Yuen, speaking addressing the Hong Kong Society of Certified Insurance Practitioners on Thursday, said buying such products involved risk

.

He said that due to low bank interest rates on savings many life insurance companies are promoting investment-linked insurance products,

a business that grew 200 per cent in the first half of the year.

People should be aware that insurance and investment are two different things, Yuen said.

``The purpose of insurance is protection. People buying investment-linked products have a very low protection element and may not be able to provide the life protection needed by the policyholders,'' he said.

``Those who choose to buy investment-linked products should make sure that they have already bought sufficient traditional life protection cover, and it pays to remember the basic principle of investment: the higher the return, the greater the risk.

``People should make sure they fully understand the nature of investment-linked products and be able to assume the potential risk before deciding to buy such products.''

Yuen encouraged people to buy appropriate insurance policies to protect themselves and their families.

``The Sars outbreak last year and recent tour-group fatalities are a timely reminder that it is the duty of individuals to safeguard their safety and their families and to ensure that they are sufficiently protected against unforeseeable events.

``Those who can afford it should buy life, medical, health, property and travel insurance, so they won't be in trouble if something unfortunate happens and they need help,'' he said.

Policyholders should bear in mind some things when buying insurance products to protect their interests: ``When we buy insurance, we often go through an insurance agent or broker who is usually a friend or acquaintance. Policyholders should remember that, ultimately, it is their responsibility to protect their own interests. No matter how close someone is to their insurance agent or broker, they should not feel embarrassed about asking details of the premium, the coverage, and more importantly any exclusions; those items and circumstances which are not covered by the policy.

``Find out if the person selling the insurance is an agent or a broker. An insurance agent represents an insurance company and sells policies to the client on behalf of the insurance company. An insurance broker represents the client and his role is to negotiate the best deal from the insurance companies for his client.

``Because the agent represents the insurance company, if the client can provide evidence that he has paid the premium to the agent, the insurance company is liable for the policy. But because an insurance broker represents the client, even though the policyholder has paid the premium to the broker, if the insurance company has not received the premium, the insurance company will not be held responsible,'' he said.

``So if policyholders choose to pay the insurance premium through the agent or broker, they should make sure they get a proper receipt and make sure it is correct.

``If the insurance is bought through an insurance broker, the policyholder must make sure the insurance company has received the premium.

``People should get the policy from the insurance company as soon as possible, and if there is a delay, make direct inquiries with the insurance company.

``People who want to buy investment-linked products should consider their financial position and the element of life protection contained in the products and decide whether such combined investment and protection products meet their needs,'' Yuen said.

``They should make the best use of the cooling-off period to read the policy document carefully.''

Investment-linked insurance is a more flexible investment plan compared to traditional insurance.

It is a combination of life insurance, investment insurance and an investment fund with customers choosing the best investment combination.

Insurance agent Jo Chan said investment-linked insurance is riskier than traditional insurance. Policyholders who have traditional insurance protection receive bonuses and cash dividends depending on the profit of the insurance company, whereas the profit of investment-linked insurance depends on the investment combination and the profitability of customers' choices.

Chan warned customers to understand the investment plan before buying anything.