Policy Lapsed

One of the areas that create mistrust and loss of confidence for insurers is a situation when customers fail to pay life insurance premiums in line with the contract for whatever reasons.

In very simple terms, Insurance is a contract between the customer (insured or assured) and the insurance company (insurer) such that the insurer agrees to pay compensation to the insured should he suffer financial losses as a result of certain events covered under the contract in return for a consideration (premium).

Insurance could be classified as either short or long term depending on the tenure of the contract.  Short term insurances are contracts that are renewed yearly while long term insurances are contracts that take longer time to mature say five years or more.

Insurance is broadly classified under life and non-life depending on what is covered under the contract.  It is life when it is based on the life of the policyholder or another person (life assured) but when it is not based on the life of a person, it is non-life insurance.  Life insurances are normally long term insurances.

Life insurance is needed by anybody who is desirous of providing for his loved ones when he dies or is unable to earn income as a result of the above causes.  When one buys a life insurance policy, he seeks to protect his income to be able to provide for those who depend on it or to cover general living expenses should his income ceases as a result of death, sickness or redundancy.

Classes of life assurance include term assurance, whole life assurance and endowment mainly but there are income protection plans, accident, critical illness insurance, sickness and unemployment protection plans too. The choice depends on age, dependants, income and financial liabilities, among other things.

Term assurance
This provides cover for a fixed term with the sum assured payable only on death within this period. There are no investment benefits or payments on survival.  This is unfortunately, where many policyholders get it wrong; they expect that since they have bought insurance, they should get something at the expiration of the policy the period. There are variants of this.

Whole life assurance
This protects policyholders throughout the duration of his life, no matter how long he lives. Unlike term assurance benefits are paid if the life assured dies during the term of the policy or if he outlives it.

This policy will eventually pay no matter how long since there is no time limit to the protection; dependants of the life assured just have to wait patiently till he dies to get the benefits of the policy.  It guarantees lump sum payment when the policyholder dies and it has “surrender value” should the policy be cancelled midway. There are variants of this too.

Endowment insurance
Endowment policies are equivalent to saving schemes but the difference is they have life assurance cover in addition.  They combine the benefits of a savings scheme with the peace of mind offer by a life assurance policy. It pays outstanding debts including mortgages should the policyholder die before repaying the loan in full but if he outlives the policy he receives a lump sum payment.

Premium default
Sometimes policyholders default in paying premiums as agreed under the contract and may ask to take back whatever accumulated premium they have paid.  For reasons, including mis-selling, under-performing policies and inability to pay the premium and even ignorance among other things; policyholders may develop “cognitive dissonance” (post purchase doubts), feeling that they made a mistake buying the policies in the first place; so they stop paying premiums.

Inability to pay
Many policyholders go for a huge sum assured because they want the best for their families and loved ones who the policies are meant to protect in case of eventualities, failing to realise how stressful it could be paying premiums from their salaries and wages. Policyholders could as well lose their jobs or suffer business failures making it very difficult for them to meet their premium obligations to the insurer. These could lead to default in premium payment.

Stuck with wrong Products/mis-selling
The insurance industry in Nigeria is suffering from image crisis and apathy flowing from the activities of Agents who live on commissions. Insurers still engage unqualified and uninterested job seekers without giving them adequate trainings before sending them out into the field.  One of the sins of Agents is mis-selling as a result of ignorance or desperation to sell and earn commission.

 Many people who needed income protection plans unfortunately end up buying term assurances because their Agents did not explain to them the differences in the product offerings.  The policyholders eventually get frustrated.

Under-performing policies
Some policies may be under-performing and unable to meet policyholder’s expectations in terms of bonuses and interests.  The future value of life insurance products is affected by fluctuations in the rates of interest and inflation and cost of living index.  Where these rates erode the value in view, the product under-performs and frustrates policyholders.

Also, some people buy life insurance to reduce taxes but when tax policies change and frustrate their goals, the policy is seen to be under-performing and premium payment may not be a priority any longer.

When life policies lapse
A life insured is expected to pay premiums monthly, quarterly, half-yearly or annually. If the premium is not paid within one month of the due date the policy lapses. The insurer gives a notice to the policyholder stating that the policy is about to be terminated due to the non-payment of premiums within the specified timeframe and the grace period for reviving it.

But when for whatever reasons the policy lapses, the policyholder does not necessarily have to give up because depending on the conditions laid out in the policy document, a lapsed policy could be revived within 5 years from the date of the last premium paid by paying the outstanding premiums with interest.

If revived within 6 months, it could be reinstated without fresh medical examinations. Where the policy has been in force continuously for over 3 years, it gets a paid up value but there is no surrender and paid up values for policies that have not been in force for the minimum period stated in the policy document.

'Paid up' policy
Stuck with a lapsed policy, the policyholder could convert it to “Paid Up” policy. In this case, the sum assured of the policy is reduced to a proportion of premiums paid till date by the policyholder and number of times premiums have been paid.  In a paid-up policy, a diminished sum assured is paid
on death or on maturity.

This option benefits older people and those who may not be in a position to pay further premiums because they can continue to be insured under the same product for the same premium till the policy matures.  It also helps to reduce premium outflow and keeps life policies alive as against surrendering it.

Speaking on this option, an expert who pleaded anonymity said “after the policy tenure is over, the insured gets a diminished maturity amount plus bonus for the number of years premiums were paid and loyalty additions.”
However before going for this option, the policyholder should review the policy to see whether policy administration, mortality and fund management and other charges will continue to apply after making the policy paid-up.  If yes, then he needs another option because these would eventually erode the value of the policy significantly.

Surrender value
Another option for holders of lapsed policies is to go for the Cash Surrender Value (CSR).  The cash surrender value is the amount a life insurer pays a policy or annuity holder who voluntarily terminates the policy before it matures or the insured event occurs.

Surrender value is the worth of a life insurance product after charges and fees, if the contract is terminated early with value remaining. It is different from the cash value, which is calculated before any fees are taken upon surrender.  The difference is in the surrender charges, which can be significant at times.

Surrender charges drop over time and while always significant they may not impact the surrender value substantially in later years. These usually apply during the first 10-15 years of the policy and when this stops the cash value and surrender value will be the same.

