Life Insurance. Introduction of life insurance in HK Life insurance 1.Whole life 1.Whole life 2.Endowment 2.Endowment 3.Term 3.Term.

Life Life InsuranceInsurance

Introduction of life Introduction of life insurance in HKinsurance in HK

Life insuranceLife insurance

• 1.Whole life1.Whole life

• 2.Endowment2.Endowment

• 3.Term3.Term

Number of Policies in Number of Policies in 20042004

0500000

1000000150000020000002500000300000035000004000000

whole life endowment Term

Number of Policies in Number of Policies in whole lifewhole life

0

100000

200000

300000

400000

500000

600000

2000 2001 2002 2003 2004

Number of policies in Number of policies in endowmentendowment

0

100,000

200,000

300,000

400,000

500,000

600,000

2000 2001 2002 2003 2004

Introduction of Introduction of PrudentialPrudential

Always Listening , Always Listening ,

Always UnderstandingAlways Understanding

HistoryHistory

• 1848 – Prudential was founded on 30 May1848 – Prudential was founded on 30 May

in Hatton Garden, London. Named in Hatton Garden, London. Named

as “Prudential Mutual Assurance, as “Prudential Mutual Assurance,

Investment and Loan Association”Investment and Loan Association”

, offer life assurance and loans to , offer life assurance and loans to

the middle classes. the middle classes.

• 1919 – Prudential moved to the field of 1919 – Prudential moved to the field of General Insurance for the first time.General Insurance for the first time. Providing Fire, Marine and accident Providing Fire, Marine and accident insurance etc.insurance etc.• 1923 – agencies were set up world wide in 1923 – agencies were set up world wide in China, Malaya, the Philippines,China, Malaya, the Philippines, India and Japan etc.India and Japan etc.• 1960 – Prudential Hong Kong was set up1960 – Prudential Hong Kong was set up first as a general and then as a life first as a general and then as a life insurance business insurance business

• 1994 – Prudential Corporation Asia 1994 – Prudential Corporation Asia was was

formed to develop and formed to develop and existing existing

business in Asia.business in Asia.

Structure of Operating DivisStructure of Operating Division of Prudential plc(UK)ion of Prudential plc(UK)

Prudential plc (UK)

Prudential’s UK & Europe Insurance Operation

Jackson National Life

M & G

Prudential Corporation Asia

Egg plc

Introduction of AXAIntroduction of AXA

Be Life Confident!Be Life Confident!

HISTORYHISTORY

• 1986 - Nation Mutual acquired Sentry 1986 - Nation Mutual acquired Sentry Assurance International LTD.Assurance International LTD.• 1990 - Operation extended to Macau.1990 - Operation extended to Macau.• 1992 - National Mutual Asia was listed on 1992 - National Mutual Asia was listed on the Hong Kong Stock Exchange.the Hong Kong Stock Exchange.• 1999 - Renamed as AXA China Region 1999 - Renamed as AXA China Region Limited.Limited.• 2005 - 20thanniversary of the AXA brand.2005 - 20thanniversary of the AXA brand.

In Hong KongIn Hong Kong

• AXA China Region, was formed after the AXA China Region, was formed after the acquisition of Sentry Assurance International acquisition of Sentry Assurance International Ltd. by National Mutual in 1986, has been a Ltd. by National Mutual in 1986, has been a leading insurer in Hong Kong and Macau for leading insurer in Hong Kong and Macau for over 18 years. over 18 years.

• AXA China Region is a wholly-owned AXA China Region is a wholly-owned subsidiary, and is one of the largest life subsidiary, and is one of the largest life insurers in Hong Kong, ranking in the top 6 insurers in Hong Kong, ranking in the top 6 for new business and top 3 for in-force for new business and top 3 for in-force business. business.

• As of 31 December 2004, the business has As of 31 December 2004, the business has A$7.6 billion funds under management, total A$7.6 billion funds under management, total premium income of A$1.5 billion, over 2,100 premium income of A$1.5 billion, over 2,100 agents, 300 advisers and 500 employees agents, 300 advisers and 500 employees

Structure of Operating Structure of Operating Division of AXADivision of AXA

AXA

The Insurance Market The Insurance Market Share of both companies Share of both companies

in Hong Kongin Hong Kong

Individual Life Insurers’ Individual Life Insurers’ statisticsstatistics

cited from Office of the Commissioner of Insurance cited from Office of the Commissioner of Insurance

• For detail, the number of policies for liFor detail, the number of policies for life insurance that Prudential made last fe insurance that Prudential made last year is nearly 15% of the market.year is nearly 15% of the market.

