Participating Policy Fact Sheet This Fact Sheet helps you better understand the factors that may affect the Reversionary Bonus and Terminal Bonus of your Fortune Guard Life Insurance 1 and/or Fortune Protector Life Insurance 1, participating life insurance policies issued by AXA. 1. AXA is your choice AXA is a member of the global AXA Group, a worldwide leader in insurance and financial services. The strength of AXA provides important security and stability to our policy owners by capitalising on our global presence and professional expertise. 2. Your participating life insurance plan at a glance Your participating life insurance plan is a life insurance policy designed to provide both life insurance protection and growth potential for your savings through a combination of: a. guaranteed benefits 2 which are guaranteed cash value and guaranteed death benefit; and b. non-guaranteed bonuses 2 which are benefits in addition to the guaranteed benefits after the policy has been in-force for a specified number of years. Reversionary Bonus Reversionary Bonus may be declared to a policy on an annual basis. It is non-guaranteed before declaration. Once declared, both its face value and cash value will be guaranteed and cannot be cancelled. However, Reversionary Bonus that may be declared in the future is still not guaranteed. Terminal Bonus Terminal bonus is not guaranteed and does not form a permanent addition to the policy. It may be reduced or increased at subsequent declarations. Its amount will only be determined when payable.
Face value of Reversionary Bonus (if any) and face value of Terminal Bonus (if any) will only be payable upon the death of the insured. Cash value of Reversionary Bonus (if any) and cash value of Terminal Bonus (if any) will be payable in full or in part upon policy surrender, policy maturity, withdrawal of Reversionary Bonus and/or reducing basic sum insured, whichever is applicable. Please refer to your policy contract for details. The Company will provide information on the Reversionary Bonus and Terminal Bonus upon request. The premiums from participating policies with similar product features, policy duration and/or policy currency (as determined by AXA) are pooled together into a participating fund. Participating funds provide the benefits and cover the expenses of the relevant policies and are invested into a variety of assets including bonds, equities, alternatives, cash, policy loans, etc. 3. Reversionary Bonus and Terminal Bonus philosophy Reversionary Bonus and Terminal Bonus are reviewed at least annually and are approved by the Board of Directors. Due to different benefits and features of different products, the declarations may vary across products. Even where the product is the same, the declarations may vary among policies depending on the policy s currency denomination and/or policy duration. Factors for considerations: When we determine the Reversionary Bonus and Terminal Bonus in each of our reviews, we consider, amongst other factors, the following: a) fairness to policy owners and the long-term sustainability of Reversionary Bonus and Terminal Bonus rates b) the past investment performance and our outlook for the future investment performance of the assets in the participating funds c) the past experience and our outlook for the future experience of non-investment factors such as expenses, claims and policy surrenders d) smoothing of actual experience on investment and non-investment factors
Actual experience, especially investment can be volatile and the outlook may change over time. AXA will consider these impacts and may smooth out the actual Reversionary Bonus and Terminal Bonus payment in order to reduce the volatility. Thus, the actual ups and downs of the experiences may not be fully reflected in the Reversionary Bonus and Terminal Bonus declared for a particular year. If the actual investment performance, future long-term investment outlook and/or other non-investment factors are more favourable, there will be a possibility for higher declared rates of Reversionary Bonus and Terminal Bonus. On the contrary, if the actual investment performance, future investment outlook and/or other non-investment factors become less favourable, there may be a lower declared rates of the Reversionary Bonus and Terminal Bonus. Reversionary Bonus and Terminal Bonus are affected by both investment and non-investment factors. Generally, among the investment factors, the Reversionary Bonus rate is to a very large extent affected by the recent and future outlook of fixed income assets return while the Terminal Bonus rate is to a very large extent affected by the past experience of the participating funds. Information about the latest review of Reversionary Bonus and Terminal Bonus will be available at our website www.axa.com.hk 4. AXA s participating funds overview The overall strategy is to ensure the guarantees we committed to your policy are fully met, as well as to seek to achieve competitive long-term returns for your policy through the addition of Reversionary Bonus and Terminal Bonus. Backed by our proven financial strength and expertise, we continue to maintain a robust asset portfolio for the participating funds by investing in a wide range of investments mainly including bonds, equities, alternatives, cash, policy loans, etc.
The current target asset allocation range is shown below: Asset Growth assets (e.g. equities and alternatives) Fixed income assets (e.g. bonds, cash and policy loans) Target allocation* 10% to 50% 50% to 90% * The total actual allocation will be equal to 100%. Actual allocations will take into consideration past investment performance of, and future outlook for, the participating funds. The asset portfolio is carefully monitored. We seek to select and monitor assets based on the criteria as below: a) The average credit quality of the underlying bonds portfolios generally ranges from AA+ to A-, reflecting the high quality of the assets; b) The underlying equity portfolios are generally benchmarked to appropriate market indices; c) The expected long-term performance of assets, the projected stability of returns, and the expected diversification benefits from investing in different asset classes. To achieve long-term competitive return, the asset allocation is carefully determined with an aim to ensure all guarantees are fully met, while non-guaranteed return potential is maintained. This includes assessing factors such as risk tolerance, investment return goals, and time horizon in order to develop an optimal portfolio for the participating funds. Generally, when the market environment is favourable, a larger portion of investments may be invested in growth assets. If the market environment becomes less favourable, a larger portion may be allocated to fixed income assets to ensure stability of returns. Disclaimer: This Fact Sheet is for general information only and does not take into account any specific policy, investment objectives, financial situation or particular needs of any person.
5. Glossary Alternatives Alternative growth assets are the more sophisticated asset types such as private equities, real estate, hedge funds etc, requiring a higher degree of analysis, and which, generally, may be associated with higher risk compared to more conventional asset types. However they provide important diversification from other asset classes, and are used to help the overall portfolio produce higher returns. Through diversification the overall risk of the portfolio is maintained at an acceptable level. Asset allocation Asset allocation is the activity of adjusting the percentages of different investment types in a portfolio so as to strike a balance between risk tolerance, investment return goals, and investment time frame. Bond A type of security under which the issuer owes the holders a debt and is generally obliged to pay interest and/or to repay the principal at a specified date. Equities A type of security that indicates ownership in a corporation and represents a claim, generally residual after discharge of all senior claims, on the corporation's assets and earnings. Fixed income assets Fixed income assets are the types of assets on which the borrower is required to make periodic payments of a pre-determined amount according to a certain schedule (e.g. regular government bonds). There is usually a face amount which is payable on the maturity date of the security, in addition to the periodic payments. Growth assets Growth assets are assets which have the potential to increase in value, and are generally considered higher risk. There is usually no fixed payment schedule associated with such types of assets (e.g. listed common stocks). Participating funds Participating funds are made up of premiums pooled from participating policies from an insurance company and provide benefits and cover expenses of the policies. These collected premiums are pooled together and invested into a variety of assets including bonds, equities, alternatives, cash, policy loans, etc.
Policy loans A policy owner may apply for a policy loan against the cash values of the policy which forms part of the assets of participating funds. Interest will be charged from the date of the policy loan. Note: 1 This Fact Sheet is applicable to Fortune Guard Life Insurance and Fortune Protector Life Insurance issued by AXA China Region Insurance Company (Bermuda) Limited (Incorporated in Bermuda with limited liability). 2 Please refer to your policy contract regarding which form(s) of guaranteed benefit(s) and/or nonguaranteed benefit(s) is/are applicable to your policy. Updated date: 27 May 2015