimum guaranteed death benefit provides a floor for the death benefit, with the actual payment calculated under the policy terms. This guarantee does not extend to the investment principal, policy value, annuity payments or surrender proceeds; policy value can still fall when the funds perform poorly.

The Effect of Small Premiums 小額保費的影響

Investment-linked policies generally do not work well with very small premiums because expenses and the cost of insurance may leave little available for investment. Some expenses are fixed amounts, so they take a larger proportion of a smaller premium.

Assess the amount remaining after charges, rather than looking only at the premium paid. A positive fund return alone does not establish that policy value must exceed total premiums paid, because insurance protection and other charges have used part of those premiums.