New government scheme will allow Hong Kong’s elderly folk to get loans by using their life insurance policies as collaterals
- The Policy Reverse Mortgage Programme will convert a policy’s death benefits into cash flows while the person is still alive
- It is targeted at Hong Kong Identity Card holders aged 60 or above
The Hong Kong government has launched a new retirement scheme, which will allow Hongkongers to use their life insurance policies as collaterals to draw loans.
But insurance experts and elderly welfare advocates have urged those interested in the scheme to take into consideration the additional handling charges associated with it.
Announcing the launch of the Policy Reverse Mortgage Programme on Wednesday, the Hong Kong Mortgage Corporation’s executive director and chief executive officer Raymond Li Ling-cheung said the scheme would provide retirees with an immediate, stable and lifelong stream of income for enhancing the quality of their retirement lives.
After the retirees die, the lenders will be able to recover their loans from the death benefits of the borrowers’ life insurance policies.
“The payout calculation of this product is based on its death benefits instead of its cash value,” Li said.
“In other words, the [programme] can meet people’s retirement needs by converting assets, which are supposed to be granted after death, into instant cash flows.”