SINGAPORE - Come early next year, consumers here can bypass insurance agents to directly buy basic life insurance products at a likely lower price.
The Monetary Authority of Singapore (MAS) announced on Wednesday that it has discussed the parameters for the sale of such products with industry players and other stakeholders for the past 10 months.
For a start, MAS will require all insurance companies that serve the retail market to offer three categories of protection products through the direct sales channel.
They are: 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.
The deadline for the launch for such direct sales channel has been pushed back from its original deadline of the middle of this year.
Such direct sales channels are a key initiative under the Financial Advisory Industry Review (Fair), with MAS accepting most of the recommendations in September last year.
Singapore is believed to be the first in the world to mandate the provision of such direct sales channels, though other jurisdictions also have such channels provided voluntarily by insurers.
For term life insurance, insurers will have to provide three types of direct purchase products, namely: for five years with a renewability feature, for 20 years and for up to age 65.
In terms of whole life insurance, insurers will have to provide two types of direct purchase products, for payment up to age 70 and payment up to age 85.
The maximum sum assured for direct purchase products will be set at $400,000 per person per insurer, with a sub-limit of $200,000 for whole life products.
MAS said that in setting a maximum sum assured, it took into consideration the protection need of the average working adult, which is estimated at 10 times of annual income.
It added that the sub-limit of $200,000 for whole life products is aimed at helping to alleviate the risk of consumers buying whole life products beyond their means and protection needs.
MAS assistant managing director Lee Boon Ngiap said in the statement: "When direct purchase products are introduced in early 2015, they will provide consumers who do not require advice with cheaper access to selected life insurance products.
"Consumers will benefit from the greater price competition that will be introduced between the direct and commission-based channels."