Policy dividend - Participating products

Wealth accumulation - Plan today for tomorrow’s prosperity

Policy dividend

Participating insurance products

Hang Seng Insurance Company Limited (“Hang Seng Insurance”) issues participating policies, which are life insurance contracts providing both guaranteed and non-guaranteed benefits. The guaranteed benefits may include the following: 1) guaranteed death benefits, 2) guaranteed cash values, 3) guaranteed annuity payments, 4) guaranteed maturity values and 5) endowment coupon. The non-guaranteed benefits include policy dividends, which may be paid or varied at the discretion of Hang Seng Insurance. The policy dividends, if any, are in form of:

 

  1. Annual dividend[1] which is declared by the Hang Seng Insurance on an annual basis. Once declared, the amount of annual dividend[1] for the year becomes vested and will be credited to your policy.
  2. Terminal dividend[2] which is a one-off entitlement declared at maturity or upon early termination of the policy (e.g. death, surrender etc.) before maturity. The amount of terminal dividend[2] may change from time to time based on the performance over the entire period before such declaration as well as the prevailing market condition and the actual amount will not be determined until it is payable.
  3. Special dividend[3] which is a one-off entitlement declared at maturity or upon early termination of the policy (e.g. death, surrender, exercise of Policy Value Management Option[4] etc.) before maturity or special event[5] before termination of the policy (e.g. the total claims paid reaches 100% Sum Insured). The amount of special dividend[3] may change from time to time based on the performance over the entire period before such declaration as well as the prevailing market condition and the actual amount will not be determined until it is payable.

 

The key feature of participating policies over other forms of insurance policies is that in addition to the guaranteed benefits receivable, policyholders will also benefit from additional dividend payments if the performance of relevant participating policies is better than that required to support the underlying guarantees. The better the performance, the greater the annual dividend[1] and/or terminal dividend[2] and/or special dividend[3] payments, and, conversely, the worse the performance, the lower the annual dividend[1] and/or terminal dividend[2] and/or special dividend[3] payments.

Dividend philosophy

Annual dividend[1], terminal dividend[2] and special dividend[3] allow policyholders to participate in the financial performance of the life insurance operations. Whether annual dividend[1], terminal dividend[2] and special dividend[3] are payable and the size of these dividends which Hang Seng Insurance distributes or pays depend on the performance of relevant participating policies with regard to investment returns on the assets supporting the policies, as well as other factors including but not limited to claims, persistency, expenses, and the long term future performance outlook (both economic and non-economic factors). Performance of policies managed similarly are pooled together when deciding the amount of annual dividend[1], terminal dividend[2] and special dividend[3] to be paid. Please refer to section “Product risks - Risk affecting Non-guaranteed benefit determination” on the product brochure for the detail of key risk factors.

Hang Seng Insurance conducts regular review on the level of annual dividend[1], terminal dividend[2] and special dividend[3] payable to policyholders. Both actual performance in the past and management's outlook of long-term future performance will be assessed against expected (assumptions underlying the prevailing dividend scale of us), if there are variances arisen, they will then be considered sharing with policyholders through the adjustment of annual dividend[1] and/or terminal dividend[2] and/or special dividend[3] scales. If the performance over the long term is better than expected, then the annual dividend[1] and/or terminal dividend[2] and/or special dividend[3] amount paid would increase. If performance is worse than expected, then annual dividend[1] and/or terminal dividend[2] and/or special dividend[3] amount paid would decrease.

When considering the adjustment of annual dividend[1], terminal dividend[2] and special dividend[3] scales, Hang Seng Insurance operates a smoothing philosophy, so the level of annual dividend[1] and/or terminal dividend[2] and/or special dividend[3] will only be changed if the actual performance is significantly different from expected over a certain period of time or if management’s expectation of long-term future performance changes.

In order to achieve broad fairness between policyholders of participating products, Hang Seng Insurance will carefully consider the experiences of different groups of policies so that each group of policies will receive a fair return reflecting mostly its own performance. Hang Seng Insurance has also established a dedicated committee to review the fairness of treatment to policyholders and to provide independent advice on the management of the participating policies and the determination of dividend level.

Investment strategy

Hang Seng Insurance operates an investment strategy with key objectives as follows:

  1. Ensure that we can meet the guaranteed benefits that we have committed to you;
  2. Deliver to you competitive long-term returns through the non-guaranteed policy dividends; and
  3. Abide by a pre-defined set of risk appetite.

Participating policy (Policy currency: HKD/USD)[6]

The assets supporting the participating policies assets are carefully managed and monitored according to a predefined set of risk appetite. The asset portfolio predominantly consists of fixed income assets issued by government and corporate entities with good credit quality and long term prospects. Growth assets, including equity, property, hedge fund, private equity and etc. are managed on prudent basis and utilized in order to enhance investment performance in the long run. Subject to our investment strategy, derivatives may be used for hedging or efficient portfolio management.

