Direct Purchase Insurance: Compare life insurance products on Web portal, then buy direct

By Rachael Boon, The Straits Times, 1 Apr 2015

CONSUMERS will soon be able to compare life insurance products on a new Web portal, and buy a new category of insurance direct - bypassing financial advisers altogether.

From April 7, consumers will have the option of comparing life insurance products across insurers through a new Web portal called compareFIRST (www.comparefirst.sg), the Monetary Authority of Singapore (MAS) announced yesterday.

Mr Lee Boon Ngiap, MAS' assistant managing director for capital markets, said: "Buying a life insurance product is a decision for the long term.

"We strongly encourage consumers to use compareFIRST and assess the suitability of the various life insurance products offered by different companies before they buy a product."

The portal allows consumers to compare the premiums and features of similar life insurance products at a glance.

Consumers would then approach a financial advisory representative or life insurer to buy their choice of insurance plans.

The Web portal combines the efforts of the regulator, the Consumers Association of Singapore (CASE), the Life Insurance Association Singapore (LIA Singapore) and MoneySense.

Life insurance companies will also start selling direct purchase insurance on April 7.

These are simple life insurance products sold without commissions and financial advice, and so the premiums are lower than comparable life insurance products.

These new moves come under the Financial Advisory Industry Review.

LIA Singapore said these will help to bridge the protection gap, and consumers will be able to "make better informed choices".

MAS says consumers should read the factsheet for direct purchase insurance and also complete the checklist provided by insurers before buying. More information is available on www.moneysense.gov.sg/dpi.

The features and pricing of direct purchase insurance are available from life insurers.

Manulife Singapore yesterday launched a whole life plan and term plan for the direct purchase segment.

Prudential said it will have 37 products up on the portal.

Manulife Singapore chief executive Naveed Irshad said: "With the launch of the new direct purchase channel, we want to support consumers in their financial decisions by providing them with information that is clear, relevant and easy to understand."

Picking life insurance plans easier with portal
Consumers can compare products and make direct purchase
By Rachael Boon, The Straits Times, 8 Apr 2015

CHOOSING a life insurance product is now less of a chore with the launch of a new portal to make comparing policies easier.

Consumers now also have the option of shopping direct in a new category of simple life insurance plans, bypassing financial advisers.

The moves follow recommendations made in 2013 by the Financial Advisory Industry Review panel, set up to recommend ways to raise industry standards.

The portal, compareFIRST, was launched yesterday. It allows consumers to compare similar life insurance products across a range of insurers at a glance.

Dr Khoo Kah Siang, president of the Life Insurance Association Singapore (LIA), said at a briefing: "This will benefit consumers in the long run, to help them understand products. A lot of times, consumers face challenges in that." In all, 12 life insurers including AIA Singapore and Aviva Singapore have products on the site. AIA said it has 22 products while Aviva has listed 16 plans on the website.

The same 12 insurers were given the green light to sell direct purchase insurance plans yesterday. These are simple life insurance products sold without commissions and financial advice.

The products available for comparison on the site are direct purchase insurance, term life insurance, whole life insurance and endowment policies.

Information on features such as premiums, a guaranteed death benefit and surrender values at different years in the term of a policy will be available for comparison.

Some information, such as the history of bonus rates, is not available to consumers.

Dr Khoo said: "Bonus rates are too complex to compare. An insurer can give a higher bonus rate but a poorer return. The bonus rate is designed for a particular feature of the participating policy and every policy has a different bonus rate."

He said other features, such as the death benefit and the expected guaranteed value, would be better for comparing products.

General information on investment-linked life insurance policies is also available on the portal, which features useful tools and guides as well.

Direct purchase insurance is made up of term life and whole life insurance products with total and permanent disability cover, as well as optional critical illness riders attached to those products.

Consumers can insure themselves for up to $400,000 - with a maximum coverage of $200,000 for whole life direct purchase insurance - with each insurer. This is based on the average protection needs of Singaporeans - estimated at 10 times of annual income, based on a 2012 LIA study.

A 2013 survey by the Ministry of Manpower found that the gross median annual income of Singapore residents is about $39,000, which translates to protection needs of about $400,000.

Great Eastern said it has set up a dedicated customer service counter for such products.

Mr Seah Seng Choon, executive director of the Consumers Association of Singapore, said the new moves could foster greater competition among insurers and create better products in time.

Mr Lee Boon Ngiap, assistant managing director for capital markets at the Monetary Authority of Singapore, said price competition would not hurt the market as the aim is to get more people insured.

