Advantages & disadvantages of purchasing insurance directly from companies vs through financial advisors/consultants.

[sohguanh]

The topic seem to talk about agent now. Lets be fair be it insurance or property agent for e.g as long as the job is high comm low basic will have same issue. Someone propose take salary instead of comm then employer jialat becuz the sales will not be so on the ball get new customers. So you all see this cycle has been going on for years way before I was born. I don't see any good solution to it.

 

[blurpandasg2014]

Hey all, just wanted to understand more with regards to the advantages & disadvantages of purchasing insurance directly from companies vs through financial advisors/consultants.

Would deeply appreciate if anyone can provide a comparison list in the comments!

Feel free to correct me if I'm wrong (because I'm not quite familiar with how purchasing of insurance works, never dare to purchase insurance before), but all the insurance policies/premiums can be purchased directly from the insurance company itself right instead of through a FA/FC? That way, I believe, would enable me to save on the comission fees for the FA/FC right?

1) There is a cap of 400k per insurer for direct purchase insurance (DPI)
2) DPI covers till age 65 and only for death, tpd and late stage ci
3) DPI may not be the most cost effective option in the market

If you are on a budget, and can only afford low premiums, going with DPI is fine. I personally have some DPI.

However, if u have more budget, suggest you get higher coverage to stretch your coverage per dollar.

For purpose of comparison, 30YO male, cover till age 65 for Death/TPD

Direct term (400k) by Etiqa: $256 or $0.64 per $1000 coverage

Term (1mil) by Singlife: $553 or $0.55 per $1000 coverage

 

[BBCWatcher]

1) There is a cap of 400k per insurer for direct purchase insurance (DPI)

First of all, “Direct Purchase Insurance” is a term of art, referring to a collection of life insurance policies offered directly by insurance carriers that are more easily comparable. But there are other directly purchased insurance policies that aren’t DPI (capital letters) policies.

OK, with that point aside, having a per carrier cap for DPI policies might be a good thing. Insurance has SDIC coverage limits per carrier.

2) DPI only covers till age 65 and for death, tpd and late stage ci only

There are whole life DPI policies and term life DPI policies with other ages. But term life to age 65 is a very common product because 65 is a classic retirement age, and that’s the point of life insurance: to protect dependents when there’s a loss of income due to the death of a worker.

3) DPI may not be the most cost effective option in the market

But CompareFirst.sg can help since it also provides information about other policies. CompareFirst.sg doesn’t include information about group insurance (such as Singlife’s MINDEF, MHA, and POGIS group insurance plans) or overseas carriers’ policies.

If you are on a budget, and can only afford low premiums, going with DPI is fine. I personally have some DPI.
However, if u have more budget, suggest you get higher coverage to stretch your coverage per dollar.

I don’t think this makes much sense. Analogously, maybe you could get a lower price per gigabyte of data on a mobile phone plan if you choose a higher priced plan. But why would you do that if you don’t need more data than the lower priced plan offers? You wouldn’t.

 

[blurpandasg2014]

First of all, “Direct Purchase Insurance” is a term of art, referring to a collection of life insurance policies offered directly by insurance carriers that are more easily comparable. But there are other directly purchased insurance policies that aren’t DPI (capital letters) policies.

OK, with that point aside, having a per carrier cap for DPI policies might be a good thing. Insurance has SDIC coverage limits per carrier.

There are whole life DPI policies and term life DPI policies with other ages. But term life to age 65 is a very common product because 65 is a classic retirement age, and that’s the point of life insurance: to protect dependents when there’s a loss of income due to the death of a worker.

But CompareFirst.sg can help since it also provides information about other policies. CompareFirst.sg doesn’t include information about group insurance (such as Singlife’s MINDEF, MHA, and POGIS group insurance plans) or overseas carriers’ policies.

I don’t think this makes much sense. Analogously, maybe you could get a lower price per gigabyte of data on a mobile phone plan if you choose a higher priced plan. But why would you do that if you don’t need more data than the lower priced plan offers? You wouldn’t.