A policyholder is eligible for guaranteed surrender value if he has paid premium for at least three years. Traditionally, the surrender value of a life policy is 30 per cent in the second and third years and 70 per cent in the fourth year, excluding the first year premium.

Making a choice
Many policyholders, who fail to revive their policies back out or surrender it out of ignorance only to regret their actions when they come to terms with the cost of their actions.
So it is important to note that if a policyholder stops paying premium after a specified period, his policy will continue but with lower sum assured. This reduced sum assured is called paid-up value or paid-up sum assured.

Also, if a policy is surrendered, the life cover stops unlike when the policy is paid-up. So, before surrendering that life policy, review what you stand to gain if you make it paid-up and keep it active till maturity.

Surrendering an endowment policy makes sense only if the surrender value when reinvested would generate a better return than the policy would at maturity.

On Line On Life

Until the October of 2009 all attempts to sell life insurance online had been met with pretty much abject failure. One of the reasons for this was that previous attempts had put products designed for the offline world into the online space with absolutely no attempt to give the customer good reason to buy the product without intermediation.

One must understand that there are four basic drivers that compel consumers to invest their time and effort to buy a product online.

The first reason is value - a key reason for buying online is that it is cheaper than buying a comparable product offline.

Another reason is convenience - a customer should see very distinct convenience in buying something online. Ticketing and booking sites use this as a great hook and in fact some have started charging a convenience charge.

A third driver to online purchase is information - customers use the digital space to compare prices and specifications and also look for recommendations and reviews in order to make an informed purchase decision.

Another driver is sometimes access - when a product is not available in the customer's geography and hence the Internet becomes the only place to get access to that product. If your product does not have one, some or all of these drivers then it has little or no chance to succeed online.

This is the reason why online term insurance saw almost instantaneous traction when it was launched nearly 5 years ago in 2009. The product was designed for online purchase - it was simple and easy to understand, it was cheaper by a large margin as compared to the offline versions available, it could be bought conveniently anyplace anytime and it offered a protection offering that was traditionally not very actively promoted by other distribution channels.

Yet despite early growth the share of online life insurance remains tiny. So what does the future hold for online life insurance? One of the very interesting things that is happening in the online space as far as life insurance is concerned is the concept of researching online and purchasing offline (ROPO).

Imagine a pyramid with online buyers right on the top, those researching online but not buying in the middle and the offline population right at the bottom. The portion at the top is a sliver at the moment and the portion at the bottom is the largest with a medium sized portion in the middle. It is the opinion of this writer that the relative sizes of each of these segments is likely to change.

Mobile connectivity and lowering of data access costs will see large proportions of online customers transitioning online thus increasing the share of online users or the ROPO segment. At the same time we will also witness more online non-buyers becoming buyers as they become more comfortable with issues of payment security etc. Hence the growth in online insurance will only accelerate.

In order to facilitate this growth insurers competing in the online space will need to keep in mind that they would need to focus on products with a simple and clearly defined benefit that can be compared with similar offline products. That the customer must continue to derive both value and convenience from the product category that will give them a very tangible reason to adopt the online purchase process.

Leveraging technology in the future is also going to be critical. With more and more online users becoming unfettered - using only mobile devices to communicate, search and buy products on the net - an easy to use and intuitive mobile interface will be key to growing sales and fuelling growth in the category.

Mortgage Life Insurance - A Risk

If you’re getting a mortgage for the first time or refinancing an existing mortgage at a different institution, chances are the person across the desk is going to try to peddle mortgage life insurance. Data show that about 60 per cent of home purchaser comes with a mortgage written by a bank also have mortgage life.

It’s a check mark on the mortgage application, but it’s costly, often a bad deal when sold by a lender and deeply troublesome if the borrower dies before the mortgage is paid off.

Banks love to sell mortgage life insurance. Statistics from the National Association of Insurance Commissioners, an organization of U.S. insurance regulators, shows that mortgage life insurance lenders pay claims amounting to 40 cents for every dollar they collect in premiums. Regular life insurance policies pay 90 cents of premium dollars in claims.

The concept behind mortgage life is not troublesome. The lender wants to be sure it is paid; life insurance is just a way of covering the risk of the borrower’s death before the last dollar is paid on the debt. The bank fills out a form, gets a signature, and adds the life insurance cost to the monthly mortgage payment.

The devil is in the details, goes the saying, and that is where mortgage life gets to be problematic. Mortgage life has one beneficiary, the lender, and, though the amount of the risk declines as the mortgage debt is paid down, the premium remains the same. Although the bank’s risk is decreasing, there is no transfer or spillover of benefit for anybody else — for example, the borrower’s heirs

Mortgage Life Can Be Risky
Not only does mortgage life not provide benefits to anyone but the lender, it also tends to be evaluated or underwritten after a claim is made. That gives the insurer the opportunity to deny the claim, often on the basis that material facts were not disclosed.

Critics of the underwrite-after-claim process say that questionnaires asking about pre-existing conditions are complex and confusing. Some questionnaires ask, “Do you have a condition which would affect your health but about which you have not seen a licensed medical practitioner?” Or the ultimate basket case question: “Is there any condition that you have not disclosed which, if disclosed, would affect your insurability?” Do you recall a throb near your liver last year? Maybe you should have had imaging studies. In after-the-fact underwriting, you ignore even faint hints of illness at your financial peril.

Have you ever smoked? If you did take a puff 20 years ago but did not become a committed smoker, you can explain that and probably get a non-smoker discount on a conventional term policy.

Mortgage lenders tend not to give non-smoker discounts and are keen to deny coverage if they think they have been deceived. The moral of the story is to be very careful to report every illness when seeking life insurance, report anything that could be related to questions asked, and remember that lenders do their underwriting when you have a claim. That is a terrible time to find out that you should have shopped the policy and gotten coverage from a conventional insurance company that checked you out when you bought the policy.

With conventional term coverage, the insurer has two years to decline coverage for any reason. After that, you are covered even if you fudged a question.
With conventional term coverage, you can make the lender the beneficiary, provide evidence of that to the lender, and, if you change lenders, change the beneficiary. You will need the approval of the insurance company, but it is routine and usually given. As the loan value declines, you can beef up what other potential heirs get.

