AIA Deferred Annuity Plan

Life Insurance - Retirement Income

Underwritten by AIA International Limited (Incorporated in Bermuda with limited liability)

PLAN AHEAD FOR A STABLE STREAM OF RETIREMENT ANNUITY INCOME

AIA Deferred Annuity Plan provides you guaranteed Monthly Annuity Payment, helping you to realise a fulfilling retirement life.

We understand that you want to have a stable guaranteed annuity income stream that you can rely on for your retirement. With AIA Deferred Annuity Plan, you can choose Annuity Payment Start Age for the annuitant (as the insured) to start receiving high guaranteed portion of annuity income at age 50, 55, 60, 65 or 70, and enjoy a regular annuity income stream for 10 years.

Stable returns for retirement

5-year premium payment term

AIA Deferred Annuity Plan is denominated in US dollars, the minimum annual premium is US$4,800. With a 5-year premium payment term and premium amounts are guaranteed to remain stable throughout the entire period of your payments.

Your choice of annuity arrangement for your retirement

Benefit received when policy matures

Provided that the insured is alive at the end of the benefit term, the policy will mature and we will pay you any accumulated Monthly Annuity Payment with interest accrued (if accumulation has been chosen as the payment option of Monthly Annuity Payment) and any Terminal Dividend in a lump sum.

If the worst should happen

If the insured passes away, we will pay the death benefit to the person whom you select in your policy as beneficiary. The amount of death benefit will be calculated according to the tables below.

In either of the cases above, we will deduct all outstanding debt under your policy before we make the payment of death benefit to the beneficiary.

Protection for your loved ones

Apart from lump sum payment, during the insured’s lifetime, you can choose in advance to let the beneficiary continue receiving the unpaid Monthly Annuity Payment from the insured’s death (the death should occur on or after the commencement of the Annuity Period) until the end of the Annuity Period. If there is any accumulated Monthly Annuity Payment accrued before the insured passes away, such amount with any interest will be paid in a lump sum to the beneficiary at the time of the insured’s death.

Easy to join

No medical examination is required for new applications, as long as the total annual premiums do not exceed the aggregate limit set for each insured, subject to our prevailing rules and regulations.

Delay premium payments in case of unemployment

Unemployment may cause a significant impact on your finances. Hence, the Unemployment Benefit helps ease your financial burden during tough times while keeping the insured protected, even if life takes an unexpected turn. Subject to terms and conditions and our approval, if you are laid off and become involuntarily unemployed during the premium payment term of your basic plan, you may claim for the Unemployment Benefit. Once it is approved, the grace period for late premium payment under the basic plan and any add-on plans will be extended from 31 days up to 365 days to give you a safe buffer. Your Unemployment Benefit claim needs to be submitted within 30 days of your involuntary unemployment. The Unemployment Benefit is available once per policy and relevant proof is required.

Extra cover for more protection

Save more while planning your retirement

AIA Deferred Annuity Plan is certified by the Insurance Authority as a qualifying deferred annuity policy where you can apply to deduct your premiums paid from your annual taxable income. This means if you are taxpayer in Hong Kong, you can apply for tax deduction of up to HK$60,000* per taxpayer each year which allows you to plan ahead to grow wealth for your retirement while also enjoying a tax deduction.

As an example, the illustration below shows the maximum tax deduction amount you could claim for you and your spouse as a policy owner applying AIA Deferred Annuity Plan.

* HK$60,000 is the maximum tax deductions per taxpayer per year for qualifying annuity premiums and MPF tax deductible voluntary contributions. For details on tax deductions, please visit the website of Inland Revenue Department (IRD) of HKSAR or contact IRD for tax related enquiries. You can also consult your tax and accounting advisors for tax advice.

Important Information

The brochure does not contain the full terms and conditions of the policy. It is not, and does not form part of, a contract of insurance and is designed to provide an overview of the key features of this product. The precise terms and conditions of this plan are specified in the policy contract. Please refer to the policy contract for the definitions of capitalised terms, and the exact and complete terms and conditions of cover. In case you want to read policy contract sample before making an application, you can obtain a copy from AIA. The brochure should be read along with the illustrative document (if any) and other relevant marketing materials, which include additional information and important considerations about this product. We would like to remind you to review the relevant product materials provided to you and seek independent professional advice if necessary.

This plan can be only purchased through Bank of East Asia as a basic plan.

The brochure is for distribution in Hong Kong only.

“AIA”, “the Company”, “We”, “our” or “us” herein refers to AIA International Limited (Incorporated in Bermuda with limited liability).

