MAS has been discussing with the insurance providers to provide an alternative sales channel for consumers to bypass insurance agents and buy basic life insurance directly. If all goes well, this could be in place by as early as next year.
Without having to pay commissions, these life insurance products would have lower premiums, hence making them more affordable. This is especially critical for term life insurance products which have low premiums to begin with and the insurance companies can become more competitive in these products.
Both term life insurance products and whole life insurance products with total permanent disability cover will have to be made available to the direct retail channel. Optional critical illness rider will be available for both products as well.
[Free Ebook] How should you invest your first $20,000?
We asked 14 Singapore finance bloggers to share what they would do if they could go back in time and invest their first $20,000. They can no longer rewind time, but you can learn from their experience and hopefully start with a better footing.
A Step In The Right Direction
This is an excellent move as people are becoming more and more financially savvy, they know exactly what they need in terms of protection. There are many people who want to get insurance, but avoid doing so as they do not want to deal with agents.
Making The Insurance Process Easier
There should also be moves to help make the insurance process easier as there is so much documentation involved. The policy terms and conditions should also be provided in a way that easier for the public to understand.
There will generally still be issues as these products will probably only be reserved for healthy young individuals. For older individuals with health issues, the process may not be so straightforward.
Another limitation is that the maximum limit for term life insurance is set at $400,000. This is critical as most households will generally require coverage of $1 million or more to be sufficient. Capping it at $400,000 is way too low and definitely not enough for most people. One way around it would be to take up multiple $400,000 policies from different insurers. However, depending on how this gets implemented, I am not sure if this can be done.