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."
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
This article was first published on April 8, 2015.
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