Effective from 1 January 2018, all policy owners are required to pay a levy on each premium payment made for both new and in-force Hong Kong policies to the Insurance Authority (IA). For levy details, please visit our website at www.aia.com.hk/useful-information-ia-en or IA’s website at www.ia.org.hk.

Dividend Philosophy

This is a participating insurance plan in which we share a portion of the profits earned on it and related participating insurance plans with the policy owners. It is designed to be held long term. The premiums of a participating insurance plan will be invested in a variety of assets according to our investment strategy. The cost of policy benefits (including guaranteed and non-guaranteed benefits as specified in your plan that may be payable on death or surrender, as well as charges we make to support policy guarantees (if applicable)) and expenses will be deducted as appropriate from premiums of the participating insurance plan or from the invested assets. We aim to ensure a fair sharing of profits between policy owners and shareholders, and among different groups of policy owners.

Divisible surplus refers to profits available for distribution back to policy owners as determined by us. The divisible surplus that will be shared with policy owners will be based on the profits earned from your plan and related groups of similar plans or similar group of policies (as determined by us from time to time by considering factors such as benefit features, policy currencies and period of policy issuance), divisible surplus may be shared with the policy owners in the form of terminal dividends and other non-guaranteed benefit payments as specified in your policy.

We review and determine the dividend amounts payable to policy owners at least once per year. Divisible surplus depends on the investment performance of the assets which we invest in and the amounts of benefits and expenses we need to pay for the plan. It is therefore inherently uncertain. Nevertheless, we aim to deliver relatively stable dividend payments over time through a smoothing process by spreading out the gains and losses over a period of time. The actual dividends declared may be different from those illustrated or projected in any insurance plan information provided (e.g. benefit illustrations) depending on whether the divisible surplus, past experience and / or outlook are different from what we expected. If dividends are different, this will be reflected in the policy anniversary statement.

A committee has been set up to provide independent advice on the determination of the dividend amounts to the Board of the Company. The committee is comprised of members from different control functions or departments within the organisation both at the AIA Group level as well as Hong Kong local level, such as office of the Chief Executive of the Company, legal, compliance, finance, investment and risk management. Each member of the committee will endeavour to exercise due care, diligence and skill in the performance of his or her duties as a member. The committee will utilise the knowledge, experience, and perspectives of each individual member to assist the Board in the discharge of its duty to make independent decisions and to manage the risk of conflict of interests, in order to ensure fair treatment between policy owners and shareholders, and among different groups of policy owners. The actual dividends, which are recommended by the Appointed Actuary, will be decided upon the deliberation of the committee and finally approved by the Board of Directors of the Company, including one or more Independent Non-Executive Directors, and with written declaration by the Chairman of the Board, an Independent Non-Executive Director and the Appointed Actuary on the management of fair treatment between policy owners and shareholders.

To determine the dividends of a participating policy, we consider both past experience and the future outlook of all factors including, but not limited to, the following:

Investment returns: include interest earnings, dividends and any changes in the market value of the backing assets, i.e. the assets in which we invest your premiums (the cost of policy benefits and expenses will be deducted from the investment). Depending on the asset allocation adopted for the insurance plan, investment returns could be affected by fluctuations in interest income (both interest earnings and the outlook for interest rates) and various market risks, including interest rate risk, credit spread and default risk, fluctuations in listed and private equity prices, real estate prices as well as foreign exchange currency if the currency of the backing assets is different from the policy currency, etc.

Claims: include claims for death benefits and any other insured benefits under the insurance plan.

Surrenders: include policy surrenders, partial surrenders and policy lapses; and their corresponding impact on the backing assets.

Expenses: include both expenses directly related to the policy (e.g. commission, underwriting, issue and premium collection expenses) and indirect expenses allocated to the insurance plan (e.g. general administrative costs).

Some participating insurance plans (if applicable) allow the policy owners to place their annual dividends, guaranteed and non-guaranteed cash payments, guaranteed and non-guaranteed incomes, guaranteed and non-guaranteed annuity payments with us, potentially earning interest at a non-guaranteed interest rate. To determine such non-guaranteed interest rate, we consider the returns on the pool of assets in which these amounts are invested with reference to the past experience and future outlook. This pool of assets is segregated from other investments of the Company and may include bonds and other fixed income instruments.

For dividend  philosophy  and  dividend  history,  please visit our website at https://www.aia.com.hk/en/dividend-philosophy-history.html

Investment Philosophy, Objective and Strategy

Our investment philosophy aims to deliver sustainable long-term returns in line with the insurance plan’s investment objectives and the Company’s business and financial objectives.

