Selling Process

ILAS

Intermediaries selling ILAS products have to go through the following steps with the clients:

  1. Confirm your needs
  2. Compare different insurance options that suit your needs
  3. Assess your risk profile
  4. Explain key product features

The intermediary has to complete the following documents with you. The insurance company 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 (e.g. name, date of birth, occupation), analysis of needs (e.g. 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 options (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) and Applicant’s Declarations

    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, such as the long-term nature of ILAS policies, fees and charges, early termination penalties etc. and disclosing remuneration of the intermediary.
    • for ILAS products with an embedded high level of insurance protection, the IFS also contains additional information in relation to the high protection features including the long term nature, cost of insurance protection and the sum assured under the ILAS policy.

    The objective of the Applicant’s Declarations aims to:

    • provide a check-point assisting the insurance company and insurance intermediary to focus the customer’s attention on the suitability of the ILAS product for the customer.
    • confirm the customer’s understanding of the risks associated with it.

The IFS and Applicant Declarations also aim to provide disclosure of the insurance intermediaries’ remuneration to the customer. Insurance intermediaries are required to disclose and explain the IFS and Applicant’s Declarations to the customers during the sales process. Customers will be asked to go through each part of the IFS and Applicant’s Declarations, and sign on each part before making a policy application. The IFS / Applicant’s Declarations must be completed for base plan and top-up applications.

  • Illustration document

The insurance company will prepare a personalised illustration document for you to review and sign. The document typically shows you the amount that you would expect to receive upon surrender of the ILAS policy and projected death benefits based on certain assumed net rates of returns after deduction of all relevant fees and charges at policy level as disclosed. The figures do not guarantee future returns (unless the policy offers a return guarantee) nor represent any past performance.

 

During the sale process, the customer should be properly apprised of the product features and risks. Accordingly, the intermediary should disclose and explain to the customer, and provide the customer with information on the product. Apart from the aforesaid documents, the intermediary will also provide other information including product brochures, Product Key Facts Statement (KFS) and investment option brochure of the ILAS product. Customer should be given adequate opportunity to review all the information provided and ask questions.

After completing the above procedures, the intermediary will assist customer in policy application.

Post-sale

The insurance company is required to conduct either post-sale calls or point-of-sale audio recordings for base plans of ILAS products sold via all distribution channels. If the intermediaries are banks, they should also observe the relevant requirements imposed by the HKMA, including the requirement for audio recordings of the sale of ILAS products.

The post-sale 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. For point-of-sale audio recording, the customer will be arranged to listen to the audio recording at the end of sales process. If in lieu of a point-of-sale audio recording, the insurance company will make an audio-recorded post-sale confirmation call within 5 working days of the date of policy issue. 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.

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.