JUST as life insurers welcome the recommendations crafted under the Financial Advisory Industry Review announced on Wednesday, consumers may be looking at cheaper insurance products when they make a direct purchase.
Khoo Kah Siang, chief executive officer of Great Eastern Life Assurance, said that he expects premiums of direct channel insurance products to be reduced by 5 to 10 per cent.
This, as life insurers in Singapore will have to sell protection up to a sum assured of S$400,000 under a government-mandated direct-purchase scheme from next year.
The scheme involves two products – term life insurance and whole life insurance – essentially cutting out the agent.
Commenting on the initiative, Dr Khoo said that there will be customers who understand their needs quite well and in those cases, they now have the option to purchase products directly from the company.
Still, he believes financial advisers are able to provide value-added service and that “their roles will continue to be very important to the public at large”.
“There are a lot of other products out there and I think people need to be advised because if you look at the financial needs, they are not that simple. All of us are not trained in financial needs.”
Dr Khoo, who is also the president of the life insurance association, stressed that consumers should not see the move as one where they can “buy on a bargain, without considering affordability aspects and aspects on purchasing the right products”.
He pointed out that there is a need to balance between a direct channel (purchase) versus that of not over-purchasing products without advise