Life insurance is the most popular type of insurance product in Hong Kong. It is an important type of coverage that helps cushion your loved ones after your death. Essentially, you contribute premium payments to an insurance company in return for a death benefit that your beneficiaries can access when they need it. Choosing the right life insurance plan is paramount so you get value for money and your dependants can get sufficient and timely financial protection after you leave the world.
Before purchasing a life insurance policy in Hong Kong, make sure to factor in the types of coverage available, premium and death benefit amounts, the reputation of the insurer, and more. Often, working with a licensed insurance broker is the best way to wade through all these considerations and find a life insurance plan that is ideally suited for you.
This blog post offers a few important tips and guidance that can come in handy when looking for an insurance broker in Hong Kong.
Types of Life Insurance Policies
First things first, let’s understand your options in terms of life insurance policies. Hong Kong residents typically choose from 3 main types of life insurance policies.
Term life insurance – this is a type of life insurance that doesn’t offer as much protection as whole life insurance but all the same provides a more affordable option. Term life insurance is effective for a specified duration of time (e.g. 15 years). Once it expires, you may either get your premiums back or renew your coverage (as long as you do not suffer from some kind of chronic medical condition). Term life insurance is ideal if you only need temporary protection over a fixed duration of time.
Whole life insurance – this is also referred to as permanent life coverage and is in effect throughout the policyholder’s life (so long as premiums are paid). This type of coverage has a fixed premium throughout the life of the policy and accumulates a cash value over time. Interest paid on this cash value is typically considered tax-free or tax-deferred. Policyholders are usually able to access loans or get a partial (surrender) of their cash value.
Critical Illness life insurance – this is a type of life insurance that is designed to provide a lump-sum benefit if the policyholder is diagnosed with a critical illness that is covered by the policy. This benefit would allow the insured to take care of living and treatment expenses. This type of insurance provides great coverage to fill the gaps left by health insurance plans.
Traditional vs Online Life Insurance Agent
There are two different ways to access life (and other) insurance products in today’s market:
→ Online life insurance broker
Like many other things, technology has changed how we access insurance products. Hong Kong residents are able to visit a website and access all the information they need on insurance products. You can typically compare quotes from different companies, choose a product that best suits your needs, and even purchase the policy without the need to physically meet with an insurance broker. This option works when you generally understand your needs, prefer to purchase coverage during your own time, and are looking for simpler products such as term life insurance.
→ Traditional life insurance agent
This is the old-school way of purchasing insurance. You either visit a local insurance agent’s office or have them come to your home to discuss options. After discussing your precise needs, the broker will then guide you to a suitable insurance policy. This way of accessing insurance products is ideal when you are purchasing a complicated life insurance product (e.g. a permanent life policy such as whole life insurance). The agent will help answer your questions and provide the hand-holding you need to understand the options and choose the right plan. In some cases, hiring an independent financial planner (who doesn’t earn a commission) is a good way to understand complex life insurance products and how they fit into your overall financial picture.
“Single Company” vs Independent Insurance Broker Hong Kong
It is important to understand insurance brokers from the perspective of what policies they can sell to you. “Single company” or “captive” insurance agents can only market and sell policies from the company that employs them. Independent insurance brokers, on the other hand, have no fixed affiliation to a single company. For this reason, they can market and sell policies from multiple insurers that they have an agreement with. This means they give you the chance to compare prices and options from various insurance companies and select the plan that makes the most sense to you. Independent insurance brokers can be particularly useful for patients who have difficulty qualifying for affordable coverage for one reason or the other (health conditions, risky hobbies, etc).
Qualities of a Good Life Insurance Broker
Here are some of the qualities to keep in mind when looking for a life insurance broker in HK:
Licensed – a good insurance broker should at least have an insurance broker license to operate in Hong Kong. The Hong Kong Insurance Authority is in charge of licensing professionals who are qualified and meet all the requirements set by the city. As of mid-2021, there were over 2,000 licensed insurance brokerages in the city. The number of licensed individual brokers was more than 89,000.
Experienced – an insurance broker should not just be licensed. They should also have the requisite experience to understand the market landscape and the different types of products available. Ask the agent whether they have any prior experience working with individuals from similar family, financial, and personal backgrounds as yourself. Preferably, work with someone who has been in the Hong Kong insurance scene for a good number of years.
Education and professional credentials – education, training, and professional credentials are just as important when looking for a good life insurance broker in Hong Kong. Many agents choose to complete additional training to earn credentials such as the Chartered Life Underwriter (CLU), Financial Services Specialist (FSS), Certified Financial Planner (CFF), and Chartered Financial Consultant (ChFC). These additional credentials show a serious commitment to professional and ethical practices.
People Skills – you definitely want to work with an insurance broker who has important people skills such as putting their client first. They should be able to explain the options and earn your trust. The insurance broker that you choose to work with should also provide excellent customer service, whether you’re calling to enquire about other insurance products or find out how to file a claim.
Product knowledge – an insurance broker should be able to provide a wide array of comprehensive solutions for you to choose from. They should also understand the tax and legal aspects associated with different insurance products.
About Trusted Union Insurance Brokers
Our insurance agents at Trusted Union are licensed, experienced, and highly skilled in their tradecraft. We partner with numerous insurance companies and link you to a variety of life insurance products to suit your unique needs. Our team is committed to your needs and will guide you through the various options so you get sufficient coverage and maximum value for money.
An insurance broker is a professional who acts as an intermediary between insurance companies and customers. They understand the market and help you choose the right coverage based on your unique needs. Insurance brokers sell all types of insurance, ranging from health to homeowner and life coverage.
There are tens of thousands of licensed insurance brokers in Hong Kong. Choosing the right professional is important so you get the best possible guidance. In addition to licensing by the Hong Kong Insurance Authority, look for experience, professional credentials, and personal skills.
Not all insurance companies are the same. Most customers will be attracted to the company that offers the best initial price quotes. But this does not necessarily mean that such a company is the best. Other considerations such as financial strength and the range of products available are just as important. An insurance agent or insurance broker can help you wade through the options and pinpoint the best company based on your unique requirements.