The Monetary Authority of Singapore (MAS) has released the amended MAS Notice 307 on 08 October 2020. This revision will impact investment-linked policies (ILP) issued by all insurers from 08 October 2021 onwards.
I applause for the new regulation as the charges for investment-linked policies are always complicated and confusing. This gives the consumer a clearer understanding of how much is the cost to their investment products.
What are the key changes to Investment-Linked Policies?
In a nutshell, with effect from 8 October 2021, all insurers must consolidate any upfront fees and charges description into a single terminology “Premium Charge”.
- Insurer to consolidate the fees and charges for ILP that are imposed upfront (other than charges for insurance
coverage), to be disclosed as a single charge and termed as “Premium Charge”.
- For example, if a product currently includes premium allocation rate, sales charge and bid-offer spread, going forward, these shall be combined into a single Premium Charge. Premium Charge may apply to the first-year premium or renewal premiums in subsequent years. The Premium Charge may vary by policy year.
- Apart from the Premium Charge, the ILP may also be subjected to other types of fees and charges which are
not due to the sale of the policy, premium payment or entry.
- Insurers shall adopt single pricing using a Net Asset Value (“NAV”) basis, without bid-offer spread.
These new changes will apply to only new businesses issued on and after 8 October 2021.
All in-force ILPs may continue to transact on the basis stipulated in their policy contracts, i.e. no changes to
the deductions specified in the policy contract upon premium payment, including charging bid-offer spread if
currently specified in the policy contract.