The price of mortgage life
Mortgage life is expensive. For example, a 38-year old man and a 37-year old female can pay $140 per month for $500,000 of term coverage with a 20-year level premium from a major bank for its mortgage life insurance.

The same couple could get 10-year term renewable and convertible coverage from a major life insurer through an independent agent for $41.54 per month. $500,000 of coverage for the same couple with 20-year level term would be $66.75. Details change from one quote to another, but the size of the gap indicates the advantage of shopping.

Over 10 years, in the first case, the savings would be $11,815. In the second case, which matches the 20-year term of the lender’s insurance, the savings would be $17,580.

There is also a cost strategy you can use with conventional term coverage. When young, say in your 30s, you can get 10-year level term coverage for very little. The rate rises for the next 10 years and then higher for the next. But family income is likely to rise and — this is the critical point — as mortgages are paid down, your need for coverage also declines. This is insurance cost management. Add guaranteed renewability to the 10-year term policy and you have a low-cost, intelligent method of premium management, a base insurance plan for your family or farm, portability and control.

Non-bank insurance
There are other advantages to having your own term insurance to cover mortgage debt. If you change lenders, you take your coverage with you and — this is vital — there will be no gap in coverage.

There are sad cases in which a mortgage borrower dies before coverage is in place in a mortgage transfer. That can’t happen if you have your own policy. Properly drafted, the policy and benefits provisions of your own policy would cover debt transfer in process.

Finally, and this is no small advantage, when you choose your own term policy, you can shop by price and have the policy tailored to your needs. Guaranteed renewability, guaranteed convertibility to whole ordinary life, various discounts for not smoking, good health, sometimes memberships in professional societies that get good insurance deals for members — all can help set the price of insurance and the bells and whistles on the policy.

That is not possible with the one-size-fits-all life policies mortgage lenders offer. As well, with your own policy, you can extend coverage for other debts, even for a family loan. One policy can then cover your house, maybe some equipment purchased with loan and other obligations. That flexibility is valuable and, if you do it right, you can get more insurance, more appropriate coverage, and pay less.

Planning Your Life Insurance

Financial needs change with change in one's life stage. Whether it's your marriage, children's education or retirement years, you need money to get through the various stages of life comfortably. Life insurance helps you meet these requirements and prepares you for unforeseen expenses. Insurance provides you with financial security that helps you take care of your loved one.

In order to reap the benefits that insurance has to offer, you must factor in insurance early in life.
When it comes to insurance, be an early bird

Ideally, it makes sense to buy at least one life insurance policy when you have just started to earn. Doing so has its own advantages. Not only do you add a crucial instrument to your financial portfolio, but it also helps ensure that your family's financial situation does not debilitate should anything untoward happen to you. Besides, when you start young, the premium amounts too are lower.

At a later stage in life, you can always revisit your insurance portfolio and add another policy keeping with your changing financial needs. This process is called a life insurance review and is extremely important.

Review your insurance plan from time to time
Life insurance is not a one-size-fits-all solution. It is therefore important to review your insurance plan at regular intervals. It will prepare you for life's various milestones and the associated expenses.

One of the biggest advantages of a life insurance review is that you do not stay underinsured. As age advances, your responsibilities increase and lifestyle undergoes changes. Based on timely reviews, you can revise your life insurance cover from time to time.

It is only with constant reviewing of your insurance plan can you start building a corpus for your old age.

Planning for the future
You start working, get married, have kids and soon enough, your kids grow up. Even before you realize it, you find yourself standing with a farewell bouquet at the threshold of a new phase of life - the post-retirement period. To ensure that you don't take a financial hit in your older age, you must plan for it in advance.

Taking a life insurance policy at a young age will simplify things for you as you approach the golden years of your life. There are varied options of retirement plans that one can choose from. You can choose to go with monthly income or annual payouts as per your requirements. if you choose to buy a monthly income plan, you will be entitled to a monthly income during your post-retirement years.

How your retirement plan will help you in your old age
On various occasions, people are under the impression that savings accrued over a lifetime are sufficient to see them through old age. This is perhaps one of the biggest misconceptions. Life is unpredictable and sometimes all it takes is a bout of critical illness to wipe out all that you had saved.

You can avoid such a situation by opting for a retirement plan early in life (preferable in late 20s or early 30s). It supplies you with an income every month, almost similar to the salary that you used to receive when you were employed. You can use this money for your routine expenses as also for health emergencies.

While none of us can gaze into a crystal ball and find out what the future holds, we can at least make the right choices which can help secure the future. This starts with investing in a reliable life insurance plan!

Medical Tourism In Malaysia

Muslim tourists have long chosen Malaysia, its beaches and its malls as a holiday destination thanks to cultural affinity. Now the Southeast Asian country, where Muslims make up about 60 percent of the population, wants to parlay its visitor dividend into a bid to overtake its neighbours for the world’s medical tourism crown.

It seeks to appeal to less affluent patients with reasonably priced treatments. But figures show it has some ground to make up on Thailand and Singapore in boosting its share of an industry that generates $38 billion to $55 billion annually.

 

Malaysia is a new player in the market, competing with experienced, branded names. But it is quickly attracting the attention of patients, earning third place for “best and most affordable healthcare” by International Living, a lifestyle magazine.

 

“Thailand’s pricing is not attractive any more and Singapore can’t cope with the flood of patients,” said Jacob Thomas, president of the Association of Private Hospitals of Malaysia.

 

“We are one of the easiest countries to enter. Most foreigners don’t need to fill in a landing form.”

The number of foreigners seeking care in Malaysia more than doubled over five years to 770,134 in 2013. Most patients are from Indonesia, followed by the Middle East and North Africa, areas with plenty of new money and where healthcare is inadequate or dogged by long waiting lists.

 

That compares with 850,000 in Singapore in 2012 and nearly 2.5 million last year inThailand, though that figure includes spa stays and resident expatriates.

 

Spending by foreign patients totaled $216 million in 2013, dwarfed by Thailand’s $4.3 billion, again including spa stays.

 

Medical institutions have promoted cardiology and orthopaedics, areas with high demand in Indonesia and the Gulf states. And the mainstay, according to Patients Beyond Borders, a medical tourism publisher, is health screenings, which account for more than two-thirds of business.

