Application Procedure 投保手續
The application form is the insurer's main basis for assessing the risk. It usually covers personal details, the plan applied for, beneficiaries and health information. The applicant and the life insured, if a different person, must read and sign it personally. Where the life insured is a minor, a parent or legal guardian normally deals with the application.
Utmost good faith applies, so the applicant and the life insured must disclose material facts truthfully. Even if an intermediary helps to fill in the form, the person signing must check its contents. An intermediary must not encourage non-disclosure, ask a client to sign a blank form or sign on the client's behalf.
The intermediary will usually also verify the client's identity and submit an intermediary's report. The insurer then underwrites the application and may ask for a medical examination or further information. It may accept at standard terms, accept with special terms or an extra premium, postpone or decline.
Receipts and Policy Effectiveness 收據及保單生效
A client who pays a premium should receive an official receipt as evidence. To reduce the risk of misappropriation, cheques should be made payable to the insurer, and clients should avoid handing cash to an intermediary.
Paying the first premium does not necessarily mean that cover has started. When a policy takes effect depends on whether the insurer has accepted the application, whether the first premium has been paid, and any other conditions in the application form or policy, such as no material change in the life insured's health since applying.
Some insurers issue a conditional receipt when collecting the first premium. An insurability-type receipt generally provides cover from a stated date, such as the application or medical examination date, if the life insured met the insurer's underwriting standards on that date, even if death occurs before approval. An approval-type receipt provides cover only once the insurer approves the application. The exact effect depends on the wording of the receipt.
Client Service - Policies and Standards 顧客服務方針及標準
A long term insurance contract may last for decades, so client service does not end at the point of sale. An insurer should set clear service policies and standards covering quotations, policy issue, policy changes, claims and complaints, and should use them to monitor performance.
Licensed insurance intermediaries must treat clients honestly and fairly and with due care, provide accurate information on time and deal properly with enquiries. Typical after-sale services include helping with a change of address or beneficiary, giving premium reminders and explaining annual policy information.
A dissatisfied client should have a clear route for raising a complaint with the insurer or intermediary. An individual policyholder may then also consider seeking help from the Insurance Complaints Bureau.
Cooling-Off Period 冷靜期
The Guideline on Cooling-off Period (GL29) gives individual long term policyholders time to reconsider after buying a policy. The period is the 21 calendar days immediately following the day the policy is delivered, or the day a notice is issued to the policyholder or their representative stating that the policy is available and when the period expires, whichever is earlier.
To cancel, the policyholder must give the insurer a signed written notice within the period. The insurer will generally refund the premiums paid, and the policyholder need not give a reason.
For an investment-linked policy, the refund may be subject to a market value adjustment, so it may be less than the premiums paid if the underlying investments have fallen. A common exam trap is to count the period from the policy's effective date or the application date.
Policy Replacement 轉保
Policy replacement means ending or reducing cover under an existing policy and substituting a new one, for example by surrendering a policy and buying another. Replacement is not illegal in itself, but it must genuinely serve the client's interests rather than simply earn new commission.
The intermediary should help the client compare the policies and clearly explain possible disadvantages: surrender charges and lost value; higher premiums because of age; fresh underwriting, which may lead to an extra premium or refusal; the contestable and suicide exclusion periods possibly starting again; and existing benefits that the new policy may not include.
Application documents usually require the client to declare whether replacement is involved and to confirm understanding of the consequences. A client should generally not end the old policy before the new one is approved, to avoid a gap in cover.
Benefit Illustrations for Long Term Insurance Policies 長期保險保單利益說明
The Guideline on Benefit Illustrations for Long Term Insurance Policies (GL28) aims to help clients see how premiums paid relate to possible future benefits. An illustration must show guaranteed and non-guaranteed benefits separately, so that clients can tell which part is contractually promised.
For products with non-guaranteed benefits, such as participating and universal life policies, illustrations are usually based on current assumptions, with more optimistic and more pessimistic scenarios also shown. These figures are illustrations only, not forecasts or promises, and actual results may be higher or lower.