What are other insurance plans besides travel insurance, and possibly accident plans that can be purchased from insurer directly? Personal accident direct or via agent is similarly priced. There is no additional benefit to go direct.

Group insurance while cheap has its limitations. MINDEF/MHA GTL can only be nominated to parents/spouse/children. Additionally, TPD payout is not paid in lump sum but in tranches over 3yrs. And should there be large amt of claims (eg. in event of war), payout can be reduced to 1.5% the aggregate sum per policy yr

While I do agree with you on the gigabyte data analogy but 1mil death/tpd coverage is in no way excessive considering inflation and future health condition. 100k or 200k coverage just wouldn’t work in today’s environment

 

[BBCWatcher]

What are other insurance plans besides travel insurance, and possibly accident plans that can be purchased from insurer directly? Personal accident direct or via agent is similarly priced. There is no additional benefit to go direct.

As another example, Income Insurance sells their Integrated shield plans online.

Group insurance while cheap has its limitations. MINDEF/MHA GTL can only be nominated to parents/spouse/children.

Singlife doesn't list any such limitations. Are you perhaps thinking of the Core Scheme which might have that limitation?

Additionally, TPD payout is not paid in lump sum but in tranches over 3yrs.

Where are you seeing that? The benefit summary says TPD is paid in one lump sum.

And should there be large amt of claims (eg. in event of war), payout can be reduced to 1.5% the aggregate sum per policy yr

In the event of war it's not clear any insurer would be able to pay claims, except perhaps an overseas insurer.

While I do agree with you on the gigabyte data analogy but 1mil death/tpd coverage is in no way excessive considering inflation and future health condition. 100k or 200k coverage just wouldn’t work in today’s environment

That's situational, and we shouldn't presume. One size does not fit all. For example, would it make much sense for a single man with one surviving parent, age 75, as his dependent to buy $1 million of life insurance? I don't think that's likely. And even if you do need $1 million of life insurance it might be more financial sensible to "ladder" that coverage such that, as you progress through a working career and accumulate wealth, and as the dependency(ies) get closer to maturity (children get closer to adulthood, elders get closer to the ends of their lives) the total sum assured automatically adjusts downward as policies "stairstep" down. For example, you might have this collection of term life policies:

$400K to age 65
$300K to age 60
$300K to age 55

 

[reddevil0728]

Singlife doesn't list any such limitations. Are you perhaps thinking of the Core Scheme which might have that limitation?

they do...

• Nominee must be spouse, child or parent of the Applicant. Please refer to Part 2 below for more details.

https://singlife.com/content/dam/public/sg/documents/mindef-and-mha/revocable-nomination-form.pdf

 

[JuniorLion]

If you have at least 1 child, a 1mil coverage is the least you should get. All thanks to MINDEF GTL, we can at least afford it.

 

[blurpandasg2014]

As another example, Income Insurance sells their Integrated shield plans online.

Singlife doesn't list any such limitations. Are you perhaps thinking of the Core Scheme which might have that limitation?

Where are you seeing that? The benefit summary says TPD is paid in one lump sum.

In the event of war it's not clear any insurer would be able to pay claims, except perhaps an overseas insurer.

That's situational, and we shouldn't presume. One size does not fit all. For example, would it make much sense for a single man with one surviving parent, age 75, as his dependent to buy $1 million of life insurance? I don't think that's likely. And even if you do need $1 million of life insurance it might be more financial sensible to "ladder" that coverage such that, as you progress through a working career and accumulate wealth, and as the dependency(ies) get closer to maturity (children get closer to adulthood, elders get closer to the ends of their lives) the total sum assured automatically adjusts downward as policies "stairstep" down. For example, you might have this collection of term life policies:

$400K to age 65
$300K to age 60
$300K to age 55

My bad. It’s for TPD due to accident under benefit 2 section B

All the other examples that you mentioned of direct purchase do not have additional benefits.

