Hong Kong ILAS: Frequently Asked Questions

Legally it is a life insurance contract in Class C (linked long term) business under the Insurance Ordinance; economically it is investment-led with limited life cover. The SFC Code excludes from the term any linked policy whose predominant purpose is life assurance. The owner bears the investment risk and the insurer pays a death benefit based on account value.

No. Premiums buy notional units that exist only to value the policy. Under paragraph 3.10 of the SFC Code the insurer need not actually invest in the options you select, and you have no ownership of the underlying assets even if it does. Your recourse is against the insurer only.

Neither. The IFEC states that an ILAS is not a deposit and is not covered by the Deposit Protection Scheme. Hong Kong's Policyholders' Protection Scheme was still in preparation as at November 2026, so if the insurer becomes insolvent the owner ranks as an unsecured creditor.

Only those offered to the public. An ILAS offered exclusively to professional investors, as defined in the Securities and Futures Ordinance, generally needs no SFC authorisation (SFC FAQ 1A), but it remains an Insurance Authority-regulated policy subject to GL15 and GL26. SFC authorisation is not a recommendation and does not guarantee performance.

Two layers. Policy charges paid to the insurer: an upfront charge, an ongoing platform fee, the cost of insurance and early surrender or withdrawal charges. Fund charges paid to the fund managers: management, performance, trustee and custodian fees, deducted inside the unit price. The policy's return is therefore lower than that of the underlying funds.

Under the SFC's 23 May 2022 template, every KFS shows platform fee net of bonuses plus cost of insurance as a percentage of total premiums for a 40-year-old non-smoking male paying HK$1,000,000 single or HK$100,000 a year, at an assumed 3% return, held for 10, 15 and 20 years, and converts the result into an equivalent annual percentage of policy value.

No fixed cap, but a fairness test. Since 1 November 2021 the SFC requires fees to be fair, proportionate and commensurate with the insurance protection: the cost of insurance should generally not exceed comparable term life cover, platform fees should be comparable to investing in the same funds directly, and low-protection products should carry lower and shorter surrender charges.

The Important Facts Statement must disclose it on an all-year-average basis. The IFEC example: HK$100,000 a year for 10 years, a 15% first-year commission (HK$15,000) plus 3% in years two to six (HK$15,000), total HK$30,000, or 3% of total premiums, HK$3 per HK$100. If disclosed in bands you may ask for the exact figure for your payment term.

A market term left over from the pre-2015 design in which the death benefit was 101% of account value. Since 1 January 2015 every new ILAS must pay at least 105% of account value, which the IFEC calls "pure 105". The term now loosely means any low-protection ILAS; check the formula in the contract, not the name.

Pure 105: 105% of account value. Capital preservation: the higher of 105% of account value and premiums paid less withdrawals. Protection Linked Plan: before age 65 the higher of 105% of account value and 150% of total premiums payable less withdrawals; from age 65 the capital-preservation formula applies. In the IFEC example a 30-year-old on a 10-year PLP paying HK$50,000 a year who dies after three years with HK$100,000 in the account receives HK$750,000.

Because it is charged on the net amount at risk, the gap between death benefit and account value. Where the formula has a fixed floor, a fall in account value widens that gap, and the IFEC warns the cost of insurance "may increase significantly"; it is then deducted from the already lower account value.

A financial needs analysis and a risk profile questionnaire (if you decline them the insurer cannot accept the application), the Important Facts Statement and Applicant's Declarations with your own Statement of Purpose, and the personalised illustration document. The insurer must then record the point of sale or make a post-sale call within five working days by staff not involved in the sale.

Twenty-one calendar days from delivery of the policy or the cooling-off notice, whichever is earlier. You get back your original investment subject to a market value adjustment, which under the SFC Code may reflect only the insurer's loss on realising the assets and not issuance expenses or commission. Cancellation must be in writing.

A premium holiday does not stop the fees. The IFEC explains that charges continue to be deducted from the account value, and if it falls below the insurer's minimum or cannot cover the charges you may be required to resume payments; otherwise the policy may terminate early with a surrender penalty and you could lose all premiums paid.

Policy disputes with the insurer go to the Insurance Complaints Bureau: personal policies, claim or dispute amount not exceeding HK$1.5 million, within six months of the insurer's final decision, non-residents included. Conduct of intermediaries goes to the Insurance Authority, bank staff to the HKMA, and anything beyond the Bureau's limit to the courts.

No. The whole sales process and all signatures must take place in Hong Kong, with the Important Facts Statement for Mainland Policyholders (since 1 September 2016) and the ILAS Important Facts Statement both signed. The Mainland regulator's 2016 risk alert called policies signed on the Mainland "underground policies" protected by neither jurisdiction. Since 1 January 2017 the Mainland personal foreign-exchange purchase form excludes buying life insurance overseas. This site carries on no sales activity in Mainland China.