Life Insurance

• Universal Life
• Term Life

Pure term life insurance contains no inbuilt savings; it is simply your bet against the insurers that you may die prematurely.

These are not things we want to talk about.. but remember when you were 20? At that age one out of four men could expect NOT TO BE ALIVE on their 65th birthday (source Swiss Re 2001). For men the chances of dying prematurely are higher than women’s chances of death at the same age.

Term life rates in Hong Kong and Asia generally are significantly more expensive than term life rates in the US. In part this is because of competition and in part because of the availability of statistics. Part of the reason also may be that in Asia there is a prevalence of traditional whole-of-life insurance and increasingly unit-linked insurance products which are far more profitable to insurers than term life. So term life’s less attractive pricing helps drive customers toward taking out savings-oriented rather than term life cover.

One downside of term life cover is that as it only goes for a term and not necessarily for life, there is thus no certainty there will ever be a claim paid out on it.

If you are an American living in Asia, there was a time when you could buy from an American insurer called ‘Transamerica’. Nowadays however, Transamerica HK will insure anyone but an American, perhaps because they may have had experience of US nationals lapsing their HK policies on return to the US.

In all probability, if you are a smoker (even a cigar smoker lighting a cigar every second month), we will find you more competitive smoker rates from other local insurers than Transamerica. Such companies however are generally tougher with their medical underwriting than Transamerica, which tends to appeal to a more demanding, professional audience of people who believe in buying term and investing the rest.

With most companies you are going to need to go for a medical exam. Depending on your age and the level of cover you need, you may face additional tests like ECGs, treadmill tests and extensive probing as to your assets and liabilities.

The suggestion from most life insurers is that we should have sufficient cash on our death to cover family expenses of at least a further 7-10 years. In the US for those with life cover, the average multiplier is apparently around 3.5 times the annual salary.