The HSBC guide to choosing life insurance details key considerations for every stage of your life, so you can make informed decisions about your insurance options. In addition, our holistic life-cycle planning approach can help you integrate insurance into a larger wealth-management strategy.
Insurance solutions address different needs depending on where you are in life. For young families, life insurance can help replace income after the loss of a breadwinner. As your income and personal assets increase with career success and growing earning power, the role of insurance coverage can change. For example, during retirement, life insurance can become a key part of a tax-deferred investment and estate-preservation strategy.
In addition to the information in this guide, your HSBC Wealth Relationship Manager can discuss your life goals and needs to help you make informed decisions. We can help you create an insurance strategy for your current and future life stages, as part of your overall financial plan. Most frequently used for wealth protection and transfer, insurance may also be used for accumulation and distribution. We'll help you focus your strategy across four categories:
Set assets aside for important goals and plan to build wealth through investment compounding, which can include cash value inside insurance.
Take action with the goal of preserving wealth and planning ahead to help protect your family against setbacks. Insurance is frequently used for this function as part of a larger financial strategy.
Use your wealth to enjoy the lifestyle you would like in retirement years and help others during your lifetime. Insurance is often a key component of supplemental retirement planning and income distribution.
Arrange for the efficient transfer of your wealth to your beneficiaries. Insurance is ideal for the tax-free or tax-deferred transfer of funds to your heirs without costly delays or probate.
If you would like personal support for your insurance planning, our knowledgeable Wealth Relationship Managers provide:
Investment, annuities, and variable life insurance products are offered by HSBC Securities (USA) Inc. (HSI), member NYSE/FINRA/SIPC. In California, HSI conducts insurance business as HSBC Securities Insurance Services. License #: OE67746. HSI is an affiliate of HSBC Bank USA, N.A. Whole life, universal life, term life, and other types of insurance are offered by HSBC Insurance Agency (USA) Inc., a wholly owned subsidiary of HSBC Bank USA, N.A. Products and services may vary by state and are not available in all states. California license #: OD36843.
Investments, Annuity and Insurance Products: Are not a deposit or other obligation of the bank or any of its affiliates; Not FDIC insured or insured by any federal government agency; Not guaranteed by the bank or any of its affiliates; and subject to investment risk, including possible loss of principal invested.
All decisions regarding the tax implications of your investment(s) should be made in consultation with your independent tax advisor.
Research backgrounds of brokers and firms for free by visiting FINRA's BrokerCheck website.
Environmental, Social & Governance (“ESG”) and Sustainable Investing (“SI”)
HSBC Securities (USA) Inc. (“HSI”) does not provide recommendations or advice on any products based on ESG or SI considerations except in certain discretionary solutions or based on HSBC Group’s* policies. Customers can purchase ESG/SI related products on our platform on a self-directed basis. For our general ESG/SI disclosure, click Disclosures- HSBC. Information about HSBC Group’s approach to Sustainability can be found at Our climate strategy | HSBC Holdings plc.
*HSBC Group refers to HSBC’s global affiliates.
You may require one or more types of life insurance to meet your financial needs and goals. Two major categories of life insurance are term and permanent. Permanent life insurance has options including whole life, variable life, universal life, and single premium life.
Term life insurance provides a fixed amount of coverage, at a fixed premium, over a specific period of time or term (10, 15, 20 or 30 years). Because its premiums are generally lower, term life insurance is often the choice made by young families. If you die before the end of the term, your beneficiaries receive a lump sum equal to the amount of coverage you purchased. Term Life does not build up cash value. Coverage can often continue after the chosen period if needed (but the cost will rise, sometimes significantly), or can be converted to a permanent life policy.
Term life insurance coverage is best suited to wealth protection, especially during periods of increased risk and exposure, like when paying off a mortgage, replacing your income during child-rearing years.
Besides its generally lower premiums compared to permanent life insurance, term life offers you the flexibility to receive additional coverage if you need it, beyond any other life insurance you may have.
Term life only lasts for the term you set or until you stop paying the premium. It accrues no cash value paid out at the end of the term, if you're still living.
Permanent life insurance covers you from date of issue until the day you die, as long as you continue to pay your premiums. Permanent life can earn cash value as your premiums are invested. This helps you build wealth while also protecting it. And of course, it transfers and distributes your wealth efficiently to your heirs.
Because it never expires*, permanent life can be used as the foundation of your overall life insurance plan for a variety of life stages and financial needs.
Permanent life insurance never expires* and your beneficiaries can receive a lump sum payment when you die. Another benefit of many permanent life plans is the accrual of cash value over time, which can be borrowed against if needed.
Permanent life policies tend to have higher premiums than term policies, and may offer less flexibility than term life for pricing and options.
Whole, universal, variable and single-premium are all types of permanent life insurance. Each may be used for wealth accumulation, protection, distribution and transfer depending on your needs.
HSBC Insurance Agency continually evaluates a variety of insurance options from leading, top-rated carriers. Our broad access and well-established relationships enable us to offer quality coverage choices and cost-effective solutions. We'll help you decide how much and what kind of coverage is optimal for your needs.
*Assuming that the policy does not lapse due to a failure to pay premiums and/or lapses because the cash value is insufficient to support the policy.
Investment, annuities, and variable life insurance products are offered by HSBC Securities (USA) Inc. (HSI), member NYSE/FINRA/SIPC. In California, HSI conducts insurance business as HSBC Securities Insurance Services. License #: OE67746. HSI is an affiliate of HSBC Bank USA, N.A. Whole life, universal life, term life, and other types of insurance are offered by HSBC Insurance Agency (USA) Inc., a wholly owned subsidiary of HSBC Bank USA, N.A. Products and services may vary by state and are not available in all states. California license #: OD36843.
