A unit-linked policy may present itself as a life insurance product, but its economic outcome normally depends on the performance of funds, units, or other assets linked to the contract. If the value has decreased, the doubt is not only whether the investment performed poorly: it can be important to understand whether the risk was explained clearly, whether the product was consistent with your objectives, and whether the planned insurance protection was effective.

The loss alone is not enough to obtain the cancellation of the contract or compensation. However, I want to help you distinguish normal market fluctuation from a possible irregularity in the sale, understand why the subscription date matters, and recognize the different consequences of a claim for nullity compared to a request for damages.

What you buy with a unit-linked policy

The unit-linked policy combines investment and insurance. In this type of contract, benefits are linked to the value of an internal fund of the insurance company or to units of collective investment undertakings. The return, and in many cases also the recoverable capital, are therefore not necessarily predetermined: they depend on the assets to which the premium is linked. The regulatory definition of the unit-linked contract can be found in IVASS Regulation no. 40 of 2018 published in the Official Journal.

The commercial name does not decide everything. The Court of Cassation has clarified that calling a contract life insurance is not sufficient to attribute such a nature to it. One must look at the concrete coverage of demographic risk, i.e., the actual relevance of the death event in the promised benefit. If the beneficiary receives only an insignificant amount or an amount entirely exposed to the negative performance of investments, the classification of the relationship requires a substantive examination of the clauses. This criterion is illustrated in the civil digest of the Court of Cassation relating to order no. 21022 of July 26, 2024.

Not all losses indicate a wrongful act. An equity, bond, or balanced fund can undergo even significant variations if the contract exposes the policyholder to market risk. The central question then becomes another: was that risk compatible with the duration of the investment, the capacity to bear losses, and the reason why you were employing those sums, for example liquidity destined for near-term needs or savings to be preserved?

Which rules matter in the distribution of the policy

Today, the regulation does not end with MiFID. For insurance-based investment products, the main reference is the Private Insurance Code. Article 121-septies distinguishes sales with advice from sales without advice and requires different controls; the regulation is included in the Chapter dedicated to additional requirements for the distribution of these products. The current text of the Private Insurance Code also defines the insurance-based investment product.

With advice, an appropriateness assessment is required. The distributor must gather information on the policyholder's knowledge and experience, financial situation and capacity to bear losses, investment objectives, and risk tolerance. The purpose is not to fill out a form as a formality: it is to be able to recommend a product appropriate for that person. Furthermore, before the conclusion of the contract, a statement must be provided on a durable medium explaining the advice given and the correspondence of the product with the policyholder's preferences and characteristics.

Without advice, the obligation changes, but does not disappear. In this scenario, the distributor must still gather information on knowledge and experience in investment matters to verify whether the product is appropriate. If it turns out to be inappropriate, it must warn the policyholder. If sufficient information is lacking, it must clarify that this hinders the assessment. For this reason, it is decisive to understand not only what appears in the questionnaire, but also whether the sale was truly presented as advice, a simple proposal, or the policyholder's independent choice.

Information, costs, and the KID document

Information must enable an informed decision. For insurance-based investment products, information on risks, costs, and charges must be provided before conclusion. A particularly relevant document is the KID, the document containing key information for PRIIPs, i.e., packaged retail and insurance-based investment products. The European regulation requires the creator to draw it up before the product is made available to retail investors; you can read the rule in Article 5 of EU Regulation no. 1286/2014.

The KID does not replace the contract. It serves to make essential information comparable, such as the nature of the product, risk, possible scenarios, duration, and costs, but it must be read together with the policy, contractual conditions, pre-contractual documents, and the suitability statement when it exists. Its presence does not automatically prove that the information was understood; its absence or late delivery does not automatically render every contract void. However, it remains a fact that can take on significance in the reconstruction of the sale.

The facts that can make a dispute well-founded

The consistency between profile and product is the first comparison. A policy linked to highly volatile funds poses a different problem if it is subscribed by someone who declares they have no financial experience, cannot bear significant losses, or must use the money within a few years. Conversely, the existence of prior experience and a long horizon does not close the issue, but can affect the assessment of risk awareness and appropriateness.

Forms are not untouchable. A signed questionnaire deserves attention, but must be compared with its concrete content. Pre-filled answers, a risk profile inconsistent with available data, vague indications on objectives, or documents delivered only after subscription can be significant elements. However, it is not enough to claim not to have read: it is necessary to verify whether the information gathered, warnings, and recommendation were truly suitable to represent the characteristics and risks of the specific policy.

Costs and constraints can change convenience. Initial loads, management costs, underlying fund costs, surrender fees, and the duration of the commitment affect the outcome. A loss recorded in the early years may also depend on the weight of costs and the surrender value provided by the contract, not just market performance. Therefore, a negative return must be distinguished from a cost clearly indicated but not adequately understood or illustrated in relation to the purpose of the investment.