I checked FWD and Great Eastern which offers other kind of term insurance (non-DPI) that can be purchased directly. They are not cheaper - in fact I find it more expensive than the ones sold via agent.

Why would someone purchase insurance directly from an insurer when there is no tangible benefit (eg. cost savings). By having an agent, there might still be a small chance of him helping with claims and appeals. If you purchase direct, one thing is for sure. You are on your own.

And back to TS main aim, he wants to save cost by cutting the middleman to save on the commission.

 

[BBCWatcher]

Why would someone purchase insurance directly from an insurer when there is no tangible benefit (eg. cost savings).

No agent sales pressure, no risk of agent fraud, you can buy a policy in your pajamas, and the insurance carrier can’t insist you primarily interact with the agent for policy servicing — with yet more sales pitches. They’re the same basic reasons people sometimes shop online instead of in shopping malls.

Recently I was chased in a Fairprice by someone trying to get me to buy their chicken product. I must say it occurred to me I wouldn’t have to put up with high pressure frozen chicken salespeople at Redmart.

By having an agent, there might still be a small chance of him helping with claims and appeals. If you purchase direct, one thing is for sure. You are on your own.

No you’re not. Your policy is always with the insurance carrier, and they exist. This is just a question of the distribution channel.

And back to TS main aim, he wants to save cost by cutting the middleman to save on the commission.

DPI tends to do that, but “it depends.”

Why not let insurance consumers decide? Consumers frequently buy more complex products and services than insurance with fewer middlepeople. If you want to buy insurance through an agent, fine. If you don’t, fine. I really don’t see the problem.

 

[rizhal]

Different strokes for different folks.

Some like to be served by agent because they print and prepare paper work, explain the product.

Some like to diy and not push by agent.

I prefer to go for the $12 Malay barber compared to $6 PRC barber, because the later will talk and talk and ask me to buy their package.

 

[CrashWire]

In the event of war it's not clear any insurer would be able to pay claims, except perhaps an overseas insurer.

I think you're going a bit too far with this.

The MINDEF plan caps claims at 1.5% in aggregate for both acts of war and terrorism.

If war does happen, and Singapore's legal and financial systems still work, every other insurer would likely still be able to pay out their claims. Some of these local insurers might even have reinsurance for such circumstances.

 

[BBCWatcher]

I think you're going a bit too far with this.
The MINDEF plan caps claims at 1.5% in aggregate for both acts of war and terrorism.

Yes, and it's clear why: the risk pool involves a remote but correlated risk. In the event of a national security calamity Singapore's primary defenders will be predominantly from this risk pool. In this sort of far fetched scenario the 1.5% limit has to thread this needle to be relevant:

• Bad enough to wipe out huge numbers of the risk pool, including the insured person.
• The claim (such as death) is not caused by an event that's excluded from coverage in some hypothetical alternative policy.
• Not bad enough to wipe out the beneficiaries.
• Not bad enough to be a national existential risk (i.e. insurance carriers still function, the Singapore dollar doesn't become worthless).
• The government still exists but chooses not to backstop the group insurance plan.

If you want to lose sleep over this particular needle threading I suppose you can.

 

[blurpandasg2014]

No agent sales pressure, no risk of agent fraud, you can buy a policy in your pajamas, and the insurance carrier can’t insist you primarily interact with the agent for policy servicing — with yet more sales pitches. They’re the same basic reasons people sometimes shop online instead of in shopping malls.

Recently I was chased in a Fairprice by someone trying to get me to buy their chicken product. I must say it occurred to me I wouldn’t have to put up with high pressure frozen chicken salespeople at Redmart.

Unfortunately, many black sheeps in the insurance industry that hard sell products not in the interest of their clients. Ultimately, it’s up to individuals to decide which route suits them better.

