Sales Practice 銷售常規

Customer Protection Requirements Relating to Sale of Investment Linked Assurance Schemes (ILAS) 與銷售投資相連壽險計劃相關的保障客戶權益的規定

The IA's [GL26](https://www.ia.org.hk/tc/legislative_framework/files/GL26_Chinese.pdf) supplements GL15 by setting minimum standards for fair ILAS sales. Recommendations must meet the customer's insurance, financial and investment needs, including suitable underlying investment choices. Financial Needs Analysis (FNA), governed by GL30, assesses needs, finances and the ability and willingness to pay premiums before a recommendation and application signature. Where investment is an objective, it must also establish whether the customer can and will choose and manage the investment choices.

An ILAS customer cannot opt out of FNA; an intermediary cannot recommend an insurance product if the customer refuses to provide the required information. The Risk Profile Questionnaire (RPQ) assesses investment objectives, investment horizon, risk tolerance, financial circumstances, and investment knowledge and experience, including derivatives knowledge and the length of investment experience. Customers cannot omit or depart from the RPQ process; the insurer must reject an application if they do.

A top-up normally requires fresh FNA and RPQ processes. These need not be repeated where the top-up is made with the same authorized insurer or through the same licensed insurance intermediary within 12 months of completing both processes, provided there is no material change in circumstances and no resulting mismatch. This exception does not remove the Important Facts Statement (IFS) and Applicant's Declarations (AD) requirements: both new applications and top-ups require them, covering features, risks, suitability and intermediary remuneration, using the IA template and signed and dated by both customer and intermediary.

The sales process must fully explain features, risks, charges at each level, cooling-off rights, and customer rights and obligations, allowing time for consideration. Base plans sold through every distribution channel require either post-sale calls or point-of-sale audio recordings; bancassurance must also follow the HKMA's mandatory recording requirements. Insurers must supply signed IFS and AD copies with the policy, explain access to the original signed FNA and RPQ, and retain sales and post-sale records for regulatory inspection. Intermediaries must not encourage customers to evade post-sale controls.

Information to be Communicated in Sales Process 在銷售過程中須說明的資料

ILAS products suit a long investment horizon and should not be treated as short-term speculative investments. The intermediary must explain how the investment period relates to charges: costs are often concentrated near the start, so early encashment may attract very high charges.

Prospective customers must receive the principal brochure, illustration document and Product Key Facts Statement (KFS). The KFS summarises key features and risks in plain language; it differs from the IFS/AD used for sales disclosure and customer confirmation. The KFS forms part of the offering documents and normally needs the SFC's prior approval. An existing scheme's KFS revised solely to reflect enhanced disclosure requirements does not need prior approval.

The explanation should cover product features and benefits, investment choices and all relevant charges, including charges at insurance and underlying fund levels. Higher prospective returns generally involve greater volatility and risk; a fund's past performance does not guarantee its future performance.

Early termination, surrender or withdrawal may involve charges and loss of entitlement to bonuses. A premium holiday permits a pause in premium payments, but relevant charges continue to reduce the policy value, potentially reducing it substantially and affecting bonus entitlement.

Principal Brochure 主要推銷刊物

An up-to-date principal brochure must reach the prospective customer before the formal policy application. Where it comprises several documents, the customer should check them against the application form's component list. It must enable the customer to identify the scheme's nature, operating parties, investment objectives and restrictions, and the purposes and extent of borrowing.

The brochure must explain how returns are determined. Unless returns carry a non-variable guarantee, it must warn of investment risk and explain abnormal risks where relevant. Charges borne by the customer, scheme and underlying investment options must be disclosed, including subscription, redemption and switching charges, possible changes and notice periods. A fee summary table is required, with examples for complex calculations.

It must also explain valuation and pricing, premiums, benefits, maturity and surrender values, termination conditions, and application and surrender procedures. Policy units are notional measures of policy value: premiums become the insurer's assets, which the customer does not own. The customer's recourse is against the insurer, creating insurer credit risk. Scheme charges may reduce returns below those of the corresponding fund, while early surrender, withdrawal, or stopping or reducing premiums may cause substantial losses of principal or bonuses.

