17 August 2014

The Editor
ST Forum

Dear Editor

We thank Madam Tang Yi Ling for her letter, “Vital role of financial advisers in insurance sales", published in the Straits Times on 14 August 2014. Madam Tang expressed concerns that the role of financial advisers would be displaced with the introduction of direct purchase insurance products (DPPs) and that consumers may not exercise sufficient care when purchasing DPPs.

DPPs are not intended to replace current distribution channels. They are an alternative channel for consumers who do not need financial advice, are looking for very basic insurance products, and know how much coverage they need.  DPPs will provide such consumers cheaper access to selected term life and whole life products. Financial advisers will continue to play an important role in providing advice to Singaporeans who require non-DPP insurance products and who prefer to receive financial advice.

MAS has put in place safeguards for consumers purchasing DPPs. To help ensure that consumers do not buy DPPs beyond their means and protection needs, we have imposed caps on the maximum sum assured for the purchase of DPPs. We have also standardised the features of these products to make them easier for consumers to understand and purchase without the need for advice.

MAS is also working closely with insurers to help Singaporeans make prudent decisions. Online calculators will be provided to help consumers ascertain their protection needs and premium affordability.  Consumers will be given factsheets describing the key product features of DPPs and checklists to ensure that they make truthful and complete medical and financial declarations to the insurer.  MAS will also work with MoneySENSE, the national financial education programme, to help consumers better understand their responsibility to make complete and truthful declarations. 

MAS will monitor the impact of DPPs on the industry and how they affect life insurance premiums over time. We will also work with industry and consumer groups to conduct regular reviews of DPPs to ensure that the safeguards for consumers are adequate and that these products continue to meet the protection needs of Singaporeans.

Bey Mui Leng
Director (Communications)
Monetary Authority of Singapore