Personally, I go to comparefirst, do comparisons, shortlist products, meet agents, get quotes + gather their recommendations, take time to holistically review, decide on which agent to give business to. Sometimes I just go to those firms which offer 50% back comms rebate

 

[Vinsanity]

Hey all, just wanted to understand more with regards to the advantages & disadvantages of purchasing insurance directly from companies vs through financial advisors/consultants.

Would deeply appreciate if anyone can provide a comparison list in the comments!

Feel free to correct me if I'm wrong (because I'm not quite familiar with how purchasing of insurance works, never dare to purchase insurance before), but all the insurance policies/premiums can be purchased directly from the insurance company itself right instead of through a FA/FC? That way, I believe, would enable me to save on the comission fees for the FA/FC right?

Friend, as an agent myself, I will say it is more advantageous to purchase through an agent. You will have someone who will help you keep track of all your policies and update you on whatever changes in your policies. Regular reviews will be conducted to ensure that you are not over or underinsured given the current juncture you are at. You will receive professional advice on how to manage finances. This is what I do for my clients.

 

[reddevil0728]

Friend, as an agent myself, I will say it is more advantageous to purchase through an agent. You will have someone who will help you keep track of all your policies

for someone who likes to keep track themselves then there's no benefit right?

and update you on whatever changes in your policies.

hmmm why should there be changes to policies? what kind?

Regular reviews will be conducted to ensure that you are not over or underinsured given the current juncture you are at.

that depends on the agent also right?

You will receive professional advice on how to manage finances. This is what I do for my clients.

but not all agents might be as competent as the clients themselves no? what if the client is like some Investment banker?

so it is quite circumstantial 1 what

 

[tsnd01]

Friend, as an agent myself, I will say it is more advantageous to purchase through an agent. You will have someone who will help you keep track of all your policies and update you on whatever changes in your policies. Regular reviews will be conducted to ensure that you are not over or underinsured given the current juncture you are at. You will receive professional advice on how to manage finances. This is what I do for my clients.

I have never heard of agents telling clients they are overinsured. And any changes to the policies the clients will be noticed by the insurers via email or other channels no? And my investment in ifast (managed by my agent with high wrap fee) is in the red after 15 years of investing. My agent is an independent financial advisor with decades of experience in this field and is a senior director. Not your average Tom dick or harry advisor.

 

[soneat]

Friend, as an agent myself, I will say it is more advantageous to purchase through an agent. You will have someone who will help you keep track of all your policies and update you on whatever changes in your policies. Regular reviews will be conducted to ensure that you are not over or underinsured given the current juncture you are at. You will receive professional advice on how to manage finances. This is what I do for my clients.

No offense but how many years have you been in industry?
- You are probably still junior and seeking to expand your client base.
- Define "professional advice on how to manage finances".
--> Are you able to demonstrate how much wealth you have grow personally and over how many years?
--> Have you personally went through many life stages and can demonstrate the considerations?

 

[reddevil0728]

No offense but how many years have you been in industry?
- You are probably still junior and seeking to expand your client base.
- Define "professional advice on how to manage finances".
--> Are you able to demonstrate how much wealth you have grow personally and over how many years?
--> Have you personally went through many life stages and can demonstrate the considerations?

don't think that user will come back anymore. I think he tried to advertise, then when got shut down, stop posting.

 

[LexusIS]

Previously i purchased from Moneyowl, for my daughter, as they rebate 50% commission back
- purchase thru them NTUC policies - 2 whole life plan with CI, 1x endowment plan & 1x Hospitalisation plan

Any more such intermediary that can give rebate on commission - looking at buying for my son?
- Saw that FundSupermart has the rebate but only 30% for my tier
https://secure.fundsupermart.com/fsmone/article/rtim340/our-rebate-program-–-save-more-when-you-insure-with-us

Just to add my preference is currently Tokio Marine and probably NTUC Income (hopefully they don't get bought over)

 

[asmartng]

it depends on your luck. choose a good agent with PA . So that they are doing paperwork for you.