Before concluding an insurance contract

1 Are you a retail or a professional customer?

Before any distribution of an insurance-based investment product, the distributor must categorize you as a retail customer or as a professional customer. Most individual customers will be placed in the category of retail customers.

As a retail customer, you enjoy the highest possible level of protection.

The category of professional customers includes banks, public authorities, pension funds, large companies and, in exceptional cases, certain individual customers.

If you are a professional customer, your distributor is not required to provide you with certain types of information or may provide you with less detailed information. This brochure only addresses the rules that apply to retail customers.

2 What level of protection do you receive?

You can call upon the services of a distributor of insurance-based investment products in two different situations:

1. to buy an insurance product without receiving advice; 2. to receive advice, that is, a personalised recommendation about an insurance-based investment product. A recommendation is personalized if it is tailored to you personally or if it is based on an examination of your own situation. This is not the case, for example, if the recommendation made is intended for the public.

Different levels of protection apply to the two different situations.

WHAT IS THE DISTRIBUTOR REQUIRED TO DO?

In every case: the demands-and-needs test

The distributor must ask you about your demands and needs and must ensure that the insurance contract proposed is consistent with those demands and needs.

Sale without advice Sale with advice

Appropriateness test

The distributor must question you on your knowledge and experience in the investment field relevant to the specific type of product offered or requested. In this manner, it must make sure that you understand the risks associated with the transaction and that it is appropriate for you.

Suitability test

The distributor must ask you about:

• your knowledge and experience in the investment field concerned; and • your investment objectives and your financial situation.

Based on this information, it may recommend a suitable product.

The distributor must also ensure that the personalized recommendation explains why the product best meets your demands and needs.

What is the distributor required to do?

A. The distributor must always perform a demands-and-needs test

Before concluding an insurance contract, the distributor must ask you questions in order to determine your demands and needs according to the complexity of the product and the type of customer. It must also provide objective information on the investment product, based on the insurance product concerned. This process is meant to enable you to make an informed investment decision. The distributor must ensure that the product it is offering you is consistent with your requirements and needs.

B. The distributor will carry out an additional test, the scope of which differs depending on whether or not you are being given advice

Without advice: appropriateness test

If you are calling upon the services of a distributor in order to enter into a contract for an insurance-based investment product without the distributor providing you with advice, a lighter protection mechanism will apply. This is called the ‘appropriateness test’.

During the appropriateness test, the distributor must assess your knowledge and experience as regards the type of investment to which the product being proposed or requested belongs:

• What types of services, transactions and insurance-based investment products or financial instruments are you familiar with? What was the nature, number, value and frequency of your previous transactions in such products or instruments? Over what period were these transactions carried out? What is your level of education and your current or former occupation?

Generally speaking, the distributor uses a questionnaire which it gives you before you make an investment.

• If the distributor concludes that you have the requisite knowledge and experience to understand the risks involved, it can proceed to carry out the transaction.

• If the distributor concludes, on the contrary, that you do not have the requisite knowledge and experience or if you have not provided enough information to enable him or her to form an opinion, it will give you a warning. The warning will indicate that the distributor considers that the product is not appropriate for you or that the information provided is insufficient for him or her to form an opinion.

If you insist that the transaction be executed, you must accept the risk it entails.

The test is thus intended to protect customers who might not understand or be aware of the consequences or of the risk level of a transaction.

With advice: suitability test

If you ask for advice from a distributor or if the latter provides you with advice at his or her own initiative, you are relying on the distributor more than where no advice is provided. You therefore need assurance that the distributor is recommending products that are suitable for you, given your personal situation. That is why the distributor must not only provide you with a personalized recommendation explaining why a particular product may better fit your demands and needs, but it must also carry out a “suitability test”. In order to do so, the distributor will ask you various questions to determine which types of insurance-based investment products are suitable for you and best serve your interests.

The suitability test must cover the following aspects:

• your investment objectives and risk tolerance

What is your risk profile and what are your preferences when it comes to taking risks? Would you like total protection of your capital, or are you ready to take elevated risks? What is the purpose of your investments? For how long would you like to keep your investment?

