On 5 March 2013, the Monetary Authority of Singapore (the "MAS") issued a consultation paper seeking feedback on the recommendations of the Financial Advisory Industry Review Panel (the "FAIR Panel") that the FAIR Panel had released on 16 January 2013. On 30 September 2013, the MAS issued its response to the feedback received from the public consultation.
One of the FAIR recommendations was to allow life insurers catering to the retail market to make available basic insurance products through a direct channel without dispensing financial advice and at nominal administration charge.
On 30 July 2014, the MAS issued a press release announcing the features of life insurance products that consumers can purchase directly from insurance companies, without incurring commissions (the "direct purchase products").
According to the MAS, this initiative will be introduced in early 2015.
Direct purchase products
The features of direct purchase products will be broadly standardised to make them easier for consumers to understand and purchase without the need for financial advice. Insurance companies that serve the retail market will be required by the MAS to offer the following direct purchase products with specified features as listed in the Annex to the MAS press release:
- Term life insurance products with Total Permanent Disability ("TPD") cover;
- Whole life insurance products with TPD cover; and
- Optional critical illness rider attached to term life or whole life insurance products
Consumers buying direct purchase products will still be subject to underwriting by the insurer.
Maximum sum assured and sub-limit
The maximum sum assured for direct purchase products will be capped at S$400,000, with a sub-limit of S$200,000 for whole life products, on a "per person per insurer" basis.
The following materials are available from the MAS website www.mas.gov.sg: