Uncover the hidden pitfalls in term life insurance policies

Recently on social media, some users questioned the “autopsy clause” in Bowtie’s term life policy — the clause states that the cost of the post-mortem examination is to be borne by the policyholder, sparking heated discussion online. Bowtie officially responded that the clause is “mainly intended as a deterrent” and is not a provision that will actually be enforced.

However, although the clause is intended as a deterrent, it may still make claims more difficult. After all, the policy terms are expressly written in black and white, and the insurer is legally entitled to rely on them when processing a claim. Moreover, in Hong Kong, deaths that are non-natural, accidental, suicides, or of unknown cause must be reported and will be handled by the police; the Coroner may also become involved in the investigation (post-mortem examination or inquest). When an autopsy clause is added on top of this, who exactly is being deterred? This article will set out the key pitfalls of term life insurance. 

Term life insurance is a relatively straightforward form of insurance: when the insured person dies, the beneficiary receives a payout. At first glance, each policy may look much the same — you pay the premium, there is a sum insured, and a death benefit is paid upon death. In fact, however, there are differences in the policy contract details, which can be decisive at claims stage, especially when a customer dies shortly after taking out the policy.

Below is a comparison of the terms and conditions of three popular term life insurance plans in Hong Kong: 

This is one of the terms with the greatest differences between plans, yet it is also one of the least noticed.

Almost all term life policies include a suicide exclusion period: during the early stage of the policy, if the life insured dies by suicide, the insurer will not pay the sum insured and will only refund the premiums paid. This is intended to prevent moral hazard arising from a policyholder premeditating suicide in order to secure a death benefit for the beneficiary. The length of the exclusion period varies from company to company.

FWD Self-Protection (Upgraded Version) Term Protection Plan (hereinafter referred to as FWD) adopts an exclusion period of “within 13 months from the policy effective date”, which is relatively uncommon in the market; whereas Bowtie Life Protection (hereinafter referred to as Bowtie) and Blue WeCare Term Life Protection Plan TL3 (hereinafter referred to as Blue) both set it as “within 2 years from the policy effective date”, in line with most traditional insurers.  

Following the life assured’s death, the family must submit the claim documents to the insurer within the specified timeframe; delays may affect, or even result in the loss of, eligibility for compensation.

In general, insurers require claim documents to be submitted within 90 days. While this may appear ample, bereaved family members may at the same time be dealing with funeral arrangements, the estate, and childcare matters. If they are unaware of the existence of the life insurance policy, or forget to make a claim with the insurer promptly, they may end up having to rush the claim process, or even miss the critical deadline.

Blue has no fixed deadline, making it the most flexible arrangement of the three; although Bowtie imposes a 90-day limit, the policy expressly states that if there is a reasonable reason for not notifying the insurer in time, this cannot be used as grounds for rejecting the claim, which is relatively clear; FWD’s terms merely mention 90 days (waived at the insurer’s discretion). 

Insurance companies may sometimes require an autopsy, with the cost borne by the customer.

As mentioned above, Bowtie officially states that this clause is “primarily for deterrent purposes”. However, in Hong Kong, if a death is unnatural, accidental, a suicide, or of unknown cause, it must be reported, with the police taking over the investigation. A coroner may also become involved in the investigation (through an autopsy or an inquest). Under what circumstances, then, would an insurance company require an autopsy? 

In the event of a dispute arising over a claim, what channels are available for the family to resolve it?

Blue permits the beneficiary to bring legal proceedings directly before the Hong Kong courts; Bowtie, by contrast, adopts the arbitration mechanism of the Hong Kong International Arbitration Centre (HKIAC). Although arbitration offers the advantages of confidentiality and procedural flexibility, the associated costs, including arbitrators’ and administrative fees, must be borne by both parties, and legal aid is generally not available. By comparison, court proceedings have a more fixed fee structure. For ordinary families, it is advisable to understand the potential costs of the dispute resolution mechanism when choosing a product. 

When buying term life insurance, most people compare premiums first. But if you are comparing the “first-year premium”, its reference value is actually quite limited.

The reason is straightforward: insurers generally attract new customers with substantial first-year discounts. The first-year premium can be less than half the standard rate, but when the policyholder renews later, they pay the “full price”. As a result, the first-year premium does not necessarily reflect the true cost of holding the policy long term. In other words, the premium in the first year is only the starting point; the average annual cost over the next 10 or 20 years is a better reflection of the real cost.  

Most term life advertisements emphasise “low premiums”, “high cover” and “online underwriting”. Beyond this, consumers should also pay attention to the following details:

• Depending on the required policy term, estimate the overall premium cost, for example by referring to the average annual premium over 10 or 20 years, rather than looking only at the first-year discounted price.
• Read the claims terms carefully: the claims period, autopsy expenses and dispute resolution mechanism determine whether your family can receive the payout smoothly at the most difficult time. 

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.