Name of Name of InsurerInsurer

Financial Financial Year Year EndedEnded

No. of No. of PoliciesPolicies

Sums Sums AssuredAssured

PremiumPremiumss(Annual)(Annual)

PremiumPremiumss(Single)(Single)

Net Net LiabilitiesLiabilities

Prudential Prudential (UK) (UK) 31-12-0431-12-04 370,356 370,356 204,980,751 204,980,751 3,211,398 3,211,398 403,698 403,698 14,062,379 14,062,379

Market Market TotalTotal 5,406,046 5,406,046 2,007,051,344 2,007,051,344 47,111,885 47,111,885 10,010,324 10,010,324 161,949,335 161,949,335

Comparison between Comparison between other insurer in accident other insurer in accident

& health insurance& health insuranceInsurer Financial

Year EndAccident & Health insurance

Gross Net

ING General 31/12/2004 72,086 70,692

AXA China (HK)

31/12/2004 285,219 258,795

Prudential 31/12/2004 176,710 142,738

AIA (HK) 30/11/2004 99,486 96,602

The strategy of the investmentThe strategy of the investment

• Match the net investment results and the Match the net investment results and the estimated maturity of its investment with estimated maturity of its investment with expected payments on insurance expected payments on insurance contracts. contracts.

• Because financial market performance Because financial market performance may affect the level of surrenders and may affect the level of surrenders and withdrawals on life insurance policies, as withdrawals on life insurance policies, as well as projected immediate and long-well as projected immediate and long-term cash needs. term cash needs.

• Adjusts its investment portfolios to reflect Adjusts its investment portfolios to reflect such considerations. such considerations.

Compare Compare Prudential & AXAPrudential & AXA

Life Insurance ProductLife Insurance Product

How to make the price?How to make the price?

• AgeAge• GenderGender• Smoking or Non- smokingSmoking or Non- smoking

CompareCompare

• PricePrice• Protection CoverageProtection Coverage• Premium PaymentPremium Payment• Premium Payment TermPremium Payment Term

Life Insurance CompareLife Insurance CompareGender : Female(Non Smoking)Gender : Female(Non Smoking)

Age (ANB) : 22Age (ANB) : 22

PrudentialPrudential AXAAXA

Premium Payment Premium Payment $730(per year)$730(per year) $1037.4(per year)$1037.4(per year)

Premium Payment Premium Payment StableStable StableStable

Premium Payment TermPremium Payment Term Up to age 78Up to age 78 Up to age 100Up to age 100

Life Protection CoverageLife Protection Coverage Age 100Age 100 Age 100Age 100

InvestmentInvestment Different FundsDifferent Funds NailNail

SavingSaving Declared annually. Client can Declared annually. Client can choose to withdraw them or leave choose to withdraw them or leave them with the company to earn them with the company to earn interestinterest

Surrender of PolicySurrender of Policy Special Investment BonusSpecial Investment BonusDo not affected by Stock MarketDo not affected by Stock Market

DeathDeathLevel Death BenefitLevel Death Benefit

The basic sum insuredThe basic sum insuredThe accumulated dividends(if The accumulated dividends(if any)any)Special Investment Bonus(if any)Special Investment Bonus(if any)

Medical Insurance Medical Insurance CompareCompare

• Gender : Female (Non Smoking)Gender : Female (Non Smoking)• Age(ANB) : 22Age(ANB) : 22

PrudentialPrudential AXAAXA

Premium PaymentPremium Payment $2493.504(per year)$2493.504(per year) $2330.64(per year)$2330.64(per year)

Premium PaymentPremium Payment Up to age 75Up to age 75 Up to age 75Up to age 75

Premium Payment TermPremium Payment Term 5353 6060

Life Protection CoverageLife Protection Coverage Up to age 75Up to age 75 Up to age 75Up to age 75

Hospitalization definitionHospitalization definition At less 6 hoursAt less 6 hours At less 8 hoursAt less 8 hours

Medical Insurance Medical Insurance CompareCompare

ProtectionProtection PrudentialPrudential AXAAXA

HospitalizationHospitalization(per confinement)(per confinement)

Daily Room & BoardDaily Room & Board Up to 90 daysUp to 90 daysClaim whole paymentClaim whole payment(Regular room)(Regular room)