The brochure must explain that the insurer accepts responsibility for its accuracy, whereas the SFC accepts no responsibility for its contents. SFC authorisation does not recommend the scheme, guarantee performance or establish suitability for an investor. Other disclosures include inspection arrangements for constitutive documents in Hong Kong, governing law, the right to bring proceedings in Hong Kong courts, and the publication date. Descriptions of tax benefits must explain relevant tax implications and advise customers to seek professional advice about their own circumstances.

Cooling-off Period 冷靜期

GL29 gives policyholders time to reconsider a long-term commitment. The cooling-off period is 21 calendar days following the earlier delivery of the policy or cooling-off notice to the policyholder or nominated representative, excluding the delivery day. If the last day is not a working day, the period extends to the next working day.

Within that period, the policyholder may send written cancellation notice directly to the authorized insurer and return the policy where applicable to obtain a premium refund. All investment-linked life policies and all single-premium policies may be subject to a market value adjustment (MVA). This may reflect only the insurer's possible loss on realising assets bought with the premiums, excluding policy-issue expenses and commissions. The adjustment right and calculation basis must appear in the product brochure and be explained before the application is signed.

The application must contain a cooling-off statement immediately above the prospective policyholder's signature space, in a font no smaller than other declarations and in the languages used elsewhere on the form. Policy delivery must include a clearly legible reminder in the corresponding languages. The cooling-off notice must state the expiry date, reconsideration and refund rights, and the insurer's customer service contact details.

For direct delivery, the insurer should deliver the policy within 9 calendar days of issue. For intermediary delivery, it must supply the policy early enough for the intermediary to use all reasonable endeavours to meet that deadline. The insurer must deliver the cooling-off notice directly within the same 9-day period, extended to the next working day if its last day is not a working day. The notice must tell customers to contact the insurer if the policy has not arrived within 9 calendar days after the notice's delivery.

Policy Replacement 轉保

GL27 requires insurers and intermediaries to take all reasonable steps to establish whether a new application involves replacement. The key conditions at the new application date are that the customer has or had another life policy, the policyholders are the same, and the customer uses or intends to use some or all of the old policy's cash value, or savings from reduced premiums, to fund the new policy. Simply holding two policies does not establish replacement.

Funding methods include withdrawal, surrender or reductions in cash value or sum insured, including automatic lapse, reduced paid-up insurance or extended term insurance. They also include policy loans and suspending or stopping premium payments. Replacement can therefore occur while the old policy remains in force. A new policy arising solely from conversion under the existing policy's terms is excluded.

An identified or potential replacement requires the customer to sign an Important Facts Statement – Policy Replacement (IFS-PR). The intermediary must explain the implications and risks so that disadvantages can be considered alongside the new policy's benefits. The new insurer must retain the signed original and provide the customer with a copy no later than the new policy's issue date. Dispatch dates, methods and related records must also be retained for IA inspection.

Guideline of Offering Gifts (GL25) 送贈禮品指引（指引 25）

GL25 aims to prevent gifts or similar benefits from distracting customers from insurance needs, suitability and long-term commitments. It restricts gifts offered directly or indirectly, and the use of rebates, by authorized insurers and licensed insurance intermediaries when marketing, promoting or distributing Class A life and annuity, Class C linked long term, and Class D permanent health products. ILAS products fall within Class C.

Specified Permitted Gifts provide an exception, including allocated bonus fund units, relationship-building gifts, later redemption under customer loyalty programmes, customer sponsorship and support, brand-building campaigns and ancillary services. Each category must strictly meet the applicable Annex criteria. Calling something a bonus or relationship-building gift does not itself establish permission. [IA GL25](https://www.ia.org.hk/tc/legislative_framework/files/GL25_Chinese.pdf)