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Choosing Right

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Getting Good Advice: Questions to Ask

Asking the right questions can go a long way towards getting the most out of your time with your financial adviser and choosing the right policies to buy.  Here are some questions you can ask: What kind of insurance do I need?The type of insurance you need depends on what needs/objectives have been identified, be it for healthcare, protection, long term savings, investment or retirement. Even after you have purchased an insurance policy, you should review your needs and objectives regularly as they may change over time. What will my insurance policy cover?You should study the product features and benefits and be clear as to what your policy covers or does not cover. How much insurance cover do I need?The amount of benefit you need will depend on many factors such as: The number of dependants you have Existing debts or mortgages The level of financial provision you want for your family when you are no longer there or able to provide How much you need for your children's education Not everyone will be able to afford to purchase all the insurance plans they need at one go. Your adviser will help to prioritise your needs and offer policies that are affordable.   How much will I be paying for insurance cover?The amount of single premium (one-time lump sum) or regular premiums depends on the level of insurance benefits you wish to receive.  There may be more than one type of plan that can meet your objective with different cost-benefit pricing. What happens if I fail to pay the required premiums?You have a grace period after the due date during which you can pay the premium with no interest charged.  If you do not pay your premium within this grace period and as long as your policy has sufficient cash value, a policy feature may automatically pay your overdue premium by taking a loan against the policy’s cash value. This keeps your policy in force but you will have to pay interest on this loan. Should I replace an existing insurance policy?Buying an insurance policy is a long term commitment and early termination may result in you receiving an amount that is less than the total premiums paid. If you develop a health condition after buying the existing policy, any subsequent new policy may not cover you for that pre-existing condition. If you are unable to continue paying premiums on your current policy, you should consult your financial adviser to consider how your policy can be kept in force.  It may be possible to reduce the sum insured which in turn will reduce the premiums to be paid. What happens if I terminate my policy?Early cancellation of a policy may incur additional fees and charges.  What is more important is that you may be losing valuable benefits. Buying an insurance policy is a long term commitment and early termination may result in you receiving an amount that is less than the total premiums paid. If you develop a health condition after buying the policy you are now terminating, any subsequent new policy may not cover you for that pre-existing condition. Contact any one of our member companies to put you in touch with a financial adviser. Start by first identifying the level of coverage you have with the protection gap calculator. Find out more about: Your participation Tips on insurance products Direct Purchase Insurance (DPI) Financial Advisory Representative’s role

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Your Participation

As a customer, you play an active part by sharing pertinent information with your financial adviser, so that he can come back with solutions that work well for you. Here are some tips when consulting a financial adviser: Be honest about your financial situation. It is only when you have done so that your financial adviser is enabled to analyse and make a suitable recommendation. Communicate your goals and objectives. Your financial adviser will then be able to recommend appropriate options within your means. Do not be afraid to ask questions! These may include queries like why the adviser is recommending a particular product to you; what are the 'health warnings' you should know about the product.  Effective financial planning is an interactive process. Take time to make your decision. While a financial adviser can recommend particular products that are appropriate, you are the one who has to make the final decision.  As the customer, the responsibility remains with you to weigh the pros and cons of each option in deciding which one(s) would serve your needs.  If you have any questions pertaining to the policies, always consult your financial adviser. Do not take up a policy if you are unsure of how it works. Regard your financial adviser as a trusted partner, and not merely a salesperson. Buying life insurance involves long term commitments on your part and a long term relationship with your financial adviser will ensure that he has a good understanding of your evolving needs over time.

