MAS announced that in April 2015, the web aggregator will be launch. This project is collaborative effort between MAS, CASE and the life insurance industry.
Similarly, consumers can buy life insurance directly in April 2015.
I previously wrote an extensive article on the life insurance direct purchase channel in this blog: Direct life insurance purchase delays to 2015. Please read that article in detail because it will affect you.
In addition to that 2014 article, I have more things to add:
When you buy life insurance directly, you must be extremely careful with the exclusion clauses and have a good understanding of insurance laws. Insurance companies can invoke these laws to deny your claims. You will not have the money to sue because they have infinite money to fund their lawyers while your reserve is only limited by your piggy bank. For instance, if you have certain material information that does not fit into any of the insurance questionnaires, it does not mean you do not need to provide the information. (See: ST forum: Care needed when buying insurance direct ). The insurance companies are empowered by law to terminate your entire insurance policy if you did not disclose material information at the point of purchase.
If you have a good financial adviser, he or she is trained to advice you on whether is the information material or not. The financial adviser can also help to disclose the material information on your behalf via the ‘adviser confidential report’ because the financial adviser is the first level underwriter.
I have helped to disclose material information on behalf of my client via the ‘confidential report’ before. In that particular case, the sum assured was within the medical limit (if you don’t understand this term, that means you are not ‘savvy’. More on *savvy later.). None of the questions specifically asked for that information. Hence, I filed a confidential report as I felt it was material information. True enough, the underwriter considered it as material information and called for a blood test. That means - if the information was not disclosed, the insurer could deny any claims and accused the client of not disclosing material information and void the entire policy contract even for claims totally unrelated to the material information.
Why do I make my job harder by providing information to the insurer which is likely to jeopardise the sale? It is because the financial adviser is the front line and first underwriter. Many financial advisers are sales people – they are not front line underwriters – and hence their job is to get their commission as soon as possible.
(To be frank, as I am a fee-based adviser, I am already paid and hence it did not matter whether the insurance application is successful or otherwise.)
Another part of buying direct is there is no delegated person to control the entire underwriting process. Any enquiries are handed by a call center (which is not necessary in Singapore). While big companies have a CRM, it is impossible to document everything down into the CRM. If the client does not understand the underwriting process, it will results in undesirable results and lots of frustration. For your information, underwriting is not just medical but it can be financial underwriting. I had a case in which the insurer wanted to see the entire KYC in order to do the financial underwriting!
Recently, there was an actual case in which my client attempted (probably unknowingly) to liaise directly with the insurer without any understanding of the underwriting process. Basically it was a case in which both parties (insurer and the client) spent more than two months emailing each other with useless information. The client emailed useless documents to the call center while the call center responded back with template cum useless information. It was so funny that I actually spent ½ hour writing it down with the aim of publishing as a blog post but I decided against doing so as the client may feel offended by it. (Why I did not help in the underwriting process? It’s because that insurer has a bad habit of bypassing the adviser and at the same time the client appeared to never had a financial adviser before and did not know the importance of an adviser. )
*To cut the long story short: The life insurance directly purchase is for savvy buyers only. If you are looking for a cheapo insurance but you are not savvy in the underwriting process, it is not a suitable channel.
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