Since April 7th, 2015, consumers can start to compare insurance products from different insurers on a new web portal called CompareFirst. The web portal allows consumers to compare the premiums and features of similar life insurance products across insurers at a glance. They can also buy insurance directly from the insurance companies, bypassing financial advisers.
These moves follow the recommendations made in 2013 by the Financial Advisory Industry Review panel, which was set up to raise industry standards.
What is Direct Purchase Insurance? What products are offered in this scheme? How can you buy insurance directly?
What is Direct Purchase Insurance (DPI)?
Direct Purchase Insurance (DPI) is a class of insurance that you can buy directly from life insurance companies.
- Simple term
- Whole life insurance products with total and permanent disability (TPD) cover
- Optional critical illness (CI) rider
As DPI are sold without financial advice, no commission is charged and you are supposed to pay lower premiums than comparable life insurance products. DPIs have broadly standardised features which makes it easier to compare products when deciding which DPI to purchase.
Which insurers offer Direct Purchase Insurance?
DPIs are offered by all life insurance companies who cater to retail customers. You may purchase DPI – which can be identified by the prefix “DIRECT” in their product name – from the customer service centres or websites (if available) of the following insurance companies:
- AIA Singapore Pte Ltd
- Aviva Limited
- AXA Life Insurance Singapore Pte Ltd
- Etiqa Insurance Pte Ltd
- Great Eastern Life Singapore Pte Ltd
- HSBC Insurance (Singapore) Pte Ltd
- Manulife (Singapore) Pte Ltd
- NTUC Income Insurance Co-operative Limited
- Overseas Assurance Corporation Limited
- Prudential Assurance Co. Singapore (Pte) Ltd
- Tokio Marine Life Insurance Singapore Ltd
- Zurich Life Insurance (Singapore) Pte Ltd
While DPI have broadly standardised benefits and features, not all benefits and features of DPI are the same across life insurance companies.
What are the types of insurance available for direct purchase?
Details of the benefits and features of each type of DPI can be found in the tables below.
|Policy Coverage Period|
|Term DPI||Whole Life DPI|
|Policy Coverage Period|
*Total and Permanent Disability1 (TPD) and Optional CI benefits cover up to age 65; Death and Terminal Illness2 benefits cover up to age 85.
|Policy coverage of DPI will be up till death of insured or up to a specified maturity age (e.g. 99), except for TPD benefits which will be up to age 65.|
|Premium Paying Period||Same as Policy Coverage Period|
|Term DPI||Whole Life DPI|
|Amount of death benefit||100% of sum assured|
|Applicability of surrender benefit||Not applicable||Applicable|
|Amount of TPD benefit|
(TPD definitions are standardised across the industry)
|100% of sum assured|
|Amount of optional CI rider benefit|
(30 CIs standardised across the industry)
|100% of sum assured|
(Payout of 10% of the coverage amount of the main policy or S$25,000 whichever is lower, for Angioplasty & Other Invasive Treatment for Coronary Artery)
|Minimum and Maximum Sum Assured|
|Minimum sum assured||S$50,000|
|Maximum sum assured||S$400,000 (with a sub-limit of S$200,000 for whole life DPI) with each insurer|
|Minimum entry age||18|
|Maximum entry age||60 or 65 depending on the type of DPI purchased|
1TPD means any of two situations:
1) The Life Assured, due to accident or sickness, is disabled to such an extent as to be rendered totally unable to engage in any occupation, business or activity for income, remuneration or profit; and the disability must continue uninterrupted for at least 6 consecutive months from the time when the disability started; and the disability must, in the view of a medical examiner appointed by the company, be deemed permanent with no possibility of improvement in the foreseeable future.
2) The Life Assured, due to accident or sickness, suffers total and irrecoverable loss of use of:
(a) the entire sight in both eyes; or
(b) any two limbs at or above the wrist or ankle; or
(c) the entire sight in one eye and any one limb at or above the wrist or ankle.
2Terminal illness is the conclusive diagnosis of an illness that is expected to result in death within 12 months.
What are the 3 steps to purchase DPI?
Do your homework by understanding your own insurance needs.
You should read and understand the policy contract and product summary which set out the terms and conditions of the policy, such as the following:
a) Coverage Period (for whole life DPI)
Insurers may either set a maturity age (e.g. age 99 or 100) when all benefits would be paid out, or pay the benefits only upon your death or diagnosis of a terminal illness, even if this occurs beyond age 99 or 100.
b) Premiums for TPD coverage
The coverage for TPD lasts up to a maximum age of 65. The premiums that you pay may change throughout the premium payment period, depending on how the insurers price the TPD coverage.
- If the TPD coverage is priced separately from the main DPI, the premiums will be reduced once TPD coverage ends after age 65.
- If the TPD coverage is priced as part of the main DPI and spread out equally over the entire premium payment period, the premiums will remain the same even though TPD coverage ends after age 65.
c) Exclusion clauses
Different insurers may have different exclusion clauses which state the situations when benefits under the DPI are not payable. For example, some insurers may not pay out the TPD benefit if the policyholder becomes totally and permanently disabled arising from travel on a non-commercial aircraft. Some insurers may void the policy contract if the policyholder’s death arises from any criminal activity; or an act of war (whether declared or not). You should read the product summary and policy contract to find out what these exclusions are and whether the DPI meets your needs.
Choose three to four products and compare their features and benefits. compareFIRST.sg is a useful tool that you can use to compare products among different insurers.
Select the product that best meets your needs.
Purchase the product directly from the customer service centres or from the websites (if available) of the applicable insurer. At the customer service centre, a customer service officer will assist you to complete the application form but not provide any financial advice.
If you wish to obtain financial advice, you may approach any of the insurer’s sales representatives who are authorised to provide financial advice. However, you may be charged a fee or commission for the advice provided.
When you purchase your DPI, tools such as the Insurance Coverage Estimator and Budget Calculator will be made available by the insurer to assist you in determining your financial needs.
You should disclose all information requested in the proposal form (including any pre-existing medical conditions) fully and truthfully. If material information is not disclosed, or is falsely disclosed, you or your dependants may not be able to claim the benefits under the DPI. If you are unsure whether the information is material, you are advised to disclose it.
Examples of material information include:
- Whether you are a smoker
- Whether you are currently on any medication or receiving any treatment
- Whether you have any pre-existing medical conditions
After you submit your application, the insurer will conduct its underwriting. As the terms and benefits of the DPI may change after underwriting, you should consider whether the revised terms and benefits still meet your needs when you receive the policy documents.
Checklist to Purchase Direct Insurance
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