2. My insurance agent asked me to transfer my existing life policy

2. My insurance agent asked me to transfer my existing life policy to another insurance company. Are there any potential losses arising from such a transfer?

Prior to switching your life insurance policy to another insurance company, you should be careful that your agent is not making inaccurate or misleading statements or comparisons to persuade you to switch. This is not uncommon as your agent could earn a commission from your switching to another insurance company (where the agent is also switching to a new insurance company).

There are two primary matters you must carefully consider.

Firstly, in connection with your application for the new insurance, you will be required to answer questions about your health, occupation and lifestyle. If the new insurance company rejects your application because of any of the updated information disclosed in the course of answering questions, you will be required to inform your existing insurance company of the rejection and the reason(s) under the "change of circumstances" clause (if any) in your existing policy. This may lead to your existing insurance company canceling your policy or requiring you to pay a higher premium.

Secondly, bear in mind that the new policy may contain different provisions and that the "contestable period"under the new policy may start afresh. The worst case is the possibility of a claim being rejected under the new policy which would otherwise have been paid under the existing policy.

In order to protect consumers against the above risks, there is a requirement for them to complete the Customer Protection Declaration Form (the "CPD Form", which can be downloaded from the website of the Hong Kong Federation of Insurers for reference). Where there is a switching or replacement of a policy, the insurance agent must declare on the CPD Form that he/she has fully explained the risks that would be involved to the client. The client must also declare that he/she understands the risks concerned . In this case, the cooling-off period is 14 days from the date a copy of the CPD Form is delivered to the existing insurance company by the new insurance company.

In summary, make sure that your insurance agent is not making inaccurate or misleading statements or comparisons to persuade you to switch. Any additional genuine and legitimate benefit available under the new policy may make it worth switching, but you must be clear of the potential risks and what could be done to manage these risks.