Up to 120 daysUp to 120 days$600 per day$600 per day

Intensive careIntensive care Up to 90 daysUp to 90 daysClaim whole paymentClaim whole payment(Regular room)(Regular room)

Up to 15 daysUp to 15 days$2000 per days$2000 per days

Doctors' VisitsDoctors' Visits Up to 90 daysUp to 90 days$585$585

Up to 120 daysUp to 120 days$600 days$600 days

Anesthetist's FeesAnesthetist's Fees Maximum 35% of the Maximum 35% of the relevant Surgeon’s Feerelevant Surgeon’s Fee

Maximum 30% of the Maximum 30% of the relevant Surgeon’s Feerelevant Surgeon’s Fee

Operating TheatreOperating Theatre Maximum 35% of the Maximum 35% of the relevant Surgeon’s Feerelevant Surgeon’s Fee

Maximum 30% of the Maximum 30% of the relevant Surgeon’s Feerelevant Surgeon’s Fee

Long Term IllnessLong Term Illness(per policy)(per policy)

Radiotherapy & Radiotherapy & Chemotherapy for Chemotherapy for CancerCancer

NilNil $50,000$50,000

Kidney DialysisKidney Dialysis NilNil $150,000$150,000

Medical Insurance Medical Insurance CompareCompare

Death BenefitsDeath Benefits Compassionate Death Compassionate Death BenefitBenefit

$78,000$78,000 NilNil

Accidental Death BenefitAccidental Death Benefit $78,000$78,000 NilNil

Medical Accident and Medical Accident and Incident Extension Incident Extension BenefitBenefit

$85,800$85,800 $60,000$60,000

DeathDeath NilNil $10,000$10,000

Benefit ScheduleBenefit Schedule Up to 1000 daysUp to 1000 days(whole policy)(whole policy)$390 per day$390 per day

Up to 1000 daysUp to 1000 days(whole policy)(whole policy)$750$750

PRUmed surgical PRUmed surgical cash plancash plan

AAmountmount is payable accordis payable according to the severity rating ing to the severity rating of the surgeryof the surgery

NilNil

Total Disability Total Disability Waiver of Waiver of Premium BenefitPremium Benefit

The policy will be waived The policy will be waived until the policy expires or until the policy expires or such total disability stopssuch total disability stops

NilNil

The function of The function of InsuranceInsurance

•ProtectionProtection•Saving & InvestmentSaving & Investment

•Protection > Protection > Saving & Saving & InvestmentInvestment

Unfortunate event of Unfortunate event of DEATHDEATH

•No matter Long Term or No matter Long Term or Short TermShort Term

Gain a large Gain a large amount of money to amount of money to beneficiarybeneficiary

Short Term ( Year 4 )Short Term ( Year 4 )• The total amount of premiums paid: The total amount of premiums paid:

US$2,564 US$2,564 (HK$19,871)(HK$19,871)

• Total guaranteed cash endowments: NilTotal guaranteed cash endowments: Nil• Basic sum insured: US$15,000 (HK$116,250)Basic sum insured: US$15,000 (HK$116,250)• Total amount received in the unfortunate Total amount received in the unfortunate

event of death (annual return ratio 9%) :event of death (annual return ratio 9%) : US$15,526 US$15,526 (HK$120,326.5)(HK$120,326.5)

• Total amount received in the unfortunate Total amount received in the unfortunate event of death (annual return ratio event of death (annual return ratio 5%) :5%) :US$15,502 US$15,502 (HK$120,140.5)(HK$120,140.5)

Long term ( Year 43 )Long term ( Year 43 )

• The total amount of premiums paid:The total amount of premiums paid: US$27,565 US$27,565 (HK$213,628.75)(HK$213,628.75)

• Total guaranteed cash endowments: Total guaranteed cash endowments: US$12,000 (HK$93,000)US$12,000 (HK$93,000)

• Basic sum insured: US$15,000 (HK$116,250)Basic sum insured: US$15,000 (HK$116,250)• Total amount received in the unfortunate Total amount received in the unfortunate

event of death (annual return ratio 9%):event of death (annual return ratio 9%): US$220,460 US$220,460 (HK$1,708,565) (HK$1,708,565)

• Total amount received in the unfortunate Total amount received in the unfortunate event of death (annual return ratio 5%) :event of death (annual return ratio 5%) : US$98,774 US$98,774 (HK$765,498.5) (HK$765,498.5)

