As a rule of thumb, on most 25-year plans close to 90 per cent of the first year's premiums go to pay the adviser's commission.

According to investment advisers Asia Pacific Financial Planning, there is no need to buy an investment wrapped up in an insurance product.

Director Steve Cumming said he advised clients to separate their investment and insurance needs. 'There's no reason to sell any investment wrapped up in an insurance product,' he said.

'Clients investing in insurance-linked investment products pay ludicrous charges for an inflexible investment.' Hill Samuel's regional director for financial services, Barry Lea, said he was extremely sceptical about the sale of long-term insurance savings plans.

'It must be remembered that commissions are generally linked to the term of the policy and for people who are uncertain about their personal long-term plans, I would question the wisdom of a 20-, 25-or 30-year plan,' he said.

These concerns have been graphically illustrated by the case of marketing consultant Terry Sampson.

In 1991, Mrs Sampson was looking for a safe investment in which to place US$20,000 (about HK$155,000), her savings of 12 years. One of her main stipulations was that the money be accessible.

After being introduced to pension specialist Christopher Coleridge Cole, she signed up for what she believed was a one-off, lump sum investment in an insurance-linked unit trust investment policy.

She later discovered the policy had an annual premium of about US$19,000 and matured in 25 years. There were heavy penalties for early encashment.

Mrs Sampson admits she did not read the small print on her policy, a Royal Skandia pension product, and only discovered it carried a yearly premium when she received a demand for the second premium.

Mr Coleridge Cole advised her to leave the Royal Skandia premium as a paid-up policy and begin a new investment policy with Clerical Medical International (CMI). This was also an insurance-linked product investing in unit trusts.

Mrs Sampson paid monthly premiums of US$300 for two years before seeking further advice. She then discovered the CMI policy also had a 25-year term and also carried heavy penalties for early encashment.

Today, the paid-up Royal Skandia policy has an account value of US$16,600 but, if cashed in, it would be worth only $5,100.

Mrs Sampson's situation was explained to Mr Coleridge Cole, who insisted however that the 25-year Royal Skandia policy was what she had asked for.

Mr Coleridge Cole surrendered his licence as an investment adviser to the Securities and Futures Commission (SFC) in 1992, but can still sell pension plans because they are not deemed to be investment products.

He said he had surrendered his licence because he intended to concentrate on pension and school fee plans. An SFC licence is not required to sell these products.

He denied that Mrs Sampson had incurred a new and unnecessary set of commission fees in buying the second policy. 'If Mrs Sampson had continued the Royal Skandia policy but with a lower premium, she would have paid higher commissions than those she paid for the new CMI policy,' he said.

Hong Kong Federation of Insurers public relations manager Iris Wong Po-yee said: 'Whenever consumers are signing an insurance policy, they should always read the document thoroughly. If you want to check any facts, you should always contact the insurance company directly.'