 

The United Arab Emirates spent over $2 billion in 2011 to send patients abroad, according to Medical Tourism Guide 2014.

 

Also being tapped are middle class patients from countries with poor health systems. Kuala Lumpur’s Prince Court Medical Centre received almost 2,000 from Libya and more than 1,000 from Iran in 2012.

 

Lower costs, a shorter recovery time and high quality care have helped put Malaysia on the radar.

A heart bypass, at about $20,000, is less than half the cost in Singapore, and 10 percent cheaper than in Thailand, Patients Beyond Borders says. Hospital rooms and follow-up treatments are also cheaper.

 

“Malaysia’s strength has been at conducting high-end surgeries like the heart bypass and orthopedic procedures that are done non-invasively, so they don’t have to stay too long to recuperate,” said Mary Wong, chief executive of the Malaysia Healthcare Travel Council, a government agency.

Not all industry players back the low-price strategy.

 

“The number of people coming in doesn’t necessarily translate into higher revenue,” said Suresh Ponnudurai, chief executive of private medical travel company Malaysia Healthcare.

 

“Singapore and Thailand are targeting those who are really wealthy, whereas those who come to Malaysia aren’t as wealthy.”

 

Hospitals say most Gulf governments sponsor their citizens to specific countries. But they are more inclined to choose Singapore and Thailand, so persuading patients to switch to Malaysia, regardless of price, has been a challenge.

 

At least three countries – Kazakhstan, Libya and Oman – already have government-to-government agreements to send patients to Malaysia.

 

“The way to gain ground is to secure these accounts with government agencies since they are paying for the patients,” said Amiruddin Satar, managing director of KPJ Healthcare, one of three big hospital groups.

 

Still, institutions anticipate an influx of patients.

 

KPJ Healthcare, along with fellow health giants IHH Healthcare and Ramsay Sime Darby Health Care have sought increased bed allocations for foreigners.

 

KPJ hopes by 2020 to see the share of its revenue from medical tourism jump to 25 percent from 4 percent last year.

 

To the north, business is still flourishing in Thailand, but the military coup in May has posed a problem for patients whose governments have issued travel advisories.

 

Thailand had a head start, promoting its services after the 1998 Asian financial crisis, when the value of the baht currency sank. Middle East business rose after the September 11, 2001 attacks on U.S. targets, as patients felt unwelcome in the West.

 

But competition is also heating up from elsewhere.

 

South Korea last year flew actor Song Joong Ki, its medical tourism ambassador, to Qatar and the UAE to drum up business. Dubai and Istanbul are also marketing themselves as hubs for Middle East patients reluctant to travel long distances.

 

 Malaysia is also pursuing a larger share of the Muslim market through halal treatments, which exclude products forbidden under Islamic law, such as those derived from pork.

 

“For example, insulin, a widely used product in hospitals, we are sure which are bovine or porcine based. Where we can help it, we offer patients halal options,” said KPJ’s Amiruddin.

 

Islam allows for the consumption of non-halal ingredients in matters of life and death, but hospital pharmacies inform patients of products that are gelatin and porcine free. That includes offering the drug Dhamotil as a halal option for diarrhea, instead of the commonly used Imodium.

 

Hospitals are also using sutures manufactured by a local firm made from lambs slaughtered under Islamic law.

 

Work is underway to produce the world’s first halal vaccines for meningitis and hepatitis by 2017. The target would be Muslim pilgrims going for the Hajj in Saudi Arabia, which requires visitors to be vaccinated for meningitis.

 

“We realize that if we can come up with halal pharmaceutical products, there’s a big market for it,” said Jamil Bidin, chief executive of Halal Industry Development Corp.

 

“As far as Muslims are concerned, if you have a halal product, there’s no compromise.”

Life Plan

A: Insurance Protection Gives You Plan B - Life is a chock-full of unexpected events and whilst some may be pleasant; there will definitely be those which make you wish you had Plan B. That’s where the right kind of insurance comes in. If you have purchased the necessary policies, you will be afforded the peace of mind of knowing you already have an escape route. But having the foresight to know what kind of insurance policy you need and when to purchase it is key.

While we have segmented when you should get a specific policy, these are just guidelines – they’re not set in stone – so do feel free to make the ‘executive decision’ on which policies to purchase as and when necessary. Below is a brief overview of the insurance policies that you should be getting at specific points in life:

B: Starting Your First Job - Priority: Establishing a career, setting financial goals, including adequate medical and accident coverage

1: Medical and Health Insurance
How cheap (or expensive) is basic healthcare in Malaysia? With the recent allowance for medical practitioners to raise medical fees and charges, the simple fact remains that for most Malaysians, healthcare is hard to afford without access to a medical card – which allows you to claim for costly hospitalisation and surgical fees.

If you have been insured under your parents’ medical insurance policy all these years (usually up to a maximum of 23 years old), you’ll need to fork out some cash for your own after your coverage has expired. If you have a confirmed employment, you will usually obtain one through your employer.

2: Motor Insurance
Malaysia currently has the dubious honour of being one of the top 25 countries most dangerous to road users, with an average of 30 deaths for every 100,000 individuals – the road accident rate in Malaysia is really quite alarming! Not only that, because of the often clogged roads and frantic driving in urban cities such as Kuala Lumpur, many drivers have succumbed to road rage – just ask our good friend Kiki below:

The point is not to scare you from ever driving again, but to emphasize the importance of having comprehensive insurance protection for your vehicle, be it a car or motorbike. For a new vehicle, the insured value will be the purchase price while for other vehicles, the insured value is the market value of the vehicle at the point you apply for the insurance policy.

3: Personal Accident Insurance
If you rely purely on your monthly salary to support your daily expenses, you should get yourself a personal accident insurance policy – it will provide you with financial compensation in the event of injury, disability or death caused by violent, accidental, external and visible events. That is unless you are working in a high risk environment that has already provided you with a specialised PA policy i.e. law enforcement, pilot, military, and divers.

While employers traditionally provide you with PA insurance policy, some people may prefer the increased coverage provided by buying private policies to supplement those of their employers. This is especially important when you have dependents relaying on your income.

