[Insurance Clinic] A friend’s agent allegedly exaggerated income, leaving the victim stuck with an overpriced savings policy.

Savings insurance scams are often heard of, and many cases involve poor sales practices by insurance agents, such as exaggerating product returns and failing to disclose product risks truthfully. 10Life previously received help from reader Mr D, whose friend, who was then working as an insurance agent, recommended savings insurance and accident insurance to him more than two years ago. As he was not familiar with insurance products and, trusting his friend, Mr D decided to take out the policies.

Later, Mr D found the premium payments very burdensome. He had considered reducing the premium amount, but discovered that this would result in substantial losses. It was only when he complained to the insurer that he found out the agent had exaggerated his income and assets, leaving him stuck with an expensive savings policy! And when he claimed under the accident insurance, the agent miscalculated the sum insured. When the coverage was exceeded, the agent even suggested that the insured issue a false claim form to deceive the insurer...

Mr D, aged 30, originally had some spare cash and was planning to pursue further studies in the coming years. However, after being persuaded by a friend acting as an agent, he took out an endowment policy with a 20-year premium term and an annual premium of about HK$80,000. At first, he questioned whether the policy term was too long, but the friend-turned-agent explained that endowment insurance nowadays would not mean “paying until death”, and that it would roughly break even after about 12 years.

However, in the first year or two after the policy commenced, Mr S already felt the premiums were very burdensome, so he asked the agent to reduce the premium amount. The agent suggested a partial surrender, which would allow the future premiums to be lowered (to about HK$50,000 a year). After looking into it more carefully, Mr D realised that as less than three years of premiums had been paid, this would constitute an early surrender, leading to a heavy loss on the more than HK$100,000 already paid and the bonuses accrued. Mr D therefore rejected the proposal.

Mr D later complained to the insurer, alleging that the agent had failed to consider the client’s financial situation and had even exaggerated his monthly income as HK$50,000 and total assets as HK$2 million in the application, causing him to take out an endowment policy with substantial premiums. Mr D even submitted bank deposit documents as evidence to explain that he had been deceived, but the insurer refused to handle the complaint on the grounds that he had already signed the documents.

Last year, Mr D was injured in a traffic accident and underwent several sessions of traditional Chinese acupuncture treatment (outside the insurer’s medical network). Before receiving treatment, he had asked a friend who was an agent to confirm that the sum insured was sufficient to cover the estimated medical expenses, and only then did he proceed with peace of mind. Unexpectedly, when Mr D later made a claim, the insurer informed him that the sum insured had already been exhausted.

The friend-turned-agent later explained that this was a misunderstanding in communication. He first told Mr D to ask the Chinese medicine clinic for a refund, and later claimed that he had a familiar physiotherapist who was willing to issue a false medical certificate for Mr D, so that he could claim again under the guise of physiotherapy and make up for the shortfall in acupuncture treatment expenses. Mr D believed this raised serious ethical concerns, firmly refused, and recorded the conversation as evidence to lodge a complaint with the insurer. After several months of investigation, the insurer eventually agreed to reimburse HK$8,000 in medical expenses (the actual medical expenditure was about HK$20,000).

What Mr D found most puzzling was that shortly after the investigation began, the insurance agent involved resigned on his own initiative, yet was able to move to another insurance company without any apparent issue and continue working as an insurance agent.

Insurance is a business built on trust. Policyholders often trust friends who work as insurance agents and do not delve deeply into the application documents; such situations are commonplace. However, whether or not you know the agent well, you should always read the policy documents carefully when taking out insurance, especially the personal details, income and assets, and only sign once you have confirmed that the information is correct.

Mr D recalls that when he took out the policy, his friend, the agent, displayed the policy on a tablet for him to review. As many details can be easily missed, he simply went straight to the signature page. In this digital age, customers should take a more proactive approach when applying for insurance by scrolling through the screen themselves and paying attention to the policy content, rather than simply being led along.

Savings insurance comes with a 21-day cooling-off period, during which consumers have the right to cancel the policy and receive a refund of all premiums paid. Policyholders should make use of this period to read the policy terms carefully.

Finally, if readers need help with policy applications or claims, they are welcome to contact 10Life. 10Life’s claims specialists are committed to analysing claims cases for customers and will also negotiate with insurers for fair compensation where treatment is unfair.

Note: This article was last updated on 12 March 2024.  

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.