Qidi Aixinjueluo Whitaker bought an expensive life insurance plan from Prudential in 2009. She has tried, in vain, to get a refund on the policy. Her situation illustrates a number of problems seen in the sale of investment products. Mainly, that people often do not know what they are buying. At the time, Whitaker was living in Thailand and was estranged from her husband and considering divorce. She had two young children, no home of her own, no job and no income. On a visit to Hong Kong she saw a Prudential representative. She wanted a savings or investment plan. The specifics of what happened next are disputed. Whitaker says Prudential sold her a life insurance plan, even though she did not want it. Rick Adkinson, an independent financial adviser who picked up Whitaker's case, filed a letter of complaint to the Hong Kong Federation of Insurers. In the letter Adkinson says that on a form completed for Prudential, Whitaker said she wanted 'savings/investment', but did not indicate a need for 'protection' (insurance). Prudential sold her a life insurance plan involving five years of contributions for a total payment of US$128,330 (HK$1 million). The plan pays a guaranteed death benefit of US$252,000. As is common for insurance products, it included a savings plan. The company says after 10 years, the plan would have an expected cash value of US$158,943, of which Prudential guarantees US$92,610. Adkinson says his client did not want insurance and that, in any case, the Prudential product comprised expensive insurance. For example, Transamerica Life would have offered her US$250,000 of life insurance coverage for just US$643 a year. Adkinson also complains that Whitaker was committed to pay annual premiums of US$25,666 for five years. 'The client was contemplating a divorce, had two young children, no employment, and her only means of continuing premiums was using her savings or her husband's means,' he says. Adkinson argues his client was in a vulnerable state, and that she was sold life insurance she did not want. Prudential, of course, has a detailed response to this issue. The firm says its agent, Chu Yuen-yan, talked to Whitaker for two hours. Prudential says Whitaker said she had HK$5 million in usable assets, and wanted to leave money to her children. It offered a preferred steady-growth insurance plan with a large savings component. It recommended the policy because it combined savings and life insurance, and gave stable returns. Prudential says Whitaker knew she was buying life insurance and Chu indicated this to Whitaker several times. They note that the plan is, after all, called 'Achiever Life Assurance II'. As for Whitaker's 'vulnerability', Prudential responds: 'Ms Chu was not aware of Mrs Whitaker's potential divorce situation as alleged. She also declared herself as a married person. Mrs Whitaker said that her usable assets were HK$5 million without indicating any financial difficulties.' The policy has a steep fee for early exit. If Whitaker left the plan in the first two years, she would get nothing back, even though she would have paid in US$51,320 (HK$400,000) by that time. Prudential says Chu explained this penalty to Whitaker. And as a gesture of goodwill, following her formal complaint, it offered to cut Whitaker's policy to just one year. She would only be committed to one payment of US$25,666, which she has already paid. Therefore, Whitaker would not have had to pay an early-exit penalty, but the plan would still be worth less than she invested, at least in the early years. She rejected this offer. Hong Kong regulates according to a principle of disclosure: if people are advised of their risks, they are left to make their own decisions. There is little recourse for investors if they later regret buying a product they failed to understand. For example, the Prudential product contained a 'cooling-off clause'. Whitaker could change her mind about the plan even after she signed up. However, Whitaker says she was unaware of this clause. Prudential says details of the cooling-off clause were in the 'Declaration and Authorisation section' of the plan. In other words: read your contract. Product sellers still have to assess an individual's needs and they have a responsibility to sell a product that suits the investor: if it fits their risk profile, understanding, experience and expected returns. Whitaker says she did not understand the plan she bought. Meanwhile, she wrote on a Prudential document: 'I declare that I don't need to fill needs-analysis form', which suggests Prudential did not perform this analysis. Prudential says it did, in fact, do a needs-analysis during her two-hour meeting. The outcome of all this is an unhappy muddle. The Hong Kong Federation of Insurers ruled that Whitaker's complaint of mis-selling on the part of Prudential was unsubstantiated. Adkinson is taking the matter up with British regulators, as Prudential is a British company. Whitaker wants a refund of the US$25,666 she paid but Prudential is standing firm. On a positive personal note, Whitaker has reconciled with her husband. Are you unhappy about any investment product sold to you, or financial advice given? Send your complaint to Money Post, and we will look into the matter.