Intermediaries selling ILAS products have to go through the following steps with the clients:
- Confirm your need
- Compare different insurance options that suit your need
- Assess your risk profile
- Explain key product features
The intermediary has to complete the following documents with you. The insurer cannot accept the application if you choose to opt out from these processes.
- Financial Needs Analysis (FNA)
- The purpose of the FNA is to assess customers’ needs and provide proper insurance advice accordingly. The FNA form includes personal particulars of the customer (eg name, date of birth, occupation), analysis of needs (eg financial income and expenses, assets and liabilities), and recommendation.
- Risk Profile Questionnaire (RPQ)
- The purpose of the RPQ is to assess a customer’s investment risk appetite and determine if a particular product and its underlying investment choices (if any) are suitable for the customer. An RPQ includes questions to assess customers’ investment objectives, preferred investment horizon, risk tolerance etc.
- Important Facts Statement (IFS)
The IFS aims to:
- confirm (Note) the customer’s reasons/considerations for buying an ILAS product as set out by the customer in the “Statement of Purpose” paragraph of the IFS so the intermediary can assess whether a particular ILAS product is suitable for the customer, and
- enhance product disclosure at the point of sale by highlighting key features of the ILAS policy which policyholders often overlook, such as the long-term nature of ILAS policies, fees and charges, early termination penalties etc and disclosing remuneration of the intermediary.
Insurance intermediaries are required to disclose and explain to the customers each paragraph of the IFS during the sales process. Customers will be asked to go through each part of the IFS and sign on each part before making a policy application.
The insurer is required to make an audio-recorded post-sale confirmation call to you (except if the intermediaries are banks, in which case, the sales process is audio-recorded). The call is to reaffirm your understanding of the ILAS policy and that you know of your rights (including the cooling-off right within 21 days) and obligations before you procure the ILAS policy.
The post-sale call would not be made by your intermediary, but by another staff who was not involved in the sales process and has no financial interest in the arrangement.
But if the sales process was conducted in the insurer company and had already been audio-recorded, the insurer will not make the post-sale call.
Note: Before recommending any ILAS product to the client, banks and other insurance intermediaries are required to (i) request the client to set out his/her reasons/considerations for procuring an ILAS product in the “Statement of purpose” paragraph in the IFS; and (ii) take due account of the reasons/considerations set out by the client, together with other relevant information, in assessing whether or not the ILAS product is suitable for the client.