Insurance is an asset-protection instrument, and with all the uncertainties in life, it’s good to have some protection against the inevitable tragedies one will face such as disability, critical illness, dependent care needs, and death. Despite its importance, most Singaporeans don’t have a life insurance coverage of any kind. Out of all the reasons cited for this, two of the top reasons were “the intimidating process” and “apprehension toward agents”. I definitely can relate to these two concerns, as I have been personally lied to by multiple insurance agents, who were unaware that I had Certified Financial Planning (CFP) education and experience. Well now there’s a way to circumvent the agent, to compare multiple insurance products (and not just the ones your agent suggests) and purchase insurance directly (commission-free).
Why Insurance Agents Mislead or Lie
Life insurance agents earn money largely on a commission basis. How much commission? It’s not unusual for the agent to earn about half of the first year’s premium, which can amount to thousands of dollars. Each year you renew, the agent gets a small percentage of the annual premium (e.g., 5-10%) for a set number of renewals. Because of this, it’s very common for agents to sell you a much larger policy than you actually need. Agents are held to certain “suitability” standards, meaning that they only need to recommend products that are suitable for your financial goals. But that doesn’t mean they need to put your interest above their own. In other words, if there are two similar policies but one costs more, they can recommend the more expensive one (to get a higher commission) or they can omit an alternative policy because it does not offer them commission and these practices are considered “suitable” and within their duties.
How to Circumvent the Agent
If you just need to buy simple life insurance products, now you can ditch the agent and compare and buy insurance directly using CompareFirst, an online portal created by the MAS, the Consumers Association of Singapore, the Life Insurance Association and MoneySENSE. CompareFirst enables consumers to easily compare the premiums and features of life insurance products available in Singapore. There are 4 categories of products on this portal – Term Life, Whole Life, Endowment, and Investment Linked products. For the first 2 categories, you can buy Direct Purchase Insurance products (DPIs) which are less expensive commission-free products. The features of DPIs are broadly standardised so that they are easier to understand, and they are sold without financial advice. You are, however, provided with a DPI factsheet and checklist (which you should read) before proceeding to buy from the insurance companies directly (non-DPI products can be purchased through financial advisors or insurance agents). Pricing details are given for all products, except for Investment Linked products where only general information is provided.
Other Features of the Portal
CompareFirst also has calculators to help you better determine how much insurance you might need, and an extensive FAQ section that gives you a great deal of information on what is life insurance and the types of life insurance.
Disclaimer: Note that because life insurance will depend on your health, medical history, and occupation, the figures given through the portal are only estimates.
Here’s a video that explains DPIs:
Here’s an example of a policy that came up with when I did a search:
And here’s the list of life insurance companies that have their products on the portal:
For more info, please see the Money Sense article on this topic. They also have a nice infographic on their site.