Avoid pitfalls when buying insurance! China Life offers tips on suitability management for scientific insurance purchasing

In recent years, the insurance industry has been booming, offering a variety of insurance products that provide diverse protections for our lives. They play an important role as economic “shock absorbers” and social “stabilizers.” However, some consumers face issues when purchasing insurance, such as not knowing which product is suitable, where to buy from, or how much premium is appropriate.

During the “3.15” Financial Consumer Rights Protection Education and Promotion Campaign, the China Insurance Industry Association invited industry experts to educate the public about financial consumer protection, enhance risk prevention capabilities, promote lawful and rational rights protection, and strengthen consumers’ sense of gain, happiness, and security.

Xu Chongmiao, Chief Compliance Officer of China Life Insurance Co., Ltd. (hereinafter referred to as “China Life,” stock code: 601628.SH, 2628.HK), was invited to participate in the event. He discussed “suitability management” with consumers and how to use “suitability management” to purchase insurance products that truly fit their needs, making insurance a solid safeguard for a better life.

What is “suitability management”?

“Suitability management, at its core, means selling or providing appropriate products through suitable channels to suitable customers,” explained Xu Chongmiao.

The “Measures for the Management of Suitability of Financial Institution Products” (hereinafter referred to as the “Measures”) issued by the China Banking and Insurance Regulatory Commission came into full effect on February 1, 2026. These measures incorporate the suitability of insurance products into unified standards, aiming to prevent mismatches, misguidance, and disputes from the source. This marks a milestone for the insurance industry in protecting consumer rights, establishing clear behavioral guidelines and rigid constraints. From the perspective of insurance consumers, this new regulation offers tangible protections in three key areas:

First, clear product classification and transparent information disclosure. Clear classification helps consumers easily identify product features and make rational choices. The “Measures” require financial institutions to consider factors such as insurance type, coverage responsibilities, and whether policy benefits are certain when classifying and grading insurance products. For example, life insurance can be divided into life insurance, annuities, health insurance, and accident insurance based on coverage; based on design, it can be ordinary, dividend, universal, or investment-linked. Consumers can usually find specific classification and grading information on insurance companies’ official websites.

Second, pre-application assessment and risk acknowledgment. Before selling insurance products with a term longer than one year, financial institutions must analyze the consumer’s needs and financial capacity. For products like investment-linked insurance that may result in capital loss, they must also assess the consumer’s risk tolerance. If mismatched needs, insufficient financial capacity, or inadequate risk tolerance are identified, the institution will advise against purchasing. If the consumer insists, they must sign a written acknowledgment confirming their voluntary decision and understanding of the risks.

Third, special care for vulnerable groups, especially the elderly. The “Measures” pay particular attention to consumers over 65 years old, requiring financial institutions to exercise special caution when selling high-risk products to them. This includes implementing specific sales procedures, enhancing risk warnings, and providing more time for consideration. This reflects regulatory warmth and demonstrates human concern for elderly consumers.

How to implement suitability management for scientific insurance purchasing and rational consumption?

“Good systems are essential, but active cooperation from consumers is also needed. To achieve ‘suitability management,’ insurance consumers should focus on five key points,” Xu Chongmiao emphasized.

First, be truthful and conduct self-assessment. Before purchasing insurance, consumers are asked to fill out evaluation questionnaires. Some may hide true information or fill out forms carelessly to buy certain products, which is unacceptable. Consumers must provide accurate, complete personal information, including financial status and health conditions, so that financial institutions can recommend truly suitable products.

Second, understand your needs, avoid blindly following trends or comparing excessively. Based on factors like family lifecycle, health, and debt levels, consumers should clarify their core protection needs, avoid impulsive decisions, and ensure coverage matches their actual requirements. For example, primary breadwinners should prioritize sufficient accident, life, and health insurance; retirees should focus on pension and long-term care planning.

Third, live within your means and adjust financial plans dynamically. Premium payments should align with household income and cash flow. The “Measures” specify that for policies like dividend, universal, or investment-linked insurance with uncertain benefits, the one-time premium should generally not exceed four times the annual household income, and annual premiums should not exceed 20% of annual household income, to avoid risking cash shortages due to high premium payments.

Fourth, verify credentials and carefully read policy terms. Purchase insurance through legitimate channels and choose qualified sales personnel. The insurance contract is a key document protecting consumer rights. Before signing, thoroughly review the “Insurance Application Tips,” “Risk Warning,” and “Product Terms,” paying close attention to coverage, exclusions, payment periods, cash value, and surrender rules. For products with uncertain benefits like dividend, universal, or investment-linked policies, pay special attention to risk warnings about benefits illustration.

Fifth, stay calm and make good use of the “hesitation period.” Most life insurance policies include a “cooling-off” period (usually 15 days), during which consumers can cancel the contract and receive a full refund. After purchasing large or long-term policies, consumers should discuss with family members and review whether the product still fits their needs before finalizing.

Xu Chongmiao also advised consumers:

1. Insure rationally, ensuring coverage matches needs. Before buying, evaluate key factors such as age, occupation, income, health, and family responsibilities, and clarify core protection needs, financial capacity, and risk tolerance. Avoid following trends or making impulsive decisions.

2. Stay calm in emergencies and use official channels first. If any doubts arise during the process, contact official customer service hotlines, apps, service outlets, or authorized agents.

3. Be vigilant and beware of scams. Do not trust online messages claiming “full refunds,” “rights protection experts,” or “policy inspections.” Do not disclose sensitive information like ID numbers, bank details, or policy documents to avoid falling into traps set by illegal agents.

“There’s no one-size-fits-all answer to insurance; only products that match your needs, financial situation, and risk tolerance can truly provide protection. Be rational, make cautious decisions, and let’s work together to create a fair, transparent, and secure insurance consumption environment, where every protection is just right and every trust is worth entrusting,” Xu Chongmiao urged.

【Source: Liu’an New Weekly】