Many young people think that annuities are only suitable for those who are nearing retirement or have already retired, and this idea can make you miss out on financial opportunities! Retirement planning is a must-have in life, and the more you save, the higher the potential for your wealth to grow over time, and the more worry-free your retirement life will be. There are many annuity products in the market that offer considerable growth potential, and some of them have a shorter premium payment term of as little as 5 years, which can also benefit young people. In addition, in order to encourage people to save voluntarily for retirement, the Hong Kong Government provides tax deductions to taxpayers who purchase Qualifying Deferred Annuity Policies. Start applying for a Tax Deduction Annuity Plan as early as possible, the benefits are beyond imagination at any time, that is, take a look at the following 3 advantages of applying for a Tax Deduction Annuity Plan.
Lazy Money Management Approach Achieve your savings goals while you're young
As a newcomer to society, you may not be able to immediately appreciate the importance of stable retirement income. However, it is conceivable that as you get older, you will lose a stable source of income after retirement, and at the same time, you will face a certain amount of financial pressure in the face of living expenses. If you don't have much financial knowledge, buying a tax deduction annuity can be regarded as a lazy financial tool, and regular contributions may be more able to avoid impulsive spending, save money and make long-term food in disguise, and help you plan your life goals properly.
Sun Life's Extended Deferred Annuity Plan is available for applications from age 18 to 65 with 5-year and 10-year premium payment terms and a variety of annuity options. The plan provides a stable monthly income of up to 100 years old, with a non-guaranteed monthly annuity payment from accumulated reversionary dividends¹ It also offers considerable potential for growth and flexibility to suit the policy owner's plan and budget.
Earn tax deductions
As a tax-deductible product, one of the selling points of a tax-deductible annuity is naturally to save tax for the policyholder. Harvest Deferred Annuity Plan is a Qualifying Deferred Annuity Policy ("QDAP") certified by the Insurance Authority, with a maximum tax deduction (per taxpayer) of HK$60,0002 per year of assessment. For example, assuming that the policyholder, Mr. Sze, is the policy owner, the insured (annuitor) and the taxpayer, and has paid an annual qualifying annuity premium of HK$70,000, assuming a tax rate of 17%², Mr. Sze can save HK$1,60 x 000%, i.e. HK$17,10 in tax in the first policy year. As long as the premium payment period is in place, you can continue to enjoy the tax deduction offer.
Considerable value-added potential and at the same time to protect the living needs of the family
In addition to tax deduction, Harvest Deferred Annuity Plan will declare non-guaranteed reversionary dividends (if any) at least once a year starting from the 3rd policy anniversary and credit them to your policy. Reversionary dividends are guaranteed once declared and accumulate in the policy to bring snowballing returns. The more reversionary dividends you accumulate, the higher the non-guaranteed Monthly Annuity Payment you will receive.
At the same time, the Harvest Deferred Annuity Plan can also protect your family. In the unfortunate event of the death of the insured, the beneficiary will receive the death benefit. The Harvest Deferred Annuity Plan offers 2 payment options for the death benefit, namely a lump sum or instalments³ to maintain the financial expenses of your family. If you are planning to start a family and want to balance your family needs with your own retirement protection, starting to apply for a Tax Deductible Annuity Plan as early as possible can help you achieve your financial goals as soon as possible.
Terms and conditions apply. This article contains general information only and does not constitute any recommendation to sell an insurance policy. For details of the product features including details of risks and exclusions, please refer to the relevant brochure and sample policy document. If there is any discrepancy between this document and the policy document, the policy document shall prevail. For details of the interpretation and full terms and conditions, please refer to the sample policy document. We will provide relevant documents upon request. For more information, please refer to the Sun Life website: https://sunlife.co/813x
¹. The non-guaranteed Monthly Annuity Payment is determined and paid based on the accumulated Reversionary Bonus, the Non-guaranteed Monthly Annuity Payment and the Reversionary Bonus are not guaranteed and are determined by Sun Life Hong Kong Limited ("Sun Life") at its sole discretion and announced from time to time, both of which may vary based on the performance of a number of empirical factors, of which investment return is generally regarded as the primary determinant. Other factors include, but are not limited to, claims experience, policy expenses, taxes and the policy owner's experience in terminating the policy. If there is any change in the reversionary bonus and non-guaranteed Monthly Annuity Payment, the total internal rate of return will also be affected. Under the Plan, any withdrawal of the cash value of accumulated Reversionary Dividends can only be made after the premium payment term. Such withdrawals after the premium payment term will reduce the face value and cash value of the accumulated Reversionary Dividends and the future non-guaranteed Monthly Annuity Payment.
². The maximum tax deduction per taxpayer for each year of assessment is HK$60,000, which is the aggregate limit of qualifying annuity premiums and tax deductible MPF voluntary contributions. Whether the premiums paid under the Plan are tax deductible for salaries tax and tax under personal assessment is subject to the prevailing tax laws in Hong Kong and your individual circumstances, please refer to the Tax Impact section of Qualifying Deferred Annuity Policy for the key risk factors. Please note that only the premiums payable and paid for qualifying annuities in the year of assessment are eligible for tax deduction in the year of assessment. For more information about the tax concessions applicable to Qualifying Deferred Annuity Policies, please visit the website of the Insurance Authority (www.ia.org.hk/tc). For other tax enquiries, the Policy Owner may also visit the Inland Revenue Department's website or contact the Inland Revenue Department directly.
³. The Minimum Death Benefit Amount shall be met at the time of exercising the Death Benefit Payment Option, which shall be determined by Sun Life from time to time.
(Data provided by the customer)