Frequently Asked Question
Prudential With-Profits Plans

Why does my policy not match the fulfillment ratio disclosed on the company website?

The fulfillment ratios disclosed on the company website are the average ratios calculated for all relevant policies under the respective plan groups, which may not reflect the circumstances of an individual policy. For the latest policy value of an individual policy, you may refer to the anniversary statement.

Why are the values in the benefit illustration at the point of sale different from the future value illustration distributed in each policy year?

Participating policies pay both guaranteed and non-guaranteed benefits to policyholders. At the point of sale of a participating policy, a potential policyholder will receive a document of benefit illustration (insurance proposal) based on the bonus scales reflecting the condition and assumptions at the time of determination. The assumed investment returns are calculated based on the best-estimation scenario (standard illustration), as well as optimistic and pessimistic scenarios. For more details, you may refer to the Insurance Authority website for “How to interpret the benefit illustrations” at https://www.ia.org.hk/en/participating_policy/benefit.html.

After the participating policy is issued, our company will generally declare the actual bonus rate, which comes into effect for the upcoming policy anniversary in April each year. We have the right to determine and declare the bonus more frequently than on an annual basis at our sole discretion.  The future projected value may also be adjusted based on the actual performance and the latest market information and forecast. These adjustments could result in the future projected values being higher or lower than those illustrated at the point of sale. The actual values will be determined upon actual declaration.

How should I interpret the range of average increase in the current assumed investment return under the optimistic scenario and the average decrease of the current assumed investment return under the pessimistic scenario?

The range of average increase of the current assumed investment return under the optimistic scenario and the average decrease of the current assumed investment return under the pessimistic scenario shall be read together with the target investment mix of the insurance plan. A wider range of scenarios is expected for investment strategies with higher volatility.

For an insurance plan with a higher portion invested in equity-type assets, this generally results in a wider range of average increase or average decrease in the current assumed investment return under the optimistic or pessimistic scenario. For an insurance plan with a higher portion invested in fixed-income assets, this generally results in a narrower range.

Why is the fulfillment ratio of the product I purchased not available in company website? 

We disclose the fulfillment ratios for each of our participating products which have had new policies issued since 2010 and still has policies inforce for the reporting year on the company website as per the latest regulatory requirements.

If you cannot find the fulfillment ratio of the product you purchased, such as Achiever Life Assurance or Better Life Assurance, it is likely the product was discontinued before 2010. For the latest policy value of an individual policy, you may refer to the anniversary statement.

What are the factors affecting the investment performance?

Investment performance could be driven by various factors such as interest earnings from fixed-income securities, dividends from equity-type securities (if any), changes in the market value of the backing assets (such as bonds and equities, etc.) within the With-Profits Fund/ Shareholder-backed Participating Fund. Market value reflects the estimated worth of an asset and may fluctuate due to various factors including but not limited to investment outlook, monetary policy changes and foreign exchange rates, etc..

What are the factors affecting the bond value?

A bond is a fixed-income instrument and investment product issued by governments, public organisations, banks and commercial organisations. Bonds generate return on investment through recurring interest payments on the principal of the bonds and potential profit from trading the bonds in the market. A bond’s face value remains the same until it reaches maturity. While bonds are generally considered as a lower-risk investment with more stable returns than equities and provide diversification benefit to the investment portfolio, the market value of the bonds may change subject to risks which may lead to short-medium fluctuations, including:

• interest rate risks (e.g., market value of the bonds will drop when interest rates increase);

• exchange rate risks (e.g., when investing in bonds denominated in a foreign currency, movements of the foreign currency may lead to a change in bond value); and

• credit rating risks (e.g., when credit rating of a bond is being downgraded, this may lead to a decline in bond value).

What are the factors affecting the equity value?

Equity investments target to achieve higher rate of returns through capital appreciation of stocks and/or dividends. A globally diversified portfolio provides better risk-adjusted returns and may offer protection against inflation. The market value of equities may change due to fluctuation in underlying stock prices. Equity investments carry inherent market risks as their value may fluctuate and influenced by various factors, including:

• volatility of the stock markets (e.g., economic downturns);

• company performance (e.g., material news announcement such as earnings versus expectation);

• fluctuations in exchange rates (e.g., favourable or unfavourable foreign currency movement that may lead to a rise in the stock price, vice versa); and

• significant change in market sentiment.

The above information is for reference only. Policyholders should refer to the relevant policy terms and the applicable administrative rules.