TAIPEI (Taiwan News) — Taiwan’s Financial Supervisory Commission on Thursday reminded the public to exercise caution when purchasing investment-oriented insurance products, noting that policyholders assume the investment risks and that returns are not guaranteed.
These products, also known as unit links, 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, according to UDN Health.
The FSC suggested three considerations for consumers. First, it is important to understand the type of policy.
Life insurance provides a benefit to beneficiaries in the event of the policyholder’s death, while annuity insurance provides payments to the policyholder during their lifetime, typically as a retirement pension. Policyholders should select the type that aligns with their individual protection and income needs.
Second, policyholders bear the investment risks. While these products offer flexibility to manage investments, policyholders remain responsible for market fluctuations, liquidity issues, and credit risks.
Foreign currency-denominated policies may involve additional risks, including exchange rate volatility and economic or political developments in the currency’s country. Consumers should ensure they understand the investments and are capable of tolerating potential losses, while decisions should not be based solely on expected returns or current market performance.
Finally, some products advertise regular payouts or dividends, but these may be drawn from the policyholder’s principal. Consumers are advised to review all disclaimers carefully.
Policyholders who determine that a product does not meet their needs may cancel it within 10 days of receiving the policy. The insurer is required to refund the premiums in full.
