Reading a benefit illustration
The benefit illustration is the single most important document for understanding a policy. This page breaks it into readable blocks and adds an IRR calculator.
The cash flows and figures below are illustrative examples used to demonstrate the reading method. They do not represent the pricing or returns of any real product.
What is in a benefit illustration
A Hong Kong dividend policy illustration usually contains the following sections. Reading them block by block is more efficient than reading front to back.
Policy and applicant details
Insured's age, sex and smoking status, policy currency, premium term and annual premium — these variables determine every number that follows.
Coverage description
Death benefit, critical illness payouts, riders and exclusions — what is covered and what is not.
Premiums and payment
Premium term, payment method, the insurance levy, any discount or rebate, and the consequences of missing a payment.
Cash value illustration
Guaranteed cash value, accumulated dividends and surrender value shown by policy year — the core table for judging returns.
Scenario illustrations
Regulators require illustrations under different investment scenarios, which show the range of the non-guaranteed element.
Important notices
Cooling-off period, surrender arrangements, dividend policy, currency risk and customer notices — the most overlooked and most important part.
Cash value illustration (example)
The surrender value at year 20 is a common mid-term checkpoint. Note that surrendering early usually means a significant loss against premiums paid.
| Policy year | Cumulative premiums | Guaranteed cash value | Non-guaranteed dividend value | Total surrender value |
|---|---|---|---|---|
| 1 | 100,000 | 18,000 | 42,000 | 60,000 |
| 3 | 300,000 | 62,000 | 138,000 | 200,000 |
| 5 | 500,000 | 118,000 | 272,000 | 390,000 |
| 10 | 500,000 | 268,000 | 592,000 | 860,000 |
| 15 | 500,000 | 420,000 | 1,030,000 | 1,450,000 |
| 20 | 500,000 | 596,000 | 1,684,000 | 2,280,000 |
| 30 | 500,000 | 960,000 | 3,420,000 | 4,380,000 |
Amounts in illustrative RMB-equivalent terms. Guaranteed cash value and non-guaranteed dividend value should be assessed separately: the first is certain, the second moves with investment performance.
Internal rate of return (IRR)
Converting 'annual premium + premium term + surrender value in a given year' into an annualised return is the most direct way to compare plans.
IRR is derived by discounting the cash flows. The result is indicative and excludes the insurance levy, currency movements and tax effects.
Review your existing cover
Enter the cover you already hold. The tool sizes three long-term needs — critical illness, education and retirement — and compares them with what you have.
This is a rough sizing exercise only: no product recommendations, no judgement on the quality of any policy, and no insurance advice. Everything is calculated in your browser — nothing you type is uploaded or stored.
All three figures are calculated in today's money, with no inflation rate and no investment return assumed. That cuts both ways: the retirement figure covers spending in full without crediting the returns the capital would still earn after retirement, so it reads high; the education figure ignores fee inflation, so it reads low. Treat the output as an order of magnitude, not an actuarial result.