Corporate & Securities Singapore Client Alert April 2015 For further information please contact: Stephanie Magnus +65 6434 2672 stephanie.magnus@bakermckenzie. com Liew Ying Yi +65 6434 2531 YingYi.Liew@bakermckenzie.com Address 8 Marina Boulevard, #05-01 Marina Bay Financial Centre Tower 1 Singapore 018981 www.bakermckenzie.com Launch of Direct Purchase Insurance Sales and Web Portal to Compare Life Insurance Products Online From April 7 2015, consumers will benefit from (i) access to an interactive online web portal ("compareFIRST") that compares the life insurance products of various companies and (ii) being able to purchase Direct Purchase Insurance ("DPI") directly from customer service counters or websites of life insurance companies without commissions or financial advice. Both compareFIRST and DPI are initiatives under the Financial Advisory Industry Review which aims to improve practice standards in the financial advisory industry and efficiency in the distribution of life insurance and investment products in Singapore. (See also our earlier alert, Buying Life Insurance Products Directly from Insurance Companies Without Commission on DPIs). (i) compareFIRST Accessible at www.comparefirst.sg, this interactive online portal will make information on life insurance more transparent and accessible. Consumers will be able to compare the key features and premiums of four classes of life insurance - term life insurance, whole life insurance, endowment policies and the new DPI. compareFIRST is an information portal aimed at helping consumers make better informed choices about which policy to buy and how much coverage to get by comparing the premiums and features of similar life insurance products offered by different insurance companies. This portal will not facilitate purchases of life insurance products and any consumers who wish to purchase life insurance products should approach their financial advisory representative or life insurance company. (ii) Direct Purchase Insurance DPI is a class of basic standardized life insurance policies, sold without commissions and financial advice. Lauded as the world's first direct-purchase life insurance scheme, their premiums are lower than comparable life insurance as no commissions will be charged. Consumers will be able to identify DPIs from the prefix "DIRECT" in the product name. The sale of these DPIs are available from 7 April 2015. Consumers can find out more about the features and pricing of DPIs from various life insurance companies on the MoneySENSE website (www.moneysense.gov.sg/dpi). As DPIs are sold without financial advice, consumers are encouraged to read the DPI factsheet, benefit illustration, product summary, policy contract, and product brochures, and also complete the checklist that will be provided by insurance companies. They are also encouraged to use compareFIRST to determine which products are suitable for them. A copy of the DPI factsheet and checklist to be provided is also available on the MoneySENSE website. Different insurers may continue to have different exclusion clauses addressing the areas where benefits under the DPI are not payable. If, after having read all the available information, the consumers are still unable to ascertain which DPI to buy and how much coverage is suitable, they are encouraged to seek advice from a financial advisory representative. Where such advice is sought, the insurance companies may charge a fee or commission for the advice provided. The Monetary Authority of Singapore has also issued several notices to direct life insurers and financial advisers (in relation to their financial advisory services solely incidental to the distribution of DPIs) imposing requirements in relation to the manufacture, pricing, offer, distribution and provision of advice on DPIs. A summary of the standardized benefits and features of DPI is set out below. Term DPI Whole Life DPI Policy Coverage Period 5 years* (renewable) 20 years*(non-renewable) Up to age 65 (nonrenewable) *Total and Permanent Disability ("TPD") and Optional Critical Illness ("CI") benefits cover up to age 65; Death and Terminal Illness benefits cover up to age 85. Policy coverage of DPI will be up till death of insured or up to a specified maturity age (e.g. 99), except for TPD benefits which will be up to age 65. Premium Paying Periods The same as the Policy Coverage Period. 2 options: payment up to age 70; or payment up to age 85. Death Benefit 100% of Sum Assured Surrender Benefit N.A Applicable TPD Benefit 100% of Sum Assured (Definition of TPD is standardized across the industry) CI Rider Benefit 100% of Sum Assured for the 30 standardized CIs across the industry. (Note for Angioplasty & Other Invasive Treatment for Coronary Artery, a payout of 10% of the coverage amount of the main policy or S$25,000, whichever is lower, will be made.) Non-guaranteed premium of CI acceleration rider. (Upon contracting a CI, the CI benefits will be paid out and the main policy will terminate). Minimum Sum Assured S$50,000 per policy Maximum Sum Assured S$400,000 (with a sub-limit of S$200,000 for whole life DPI) per person per insurer Minimum Entry Age 18 years Maximum Entry Age 60 or 65 depending on the type of DPI purchased ©2015 Baker & McKenzie. All rights reserved. Baker & McKenzie International is a Swiss Verein with member law firms around the world. 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