The asset portfolio is well diversified in different types of assets, and is invested in different geographical markets (mainly Asia, US and Europe) and industries. Investment for fixed income assets are mainly in HKD and USD to match the currency of the underlying policies while growth assets are invested in various currencies for diversification.

Participating policy (Policy currency: CNY)[7]

The assets supporting the participating policies are carefully managed and monitored according to a predefined set of risk appetite. The asset portfolio predominantly consists of fixed income assets (including both onshore bonds in China Inter-bank Bond Market (“CIBM”) and offshore bonds in offshore (“CNH“) Renminbi market) and equities.

Subject to our investment strategy, derivatives may be used for hedging or efficient portfolio management. However, investing in CNY-denominated assets is subject to applicable laws, regulations and guidelines issued by relevant regulatory authorities from time to time. Any change of the applicable laws, regulations and guidelines may lead to an update to the investment strategy and the associated investment performance may be affected.

Target asset allocation

The current long-term target strategy is to allocate assets attributed to this product as follows:

 

Product group[8]

1
2 3 4 5
Asset type
Allocation %
Fixed Income
80%-100%
90%-100%
60%-100%
70%-100%
40%-100%
Growth Assets
0%-20%
0%-10%
0%-40%
0%-30%
0%-60%

There could be slight deviation from the above range due to market fluctuation.

 

Actual allocations will take into consideration past investment performance of the assets supporting the policies, prevailing market conditions and future outlook, and the guaranteed and non-guaranteed benefits of the policies. As the performance of the growth assets investment plays an important role in determining the level of non-guaranteed benefits, under normal circumstances and free from any investment and operational constraints, it is expected that the allocation to growth assets will fall within the higher end of the range as specified, in order to optimize the chance of achieving the illustrated level of non-guaranteed benefits. The management and investment strategy of the asset portfolio may be subject to change depending on the market conditions and economic outlook, and we would inform policyholders should there be any material changes.

Accumulation interest rate

Policyholders can choose to accept their annual dividend[1], and/or endowment coupon[9] and/ or annuity payments[10] either in cash or to leave them with Hang Seng Insurance to accumulate with interests (if applicable). The rates of interests are not guaranteed and will be determined by Hang Seng Insurance from time to time. The review on such interest rates will be conducted regularly with reference to the portfolio bond yields, prevailing market conditions, outlook on bond yields, and the likelihood of policyholders leaving their payment for accumulation.

The policy in determining the policy dividends and accumulation interest rates may be reviewed and adjusted by Hang Seng Insurance from time to time. For more updated information, please visit here . You may also visit the above website to understand the historical fulfilment ratio of dividend distribution for reference purposes. However, the past performance or current performance of Hang Seng Insurance’s business may not be a guide for future performances.

Remark(s)
  1. Not applicable to CompanionLife Insurance Plan, LifeBetter Critical Illness Life Insurance Plan and MaxiPlus Annuity Life Insurance Plan.
  2. Applicable to FutureEnrich Life Insurance Plan, EmbraceLife Insurance Plan, FortuneLife Deferred Annuity Life Insurance Plan and MaxiPlus Annuity Life Insurance Plan only.
  3. Applicable to LifeBetter Critical Illness Life Insurance Plan and CompanionLife Insurance Plan only.
  4. Applicable to CompanionLife Insurance Plan only.
  5. Applicable to LifeBetter Critical Illness Life Insurance Plan only.
  6. Applicable to PreciousWay Education Life Insurance Plan, FutureEnrich Life Insurance Plan, EmbraceLife Insurance Plan, LifeBetter Critical Illness Life Insurance Plan, FortuneLife Deferred Annuity Life Insurance Plan,  MaxiPlus Annuity Life Insurance Plan and CompanionLife Insurance Plan only.
  7. Applicable to SavourLife II (RMB) Annuity Life Insurance Plan and HarvestLife (RMB) Life Insurance Plan only.
  8. Product group 1 refers to PreciousWay Education Life Insurance Plan. Product group 2 refers to SavourLife II (RMB) Annuity Life Insurance Plan and HarvestLife (RMB) Life Insurance Plan. Product group 3 refers to FutureEnrich Life Insurance Plan, LifeBetter Critical Illness Life Insurance Plan, FortuneLife Deferred Annuity Life Insurance Plan and MaxiPlus Annuity Life Insurance Plan. Product group 4 refers to EmbraceLife Insurance Plan.  Product group 5 refers to CompanionLife Insurance Plan.
  9. Applicable to PreciousWay Education Life Insurance Plan only.
  10. Applicable to HavestLife (RMB) Life Insurance Plan, SavourLife II (RMB) Annuity Life Insurance Plan, FutureEnrich Life Insurance Plan, FortuneLife Deferred Annuity Life Insurance Plan and MaxiPlus Annuity Life Insurance Plan only.