Our aforementioned objectives are to achieve the targeted long-term investment results while minimising volatility in investment returns to support the liabilities over time. They also aim to control and diversify risk exposures, maintain adequate liquidity and manage the assets with respect to the liabilities.

Our current long-term target strategy is to allocate assets attributed to this insurance plan as follows:

The bonds and other fixed income instruments predominantly include government and corporate bonds and are mainly invested in the United States and Asia-Pacific. Growth assets may include listed equity, equity mutual funds, physical real estate, real estate funds, private equity funds and private credit funds, and are mainly invested in the United States, Asia-Pacific and Europe. Growth assets generally have a higher long-term expected return than bonds and fixed income assets but may be more volatile in the short term. The range of target asset mix may be different for different participating insurance plans. Our investment strategy is to actively manage the investment portfolio i.e. adjust the asset mix in response to the external market conditions and the financial condition of the participating business. For example, there is a smaller proportion of growth assets when interest rates are low and a larger proportion of growth assets when interest rates are high. When interest rates are low, the proportion of growth assets may be even smaller than the long-term target strategy, so as to allow us to minimise volatility in investment returns and to protect our ability to pay the guaranteed benefits under the insurance plans, whereas the proportion of the growth assets may be even larger than the long-term target strategy when interest rates are high to allow for the possibility that we may share more investment opportunities in growth assets with the policy owners.

Our currency strategy is to minimise currency mismatches. For bonds or other fixed income instruments, our current practice is to endeavour to currency-match bond purchases with the currency of the underlying policy (e.g. US Dollar assets will be used to back US Dollar insurance plans). Subject to market availability and opportunity, bonds may be invested in a currency other than the currency of the underlying policy and currency swaps may be used to minimise the currency risks. Currently assets are mainly invested in US Dollar. Growth assets may be invested in a currency other than the currency of the underlying policy and the selection is done according to our investment philosophy, investment objectives and mandate.

We will pool the investments from similar participating insurance plans to determine the return and we will allocate the return to specific participating insurance plans with reference to their target asset mix. Actual investments (e.g. geographical mix, currency mix) would depend on market opportunities at the time of purchase, hence may differ from the target asset mix.

The investment strategy is subject to change depending on the market conditions and economic outlook. Should there be any material changes in the investment strategy, we will inform policy owners of the changes, with underlying reasons and expected impact to the dividends.

Key Product Risks

1. Investment and Early Surrender Risk

   The plan may make certain portion of its investment in growth assets. Returns of growth assets are generally more volatile than bonds and other fixed income instruments, you should note the target asset mix of the product as disclosed in this product brochure, which will affect the non-guaranteed Monthly Annuity Payment and Terminal Dividend on the product. The savings component of the plan is subject to risks and possible loss. The policy is designed to be held for a long term period. Should you surrender (or partially surrender which will be allowed after the end of the premium payment term and all premiums when due have been paid) the policy early, you may receive an amount considerably less than the total amount of premiums paid.

2. Non-payment of Premium Risk

   You should pay premium(s) on time and according to the selected premium payment schedule. If you stop paying the premium before completion of the premium payment term, you may surrender the policy, otherwise, the premium will be covered by a loan taken out on the policy automatically. When the loan balance exceeds the sum of guaranteed cash value and any accumulated Monthly Annuity Payment with interest of the basic plan less any outstanding debt of your policy, the policy will terminate and you will lose the cover. The surrender value of the policy will be used to repay the loan balance, and we will refund any remaining value. You may receive an amount considerably less than the total amount of premiums paid in case you reduce or stop paying the premium.

3. Termination Conditions

   You may request for the termination of your policy by notifying us in written notice. Also, we will terminate your policy and you / the insured will lose the cover when one of the following happens before the policy matures:
   • the insured passes away and
   i. the death benefit is payable in a lump sum; or
   ii. when all the due amounts of the death benefit have been paid if the death benefit is payable monthly in the form of guaranteed Monthly Annuity Payment and any non-guaranteed Monthly Annuity Payment;
   • you do not pay the premium within 31 days (or 365 days under Unemployment Benefit) of the due date and the policy has no cash value;
   • any benefit is paid under the basic plan or an add-on plan that triggers termination of the policy; or
   • the outstanding debt exceeds the guaranteed cash value of the policy. Where the premium is covered by a loan taken out on the policy automatically, the outstanding debt exceeds the sum of guaranteed cash value and any accumulated Monthly Annuity Payment with interest of the basic plan less any outstanding debt of your policy.