An intermediary should use the version supplied by the insurer, must not alter figures or select only favourable scenarios, and should explain items such as total premiums paid, surrender value and death benefit.
Distributions of Policy Dividends 派發保單紅利
Policy dividends apply only to participating policies. They mainly come from surplus arising when the insurer's actual mortality, expenses and investment performance are better than the pricing assumptions. The insurer sets dividends in line with its dividend policy and with advice from its appointed actuary. Dividends are not guaranteed, and past distributions do not indicate future results.
Common dividend options are taking cash, leaving dividends with the insurer to accumulate at interest, reducing premiums due, and buying paid-up additions. The interest rate on accumulated dividends is generally not guaranteed either.
Some participating products distribute surplus as reversionary or terminal bonuses. A reversionary bonus usually becomes part of the policy benefits once declared. A terminal bonus is generally paid only on events such as death, maturity or surrender, and its amount can change. The policy terms govern the details.
Guideline on Underwriting Long Term Insurance Business (Other Than Class C Business) (GL16) 《承保長期保險業務（類別C業務除外）指引》（指引16）
GL16 applies to long term insurance business other than Class C (linked long term business), such as participating, universal life and term policies. Class C business is covered separately by the Guideline on Underwriting Class C Business (GL15), and the two should not be confused.
The guideline focuses on fair treatment of policyholders, particularly under policies with adjustable benefits. An insurer should have clear principles and governance for setting and adjusting non-guaranteed benefits, and should take policyholders' reasonable expectations into account.
Insurers must also make information available to the public, including their dividend philosophy and fulfilment ratios. A fulfilment ratio compares actual distributions with the non-guaranteed benefits originally illustrated. It helps clients understand past delivery but does not guarantee future results.
Guideline on Financial Needs Analysis (GL30) 《財務需要分析指引》（指引30）
A financial needs analysis is an important step before advising a client on long term insurance. It aims to establish the client's actual needs so that suitability can be judged, rather than making recommendations based on commission or product features alone.
The analysis usually covers the client's financial objectives and protection needs, income, assets and liabilities, the affordable premium and payment term, and, where an investment-linked product is being considered, risk tolerance.
The intermediary should explain the reasons for a recommendation in light of the analysis and keep proper records. A financial needs analysis is not the same as a risk profile assessment: the former looks at overall needs and affordability, while the latter focuses on how much investment risk the client can bear.
Important Facts Statement for Mainland Policyholder 重要資料聲明書——內地人士在港投購人身／壽險保單
A Mainland resident buying a personal or life insurance policy in Hong Kong must read and sign this statement to confirm understanding of the key facts about buying in Hong Kong. It should be completed as part of the application process, not added afterwards as a formality.
The statement draws attention to matters such as the policy being a Hong Kong insurance contract governed by Hong Kong law, Mainland rules on foreign exchange and cross-border funds, currency risk and premium affordability. It does not remove these risks or replace a financial needs analysis.
Hong Kong licensed insurance intermediaries must not carry out unauthorised insurance selling activities on the Mainland. The application and signing should therefore take place in Hong Kong, and documents must not be taken to the Mainland for the client to sign.
Guideline on Offering of Gifts (GL25) 送贈禮品指引（指引25）
GL25 addresses the risk that gifts used to promote insurance may distract clients, leading them to buy because of the gift rather than the policy's suitability. Offering a gift must not weaken the suitability assessment or replace a financial needs analysis or product explanation.
The eligibility, terms and limits of a gift must be clear and accurate and must not mislead. The terms should also state, for example, what happens to the gift if the policy is cancelled during the cooling-off period. A gift is not part of the policy benefits and should not be confused with guaranteed benefits.
An intermediary should not use gifts to induce a client to replace a policy or buy an unsuitable one. If an advantage is offered to someone else's agent, the Prevention of Bribery Ordinance must also be considered.
Practice
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