Life Insurance

Life Insurance Products at a glance

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Product/Principal Brochures

• WholeLife Protection Plan
• Lifestyle Protection Plus
• Target Protection Plus
• WealthInvest Insurance Plan
• Term Protection Plan
• RetireIncome Annuity Plan
• LifeSave Protection Plan (Lifetime Medical)

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Retirement Insurance Products at a glance

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Policy dividend

HSBC Life (International) Limited ("HSBC Life") issues dividend-paying policies, which are life insurance contracts providing both guaranteed and non-guaranteed benefits. The guaranteed benefits include some or all of the following benefits: 1) guaranteed death benefits, 2) guaranteed cash values, 3) guaranteed annuity payment and 4) guaranteed maturity values. The non-guaranteed benefits comprise policy dividends, which may be paid or varied at the discretion of HSBC Life.

Policy dividends allow policyholders to participate in the financial performance of the life insurance operation. Whether dividends are paid and the size of the dividends which an insurer distributes or pays to its customers depends on how well it has performed with regard to investment returns on the assets supporting those policies, as well as its performance managing other financial matters such as claims, persistency and expenses. If the performance over the long term is better than expected, then dividends paid would increase and if performance is worse than expected then dividends paid would reduce.

HSBC Life operates a relatively conservative investment policy in order to secure the guaranteed benefit and to protect the dividend-paying policies from frequent adjustment of non-guaranteed benefit. The assets supporting the dividend-paying policies consist predominantly of fixed interest securities issued by government and corporate entities with good credit quality. Equity-type investments managed on a prudent basis are also utilized in order to enhance the investment performance in the long run. The exposure to equity-type assets is normally within the range of 0% to 20%.

HSBC Life adjusts the level of dividends payable to policyholders depending on both the actual performance and also management's expectation of the long term future performance in relation to the assets referred to in the previous paragraph. The company operates a smoothing philosophy in relation to the policyholder dividends payable, so the level of dividends will only be changed if the actual performance is significantly different from expected over a period of time or if management's expectation of the long term future performance changes. Policyholders can choose to accept their dividends either in cash or to leave them on deposit with HSBC Life and receive a credited interest at a rate decided by HSBC Life.

The main advantage of dividend-paying policies over other forms of insurance contract is that in addition to the guaranteed benefits receivable, policyholders will also benefit from additional dividend payments if the insurance company's performance is better than that required to support the underlying guarantees. The better the performance the greater the dividend payments, and conversely the worse the performance, the lower the dividend payments.

Certain dividend-paying policies sold on a tranche basis over a limited period are managed differently from the other dividend-paying policies mentioned above, which is in accordance with the specific dividend structure offered under those policies. The level of dividends payable will largely depend on the performance of the underlying investment portfolio as the contributions from other financial matters would usually be very small under this type of dividend-paying policies. Also, the majority of the policy dividends are payable as a lump sum at policy maturity date instead of payable annually at each policy anniversary date.

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