Life Insurance in H.K.

History of insurance ~ Protecting against risk Cases: ~ Over 5000 years ago, in China (measures against piracy) ~ 4,500 years ago, in Rome (burial club) => First record of life insurance

What life insurance is? ~ make sure someone they love who are financially taken care of ~ Life insurance is not gambling even though it has the similarities of probability and odds ~ Life insurance is different from the other types of insurance

Background of AIA ~ AIA established since 1931 ~ one of the largest life insurers in Southeast Asia ~ offers a comprehensive product line, e.g. life and medical , accident and health insurance ~ wholly-owned subsidiary of American International Group, Inc. (AIG),

AIA corporate vision Service objective of AIA “AIA – Your 1st Choice in LIFE, The Insurance Company distinguished by leadership in Care, Trust and Professionalism.” Service objective of AIA "Customer Comes First"

Statistic of individual life insurance policy in Hong Kong from 2001 to 2005

Statistic of Long-Term Insurance business of AIA

Type of life assurance Term Life does not provide dividends pays a lump sum only upon the policyholder's death does not provide dividends connect with a mortgage, but protection benefits ↓ amount of the loan ↓

Whole Life provide a cash value for the policyholder during his lifetime provide a lump sum plus dividends to the policyholder's beneficiary upon his death Endowment pays out a lump sum upon reaching an agreed date pays a death benefit before the agreed date is reached savings and protection function

A Choice of Savings Type part of the premium is used for investment purposes fall into two groups offering guaranteed returns offering returns which directly reflect the performance of the stock market

Dread Disease offer a lump sum in the event that person insured contracts a critical illness also provide benefits in the event of death (providing a payment in lieu of a critical illness for which a policyholder has not previously claimed )

Income Replacement Plans offer a percentage amount of the insured's salary to replace his income ( ill and cannot work for a prolonged period of time ) hospital income plans (a fixed cash sum for each day spent in hospital )

Disablement Policies offer a lump sum in the event that the insured is permanently disabled due to an accident

Products of AIA Whole life insurance non-guaranteed annual dividends. Death Benefit a medical check-up every 2 years If : totally and permanently disabled

Investment linked death benefits flexible investment savings scheme Policy fee refund A comprehensive range of fund

Universal Life death benefit Guaranteed minimum interest-crediting rate higher savings and greater flexibility

Term life Death benefits unchanged premium with each 20 year period emergency cash no saving elements

Compare between term insurance

Compare between term insurance AIA Premiums are guaranteed to remain unchanged within each 20-year period Unemployment Benefit grace period to 365 days Terminal Illness Advance Payment Benefit Manulife Premiums are guaranteed to remain unchanged within each 10-years period No unemployment benefit No grace period No terminal illness advance payment benefit Won’t increase premium for changing occupation Convert to any term policy

Compare between universal insurance

Compare between universal insurance AIA Lifetime protection Flexible premium payments death benefit increase or decrease coverage Guaranteed minimum interest-crediting rate guaranteed issue guarantee the rate would never be negative Manulife Lifetime protection Flexible premium payments death benefit increase or decrease coverage Guaranteed minimum interest-crediting rate No guaranteed issue No guarantee the rate would never be negative

Compare between whole life insurance AIA Can withdraw cash anytime Guarantee Minimum interest crediting rate After the plan matured life- long income More than 70 portfolio can be choose Freedom to choose the amount of premium and duration Manulife Can withdraw cash anytime Not Guarantee After the plan matured life long income More than 40 portfolio can be choose Freedom to choose the amount of premium and duration

Compare between whole life insurance

Compare between whole life insurance Manulife Guaranteed cash value or non- guaranteed dividend accumulation No medical check up except WEALTH MAX plan Death Benefit the Insured becomes totally and permanently disabled before the age of 60 during the premium payment period, premium will be waived# AIA Guaranteed cash value or non- guaranteed dividend accumulation medical check-up#2 every 2 years Death Benefit the Insured becomes totally and permanently disabled before the age of 60 during the premium payment period, premium will be waived#3

Compare between whole life insurance AIA A full range of optional riders on accident, medical, critical illness and disability grace period to 365 days Unemployment Benefit Manulife Addition payment for supplementary benefits 2 years grace period Unemployment Benefit

Trend/development of life insurance in HK Life insurance in Hong Kong Trend : Individual Life business most dominant line of insurance business Analyze by different methods

Number of policies(保單數目 ) Measurement : whole life + term life + endowment(saving) + others 2004 : $ 6,049,940 2005 : $ 6,587,525 Increased 8.8 % Predict : increase about 9 % in 2006

Office Premiums(保單保費 ) Measurement : whole life + term life + endowment(saving) + others 2004 : $ 82,227.4 2005 : $ 98,181.2 Increased by 19.4 % Trend : increase about 20% in 2006

Sum assured(保額) Measurement : whole life + term life + endowment(saving) + others 2004 : $ 2,007,051.3 2005 : $ 2,118,108.2 Increased by 5.5 % Trend : increase about 6 % in 2006

Number of insurance agents 2002 : 41,910 peoples 2003 : 43,503 peoples 2004 : 43,690 peoples 2005 : 46,060 peoples Steadily increase Increase in 2006

Conclusion What life insurance is and the background of our target company – AIA. Type of life assurance - term life - whole life - endowment

Type of product in AIA - Saving Insurances - Investment linked - Universal life - Term life

Compare Between American International Assurance (AIA) - term life insurance - universal life insurance - whole life insurance

Trend of buying insurance in Hong Kong - number of policies - office premiums - sum assured - number of insurance agents