C: Starting a Family
Priority: Pay for mortgage loans, protection for your spouse, and financial security for your child’s education

1: Term Life Insurance
A term life insurance, similar to your personal accident insurance, is meant to replace your income for those relying on it should something unfortunate were to happen resulting in your death or permanent disablement. Again, having this policy is very important when you have dependents such as children and a spouse who is not employed.

Once your children are all grown up and can support themselves financially, a term life insurance won’t be too necessary.

2: Critical Illness Insurance
Often times policyholders will supplement a term life insurance policy with a critical illness rider or stand-alone policy. This policy gives you a lump sum benefit upon diagnosis of any of the 36 major diseases and illnesses including cancer, heart attack, stroke, diabetes including diseases often associated with old age such as Alzheimer’s disease and Parkinson’s disease.

3: Fire/Homeowner’s insurance
If you own or plan to own a home, you will need a home and fire insurance – this cannot be negotiated. A homeowner’s insurance will insure everything from the home itself to your belongings to someone getting injured on your property.

You will also be covered from natural disasters such as flooding and landslides. A home is potentially the biggest investment you will ever make, and many struggle everyday to afford to have a roof over their heads, so protecting your home should be a top priority.

In Malaysia, you can either take up a MRTA or MLTA insurance to insure both your family and mortgage. Of course, you will have no need for one if you decide to put your home up for sale, go back to renting, or make alternative living arrangements – move in back with the parents, maybe?

D: Getting Ready For Retirement - Priority: Secure regular income for retired life, update medical and critical illness coverage

1: Retirement Insurance
As you slowly move into this stage in life, your financial woes will mostly relate to maintaining a plan to ensure a steady flow of funds with the absence of paid employment.

Once you reach your late 30s, sign yourself up for a retirement insurance plan, also known as a retirement annuity plan. You receive a guaranteed level of income each year that can be paid out monthly. For some, their Employees Provident Fund(EPF) contributions may be enough to tide them over through their golden years, but on average, most people would have run out of funds within only 3 years.

As an example, you can start by paying a RM3000 premium per year from the age of 40 until the year you retire. Your policy will then be able to pay out a higher amount based of say RM7000 per year for 10 to 30 years after you retire.

With a retirement annuity, unlike a Private Retirement Scheme (PRS), which requires you to produce a GP (Grand of Probate) or LA (Letter of Estate Administration) to unfreeze and withdraw money in the event of your death, you will only need to make a nomination to pass on your wealth to your beneficiaries.

E: Know your options
The best thing to do before deciding on a insurance policy is to get yourself educated – get quotes from different insurers, read the nitty-gritty details of your policy, and whenever in doubt, ask your insurance agent questions.

This was brought you by Chester John from RinggitPlus.com

Understanding Generation Y

When it comes to Generation Y (Gen-Y) seeking to buy their first property, there appears to be a huge expectation gap. Apparently, Gen-Yers won’t buy into low-cost and medium-cost apartments and houses because they aim too high, desiring the high-end living that their salaries are unable to support, according to several property experts.

The crux of the matter is the lack of a trade-up mentality among younger house buyers, particularly among Gen Yers, who are eyeing what they want and not what they can afford. These are the 20- to 30-year-olds who are starting out, some of whom are just starting to earn their first salaries of around RM3,000 a month, says Malaysian Institute of Estate Agents (MIEA) president Siva Shanker. “They want something that they cannot afford now. So what do they do? They save up. However, the house prices move up faster than they can save. But if they practise trade-up, affordability will not be an issue,” he says.

Gen-Yers, also known as the Millennials, were born during the 1980s and early 1990s, and are often referred to as “echo boomers” because they are the children of parents born during the baby boom. Because the generation that is born during this time period have had constant access to technology in their youth, their perception is different to their predecessors, the Generation X (Gen-X).

For example, the Gen-Yers are not afraid of quitting their jobs without a back-up plan, says Shanker during a forum held at the Property Investment Convention 2014 organised by the Wealth Mastery Academy on July 12 and 13. “And they [Gen-Yers] are not worried that they will have no income.

For the Gen-Xers, they will have another job waiting before they resign,” he says, explaining that the resignation is merely a matter of transitioning from one employer to the next. “The Gen-Yers are different and it is because they are brought up differently. In my time, if I lose my job, I would have been whacked across the room,” he says.

“Now, when the Gen-Yer quits, their parents are sympathetic to them.” Shanker suggests that instead of having to deal with saving up for that condominium “that’s out of reach”, younger buyers should consider the trade-up method as an investment route to securing the home they desire. The problem for most young buyers is that they are looking at the primary market in hot spots and the property prices in those areas are most certainly beyond what they can afford. “Don’t look for a hot spot. Look for a spot that’s hot for you and make it work for you,” he tells FocusM.

Property entrepreneur Prudence Wong shares her experience of trade-up, coming from a family that was not well off. Her trade-ups obviously worked for her. Her first investment – an apartment – had offered good rental cash flow and when the time came for her to dispose of it, she enjoyed a substantial capital appreciation. “I started small. I moved from a small apartment to condominium units, to shoplots, factories, and bungalows and now to land,” she says. “It’s not what you invest in but how you invest.

I had basically two strategies. The strategies are maximising the rental cash flows and multiplying the profits. How do I do that? I add value to the properties I invest in.”

Ken Lim - Down But Not Out

Till January, he was a transport tycoon running Five Star Tours, which had eight branches in its heyday. Today, Ken Lim Cheng Chuan, 55, is like any other odd-job worker, serving drinks at a coffee stall.

For a man who started working at a biscuit factory at 13 and climbed his way to become the boss of the transport group, life has come full circle. The former managing director was visibly tired, but cordial as he served customers on Sunday morning. Mr Lim was declared a bankrupt last month and is trying to settle his financial affairs.

He said his business went bust as it was badly hit by the emergence of the integrated resorts.
Since 2010, when Resorts World Sentosa and Marina Bay Sands opened, the number of customers taking his tour buses to Genting in Malaysia fell 70 per cent. It was a huge blow, as the Genting trips accounted for the bulk of the company's revenue.

Instead of scaling down operations, he continued to expand in Malaysia, resulting in cashflow problems. He hung on to the end, he said, and personally made a police report when the company folded.

