4. Why do I need to provide the information for completing the form for financial needs analysis prior to purchasing life insurance policy?
Life insurance policies are generally long term in nature and may lock up the liquidity of customers. It is therefore important for authorized insurers and licensed insurance intermediaries to ensure that a proper assessment of a customer’s circumstances including his/her needs, financial condition, ability and willingness to pay premiums, etc., is undertaken before any recommendation is made in respect of a suitable life insurance policy for the customer, and that the recommendation is based on such financial needs analysis (“FNA”).
An authorized insurer or a licensed insurance intermediary is required to collect relevant and sufficient information from a customer to conduct the FNA before making recommendation in respect of certain types of life insurance policies.
If a customer refuses to disclose information during the FNA process, the licensed insurance intermediary would be unable to comply with the FNA requirements, and consequently the licensed insurance intermediary could not recommend any insurance product to the customer.