【Buying Insurance for Relatives】Could You Be Walking into a Trap? 5 Ways to Stay Alert

There are always friends and relatives around you selling insurance. Sometimes, unable to withstand their persistent persuasion, you cannot help but “pay up” to support a relative. However, placing too much trust in them may leave you caught out and put you in the difficult position of wondering whether to complain that your relative was negligent when selling insurance.

The Insurance Authority stated in its Regulatory Communication that it regularly receives complaints of this nature. Take the example of an insurance agent who had just entered the market: under pressure to meet her sales target, she aggressively sold an investment-linked insurance policy to her uncle. Her uncle worked in the construction industry and had an unstable income. Although he was unsure whether he could afford the minimum monthly premium, he trusted his niece and was willing to lend her a helping hand by supporting her fledgling insurance career.

The outcome was predictable. Eventually, his income from construction work was interrupted and he could no longer continue paying the premiums. It was only then that he realised that surrendering the policy within the first ten years would result in a penalty for early surrender. He complained to the Insurance Authority that the insurance company had included this provision in the policy, but was unwilling to lodge a complaint against his niece for failing to draw his attention to it when selling him the policy.

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

We will never know the final outcome. But if time could be turned back, should the uncle have helped his niece by buying an investment-linked insurance policy? Or should he have simply swallowed the cost for the sake of their family relationship?

There is really no need to worry. If you do not want to put yourself in a dilemma, the Insurance Authority also offers five tips:

1. Temporarily set aside your family relationship with the insurance intermediary and treat them as an ordinary professional
2. During the meeting, mentally separate the parts involving casual conversation with your relative from those concerning insurance
3. Focus on your own needs, rather than those of the insurance intermediary who is also 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 an insurance intermediary fails to act with due care, skill and diligence in carrying out their duties, they may be in breach of the Insurance Authority’s Code of Conduct or guidelines. The Insurance Authority will not decide against taking disciplinary action merely because the intermediary is a family member of the policyholder.
5. Finally, engage in some “soul-searching”－－ask yourself: if the person selling the policy were not your relative, would you still buy it? If the answer is “no”, do not take out the policy.

“Prevention is better than cure.” It is preferable to bite the bullet and have an awkward conversation with your relative beforehand than to deal with the consequences afterwards, or even fall out and stop speaking to each other.

Note:

1. This article was prepared by 10Life based on market information collected from various sources. It is for general reference only, does not take into account any individual needs or suitability, and should not be regarded as sales advice. Before taking out a policy, you should discuss insurance plans suitable for you with a licensed insurance adviser 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.