After resting at home for some time, he decided he needed to keep working, and has been helping out at his relative's coffee stall for about a month.

"I work for more than 10 hours every day, standing next to the hot stove. It is a far cry from working in an air-conditioned office," he said. "I am exhausted."

But he joked that the coffee shop was in a central location, making it convenient for him to visit the court and the Insolvency & Public Trustee's Office.

It is also near the offices of the Central Provident Fund (CPF) Board, which he frequents as he still owes some employees CPF contributions, he said with a laugh.

"My friends from the industry drop by sometimes to say hi," he said. "It's encouraging."

Mr Lim is no stranger to adversity. He worked at various jobs in his teens, and started his first business selling ornamental fish at 20. A storm washed that all away and he lost a lot of money.

In 1985, his father started running an office for a Malaysian tour bus company here and that was how he learnt the ropes. He set up Five Star with his four brothers in 1990.

In the interview, he indicated that he may be back. "Who wouldn't want to make a comeback? Just give me 10 more years... but, perhaps, not now.

From Kopi Boy To Kopi King

WHEN "coffee shop king" Hoon Thing Leong published his first book last month, all 10,000 copies were snapped up within five days.

The Chinese book, The Boss Strikes - Effective Business Practices, made him a best-selling author overnight, thanks to support from an informal network of mainly Chinese-educated businessmen and friends that he had founded 18 years ago.

"I am surprised that so many wanted to read my book," said the man behind The Bosses Network, who operates the Kim San Leng chain of 32 coffee shops.

The 65-year-old had compiled 80 of his recent weekly columns in Lianhe Wanbao in the book.
In it, he revealed his past successes and failures, from working as a coffee boy in his father's shop in Hougang when he was 12, to starting his first coffee shop in Bukit Timah with a younger brother when he was 24.

In 1990, he made the news when he paid a record $3.52 million for a coffee shop in Bishan Street 13. He still owns the shop, which is worth many times more today.

His book is so popular that he has been invited to speak to businessmen in Taipei on Aug 26, at the invitation of a group of small and medium-sized enterprises (SMEs) there.

A Secondary 2 school dropout, Mr Hoon was born in Fuzhou, China, and moved here with his mother when he was five to join his father who had arrived earlier.

Married with three sons and two daughters, Mr Hoon has devoted his entire life to the coffee shop business.

But it is his leadership in The Bosses Network for which he is better known today.

Recalling how the group was founded, he said it all began with his need to upgrade himself in the early 1980s because he had little formal education.

So he attended part-time business courses: the first was a business management certificate course in Chinese at the Singapore Institute of Management (SIM) in 1984.

Motivated to learn from others' experiences, he never missed the chance to attend talks or forums on business and management. He would even travel overseas for such events as very few were conducted in Mandarin here.

Over the years he attended hundreds of these short courses and talks, earning himself the nickname "professional student".

He was so zealous a learner that he was honoured by the Success Motivation Institute in Texas, the United States, for being its Singapore Client of the Year in 1996.

But he realised most talks were on direct marketing and selling, or were actually recruitment exercises for insurance agents, which he was not interested in.


So in 1996, he and a few other like-minded Mandarin-speaking friends decided to start an informal group, to organise talks and forums and learn from one another.

One other founding member, Mr Richard Toh, 54, who owns a printing and packaging company here, said: "When we started, there were only five of us and we would invite someone to speak to us over a meal.

"When more people came to join us, we moved to community centres or hired lecture halls in commercial buildings where we could accommodate at least 50 to 100 people."

Mr Hoon said the group, which has a few volunteers, now organises talks and sessions almost every other week, where professionals from different fields are invited to speak.

Average attendance is between 200 and 300 people, but a popular speaker can attract a crowd of up to 600.

About 11 years ago, the group partnered Shin Min Daily News in starting an annual three-day cruise event. Up to 700 members join the cruise each year, where talks and workshops are organised for them.

And four years ago, it also started hosting its regular "round table" lunch meetings with top businessmen, government officials and ministers.

At each meeting, about 20 of its members gather to raise issues with the authorities.

Senior Minister of State for Finance and Transport Josephine Teo, who met the group at the Shangri-La Hotel last month, said: "I like the informal setting because I can also be frank with them with my answers to the problems they raise."

What accounts for the enthusiasm of Mr Hoon and his volunteers in organising talks and forums?
Said Mr Hoon, who has also been a grassroots leader in Bishan since 1992: "This is public service, and we are happy we can help others in business in this way."

Purchasing Life Insurance Online

The most popular way to buy life insurance is now through digital channels but customers still value face-to-face contact for financial advice, according to the latest survey of UK life and pensions customers conducted by Accenture.
    
According to the poll of 2,870 UK life and pensions customers, 38 percent of consumers purchasing life insurance in the last 12 months, bought online. This included purchases through websites run by insurers, independent financial advisors (IFAs) and banks. By comparison 33 percent bought policies in person and 22 percent completed transactions over the phone.

The survey also reveals that a significant number of customers (19 percent) used price comparison websites to buy a life policy in the last 12 months. In addition, 41 percent of all customer interactions with life insurance providers and 38 percent of interactions with pension providers over the last 12 months were digital, including time spent researching, buying and servicing products.

However, in-person meetings were the preferred way to conduct long-term financial planning. Almost one-third of customers (30 percent) do their planning in this way, and 43 percent would like to do so.

“Customers value the convenience and immediacy of digital channels and they like to do their research and make comparisons online,” said Peter Kirk, managing director for Accenture

Distribution and Marketing Services in United Kingdom and Ireland. “But when it comes to making big financial decisions, they still value face-to-face advice and prefer to deal in person with a human being. The priority for insurers is to enable seamless interactions across different contact points, whether human or digital, and also guide consumers to the relevant channels for advice.”

IFAs still dominate, but life and pension providers have an opportunity to fill the “advice gap” in a digital world
According to the survey, the most popular channel through which to buy life and pension products was IFAs, which accounted for more than a third (35 percent) of all policy sales in the past twelve months and 23 percent of these were bought in person. The survey also indicates that IFAs are the channel where most consumers (72 percent) would turn to for information and advice on retirement planning, followed by life and pension providers (65 percent).

