Hong Kongers might be missing out these tax benefits on insurance products
Manulife reveals that many still do not fully understand these benefits.
Many Hong Kong residents still do not fully understand the characteristics and benefits of some insurance products and pension schemes, and may be missing out on a lot of tax savings, a survey by Manulife Hong Kong and Macao revealed.
The survey, conducted in February, asked Hong Kong taxpayers about their knowledge on a trio of tax-deductible solutions namely, the Voluntary Health Insurance Scheme (VHIS), the Qualifying Deferred Annuity Policies (QDAP) and the Tax Deductible Voluntary Contributions (TVC) under Mandatory Provident Fund (MPF) schemes.
Respondents answered just four out of fifteen questions correctly, suggesting that taxpayers are missing out on the full benefits of tax-deductible solutions and tax savings. The survey also highlighted that the pandemic has pushed people to consider increasing medical protection for themselves and their families.
About the VHIS, over two in five are not aware VHIS plans offer guaranteed renewal for people up to the age of 100 years. Only slightly more than a third know that day case procedures, prescribed diagnostic imaging tests, and prescribed non-surgical cancer treatments are covered.
Many of the respondents know that VHIS purchases for spouses (58%) and children (47%) are eligible for tax-deduction whilst 37% are aware that parents and grandparents are also included in the scheme. However, only about one in 10 are aware that policies bought for in-laws and siblings are also entitled to a tax write-off
Knowledge for QDAP tax benefits are also similarly low with 70% unaware that the annuity period starts once the policyholder reaches age 50 or older. The relatively earlier retirement start age offers more flexibility and allows financial freedom for people targeting early retirement. It’s worth noting that almost two in five (39%) see QDAP as an investment product, when in fact it is an insurance product.
More investing in health
The survey also revealed that the pandemic continues to push people to invest in health related insurance products. 58% said they will consider buying any new insurance products for themselves or their family over the next six months.
Two in five are interested in health and protection insurance including VHIS, hospitalisation and surgical insurance, and outpatient insurance, whilst 38% are thinking about other financial solutions such as QDAP, savings insurance, and investment linked insurance.
There is also an increase in intent of purchase of medical insurance. Despite half of respondents already owning personal health insurance, more than a quarter are still considering adding buying another policy for health in the next six months.Meanwhile 27% of those who do not own health insurance are also considering purchasing health insurance. Other reasons for purchasing health insurance include it being a regular routine to increase medical protection (31%), as well as owning outdated medical insurance purchased more than 5 years ago (31%).
“VHIS, QDAP, and TVC are great solutions that offer customers enhanced protection, greater financial security, and tax benefits. It is advisable for taxpayers to take the time and effort needed to educate themselves on these solutions so they can better understand their options and plan ahead,” Danny Lee, chief product officer of Manulife Hong Kong and Macao said.
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