• your financial situation and your ability to bear losses

What is your regular income, where does it come from and how much is it? Do you own assets, investments or real estate? Do you have any debts or regular financial commitments? To what extent are you able to bear financial losses?

• your knowledge and experience in the investment field concerned

If the distributor does not obtain the information necessary to assess the suitability of the product, it cannot make a recommendation. It is therefore crucial for you to reply to the questions you will be asked. They will determine the type of service that the distributor will be authorized to provide you and the resulting level of protection.

DEMANDS-AND-NEEDS TEST, APPROPRIATENESS TEST AND SUITABILITY TEST

Level of customer protection

In every case

Demands and needs = basic test

+ knowledge and experience = appropriateness test

+ objectives and financial situation = suitability test

Without advice With advice

Insurance-based investment product

3 What information should you receive in advance?

All information you receive from the distributor must be accurate, clear and not misleading. This principle applies both to the content and to the presentation of the information. Moreover, where a distributor provides you with advertisements or advertising materials, these must be identifiable as such.

The distributor must provide you with the necessary information sufficiently far in advance of the conclusion of the contract, so that you can make an informed decision. It is possible, however, that some information is provided to you afterwards, where the product concerned is being sold to you via a remote mode of communication, such as by telephone. In that case, certain conditions must be met.

You must, in particular, receive the following information:

Information about your categorization The distributor must inform you if it has categorized you as a retail customer or as a professional customer. It must inform you of your right to request a change of category, where applicable, and tell you the limitations in terms of protection that may result from such a change.

Information on the type of advice provided The insurance intermediary must explain to you the nature and scope of the advice it provides, specifying for example if the advice is based on an impartial and personalized analysis or whether they are independent. Moreover, the intermediary will let you know if it will provide you with a periodic assessment of the suitability of the products it has recommended to you.

Suitability statement If the intermediary provides you with advice, it must provide you with a statement that summarizes the advice given and explains why the advice in question is suited to your situation. The statement must specify, in particular, how the advice meets your objectives, preferences, financial situation, knowledge and experience. The statement must also indicate whether the products recommended are likely to require periodic reassessment.

Product information The distributor will provide you with information relevant to the products, taking into account the complexity of the product and what category of customer you are. The distributor will also inform you of the relevant guidelines and warnings concerning the risks inherent in the products or in certain investment strategies.

Information about the distributor The distributor must inform you of information such as its contact information, information about its authorization/registration, etc. The distributor must also tell you whether or not it offers advice and must provide you with the requisite information regarding procedures for filing claims, complaints and redress.

Information about any conflicts of interest and on transparency Where the distributor is an insurance intermediary, it must provide you with general information about conflicts of interest. The intermediary must also provide you with information about any shares it may hold in companies or about any shares or voting rights that certain companies may hold in its capital.

Moreover, it must inform you:

(i) if it bases its advice on an impartial and personalized analysis, (ii) if it is subject to a contractual obligation to work exclusively with certain insurance companies, in which case it must give you the names of those companies, or (iii) the name and address of the insurance companies with which it can work and works if it is not in any of the situations set out in (i) and (ii).

Information about the costs and charges This information must include the cost of distributing the product, the cost of the product in question and the way in which the customer can pay these costs, including any payment made by third parties. The information provided must indicate all costs and charges in the form of a total amount, and must show the cumulative effect of the various costs and fees on the return on investment. You have the right to ask the distributor for a detailed breakdown of the costs and fees.

Information on remuneration Your insurance intermediary must inform you of the type of remuneration it receives under the terms of the insurance contract. If the distributor is an insurance company, the information should indicate the remuneration received by its staff under the terms of the insurance contract.

Where the distributor is an insurance intermediary, it must also specify whether it works on the basis of:

(i) a fee paid by you directly; (ii) a commission of any kind included in the insurance premium; (iii) any other type of remuneration; or (iv) a combination of two or more of the above-mentioned types of remuneration.

Before investing, please ensure you are familiar with the procedures for lodging claims, complaints and redress against the distributor of insurance products. The distributor is required to provide you with this information.