The survey also suggests there is still a big gap between those who think they need advice and those who actually seek it. Forty-eight percent of customers who feel they would benefit from information and advice have never actually sought any professional advice or guidance, and 51 percent of consumers without life and pension policies claim they do not need any help with planning or managing their finances.

Peter Kirk said: “The need for financial advice appears to be benefiting IFAs. Despite all the predictions about the impact of new regulations such as the Retail Distribution Review, which means IFAs are now obliged to charge fees rather than commission for advice, IFAs are still in demand. However, over the next 12 months it will be interesting to see how life and pension providers seize the opportunity to engage digitally with customers that seem reluctant or unsure of how to seek information and advice.”

Lack of consumer engagement across life and pensions market
Life and pension providers face low levels of engagement among customers as the survey found that only 44 percent of customers are satisfied, compared with 60 percent for current account banking, and only 21 percent were likely to recommend their provider compared with 40% for current account banking.

Customers rank life and pensions providers lowest among all financial companies when it comes to trust and how convenient they are to deal with. Only 31 percent felt they could manage their policy in a way that suited them, and 39 percent of customers agree strongly that products are too complicated and unnecessarily confusing.

In addition, only 38 percent of customers said their life and pensions providers offered value for money, and 37 percent indicated that their insurer provided clear and transparent communications.
Peter Kirk said: “Life and pension providers need to up their game and improve relationships with customers both by giving them the digital convenience they want but also by finding ways of meeting customers’ desire for personal contact. Companies that fail to engage better with customers risk being side-lined as financial utilities.”

Methodology
The research is based on online interviews with 2,870 UK life and pension customers conducted in March 2014. The questionnaire probed topics including the level of digital interaction, buying behaviour and preferences, customer attitudes towards new and alternative sources of advice and guidance, perceptions and behaviour shaping customers’ relationships with life and pensions providers; levels of customer satisfaction; and savings behaviour. This research was part Accenture’s fifth study of almost 10,000 banking, motor insurance and life insurance customers in the UK and Ireland, conducted simultaneously.

Purchasing Life Insurance For Children

When it comes to money decisions, it can be hard to figure out the right thing to do. Money is about power, emotion, morality, and security, among other things. So in this space, we gather personal finance luminaries to weigh in on a financial quandary.

This week’s question: Should you buy life insurance for your kid?

PRO
Yes, I’m a big believer in life insurance for children. I have life insurance on each of my three children. It allows them to have coverage which is locked in at an affordable rate regardless if they have a change in health down the road. This can be particularly advantageous if the child’s parents have health issues that are hereditary.

Many financial experts argue against it because the parent and not the child is the financial breadwinner. I totally agree insuring the parent is more the crucial of the two. But anyone who has lost a child or knows someone who has a lost child realizes the emotional upheaval this can have on the parents. The biggest advantage of having life insurance on a child is it gives the parents the time

 

PRO
 Life insurance on children should be discussed as part of a comprehensive tax and estate planning discussion with parents, especially if there is a family medical history of things like cancer, heart problems, colitis, diabetes, etc. because the best time to buy life insurance is when we are young and healthy — qualifying is easier and the premiums are much lower. Other reasons for buying life insurance on children include using it as an education-funding vehicle or for those of higher net worth, as a tax-free transfer of wealth from parents to children or grandchildren.
 

CON
Life insurance provides little or no benefit to the child. The main purpose of life insurance is to replace their income when they have dependents, which is typically not until age 25 to 30. Why pay a policy for 25 to 30 years just in case they might need it in the future? Any policy would be minor anyway. When your kids are married, they will probably need coverage of 10 times their income 25 years from now, which is likely $1-million to $2-million in future dollars.

The dumbest idea is to buy whole life insurance for your child. I’ve seen this awkward situation many times. Clients in their twenties cashing in very low return policies that were inflicted on them when they should be building wealth.

Parents have many more important uses for their money, such as life and disability insurance for themselves, their retirement goals, and their child’s RESP.

Homework Before Purchase Life Insurance

When it comes to making major purchases like a home, many people spend time beforehand preparing. It’s a good idea to think of life insurance the same way.

A life insurance policy can help pay off a mortgage loan so beneficiaries can continue to live in the home or to remove the immediate need to sell it. Debt can be inherited, and life insurance can help ease the burden your debt could put on your family after you pass away.

Once you’ve determined that you need life insurance, it’s important to put yourself in the position to get the best deal. Life insurance premium rates change with age and health factors, so in general the earlier you buy, the better rates you will likely be offered. If you are ready to buy life insurance, here are three points to keep in mind.

Stay Healthy
Developing and maintaining a fit lifestyle is not only good for your physical health, but your financial well-being, too. The less risky an insurance candidate is, the lower their monthly premiums will be. So do what is in your control. It’s a good idea to eat right, exercise and get regular check-ups so you qualify for life insurance at a lower cost. Quitting smoking, losing weight and reducing alcohol intake can all improve the rates you receive from insurance companies.

Understand Your Options
It is easy to get confused by all the different life insurance options available. Depending on where you are in life and how much protection you need, you have to determine whether you want permanent or term life insurance. Within those categories, there are specific options which may be better for your individual situation. As your life changes, your life insurance needs may change. It’s a good idea to think about whether your policy still fits your needs whenever you make major changes such as getting married, having a child or buying a home. You may want to change the type of insurance you have or even just add a new beneficiary.

Research Riders

The options aren’t done yet! Riders are add-ons to the policy you choose. It’s a good idea to look at what is available and what may be necessary in your situation. Each rider will add to the cost of the policy so it’s important you aren’t adding riders that don’t apply to your needs. Some examples of riders include an accidental benefit rider or waiver of premium rider.

By knowing the facts about life insurance before you buy, you can help ensure you get the life insurance coverage you want and need.

Purchasing Life Insurance From Kiosk

From a spot in the pharmacy section of a Wal-Mart Supercenter in this Atlanta suburb, the 44-year-old MetLife Inc.               Your Value Your Change Short position manager eyed a kiosk nearby that urged shoppers to "get life insurance today for only $5." That buys the first month of a policy with a death benefit of as much as $50,000.

