HSBC Retirement Monitor helps bridge Hong Kong’s protection gap
Candy Yuen, CEO of HSBC Insurance Hong Kong, explains the company's latest tool to help people save for retirement
Hong Kong’s mortality protection gap is now more than $500bn, according to reinsurer Swiss Re. How can this gap be closed? The issue isn’t just life cover, explains HSBC Insurance’s Candy Yuen. It’s also about coverage for critical illness, and making sure you don’t outlive your retirement savings. It requires thinking about protection in a holistic manner. She discusses the latest research HSBC has conducted on this issue in Asia, and the online tool the company has launched to help people save more. Based on real retirees’ spending patterns and your personal expectations, the HSBC Retirement Monitor can help Hong Kongers understand how much they need to be saving – and how soon they need to start.
Mrassociates: Hong Kong’s mortality protection gap is now more than $500bn, according to reinsurer Swiss Re. How can this gap be closed? Joining me is Candy Yuen from HSBC Insurance Hong Kong.
Candy, it’s a big question, but what can be done?
Candy Yuen: Yes indeed. The mortality gap in Hong Kong per working person with dependents is ranked the second highest in Asia.
According to our own study, more than three in five people with self-paid cover do not know the actual pay-out from the policies, or they don’t think that it’s enough.
The coverage is not only about protecting your loved ones when you die; we also need to consider coverage for critical illness, or outliving your savings at retirement. So we also have to think about protection in a holistic manner.
At HSBC, we’re committed to address this mortality gap issue, by creating the awareness and also offering the right products. We launched the HSBC Retirement Monitor last year, to help people plan for retirement, and we also launched, for example, a comprehensive critical illness plan, and a term online product – what we call the HSBC Term Protector. A very simple term online that you can buy within five minutes, without any need for medical underwriting.
Mrassociates: As you say, you have launched this retirement planning tool – an award winning retirement planning tool – tell me more; how does it work?
Candy Yuen: So it’s basically to answer the fundamental question: how much do I need, when I retire in Hong Kong? And we try to give how much you need for basic retirement life, comfortable, and affluent retirement life. Based on real data, statistics, and analytics on retirees’ consumption behaviours.
So a single person retiring needs about $3,000 per month, as their expenditure for a comfortable retirement. So: think about that. The average woman’s life expectancy is about 86 years. So if you want to retire at 60 years old, you have 26 years needing $3,000 per month: even if you exclude inflation you’re talking about a million US dollars that you have to plan.
When you start having these conversations, then you start to understand: wow, you know, I do need to start planning, perhaps now in my 30s, rather than in my 50s.
So having this awareness, to start planning – or at least having the conversation earlier – definitely helps.
Mrassociates: But is consumer behaviour changing? Are people saving more?
Candy Yuen: I think people start to at least be aware that this is a problem, or a challenge that they can’t just hide from. Because people in Hong Kong do care deeply about savings for retirement. The last thing they want is to create a financial burden for their kids or their loved ones.
However, not every one of us knows exactly how to prepare for retirement, and exactly how much we need to save for retirement and starting from when. So those are the questions that people are struggling with.
Because you either start saving earlier, and more disciplined. Or you have to adjust your realistic assumption, what kind of retirement lifestyle you’ll be having.
Mrassociates: What particular challenges do you face understanding and communicating with modern consumers?
Candy Yuen: Nowadays I think digital becomes an integral part of our daily lives. Absolute relevance is the only entry point. Because if you think about it, how many irrelevant messages do you get every day?
So, getting a better understanding in terms of how people behave, and how people think. What clicks with them. It’s absolutely critical.
At HSBC we invest heavily in customer analytics, big data, customer insight. We regularly commission a study on understanding online behaviours of our target segments, and also the broader market segments as well.
Because through this we can actually develop products that are most relevant, and also create and add value to our customers. And in this way we aim to develop the right products, and provide them at the right time, and via the right channel, as well. Because nowadays with digital technology advancement we have new media, new platforms to interact with our customers. And so that’s why we are crazy and passionate about this customer-centricity approach. Because only then we can win the hearts and the minds of our customers.
Mrassociates: Candy; thank you.
Candy Yuen: Thank you.