4. Payment Options of Monthly Annuity Payment

   The annuitant / insured will receive Monthly Annuity Payment if you choose to receive the Monthly Annuity Payment in cash. If you choose to accumulate the Monthly Annuity Payment in the policy, the surrender value will be paid to you upon surrender of your policy. You have the absolute right to change and choose the payment options of Monthly Annuity Payment. Under both scenarios, you will receive the policy value (if any) at maturity.

5. Credit Risk

   We underwrite the plan and you are subject to our credit risk. If we are unable to satisfy the financial obligations of the policy, you may lose your premium paid and benefits.

6. Exchange Rate and Currency Risk

   You are subject to exchange rate risks for plans denominated in currencies other than the local currency. Exchange rates fluctuate from time to time. You may suffer a loss of your benefit values and the subsequent premium payments (if any) may be higher than your initial premium payment as a result of exchange rate fluctuations. You should consider the exchange rate risks and decide whether to take such risks.

7. Inflation Risk

   Your current planned benefit may not be sufficient to meet your future needs since the future cost of living may become higher than they are today due to inflation. Where the actual rate of inflation is higher than expected, you may receive less in real terms even if we meet all of our contractual obligations.

Note for Unemployment Benefit

You must be employed under a continuous contract for not less than 24 months and be eligible for a severance payment upon termination under the employment or labour laws of Hong Kong prior to the involuntary unemployment. Further, such employment cannot be self-employment, employment by a family member (including spouse, parent, grandparent, child or grandchild) or employment as a domestic servant. The Unemployment Benefit starts on the premium due date at the time when we approve your claim and continues for up to 365 days. Proof of continuous unemployment is required by you upon our request. The Unemployment Benefit is not available if you were informed of your pending involuntary unemployment on or before the issue date or commencement date of the policy, whichever is later. The Unemployment Benefit will cease on the earliest of the following dates: (i) at the end of extended grace period, (ii) you fail to provide proof of continuous unemployment upon our request, (iii) the date on which the policy owner has been changed, (iv) the date on which any claims on waiver of premium under your basic plan is approved, (v) at the end of premium payment term of your basic plan, (vi) the date when any claims of your basic plan and/or add-on plans is made, if the premium payment mode is not changed to monthly, (vii) the date when you pay all outstanding premiums and (viii) termination date of your basic policy. Claim for Unemployment Benefit must be submitted within 30 days of your involuntary unemployment. The Unemployment Benefit could only be claimed once per policy and relevant proof is required. Please note that, during application of tax deduction, deductible amount should be qualifying annuity premiums paid, delay of premium payments may affect the tax deductions. For details on tax deductions, please visit the website of Inland Revenue Department (IRD) of HKSAR or contact IRD for tax related enquiries. You can also consult your tax and accounting advisors for tax advice. The approval of the Unemployment Benefit is subject to our prevailing rules and regulations, and the handling of policy during the extended grace period will be subject to our discretion. 

Tax Implication of Qualifying Deferred Annuity Policy (QDAP)

Please note that the qualifying deferred annuity policy (QDAP) status of this product does not necessarily mean you are eligible for the tax deduction available for QDAP premiums paid. This product’s QDAP status is based on the features of the product as well as certification by the Insurance Authority (IA) and not the facts of your own situation. You must also meet all the eligibility requirements set out under the Inland Revenue Ordinance and any guidance issued by the Inland Revenue Department (IRD) of HKSAR before you can claim these tax deductions.

Any general tax information provided is for your reference only, and you should not make any tax-related decisions based on such information alone. You should always consult with a professional tax advisor if you have any doubts. Please note that tax law, regulations or interpretations are subject to change and may affect related tax benefits including the eligibility criteria for tax deduction. We do not take any responsibility to inform you about any changes in the laws regulations or interpretations, and how they may affect you. Further information may be found in IA’s website at www.ia.org.hk. 

Certification by Insurance Authority (IA)

The IA certification is not a recommendation or endorsement of the policy nor does it guarantee the commercial merits of the policy or its performance. It does not mean the policy is suitable for all policyholders / policy owners nor is it an endorsement of its suitability for any particular policyholder / policy owner or class of policyholders / policy owners. The policy has been certified by the IA but such certification does not imply official recommendation. The IA does not take any responsibility for the contents of the product brochure of the policy, makes no representation as to its accuracy or completeness, expressly disclaims any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of the product brochure of the policy.

Suicide

If the insured commits suicide within one year from the date on which the policy takes effect, our liability will be limited to the refund of premiums paid (without interest) less any outstanding debt.

Incontestability

Except for fraud or non-payment of premiums, we will not contest the validity of this policy after it has been in force during the lifetime of the insured for a continuous period of two years from the date on which the policy takes effect. This provision does not apply to any add-on plan providing accident, hospitalisation or disability benefits.

