10 things to watch out for when... Planning insurance-linked savings

Companies: The market players are insurance companies, fund houses and banks. Banks usually offer more flexibility, such as a shorter lock-up period and lower charges.

Fund choice: In any one plan, you get to choose a number of funds within which to invest your money. The more choices offered, the more efficiently you can allocate your contributions.

In-house funds only: Some plans offer only funds managed in-house. It is best to choose one that offers you a wide choice of funds managed by different fund managers.

Number of funds: Since such plans are a form of long-term investment, you should aim for a balanced portfolio of funds. Five to six funds would be adequate to help diversify the risk.

Plan fee: Note that the monthly regular contributions are subjected to a plan fee which is made up of a flat charge and an annual management charge. Consider carefully, as the plan fee varies widely (from HK$48 to as high as HK$3000) depending on the invested amount and term of the plan.

Surrender charges: If regular monthly contributions are stopped within a certain period after the first contribution, a rate of discontinuance charge will be applied. Therefore you should study all the details of a plan and be familiar with all charges before terminating it.