Taiwan's Financial Supervisory Commission (FSC) has warned that the public needs to exercise caution when purchasing investment-oriented insurance products. The regulator said that it is necessary that policyholders assume the investment risks and that returns are not guaranteed.
The unit-linked products allocate a portion of the premiums paid by policyholders to various investment funds or financial products. The performance of these investments directly affects the value of future insurance benefits.
The FSC said in a media release that consumers need to pay attention to the following before purchasing investment-linked insurance products to avoid future disputes:
- Consumers must confirm whether the product features meet their protection needs.
- In addition to providing insurance protection, investment-linked insurance products also grant policyholders the flexibility to actively manage their funds, allowing them to choose investment targets based on their own risk tolerance and investment objectives. However, policyholders still bear various risks associated with the linked investment targets, including price fluctuations, liquidity, and credit risk.
- Some investment-linked insurance products on the market claim to link to regular dividend or profit distribution mechanisms of investment targets. However, the source of dividends or profit distribution for some products may be the principal. Consumers should pay special attention to the warnings disclosed for each product before purchasing.
FSC suggested that consumers learn more about the characteristics and basic information of investment-linked insurance products before purchasing these insurance products.
The Commission has also suggested that consumers visit the "Consumer Corner" or "Insurance Education Zone" on the website of the Insurance Development Centre to learn more about the features and basic information of investment-linked insurance products.