The subscription date also matters. Rules on insurance distribution have changed over time. It is not correct to automatically apply to a very old policy the obligations today provided for insurance-based investment products, nor to ignore the rules in force at the time of the sale. The discipline introduced and modified by the legislator must be read in relation to the date of the contract, the quality of the entity that distributed it, and the concrete activity carried out during the proposal.

Nullity, termination, and damages: different remedies

Nullity does not stem from loss alone. Declaring a contract void means arguing that an essential requirement is missing or that the contract conflicts with a mandatory rule in such a way as to justify this consequence. A dispute over inadequacy, insufficient information, or placement methods does not automatically translate into nullity. The claim must indicate with precision which defect affects the contract and what legal effect derives from it.

The insurance component can be decisive. Supreme Court jurisprudence has required the verification of the demographic risk actually assumed by the company, considering the relationship between premiums, expected capital in the event of death, duration, and type of investment. The Court addressed the issue in sentence no. 6319 of March 5, 2019, reported in the digest of the Court of Cassation. This control does not allow shortcuts: a reduced death benefit does not determine an identical result in every dispute by itself, but requires reading the economic and legal structure of the contract carefully.

Damages require a nexus between violation and prejudice. Those who claim damages must link an irregular conduct to the decision to subscribe, maintain, or surrender the policy and demonstrate an economically appreciable loss. This does not always coincide with the entire premium paid nor with every market loss. It may be necessary to compare the investment made with the choice that, based on correct information and the concrete situation, would have been reasonable to make.

The remedy must be chosen before taking action. A restitution claim consequent to nullity and a damage claim pursue different results and require different allegations and evidence. The surrender request is also a distinct option: it allows exiting the contract under the conditions provided, but does not amount to acknowledging or excluding any liability. Before deciding, it is useful to understand the current value, any exit costs, the remaining duration, and the effect that surrender produces on documentation and the reconstruction of the event.

How to prepare a dispute without confusing plans

The first request must be circumstantial. An effective dispute identifies the policy, the accession date, who proposed it, the information declared by the policyholder, and the concrete point deemed irregular: for example, an incompatible risk profile, unexplained costs, absence of a coherent recommendation, or an apparent-only death coverage. Disputingly contesting a disappointing return makes it harder to distinguish accepted fluctuation from a possible violation.

The useful documents are few but central. They normally include the proposal and policy, insurance conditions, questionnaire or policyholder profile, KID and other pre-contractual documents, the suitability statement if rendered, position value statements, communications on surrender, and correspondence relating to the sale. If some papers are missing, their absence must be noted without reconstructing their content by supposition.

Do not choose the remedy solely by the name used. Expressions like MiFID violation, cancellation, or total refund often describe a need, but do not define the applicable legal action on their own. I would start from the date, the contract, and the type of sale to separate what pertains to the qualification of the policy, conduct rules, and the damages intended to be demonstrated. If you want to address the issue with an orderly reconstruction, you can contact me.

Frequently asked questions

Can I challenge a unit-linked policy just because it lost value?

No, the loss is not sufficient. Unit-linked policies can expose the policyholder to investment fluctuations. The dispute gains relevance if there are additional elements, such as risk incompatible with the declared profile, incomplete information, unexplained costs, or a recommendation not appropriate to objectives and the capacity to bear losses.

Does the violation of MiFID rules render the policy void?

No, not automatically. For insurance-based investment products, the applicable discipline also depends on the date and type of distribution. A violation of conduct rules can be relevant, but nullity requires an independent legal foundation. It is therefore necessary to distinguish precisely between contract defects, improper conduct, and any damage caused.

What is the suitability statement?

It is the document explaining the recommendation. When advice is provided on an insurance-based investment product, it must indicate how the product matches the policyholder's preferences, objectives, and characteristics. If it is missing, generic, or inconsistent with gathered data, it can be a relevant element, but it must be evaluated together with the proposal and other documents.

Does the KID guarantee that I will not lose capital?

No, the KID is not a return guarantee. It is an informational document that helps understand the product's characteristics, risks, costs, and scenarios. Its function is to make the choice more informed. One must still verify contractual conditions, surrender value, linked funds, and any protection provided in the event of death.

Can I surrender the policy and challenge it later?

Surrender and dispute are distinct plans. Surrender closes or reduces the position under the conditions provided by the policy; it does not replace the ascertainment of any liabilities. Before acting, it is advisable to consider the liquidable value, costs, available documents, and the reason for the dispute, because the requested remedy and alleged damage must remain consistent with the facts.

Institutional references

The cited sources help get oriented. For current rules on the distribution of insurance-based investment products, the Private Insurance Code is useful; for the KID, EU Regulation no. 1286/2014 is relevant. For the concrete nature of unit-linked policies, the criteria set out in the digests of the Court of Cassation are significant.