Gangnam-based wealthy investors target offshore insurance

Annual returns reportedly looking promising

Gangnam-based wealthy investors target offshore insurance

Insurance News

By Jonalyn Cueto

Offshore insurance is becoming increasingly popular among affluent investors in Seoul’s upscale Gangnam District, South Korea, offering annual returns ranging from 6% to 7%, according to a report. This form of insurance enables Korean investors to engage directly with foreign insurers, similar to purchasing goods from an overseas shopping mall.

According to The Chosun Daily, distinguished from local insurance options, offshore insurance policies are coveted for their retirement security benefits and dividend payouts, presenting a safer investment avenue compared to stocks and funds, while delivering superior returns relative to bonds.

Among Korean high-net-worth individuals and professionals like lawyers and doctors, insurance offerings from Hong Kong-based insurers such as AIA, Prudential, and AXA are particularly favored, as noted by the local financial sector on Feb. 13.

As per a savings plan from a Hong Kong-based insurance company, a 40-year-old contributing $90,000 over five years, at an annual rate of $18,000, could accumulate $397,120 by age 70 when pension payments commence. This guarantee materializes 13 years post-policy purchase. In comparison to a pension savings insurance policy introduced by a Korean life insurance company last year, the anticipated annuity surpasses twofold.

Foreign insurers promise substantial returns through dividends, operating on a dividend-paying model where premium payments are invested across diverse assets like stocks, mutual funds, bonds, and real estate to generate profits. Hong Kong-based policies return 90% of earnings to policyholders annually while retaining 10% of profits. With dividends disbursed annually, policyholders’ savings burgeon over time, a feature absent in Korean insurance products, which direct all investment income to insurers.

An industry insider noted, “While offshore insurance policies tout annual returns of 6% to 7%, actual returns may vary depending on the performance of the investments. But regarding how well foreign insurers perform in terms of dividend payouts, they typically hit the 100% mark.”

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