The initiative, which was proposed in the jurisdiction’s Financial Advisory Industry Review (FAIR), will offer consumers commission-free products that are “easy to understand and purchase” without the need for financial advice.
Assistant managing director for capital markets, MAS, Lee Boon Ngiap, said he hoped the products would create a “price competition” between direct and commission-based channels.
The MAS said the initiative will require all insurance companies serving the retail market to directly offer term life insurance products with total permanent disability (TPD) cover, whole life insurance products with TPD cover, and an optional critical illness rider.
Under the scheme, consumers who wish to buy direct purchase products will still be subject to insurer underwriting.
The authority added that it is continuing to issue safeguards for the sale of these products, in the interests of “ensuring that the product design meets the primary protection needs of consumers”.
Direct term life insurance products will come with a policy coverage period of five years, 20 years, or up to age 65, while whole life insurance products will cover payments up to the age of 70 or 85.
The maximum sum assured for direct products will be $400,000, with a sub-limit of $200,000, which the company says is a result of a need to “alleviate the risk of consumers buying whole life products beyond their means and protection needs”.
'Greater clarity'
Ngiap said: “When direct purchase products are introduced in early 2015, they will provide consumers who do not require advice cheaper access to selected life insurance products.
“Consumers who are unfamiliar with financial products should approach their financial advisory representatives for financial advice.”
FAIR is a review aimed at raising standards of practice in the financial advisory industry, as well as improving efficiency in the distribution of life insurance and investment products in Singapore.
In October last year, financial advisers in the region welcomed the “greater clarity” given by the MAS in its consultation into the results of FAIR’s recommendations.
A 67-page document entitled ‘Response to Public Consultation on Recommendations of the Financial Advisory Industry Review’, was published and International Adviser reported at the time that there “appeared to be a widespread feeling among the adviser community that the MAS has done a thorough job”.
