SHOPPING for a life insurance product in Singapore will see a fundamental change this month when consumers can compare more than 200 life insurance policies available on the retail market, via an online aggregator.
They can do this from April 7 via compareFIRST (www.comparefirst.sg), which seeks to improve transparency in the life insurance market.
Consumers will be able to compare the key features and premiums of four classes of products - term life insurance, whole life insurance, endowment policies, as well as a new suite of basic life insurance products known as direct purchase insurance (DPI).
Information on a fifth class of products - investment-linked plans - will be included online, although no comparisons can be made.
The user-friendly web portal allows individuals to compare up to four products at a time, using its drag-and-drop feature.
The Monetary Authority of Singapore (MAS) on Tuesday said consumers can compare items such as premiums, death benefits and total distribution costs for term life products, while whole life product comparisons will encompass more information, including their surrender values and a snapshot of the benefit illustrations.
Said Lee Boon Ngiap, assistant managing director (capital markets) at the Monetary Authority of Singapore (MAS): "Buying a life insurance product is a decision for the long term. We strongly encourage consumers to use compareFIRST and assess the suitability of the various life insurance products offered by different companies before they buy a product."
From April 7, 12 life insurers will sell the DPI comprising term life insurance, whole life insurance and optional critical illness riders through their customer service counters or websites. MAS said the premiums will be lower than for comparable life insurance products as DPI is sold without financial advice, so no commissions are charged.
"Starting March 31, consumers can visit the customer service centres of life insurance companies to ask for information on DPIs including premiums and product details. Consumers can also obtain an easy to understand DPI factsheet setting out key features of DPI, as well as a checklist to guide them on what they should consider before the purchase," said a MAS spokeswoman.
The checklist will prompt consumers to make important disclosures and use online tools to check the level of coverage they require and whether they can afford the premium," she added.
To guard against mis-buying, the regulator has set a S$400,000 cap on the sum assured, with a sub-limit of S$200,000 for whole life DPI, per person per insurer. The minimum sum assured has been set at S$50,000, regardless of term life or whole life DPI.
The web aggregator and DPI are part of the recommendations made by the Financial Advisory Industry Review (FAIR) panel in 2013. They are a collaborative effort by MAS, together with industry partners, to encourage greater efficiency in the distribution of life insurance and investment products and also empower consumers to make informed decisions.
"Over time, the FAIR initiatives will transform the financial advisory industry by creating an environment where firms put the interests of their customers first and compete on the quality and value of their products and services," added the spokeswoman.
Seah Seng Choon, executive director of the Consumers Association of Singapore (CASE), welcomed the two initiatives, noting that this is the first time consumers "can make apples-to-apples comparison on the various insurance products" through the web portal. He added that the initiatives will help consumers take charge of their financial affairs.
In its response, the Life Insurance Association Singapore (LIA) said the web aggregator will "increase accessibility to accurate and reliable information", as well as narrow the protection gap within the community in the long-run.
compareFIRST is the world's first web aggregator by a regulator and it comes on the back of mis-selling complaints lodged over the years. In advanced markets such as the United Kingdom, web aggregators are run by commercial entities and have been criticised for pushing products from selected insurers.