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Tips on insurance products

Take up insurance sooner rather than later.  Buy insurance when you are young and in good health. Premiums will be lower than when you are older or when a health condition sets in.  For health insurance products, some are not available to people over a certain age or with an existing illness. 14-day free look period. All insurance companies grant a "14-day free look period". It starts from the date of receipt of your policy document. During this period, you should review your policy to see if it meets your needs.  If you decide not to keep it, give the company written notice of cancellation and the company will terminate your policy and provide the appropriate refund. You may be charged for medical examination expenses and, if you had bought an investment-linked plan, you may suffer investment loss if the unit price has fallen. Enhance your policy with riders. You can consider adding riders or supplementary coverage/benefits to enhance your insurance policy. There are many insurance riders to choose from. For example, you can take a rider that offers: Disability waiver of premium, which allows you to stop paying premiums for a policy if you become disabled for a sustained period of time; Accidental death benefit, which pays you additional benefit in the event of death resulting from an accident; Family income benefit, which guarantees that your family will continue to receive your monthly income if you die prematurely. Choose a health insurance plan with guaranteed renewal. Where possible, opt for one that guarantees your cover will stay in force as long as your premiums are paid on time. Some products allow insurers to change the benefits, premium rates or other terms and conditions when the plans are due for renewal. No need to buy several medical expense policies. With medical expense insurance, the total benefit you will get is limited to your actual expenses. There is no need to take up more than one medical expense policy. Compare and find life insurance products best-suited to your financial objectives at compareFIRST.

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Direct Purchase Insurance (DPI)

Direct Purchase Insurance (DPI) is a class of broadly standardised products offering term insurance or whole life insurance, and which include Total and Permanent Disability (TPD) coverage. DPI also provides Critical Illness (CI) coverage if you opt for it. DPI is identified by the prefix “DIRECT” in the product name. You can buy DPI from the customer service centre, or website if available, of life insurance companies. DPI is sold without financial advice. For a list of insurance companies offering DPI products, click here.  Find out more about DPI here and below. Direct Insurance Purchase Infographic, attached Direct Insurance Purchase Vidoon MAS Media Release on Direct Insurance Purchase (31 March 2015) LIA Media Statement on Direct Purchase Insurance (31 March 2015), attached Direct Insurance Purchase Guidelines (MU 63/18) and its appendices, attached

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DPI Infographic

(PDF, 2.09MB)

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Financial Advisory Representative’s role

Finding the right financial adviser whom you can trust and have confidence in is essential.  There will be number of things you would want to know in selecting a financial adviser and you may have to speak to a few before making up your mind. Here are some questions to ask your prospective financial adviser: What experience do you have? How long has he or she been in practice? How many, and what types of companies has he or she been associated with?  Your relationship with your financial adviser is a long term one – you will be relying on him or her to review your insurance coverage and investment portfolio periodically to ensure that your changing protection needs are met. What qualifications do you have? In addition to the minimum regulatory requirements, consider if an adviser has experience in insurance, investment, tax planning, estate planning or retirement planning. What is your approach to financial planning? What is the profile of clients and financial situations he typically works with?  Is the adviser’s viewpoint on investing too cautious or overly aggressive for you? How will I pay for your services? Financial advisers can be paid in several ways: A salary paid by the company for which the adviser works. Fee based on an hourly rate, a flat rate or a percentage of your assets and/or income. Commission paid from the product sold to you, usually as a percentage of the premium you pay or the amount you invest. A combination of fee and commission. Licensed professionals There are regulations setting out the entry criteria for persons wishing to offer financial advisory services.  There are minimum requirements for age, "fit and proper" status, educational level and the passing of licensing examinations. Representatives Notification Framework (RNF) Register The Monetary Authority of Singapore (MAS), which regulates the financial services industries, has an online Register of representatives for prospective clients to check if their financial adviser is currently licensed and of good standing. Every representative has an RNF Reference Number you should ask for. The following are the different types of representatives: Representative of a life insurance companyHe represents only one life insurance company and can advise you on the products of that company.  He may also advise you on the products of other financial institutions if his life insurance company has an agreement to distribute those products. Representative of a bank or other financial institutionHe represents only one bank or one other financial institution and can advise you on the products of one or more life insurance companies with whom the bank or financial institution has an agreement with to distribute those products. Other financial institutions include insurance brokers, securities firms and finance companies. Representative of a Financial Advisory firmHe represents only one FA firm and can advise you on the financial products of a few life insurance companies and other financial institutions.

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Choosing Right