People in Hong Kong need to know more about investment-linked insurance
More than 40 per cent of respondents to a survey on Hong Kong's investing public say they have no idea what an investment-linked insurance policy is, according to insurer Standard Life.
This low awareness of an otherwise popular investment vehicle, which is a type of life insurance that combines investment and protection, was also apparent in that while 56 per cent of respondents said they were aware of the product category, only 25 per cent recognised it by name. The remainder only recognised the product when a description of investment-linked insurance policies was read to them.
Normally in investment-linked insurance a small part of the premium is used as life insurance, and the remaining larger portion is issued for fund investment.
Return is linked to the performance of the funds selected and the investor has the option to switch funds without being charged any switching fees.
They can usually withdraw some of the money they have paid into the policy but such a procedure typically incurs an extra fee.
Alan Armitage, chief executive of Standard Life Asia, linked the low awareness level to the Hong Kong consumers' general lack of familiarity with investing in mutual funds, preferring instead to buy and sell stocks directly.