Refund Refund • Short term not showing a protection Short term not showing a protection

of suddenly requirement and the of suddenly requirement and the advantage and benefits of saving and advantage and benefits of saving and investmentinvestment

Need money within short Need money within short period period

• Short term not showing a protection Short term not showing a protection of suddenly requirement and the of suddenly requirement and the advantage and benefits of saving and advantage and benefits of saving and investmentinvestment

Need money within short Need money within short period period

Short Term ( Year 4)Short Term ( Year 4)

• The total amount of premiums paid:The total amount of premiums paid: US$2,564 US$2,564 (HK$19,871)(HK$19,871)

• Total guaranteed cash endowments: NilTotal guaranteed cash endowments: Nil• Guaranteed cash value: US$810 Guaranteed cash value: US$810

(HK$6,277.5)(HK$6,277.5)

• Total cash value (annual return ratio 9%):Total cash value (annual return ratio 9%): US$1,336 (HK$10,354)US$1,336 (HK$10,354)

• Total cash value (annual return ratio 5%):Total cash value (annual return ratio 5%): US$1,312 (HK$10,168) US$1,312 (HK$10,168)

• Long term provide Protection, Long term provide Protection, Saving and Investment functions.Saving and Investment functions.

Need money after retired Need money after retired

Long Term ( Year 43 )Long Term ( Year 43 )

• The total amount of premiums paid:The total amount of premiums paid: US$27,565 US$27,565 (HK$213,628.75)(HK$213,628.75)

• Total guaranteed cash endowments: US$12,000 Total guaranteed cash endowments: US$12,000 (HK$93,000) (HK$93,000)

• Guaranteed cash value:US$7,650(HK$59,287.5)Guaranteed cash value:US$7,650(HK$59,287.5)

• Total cash value (annual return ratio 9%):Total cash value (annual return ratio 9%):

US$213,065 (HK$1,651,253.75)US$213,065 (HK$1,651,253.75)• Total cash value (annual return ratio 5%):Total cash value (annual return ratio 5%):

US$91,379 (HK$708,187.25)US$91,379 (HK$708,187.25)

NEW TRENDNEW TREND

Insurance become more importantInsurance become more important

Reasons:Reasons:• Birth rate decreaseBirth rate decrease• Hospitalization cost increaseHospitalization cost increase• Rapidly ageing populationRapidly ageing population• SARSSARS

Population statisticPopulation statistic

年份年份 人口人口 年齡中位數年齡中位數 6565 歲以上人口所佔的百歲以上人口所佔的百分比分比

1991 1991 5 674 114 5 674 114 31 31 8.7% 8.7%

1996 1996 6 412 937 6 412 937 34 34 10.1% 10.1%

2001 2001 6 708 389 6 708 389 37 37 11.1% 11.1%

2011 2011 7 530 000 7 530 000 41 41 12% 12%

2021 2021 8 230 000 8 230 000 44 44 17% 17%

2031 2031 8 720 000 8 720 000 46 46 24% 24%

Q & AQ & A

QuestionQuestion

• 1) which are the following insurance 1) which are the following insurance companies we have just introduced?companies we have just introduced?

A)A) ManulifeManulifeB)B) AXAAXAC)C) PrudentialPrudentialD)D) AXA and PrudentialAXA and PrudentialE)E) All of the aboveAll of the above

• 2) When will be the premium 2) When will be the premium payment term of the AXA’s life payment term of the AXA’s life insurance policies terminated?insurance policies terminated?

A) Up to age 65A) Up to age 65

B) Up to age 75B) Up to age 75

C) Up to age 78C) Up to age 78

D) Up to age 100D) Up to age 100

• 3) Which of the following reason is 3) Which of the following reason is NotNot relate to people increase buying relate to people increase buying insuranceinsurance

A) SARSA) SARS

B) Birth rate declineB) Birth rate decline

C) Hospitalization cost decreaseC) Hospitalization cost decrease

D) Rapidly ageing populationD) Rapidly ageing population

• You can go to You can go to OFFICE OF THE COMMISSIONER OF OFFICE OF THE COMMISSIONER OF

INSURANCEINSURANCE to get more information to get more information about insurance about insurance http://www.info.gov.hk/oci/text/chi/http://www.info.gov.hk/oci/text/chi/about/content14.htm about/content14.htm

The EndThe End