"It would hurt insurers' profitability adversely only if they are competing for the same small pie. The intention of all these... is to grow the pie."

Q&A

What products are available for comparison on the portal compareFIRST (www.comparefirst.sg)?

The new option of direct purchase insurance, along with term life insurance, whole life insurance, and endowment policies.

In all, 12 insurers have products featured. Only general information on investment-linked life insurance policies is available.


What are the benefits?

The portal lets you compare the premium, guaranteed death benefit, non-guaranteed death benefit and surrender values at different years in the term of a policy, distribution cost and credit rating of life insurance companies.


Who is this good for?

Mr Lee Boon Ngiap, the Monetary Authority of Singapore's assistant managing director for capital markets, says this would be useful for consumers who are interested in or considering a life insurance product.

It removes the hassle of getting information from each insurer or from their websites.


Why can I insure myself for only up to $400,000 in total, with a maximum coverage of $200,000 for whole life direct purchase insurance products?

This takes into consideration the average protection needs of Singaporeans, which work out to about $400,000.

The sub-limit of $200,000 for whole life products aims to alleviate the risk of consumers buying such products beyond their means and protection needs.

Whole life products have higher premiums than term life products, for instance.


Where can I go for more information?

For direct purchase insurance, visit www.youtube.com/watch?v=XsZR4z24qn8 or www.moneysense.gov.sg/dpi

* Insurers see slow take-up of direct purchase policies
Just over 1,000 commission- and advice-free life policies sold since option's launch in April last year
By Rachael Boon, The Straits Times, 6 Sep 2016

The idea of buying direct purchase insurance (DPI) - simple life policies sold without commissions and financial advice - has yet to take off in an explosive way.

The Life Insurance Association (LIA) noted that only 435 DPI policies were sold in the six months to June 30. This was about $371,000 of weighted new premiums for the first half of 2016.

By comparison, weighted new business premiums - a key performance gauge - for the half-year rose 13 per cent to $1.52 billion over the same period last year.

The LIA noted that 95 per cent of new DPI sales comprised regular-premium term life policies, while the rest were whole life plans.

Since the option to buy DPI was launched on April 7 last year, 1,081 policies have been bought, or about 200 sales every quarter.

LIA president Khoo Kah Siang described the demand as "steady", but the industry has long refrained from setting any expectations.

"As an industry, we are pleased this is one of the channels offering choice to customers. We need to do that. There will be different segments of customers, and we'll let the free market develop."

Details of the demographic of DPI buyers were not available.

As such policies are sold without commissions and financial advice, the premiums are about 10 to 20 per cent lower than comparable life insurance products, the LIA said at a recent briefing.

That could have been a draw for more people to get insured, but the effect has been muted.

Eternal Financial Advisory chief executive Viviena Chin had said the initial release of DPI had alarmed the industry, seeing it as a potential competitor to existing products.

She added: "It doesn't seem to have turned out that way, and the thing is, insurance is still being sold, not bought, and it's not easy to understand."

DPI products are term life and whole life insurance policies with total and permanent disability cover, as well as optional critical illness riders attached.

They can be bought from insurers' customer service centres or websites, and compared on portal CompareFirst (www.comparefirst.sg). This allows consumers to study similar life insurance products across a range of insurers.

SingCapital chief executive Alfred Chi said the success of DPI cannot be based on the take-up rate, even if it is easily available online.

Even though consumers still prefer the personal touch when it comes to insurance purchase, he believes this will be a trend, and the portal - a joint effort by the Monetary Authority of Singapore and industry bodies - helps to promote factors such as transparency and keeping insurers on their toes.

However, consumers can insure themselves for up to only $400,000 - with a maximum coverage of $200,000 for whole-life direct purchase insurance - with each insurer, based on estimated average protection needs.

Ms Chin said that could be a factor for people who feel they need higher coverage.

She added: "I also handle higher-net-worth clients, who may know a lot but they still seek advice as they have different needs.

"Someone in his 30s who is IT-savvy did all his comparisons, but still decided to ask me about DPI and said it was not easy to understand."

Even though DPI uptake has been less than exponential, its presence should grow slowly but surely.

It also serves as a reminder that consumers have options, something they will appreciate as their knowledge about insurance becomes more sophisticated.

Dr Khoo said: "It continues to offer choices. There will always be people who want the self-service choice, but not everyone is the same. We continue to be able to serve those people, and they are buying the products at a cheaper rate than buying through intermediaries."