New York Life Insurance has launched a new guaranteed savings plan aiming to take advantage of current economic uncertainties. The 'Value SAVings' LIFEPlan offers variable maturity lengths, guaranteed returns and insurance protection.
Kendy Wong, deputy CEO & CFO of New York Life in Hong Kong, says, "Influenced by the flagging economy and the uncertain investment environment, people have become more prudent in managing their finances. They tend to invest in vehicles of low risks and stable returns.
"According to the Hong Kong Investment Funds Association," he adds, "the total gross sales of various investment funds in 2002 increased by 34% compared with 2001. Among them, capital guaranteed funds and guaranteed funds recorded the highest sales volumes, achieving a 27% market share of all the local investment funds last year. The figures speak for themselves. The vital message for the insurance industry is that there remains plenty of room for the market of saving tools with guaranteed returns."
'Value SAVings' LIFEPlan's flexible payment choices include five, 10 and 15 years, with the coverage lasting eight to 20 years. The plan also comes with life insurance, accidents and terminal illness benefits. In case the customer becomes unemployed, the grace period for deferring premium payments will be extended by one year.
Florence Lo, manager, product and market development of New York Life, gives an example of the product's returns, "Through 'Value SAVings' our customers can earn an interest of as high as 4.67% p.a., or 154% guaranteed total return, which is higher than the general rates for 12-month deposits."
The actual level of the guarantee will depend on the health of the client and the savings target (this example is based on a 30-year old non-smoker investing the 20-year plan).
The new product will be distributed through New York Life's agency force and through brokers. New York Life's investment team in New York will manage the funds raised.
New York Life hopes this product will enable it to continue the strong growth experienced last year and in the first quarter of 2003. In 2002 new business premiums rose 87%, with total premiums reached $114.1 million, a 48% growth over the previous year.
In the first quarter of this year new business grew by 81%, with total premiums up 45%, over the same period last year.
Lo attributes this growth to three main areas. The increase in New York Life's agency force, up 34% in the first quarter compared to the same period last year, to almost 1200 now; the investment philosophy of New York Life of investing in good quality bonds and finally the growth in single premium business.