Warning Statement and Cancellation Right

AIA Deferred Annuity Plan is an insurance plan with a savings element. Part of the premium pays for the insurance and related costs. If you are not happy with your policy, you have a right to cancel it within the cooling-off period and obtain a refund of any premiums and levy paid. A written notice signed by you should be received by the Customer Service Centre of AIA International Limited at 12/F, AIA Tower, 183 Electric Road, North Point, Hong Kong within the cooling-off period (that is, 21 calendar days immediately following either the day of delivery of the policy or cooling-off notice (informing you/your nominated representative about the availability of the policy and expiry date of the cooling-off period, whichever is earlier). After the expiration of the cooling-off period, if you cancel the policy before the end of the term, the projected total cash value may be substantially less than the total premium you have paid.

Important Notes from the Insurance Agent of The Bank of East Asia, Limited

• The Bank of East Asia, Limited (“BEA”), being registered with the Insurance Authority as a licensed insurance agency, act as an appointed licensed insurance agent for AIA International Limited (incorporated in Bermuda with limited liability) (“AIA”). This insurance plan is a product of AIA but not BEA.
• This insurance plan is underwritten by AIA and it is not a bank savings plan with free life insurance coverage. Part of the premium pays for the insurance and related costs. The premium paid is not a placement of a savings deposit with the bank and hence is not protected by the Deposit Protection Scheme in Hong Kong.
• Add-on plan (if any) is an add-on coverage for this insurance plan with additional premium paid required. BEA does not distribute any add-on plan; therefore, you cannot apply the add-on plan through BEA. If needed, you can contact AIA Customer Service Centre for inquiry after the policy is issued by AIA.
• In respect of an eligible dispute (as defined in the Terms of Reference for the Financial Dispute Resolution Centre in relation to the Financial Dispute Resolution Scheme) arising between BEA and the customer out of the selling process or processing of the related transaction, BEA is required to enter into a Financial Dispute Resolution Scheme process with the customer; however, any dispute over the contractual terms of the product should be resolved between AIA and the customer directly.
• Claims under this insurance plan must be made by you to AIA directly. You can get the appropriate claim form by calling AIA Customer Service Hotline (852) 2232 8968 in Hong Kong or visiting www.aia.com.hk or any AIA Customer Service Centre. For details, please refer to the policy contract provided by AIA.
• BEA’s sales staff (including direct sales staff and authorised agents) are remunerated not only based on their financial performance, but also according to a range of other factors, including their adherence to best practices and their dedication to serving customers’ interests.
• You are reminded to carefully review the relevant product materials provided to you and be advised to seek professional/ independent advice when considered necessary.
• For the benefits and returns mentioned throughout the product brochure and Important Notes, please note that the policy owner is subject to the credit risk of AIA. If the policy owner discontinues and/or surrenders this policy in early policy years, the amount of benefits he/she will get back may be considerably less than the total  premiums he/she has paid. Projected and/or potential benefits and/or returns (e.g. non-guaranteed monthly annuity payment, terminal dividend, interests) presented in the material are not guaranteed and are for illustrative purposes only. The actual future amounts of benefits and/or returns may be lower than or higher than the currently quoted benefits and/or returns.
• Apart from the key product risks mentioned in product brochure, you are also reminded of the following risks:

1. Liquidity risk – this insurance plan is designed to be held till the end of the policy term. You should only apply for this insurance plan if it is intended to pay the premium for the whole of the premium payment  term. If you fail to pay the premium for the whole of the premium payment term, this will cause the policy to lapse or to be terminated earlier than the original policy term, and the total  surrender value (if any) that get back by you may be less than the total premiums paid.
2. Risk from surrender – if you cancel the policy before the end of the policy term, you may suffer a significant loss, and the total surrender value received may be substantially less than the total premiums paid.
3. Non-guaranteed dividend scale – non-guaranteed benefits are based on the dividend scale of AIA determined under current assumed investment return. The actual amount payable may change anytime with the values being higher or lower than those being projected. In other words, a change in the current assumed investment return will affect the terminal dividend and non-guaranteed monthly annuity payment you will receive. Under some circumstances, the non-guaranteed benefits may be zero.
4. Risk associated with different death benefit payment options – you can opt for the option to allow the beneficiary(ies) to receive the death benefit in lump sum upon the death of the insured, or if the death occur on or after the commencement of the Annuity Period, to receive the unpaid monthly annuity payment from the insured’s death until the end of Annuity Period.  The amount of death benefit the beneficiary(ies) received in lump sum may be less than the total amount of the unpaid monthly annuity payment.