Universal Life Insurance Products
Universal Life Insurance products are long term insurance plans offering a high flexibility for Policyholders’ multi-generational planning needs and other insurance needs. For details of the product features and key risks of Universal Life insurance products, please refer to the relevant product materials and policy provisions or contact your relationship manager or insurance consultant.
The benefits provided by Universal Life Insurance products are impacted by the crediting interest rates as well as applicable charges. The General Crediting Interest Rate is a floating rate determined by Hang Seng Insurance Company Limited (“Hang Seng Insurance”), subject to a guaranteed minimum floor as stipulated on policy provisions.
Philosophy in deciding the General Crediting Interest Rate
The applicable General Crediting Interest Rate vary depending on the policy currency and product series. Such rates are regularly reviewed by Hang Seng Insurance at its discretion. Hang Seng Insurance will inform Policyholders concerned for any subsequent change of the General Crediting Interest Rates of their policies.
When determining the General Crediting Interest Rate, which applies to each Universal Life insurance policy, Hang Seng Insurance considers the investment returns on the underlying assets supporting the policies, as well as other factors, including but not limited to: the outlook of the long term future investment returns, the claims and surrender experience, and the expenses. If the investment returns over the long term are better than expected, then the General Crediting Interest Rate would increase and if the investment returns are worse than expected, then the General Crediting Interest Rate would reduce.
The investment returns on Universal Life underlying portfolios include interest earnings as well as losses or gains realized upon the disposal of assets or asset impairments. The claims include the cost of providing the death benefit and other insured benefits under Universal Life insurance policies. The surrenders include total and partial surrenders, and their corresponding impact on investments. The investment returns on Universal Life underlying portfolios are not guaranteed.
In order to ensure that discretion exercised when defining the crediting interest rates is fair to all Policyholders, and that any conflicting interests of Policyholders with other Policyholders and/or shareholders have been addressed having due regard to the fair treatment of Policyholders, Hang Seng Insurance established a dedicated committee providing independent advice on the management of the universal life business.
Hang Seng Insurance maintains a prudent approach to investing for the Universal Life underlying portfolios, with the primary goal being the delivery of long term value to Policyholders.
Each portfolio is invested in fixed income assets, include corporate bonds, government bonds and alternative credit, under pre-determined diversification and rating objectives. The current long-term investment strategy is to predominantly invest in diversified long term investment grade fixed income assets. Unrated fixed income assets may also be considered if they fit the Company's risk appetite profile. However, the Exquisite products underlying portfolios are conservatively positioned to limit the exposure to unrated assets. The majority of assets are held by the Company with long term prospects in order to match its long term liabilities. Subject to our investment policy, derivatives may be utilized to manage our investment risk exposure, for matching between assets and liabilities and for efficient portfolio management.
For the historical General Crediting Interest Rate of Universal Life Insurance Products of Hang Seng Insurance, that had new policies issued in the previous 5 years, please refer to this document.