Hong Kong: Rules Relaxed to Allow HNIs to Access Indexed Universal Life Policy
Hong Kong is adjusting its regulations to permit the sale of indexed universal life (IUL) policies, a move aimed at accommodating the financial preferences of high-net-worth individuals (HNIs). The policy allows these affluent clients to use assets, such as stocks and bonds, as collateral in lieu of cash payments.
According to a Bloomberg report, IUL policies, in which the cash value component tracks a benchmark index, have gained popularity in the United States, Bermuda, and Singapore. Previously, Hong Kong’s regulations and risk concerns had prevented their availability.
A joint circular from the Insurance Authority and the Hong Kong Monetary Authority stated that if these policies are offered only to high-net-worth customers—specifically, professional investors—then “there is room to offset or amend the application of certain requirements” without compromising investor safeguards.
Similar to traditional universal life insurance, IUL products offer life insurance coverage combined with a cash value element, giving policyholders flexibility in premium payments. A key differentiator is that a portion—or all—of the IUL’s cash value is linked to the performance of a financial index, like a stock market index.
This regulatory shift coincides with Hong Kong’s push to expand its wealth management sector, currently valued at HKD31tn (S$5.3tn). In this effort to stimulate economic growth, the government has proposed tax breaks and investment immigration schemes, aiming to remain competitive with other financial hubs like Singapore.
