HSBC'S LATEST CREDIT-CARD insurance scheme is surely a sign of the times. Reacting to consumer concerns about being unable to meet monthly liabilities in the event of losing one's job, the bank is for the first time offering a repayment protection plan that gives a monthly benefit to customers who get the axe. For a premium of HK$70 a month, Hong Kong residents are eligible for a monthly benefit of HK$1,000 for six months after losing their jobs or being unable to work, irrespective of their credit-card balance. 'We did a fair amount of research whilst we were designing the product,' says Ann Pearce, head of insurance products at HSBC. 'The feedback we got from customers is that there is a certain amount of stress associated with concern about unemployment and also about one's potential inability to work because of a disability. In this climate, people are concerned about job security.' Choosing the HK$1,000 sum was carefully calculated, Ms Pearce says. 'For the vast majority of our customers, this [sum] is going to be more than adequate to cover spending on their cards,' she says. Standard Chartered Bank offers similar insurance to all new cardholders - free for the first three months. For an ongoing premium of 0.4 per cent of monthly expenditure, 10 per cent of the outstanding credit card bill is paid for six months following unemployment or disability. 'This product has been very well received,' a spokesman said. 'We are studying this area carefully in light of the economic conditions and high unemployment our customers face.' Aside from credit-card protection, there is little in the way of unemployment insurance for Hong Kong's workforce. Workers in countries such as Britain, Australia and the United States are eligible for benefits, thanks chiefly to higher tax rates. These vary from up to 26 weeks of benefits in the US sourced from employer contributions, to indefinite state support in other places or payments related to employee contributions made while in the workplace. Workers also receive at least a month's severance pay, while in Hong Kong employers are only obliged to pay two thirds of a month's wage. Back in 1998, during the Asian financial crisis, Top Glory Insurance pioneered an unemployment policy. It was dropped two years later when Pacific Century Insurance took over the company. In general, insurance firms maintain the view that government should deal with public welfare issues. For now, a spiralling deficit and pressure on the welfare system mean hard times for Hong Kong's unemployed. Companies are also less likely to pay more than is mandatory in tough economic times. With a jobless rate at a record 7.7 per cent and no upturn in sight, financial advisers say workers need to take matters into their own hands and plan ahead for rainy days. According to Chris Davies, associate director at financial planning firm Towry Law, products like HSBC's are useful as the cash can go towards keeping up with insurance contributions or savings plans, and paying credit-card bills. But preparing for life's financial adversities, such as unemployment or ill-health, should be done far in advance. Depending on individual profiles, an investment portfolio should contain 10 to 15 per cent in cash for emergency reserves, with 20 to 30 per cent in property and the remainder in stocks, bonds, mutual or hedge funds. Cash holdings will address immediate money concerns if a monthly wage is suddenly suspended, Mr Davies says. Investment portfolios can also be structured to provide income should a monthly salary suddenly dry up due to unemployment or an extended period away from the workplace. Severance packages vary, but are unlikely to provide a regular income for long. 'Many younger people choose a growth-only portfolio which will not give dividends as they are all reinvested,' Mr Davies says. 'You will not be able to access that portfolio at all without incurring penalties. 'You need to be prudent when you are sitting down and organising the portfolio. Look at all concerns - and unemployment is a major one in people's minds right now - and think about building in things like income-withdrawal systems,' he says. 'If people want to take a secondment from their career or are made unemployed, they need to draw an income from somewhere.' Investors also need to take care when signing contractual agreements, such as regular savings plans or insurance policies. Some products allow for premium holidays - allowing policyholders to suspend monthly contributions without incurring penalties for a period of time. With other plans, investors risk losing out on accumulated savings if the policy is cut off before time, no matter what the reason. 'Be very careful about what type of agreement you go into, particularly nowadays as unemployment is a major issue,' Mr Davies says. Job concerns aside, Ms Pearce says Hong Kong people remain relatively under-insured compared with those in other developed economies. She hopes to see more customers turning to household, life and medical insurance to cushion themselves against any nasty surprises life may have in store. 'We need to take care of the worst-case scenarios,' adds Mr Davies. 'That means regular financial reviews. Take care of the bad times and let the good times take care of themselves.'