Insurer Manulife recently launched its latest investment-linked product: the ManuSelect Investment Protector. This is an investment-linked insurance plan offering investment and life. The plan offers customers a choice of 11 Manulife investment funds. These range from from very conservative to aggressive vehicles such as specialty China and Eastern Europe funds. The life coverage in the product - the 'face amount' - can be as low as HK$320,000 to start with, and supplementary benefits can be added. Investors can invest in Hong Kong dollars or US dollars. 'Within the portfolio, we have three lifestyle funds,' says Alan Ng, assistant vice-president, individual product marketing for Manulife. 'These are for the average investors. They are categorised as high, medium and low risk. In addition, there are seven geographic funds.' Mr Ng says investment-linked insurance products vary as a proportion of Manulife's total business. 'Over the last couple of years the share of investment-linked products within our total portfolio has come down a lot because of the depressed investment market. 'At the moment it is 3 per cent to 4 per cent of our new policy business. 'Hopefully, when this atypical pneumonia and the war in Iraq are gone and world markets recover, the significance of investment-linked products will go up as well.' Mr Ng noted there was a wide range of products available in the investment-linked category. 'There are mainly two categories of investment-linked products in Hong Kong at the moment: the type we offer are investment-linked products with a 'face amount'. That means an amount of life protection.' Mr Ng said Manulife did not offer so-called '101' investment-linked products, which are investment products without any substantial layer of insurance cover. 'These products offer very little protection, although they might be in the form of an insurance policy. We do not offer these. Customers who are just looking for investment should invest directly in a mutual fund. 'Our products come with protection in the face amount as well as investment. We ask our customers how much life protection and investment they want. 'Customers for this type of product should be looking for both insurance and investment, because the product comes with both. 'If you are a customer looking entirely for investment, our product is very flexible compared with, say, a traditional life policy. With a life policy, you get a policy for HK$1 million of coverage and once it is fixed, it is fixed. 'But with our ManuSelect product, it allows you to increase or decrease the life coverage in various stages of your life.' The life coverage portion of Manulife's investment-linked products is tailor made for each customer. 'The investment part is optional, depending on your investing needs. Someone might say: 'Other than HK$1 million in life protection, I want to make a particular regular contribution'.' Manulife encourages its ManuSelect customers to take advantage of the dollar-cost averaging effect by continuing to make contributions even when underlying stock or bond markets are unfavourable. By purchasing more units when they are cheap, the customer ends up with more money in the long term. Recognising that this discipline runs against many people's instincts, Manulife rewards people for maintaining their contributions. 'Manulife is trying to take a lead in terms of customer education. It is a core part of our philosophy,' Mr Ng said. 'Our Manulife Selector product rewards customer behaviour based on dollar-cost averaging. We think it is really bad to invest only when markets look good, so we introduced a bonus structure whereby customers who invest regularly for five years receive a bonus in additional investment and protection.' Full disclosure to prospective customers is very important for Manulife, Mr Ng said. 'There has to be disclosure of all the details, all the fees and charges, and proper selling. 'Is the product right for the customer?' This is a very important element. For example, we train our agents to ask three questions before they show the product leaflet for our new ManuSelect Investment Protector product. 'The first question is: Are you looking for life protection and investment opportunity at the same time? If the answer is no, this is not suitable for you. The second question is: Are you looking to diversify your investment portfolio to achieve your investment goals? The third one is: Are you willing to commit to a financial plan on a medium- to long-term basis to protect your family? 'If the answer is 'no', don't take this product.'
