Insurance Referral Case

Client Background – Mr. Chan & Mrs. Chan

• • Ages: 40 (Engineer) & 35 (Teacher)
  • Family: 2 children

  • Income & Expenses:

    • Monthly household income: HK$140,000

    • Monthly net savings: ~HK$50,000 (after living expenses & mortgage)

  • Property:

    • Primary residence value: HK$10M

    • Outstanding mortgage: HK$5M (20 years remaining)

  • Existing Coverage: Basic group medical insurance (employer-provided)

  • Investments: Currently only holds bank deposits with no other investment allocations

Financial Goals

Target retirement at age 55 (15 years away), but current assets and savings progress are insufficient.

Financial Analysis & Challenges

1. Retirement Savings Shortfall:

• Reliance solely on low-yield bank deposits makes it difficult to combat inflation or accumulate adequate retirement funds.
• At current savings rate (HK50K/month),projectedsavingsin15years: HK9M (likely insufficient for retirement needs).

2. Inadequate Family Protection:

• Dependent only on basic group medical insurance, lacking critical illness or life coverage.
• As primary breadwinner, Mr. Chan’s health/accident risks could disrupt income, affecting mortgage payments and children’s education.

3. Mortgage Burden:

• HK$5M mortgage repayment period extends beyond planned retirement date.

Advisor Recommendations & Plan

1. Enhanced Family Protection

• Critical Illness Insurance:
  • Coverage: HK$2M (≈2 years of living expenses)
  • Purpose: Lump-sum payout for treatment costs or income replacement if diagnosed with a serious illness.

• Term Life Insurance:
  • Coverage: HK$10M (covers mortgage + children’s education)
  • Purpose: Ensures family financial stability by clearing debts and maintaining lifestyle if Mr. Chan passes away.

2. Retirement Growth Strategy

Risk Profile: Medium-high tolerance → Suitable for growth-oriented assets.

Recommended Tools:

• • Savings Insurance Plan:
    Long-term stable returns with guaranteed cash value; ideal for retirement goals.
    Monthly contributions (e.g., HK$20K) to leverage compounding.
  • Diversified Portfolio:
    Gradually shift deposits into balanced funds/low-risk bonds for better returns.

3. Mortgage Optimization

• Explore refinancing or partial prepayment to reduce interest costs and shorten loan term.

Expected Outcomes

✔ Comprehensive Protection: Fills coverage gaps for critical illness and life risks.

✔ Boosted Retirement Savings: Combined savings and investments better align with retirement targets.

✔ Reduced Mortgage Stress: Insurance payouts or repayment strategies lower post-retirement liabilities.

(Note: Recommendations are illustrative; actual plans require personalized analysis.)