Insurers don't see high take-up of online life policies

Insurance practitioners do not expect a strong take-up for newly available online life insurance products which are being sold without financial advice.

Most insurance products are complex and require large sums to be committed. An exception would be simpler protection products such as term life and health policies, they said.

The Monetary Authority of Singapore (MAS) has said it will soon allow insurers to offer online the full suite of life insurance products without advice.

To date, insurers have been allowed to offer online and without advice only simple term-life and broadly standardised policies. The MAS will issue guidance on the safeguards to be put in place for online distribution of life insurance products.

Mr Christopher Tan, chief executive officer of financial advisory firm Providend, said it is important to have a human adviser to complement an online platform. Insurance is far more complex than investments, he said. "While I believe that the digital adviser has a role to play... there is a need to complement it with a human adviser. That is why at DIYInsurance, our online engine (for life insurance) is complemented by our team of salary-based advisers to complete the insurance advisory process."

The advantage of a "100 per cent digital adviser" is the cost savings but without human advice, consumers may end up committing huge sums of money to an inappropriate product, he warned.

Mr Vincent Ee, managing director of Financial Alliance, said that if too complicated products are sold online, there is a potential risk of consumers buying something that is unsuitable. He believes initially, the take-up is likely to be skewed towards protection-type life insurance products.

Last year, the Life Insurance Association (LIA) launched the Direct Purchase Insurance (DPI) scheme where regular-premium basic life plans are bought directly from insurers' customer service centres or websites, without financial advice. The idea of buying DPI products has yet to take off in an explosive way. Just over 1,000 DPI life policies were sold, bringing in $550,000 in weighted new premiums between the launch in April last year and June 30.

LIA executive director Pauline Lim said having the full suite of life insurance products available online provides consumers with one more channel for purchase.

A version of this article appeared in the print edition of The Straits Times on November 18, 2016, with the headline 'Insurers don't see high take-up of online life policies'. Print Edition | Subscribe