[Buying Insurance for Relatives] Could You Fall into a Trap? 5 Tips to Stay Alert

It's common to have friends or family members selling insurance, and sometimes, due to persistent persuasion, you might end up "contributing" by purchasing from a relative. However, excessive trust can potentially lead to pitfalls, putting you in a dilemma of whether to complain about a relative's possible negligence in selling insurance.

The Insurance Authority's "Regulatory Newsletter" clearly states that they frequently receive such complaints. Take, for example, a newly entered insurance agent who, under the pressure to meet sales targets, aggressively sold an investment-linked insurance policy to her uncle. This uncle works in the construction industry with an unstable income. Even though he was unsure if he could afford the minimum monthly premium, he trusted his niece and was willing to lend a helping hand to support her budding insurance career.

The outcome, as one might expect, was predictable. Eventually, the uncle's income from construction work was interrupted, and he could no longer afford the premiums. It was only at this point that he discovered that surrendering the policy within the first ten years would incur penalties for early termination. He complained to the Insurance Authority about the inclusion of this clause in the policy by the insurance company, but he was unwilling to lodge a complaint against his niece for failing to highlight this clause during the sales process.

Ironically, the niece left the insurance industry just nine months later to pursue a career in another field, presumably having already secured her commission.

The final outcome remains unknown, but if time could be reversed, should the uncle have bought the investment-linked insurance policy to help his niece? Or should he have reluctantly agreed to it out of familial obligation?

There's no need to worry. If you wish to avoid being caught in a dilemma, the Insurance Authority has provided five key tips:

1. Temporarily set aside the fact that the insurance intermediary is a relative and treat them as any other professional.
2. During meetings, mentally separate casual conversations with the relative from discussions about insurance.
3. Focus on your own needs, rather than the needs of the insurance intermediary who is your relative.
4. Ask plenty of questions and do not hold back. Regardless of whether they are a relative, answering questions is part of an insurance intermediary's job. If the intermediary fails to act with care, skill, and diligence in fulfilling their duties, they may be in breach of the Insurance Authority's Code of Conduct or guidelines. The Insurance Authority will not refrain from taking disciplinary action simply because the intermediary is a family member of the policyholder.
5. Finally, ask yourself the "soul-searching" question: If the person selling the policy were not a relative, would you still purchase it? If the answer is "no," then do not proceed with the purchase.

"Prevention is better than cure." It's better to have an awkward conversation with a relative upfront than to deal with the aftermath of trying to fix things or even falling out and cutting ties.

Note:

1. This article was compiled by 10Life using market information gathered from various sources. It is for general reference only and does not take into account any individual's specific needs or suitability. It should not be considered as sales advice. Before purchasing insurance, you should discuss with a licensed insurance advisor to find a suitable insurance plan and refer to the information provided by the insurance company.
2. Last updated: 13 April 2022

This English version of this article has been generated by machine translation powered by AI. It is provided solely for reference purposes. In the event of any discrepancy or inconsistency between this translation and the original Chinese version, the Chinese version shall prevail.