The new guidelines, which were published and came into force on 31 March, state that a “direct life insurer” may offer all types of life policies online without any requirement for financial advice.
However, the six-page document stipulates that financial advisers – either online of in person – must provide safeguards to all clients by providing them with enough information to make “informed decisions”, said the regulator.
Safeguards
Advisers must also specify any special exclusions that a client has requested as well as highlighting several disclaimers including that “the client may not get back the premiums paid (partially or in full) if the client terminates or surrenders the policy early”.
“These statements should be worded in a simple and concise manner,” said the MAS on its website.
Before life insurers are allowed to sell a life policy online, companies must check whether they offer an equivalent Direct Purchase Insurance (DPI). If so, insurers must make available that DPI on its online direct channel, added the MAS.
Where a life insurer has an online platform to distribute life policies, it should also offer the equivalent DPI online to its clients.
Online tools
The regulator said life insurers should encourage clients to use the insurance estimator and budget calculator tools before buying a life policy via the online direct channel to ensure consumers get the life cover they need at premiums they can afford.
Insurers must also urge clients to visit www.comparefirst.sg to compare the features and premiums of DPI and other types of life policies.
However, this is not applicable to all types of life policies sold online as financial advisers offering monthly renewable group term life policies online are “not expected to make available such tools” as there is “no long term financial commitment”.
Unit-linked sales slump
The new rules come just days after it was revealed that sales of unit-linked life insurance business in Singapore fell by 21% in 2016 following the implementation of the MAS reforms under the Financial Advisory Industry Review (FAIR).
“One key factor is that modern-day multi-currency investment platforms now offer a secure online alternative to traditional unit-linked life products, enabling advisers and their clients to access a huge choice of funds without the cost of an often unnecessary life insurance wrapper,” said Bryan Low, founder of international product distributor Provisca.
