HSBC Life Treasure III

HSBC Life Treasure III has noteworthy features for elaboration:

Life Coverage: The plan provides coverage for death, total and permanent disability (TPD), and terminal illness (TI) up to age 99. The benefit amount is the higher of the sum assured plus bonuses or the multiplier benefit, if applicable.
Multiplier Benefit: The plan allows you to boost your coverage by a multiplying factor of 2.5, 3.5, 4.5, or 6 times the basic sum assured and eligible riders. You can select the duration of the multiplier benefit up to the policy anniversary year of your 65th, 70th, or 80th birthday. After the multiplier coverage age, the multiplier benefit reduces by 10% each year for 5 years, then remains at 50% of the initial multiplier.
Accidental Death Benefit: In the event of death due to an accident before age 80, an additional amount is paid, equivalent to the basic sum assured or the multiplier benefit.
Cash Value Accumulation: The plan accumulates cash value over time, which can be accessed later in life. You have the option to receive annual payouts for 10 years after reaching the multiplier coverage age by utilizing up to 80% of the surrender value.
Optional Critical Illness Riders: You can enhance your coverage with optional add-ons such as the Early Critical Illness Benefit III rider, which covers 170 medical conditions across early, intermediate, and advanced stages, or the Critical Illness Benefit III rider, which covers 56 advanced stage critical illnesses. Both riders also provide additional payouts for the top 5 common critical illnesses.
Guaranteed Insurability Option (GIO): Upon specific life events such as marriage, birth or adoption of a child, or purchase of a property, you have the option to boost your coverage by purchasing a new insurance plan without additional health questions asked.
Family Support Benefit: In the event of the death of your spouse or parent, the plan pays a lump sum amount equivalent to two years of premium payments.
Premium Payment Terms: You can choose to pay your premiums for 10, 15, 20, 25, or 30 years, with payment options on a monthly, quarterly, semi-annual, or annual basis.
Payer Premium Waiver Rider: If you are the policyholder insuring another person, this optional rider allows for premium waiver if you are unable to continue payments due to death, TPD, critical illness, or involuntary unemployment.

HSBC Life Treasure III has the following pointers to take note of:

Long-Term Commitment: As a life insurance policy, it is a long-term commitment. Early termination may incur high costs, and the surrender value may be zero or less than the total premiums paid.
Not Pure Protection: The plan includes a savings component and is not a pure protection plan, so it may not suit those looking for a plan without any savings component.
Not High Yield: This plan is not designed for high policy yields or returns.
Complex Features: The plan has multiple features, such as multiplier benefits, payout options, and optional riders, that may require careful consideration and may be complex to understand fully.
Reducing Multiplier Benefit: The multiplier benefit reduces after the selected multiplier coverage age, which could mean lower coverage in later years.
Limitations on GIO: The Guaranteed Insurability Option (GIO) has certain restrictions, including the requirement to exercise the option within 90 days of a life event and a maximum of three times during the life of the insured.
Terminal Illness Exclusion: The Terminal Illness Benefit excludes cases in the presence of HIV infection.
TPD Exclusions: TPD (Total Permanent Disability) benefits are not payable if arising from a pre-existing condition not disclosed, self-inflicted injury or attempted suicide.
CI Exclusions: There are waiting periods and exclusions for certain critical illnesses, such as those arising from pre-existing conditions or diagnosed within a specific period after the policy’s start date.
Surrender Value: Surrendering the policy may result in a payout that is less than the total premiums paid.
Policy Loan Risk: Taking a policy loan can lead to policy lapse if the loan plus interest exceeds the cash surrender value.

HSBC Life Treasure III use case example:

Jason, a 30-year-old non-smoker, is newly married and planning to start a family. He decides to purchase the HSBC Life – Life Treasure III plan with a basic sum assured of S$50,000. He chooses a multiplier benefit of 6 times that lasts until his 70th birthday. He also adds the Early Critical Illness Benefit III rider with a sum assured of S$25,000. His premium payment term is 20 years, with a monthly premium of S$220.

Policy specifics:

Basic plan multiplier benefit: S$300,000 until age 70.
Early Critical Illness Benefit III rider multiplier benefit: S$150,000 until age 70.
Coverage: Jason is insured for life up to age 99 for death, total and permanent disability, and terminal illness.

How the plan benefits Jason at different stages:

Age 40: Contracts severe dengue: Jason receives a payout of S$5,000 under the special conditions benefit of his Early Critical Illness Benefit III rider. This payout does not reduce the sum assured of the rider.
Age 55: Diagnosed with advanced stage colorectal cancer: Jason receives S$150,000 from his Early Critical Illness Benefit III rider, plus an additional payout of S$12,500 for being diagnosed with an advanced stage of one of the top 5 common critical illnesses. After this payout, his rider ends, and the multiplier benefit on the basic plan sum assured reduces to S$150,000.
Age 60: Passes away due to an accident: Jason’s family receives a payout of S$150,000 from his basic plan and an additional S$150,000 from the Accidental Death Benefit. The policy then terminates.
Age 70: Payout Option: Jason can access the cash value of his policy by choosing a payout option to receive annual payouts for 10 years. He uses 50% of the surrender value to fund annual vacations and receives approximately S$2,998 per year for 10 years.
Later in Life: Jason could also choose to let the policy mature and collect the cash value, in this case, S$94,600, to gift to his family.
Guaranteed Insurability Option: When Jason has a newborn daughter, he can use the Guaranteed Insurability Option to purchase another whole life plan from HSBC Life to top up his coverage without additional health questions, even though he has been diagnosed with pre-diabetes.

Important points to consider:

The values in the scenario are based on an illustrated investment rate of return of 4.25% per annum, and all values are non-guaranteed.
If the illustrated investment rate of return is 3% per annum instead, Jason’s annual payout after age 70 would be S$1,715 per year for 10 years, and the surrender value of his policy at age 99 would be $37,392.
The multiplier benefit reduces to 50% after the multiplier coverage age.

Some things to note. This review post will get dated. And the product might not be available for new subscriptions at some point. Hopefully this serves as reference for future policyholders who have forgotten what they have taken up.

There can be shifts in planning narratives over time. For example, limited premium tenures gain popularity over the years because people are less confident of their future earning capacity or sustainability of income levels. Regular payout features gained popularity when more and more people are in tune with the FIRE (Financial independence retire early) movement. An extended period of low interest rates brought down insurance products’ returns yield for policy holders, but now in a higher interest rates environment, things have changed.

HSBC Life Treasure III may or may not fit into your financial plans. Understand that there is no best plan for all time, but there is a method to objectively facilitate your decisions. Read more about it here.

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