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MPF intermediaries
MPFMPF Intermediaries ExaminationAn ILAS customer asks whether she owns the shares held in the fund her policy is linked to. Based on the warning statements required in the principal brochure, she should be told that:
Answer: she has no rights over those assets and her recourse is against the insurer only. Premiums become part of the insurer's assets; the customer has no rights or ownership over them and her recourse is against the authorized insurer only.Why not the others:• she owns the shares jointly with the trustee of the fund: The customer has no ownership of the assets, jointly or otherwise.• she owns the shares once the cooling-off period has ended: Ownership never passes to the customer; the cooling-off period is irrelevant to it.• she owns the units and can claim the shares if the insurer fails: The units are notional, and her recourse is against the insurer, whose credit risk she bears.Watch out: Believing an ILAS customer owns the underlying fund assets as a direct fund investor would.Rule: ILAS premiums become the insurer's assets; the customer has no ownership of them, bears the insurer's credit risk and has recourse against the insurer only.Source: IA Investment-linked Long Term Insurance Examination Study Notes, 2024 Edition (7th ed., Nov 2024; for exams from 17 Feb 2025), 4.13.3(i), p. 4/35
Believing an ILAS customer owns the underlying fund assets as a direct fund investor would.
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