Consumers Allowed To Purchase Insurance Directly Online – The Good & The Bad

If you are a Singaporean and have to check out this piece of news (source: ChannelNewsAsia), the Insurance Industry is going through a big change (to be implemented in early 2015) which allows Consumers to purchase insurance (protection-oriented type, e.g. Term Insurance and Whole Life Insurance Policies for now) directly online!

With this big change coming  to you and especially if you are one who is in need of doing a proper financial planning… here are some of the good and the bad that you may need to be aware of! Note that the pointers raised here are not in any particular order.

The Good About Purchasing Insurance Online!

#1 – You Get To Be In Control

Humans are emotional creatures and a small group of Financial Planners (let’s just call them Salesmen) simply like to focus on this particular soft spot and promote the “flavors of the month” instead of the actual priorities.

So with this new platform, customers get to be in control. If they know they have a strong need to get themselves protected with a Term Insurance or a Whole Life, they can simply do so in their own comfort without having to be persuaded to change their decision.

#2 – You Get To Understand The Premium Differences Between The Insurance Companies For The Same Coverage

I always like to share that not every insurance companies are the same when it comes to products. Some may be very strong in protection and savings while the others are strong in investment and therefore the rates that each company offer will also be different.

With this platform, customers get to understand the differences better. They can basically generate the Quotes out and do the comparisons to see which insurance companies offer the best rates (as well as the potential returns if you are getting a Participating Whole Life Insurance Plan) and from there they can make a better choice.

#3 – You Get To Save More!

It is understood that with this new platform, the premium rate will be adjusted lower (assuming that the rate is dropped because you will be purchasing online and there’s no Financial Planner attached to it and so there’s no commissions needed to be paid). Therefore you will definitely get to save more with this new change!

#4 – The Chance For You To Experience A New Type Of Financial Planning

Do you know that there are two different industries of Financial Planners in Singapore? The First Type (which is the most common) that earns through commissions from the sale / recommendation of inforce policies and the other one (which is still a small minority) through a Fee which is usually charged from the number of consultation hours as well as the financial services that you have.

And some may say that the recommendations provided by the First Type (for e.g. the case of Term Insurance vs Whole Life Insurance) may be skewed towards the size of commissions whereas the other type is less biased since they still earn regardless whether you buy any plans at the end of the consultation (they will return you the commissions if you buy through them) and as long as they have done the job of helping you understand your current financial situation.

So if this platform opens up to the other insurance types (e.g. Endowment, ILPs and Medical Insurance) in the future, this may open up for more consumers to check out the fee-based financial planning model.

The Bad About Purchasing Insurance Online!

#1 – The Platform May Just Be Numbers And Dollars To You

The difference between doing it yourself and getting a Financial Planner to do it for you is that if the Financial Planner is good – he/she will be able to make you understand the significance of getting yourself covered for a certain sum of protection coverage.

For example, through a proper financial planning session, your Financial Planner may help you to discover the amount that you need to set assured for your dependents when you are gone, to cover yourself when you are sick (but still alive) and out of job permanently as well as from your current spending habits.

#2 – You Do Not Have That First Line Of Advice / Assistance When In Times Of Need

When you purchase an insurance policy while not being in good health, you will notice that you will require a fair bit more and stricter underwriting, for example, you will need to have your conditions accessed through a panel of medical tests.

The difference here is that when you buy through a Financial Planner, this usually forms a type of obligation for the Planner to help you push through the application and sometimes medical advice (through the experiences that they have while handling clients with similar situations) are provided to help you push through the medical tests.

Also when in times of claims, you or your family members may have to handle it themselves rather than through your Planner who may do up the first line of preparation to make the whole claim process easier.

#3 – It Is Still Not A One Stop Solution

The new platform only offers Protection-Oriented Products and does not really serve as a one stop solution for all your Financial Planning Needs. You may be better off sitting through with a Financial Planner and get all your insurance (application and underwriting) done through the Planner.

So What Do You Think Of This New Platform?

I may have missed out other good and bad pointers about this upcoming platform for buying insurance online so what do you think of it? Feel free to share your views with the rest by dropping a comment below!

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