Investments, Annuity and Insurance Products: Are not a deposit or other obligation of the bank or any of its affiliates; Not FDIC insured or insured by any federal government agency; Not guaranteed by the bank or any of its affiliates; and subject to investment risk, including possible loss of principal invested.
All decisions regarding the tax implications of your investment(s) should be made in consultation with your independent tax advisor.
Research backgrounds of brokers and firms for free by visiting FINRA's BrokerCheck website.
Environmental, Social & Governance (“ESG”) and Sustainable Investing (“SI”)
HSBC Securities (USA) Inc. (“HSI”) does not provide recommendations or advice on any products based on ESG or SI considerations except in certain discretionary solutions or based on HSBC Group’s* policies. Customers can purchase ESG/SI related products on our platform on a self-directed basis. For our general ESG/SI disclosure, click Disclosures- HSBC. Information about HSBC Group’s approach to Sustainability can be found at Our climate strategy | HSBC Holdings plc.
*HSBC Group refers to HSBC’s global affiliates.
Your insurance needs change based on where you are in life. Preparing to purchase life insurance is an opportunity to take stock of your current situation and future plans. Who relies on you now and how secure will their futures be? Are you planning on starting a family soon? Take into account your goals when determining which type of insurance is for you.
When you are just starting out – getting married, planning for a family – you are in what we call the "wealth protection" stage of life. While these may also be wealth accumulation years, insurance can be an integral part of protecting what you're building.
Your family requires coverage that can expand with your financial demands. You may want to build wealth for your children. Also, consider costs such as mortgage payments and savings for college to determine what your spouse or children's guardian would need in order to cover expenses without you. Should anything happen to you, life insurance can help ensure they're able to continue the life you want for them. An optional Child Rider can provide even more financial protection by insuring dependent children.
It's important to consider the beneficiary of the policy. Many choose their spouse, but naming any adult beneficiary for whom you have a financial obligation or duty of care is acceptable. Generally, it is not advisable to name minor children as beneficiaries, but arrangements can be made through trusts or by appointing a guardian to manage assets on their behalf. That way, they'll still benefit should something happen to you or your spouse. Either term or permanent life may be appropriate based on your financial goals.
If you're single and responsible for other family members, such as aging parents or siblings, your financial plans should provide for their needs as well. Life insurance can help provide the coverage you need, so those who rely on you will be taken care of. If you have debts guaranteed by someone else, obtain coverage so your guarantor will have help to repay the debt. Either term or permanent life insurance may be appropriate.
You and your spouse have committed to sharing everything, including the financial obligations necessary to secure your desired lifestyle. Life insurance is key to that commitment, helping ensure that your spouse is taken care of and the wealth you've built together is protected.
Looking beyond your own financial needs, legacy goals can be an important consideration. You may want to transfer assets to children, a family member, or your favorite charity. Planning for these legacy goals is fundamentally different from arranging assets you need during your lifetime.
| Questions to ask | Lifetime goals | Legacy goals |
|---|---|---|
| When will the goal be met? | During your lifetime | After your lifetime |
| Who receives assets or income? | You and your spouse, charities | A surviving spouse, family |
| Who makes decisions? | You and your spouse | A surviving spouse, executors, heirs or trustee |
| Taxes/costs? | Income tax | Income, estate and inheritance tax, probate |
Legacy goals can involve more complexity than lifetime goals. While you are alive, you and your spouse have control over decisions about your assets and retirement income sources. Income tax planning is an important consideration.
When your estate is transferred, you want to make sure your assets will pass on according to your wishes. In order to maximize legacy assets, you must also consider estate and inheritance taxes and probate costs – all of which can greatly erode assets available for a surviving spouse, heirs, and charity.
Once you have identified specific goals for leaving assets to others, planning can help to make sure your wishes are fulfilled privately and without unnecessary taxes, costs, delays, or disputes. Life insurance is often a useful strategy for several reasons.
Investment, annuities, and variable life insurance products are offered by HSBC Securities (USA) Inc. (HSI), member NYSE/FINRA/SIPC. In California, HSI conducts insurance business as HSBC Securities Insurance Services. License #: OE67746. HSI is an affiliate of HSBC Bank USA, N.A. Whole life, universal life, term life, and other types of insurance are offered by HSBC Insurance Agency (USA) Inc., a wholly owned subsidiary of HSBC Bank USA, N.A. Products and services may vary by state and are not available in all states. California license #: OD36843.
Investments, Annuity and Insurance Products: Are not a deposit or other obligation of the bank or any of its affiliates; Not FDIC insured or insured by any federal government agency; Not guaranteed by the bank or any of its affiliates; and subject to investment risk, including possible loss of principal invested.
All decisions regarding the tax implications of your investment(s) should be made in consultation with your independent tax advisor.
Research backgrounds of brokers and firms for free by visiting FINRA's BrokerCheck website.
Environmental, Social & Governance (“ESG”) and Sustainable Investing (“SI”)
HSBC Securities (USA) Inc. (“HSI”) does not provide recommendations or advice on any products based on ESG or SI considerations except in certain discretionary solutions or based on HSBC Group’s* policies. Customers can purchase ESG/SI related products on our platform on a self-directed basis. For our general ESG/SI disclosure, click Disclosures- HSBC. Information about HSBC Group’s approach to Sustainability can be found at Our climate strategy | HSBC Holdings plc.
*HSBC Group refers to HSBC’s global affiliates.