 

The kiosks are part of a push by the biggest U.S. life insurer in assets to reverse a long slide in sales of life insurance to the middle class. Instead of the army of agents that used to sell policies door-to-door and over conversations at the kitchen table, MetLife is trying an experiment that includes touch-screen-equipped kiosks at 223 Wal-Mart Stores Inc.

 

As he watched for about 90 minutes, just two shoppers stopped to check out MetLife's insurance offer. No one took a $5 card needed to activate the new coverage with a follow-up phone call. "You don't go into something like this assuming you'll have a blockbuster," said Mr. Burton, wearing bluejeans and a determined expression. "It's a learning process." 

         

MetLife won't disclose financial results for the Wal-Mart effort, but the New York insurer said in June that it expects to suffer about $40 million in losses this year on startup costs and other expenses tied to direct-marketing initiatives in the U.S.

 

Even rival insurers are hoping for the best. "As an industry…we need to change these [sales] trends," said Mark Hug, an executive vice president in Prudential Financial Inc.                Your Value Your Change Short position                        individual life-insurance unit. The Newark, N.J., company also is trying to sell more policies to middle-class Americans, including through websites and branches of banks across the U.S.

 

MetLife's premiums on policies sold to individuals last year totaled $409 million, a decline of 26% from $553 million in 2005. Industrywide sales of individual life-insurance policies are down 45% since the mid-1980s, according to industry-funded research firm Limra. About 30% of American households have no life insurance at all, up from 19% about 30 years ago.

 

The U.S. market is one "we think we can win in," Mr. Wheeler added. A Limra spokeswoman said recent signs show "insurers are finding new ways to connect with Americans."

For generations, many middle-class and lower-income families saw life insurance as a staple of basic financial planning. MetLife prospered with its strategy, born in the late 1800s, of hiring agents to canvass neighborhoods with "workingmen's" insurance, typically just big enough for burial expenses.

 

MetLife and other insurers got another big boost from "permanent life" policies, which combine a death benefit with a tax-deferred savings vehicle.

 

But traditional life insurance began losing popularity with the rise of mutual funds and 401(k)s in the 1980s. Financial planners urged many Americans to buy cheaper, bare-bones "term life" coverage—and pour more money into products aimed at helping them have enough money in retirement.

 

The lower premiums on term-life policies chased agents who rely on commissions out of the insurance business or into products aimed at wealthier Americans, including variable annuities. Permanent life policies remain popular among people in higher tax brackets because savings grow tax-deferred.

 

Another reason for the sales decline: MetLife, Prudential and other insurers that went public in the 1990s and early 2000s got more fixated on the bottom line. As a result, insurers shrank their ranks of in-house agents to save on recruitment, training and other costs. They farmed out sales to securities brokers and independent financial advisers, who also tend to have well-to-do clients.

 

Melina Ahmadpour didn't know that her mother, a hair stylist in a Las Vegas casino, had no life insurance and little savings until shortly before the mother died of cancer in 2009 at the age of 52. "No one ever talked to her about it," said Ms. Ahmadpour, now 24 years old.

 

Relatives pulled together about $20,000 for Ms. Ahmadpour and her older sister. Nearly half of it was spent on burial costs. To raise more money, the sisters put their mother's property up for sale on Craigslist.

"Strangers came into our apartment, bargaining to get the price down," she said. Ms. Ahmadpour has had 10 different jobs since her mother died and lost a college scholarship because her grades suffered. Ms. Ahmadpour believes she would have earned a master's degree by now if her mother had bought life insurance.

 

Last year, MetLife got 16% of its total operating earnings of $6.29 billion from the company's U.S. individual life-insurance business and 25% from retail annuities. In addition, about 30% of MetLife's operating income now comes from outside the U.S.

 

Prudential, the nation's second-largest life insurer, earns about half its operating income in other countries. During the financial crisis, Prudential and MetLife both acquired non-U.S. life-insurance operations from American International Group Inc.

 

Insurers have been successful at persuading companies to offer life insurance as an employee benefit. But that makes some Americans feel even less need to buy life insurance on their own, even though employer-provided coverage can be lost when a job ends and usually carries a small payout amount.

 

One rule of thumb among insurers, financial planners and consumer advocates is that a family's breadwinner should have enough insurance to replace five to 10 years of income. But only 4% of private-sector workers who have employer-sponsored policies are covered for more than two years of earnings, according to a Labor Department survey in 2013. More than 60% are covered for just a year's pay.

 

FLWS in Your Value Your Change Short position                       Unlike most industries, online sales of life insurance haven't taken off, largely because getting the best rates depends on the applicant's health and requires a review of medical records and a blood sample.

To overcome that hurdle, MetLife is developing a website that will connect to prescription-drug, motor-vehicle and other databases to verify and analyze information submitted by applicants for policies as large as $500,000.

 

MetLife also has begun selling "final expense" policies for the first time in decades. Such policies carry

payouts as small as $2,500 and are less risky to the insurer than bigger policies. Coverage can be bought with no medical questions asked.

 

Buyers dial a toll-free number, and MetLife's technology automatically routes calls to agents with the correct state licensing. MetLife is ramping up its use of television ads to promote the policies.

 

The Wal-Mart experiment began in 2012 with "insurance in a box" that was displayed on shelves. The boxes contained a prepaid card good for one year of coverage.

 

"It looked nice, but it was expensive to produce the box" and displays, Mr. Burton said. Another problem: Many shoppers were put off by having to decide the size of their new life-insurance policy at the store and pay a one-year premium at the checkout counter. It usually cost a couple hundred dollars.

 

The first kiosks were installed in 2013. After the initial $5 payment for the first month of coverage, buyers switch to a monthly premium based on gender and age. Rates are set at a "blended" level between the insurer's normal premiums for excellent and poor health and smokers and nonsmokers.

That means people with the best health can get better prices elsewhere. MetLife isn't aiming to be the cheapest seller. It wants to offer an affordable price that is easily accessible.

 

Mr. Burton said many consumers use the digital screens on kiosks to calculate how much insurance they can buy for $20 to $30 a month, working backward to the size of the policy.

 

The kiosks at Wal-Mart pitch a death benefit of as much as $50,000, but MetLife's call-center agents can sell coverage with a face value of as much as $100,000 to buyers who want bigger policies.

 

One afternoon in May, Gene Richards, 51, checked out a MetLife kiosk while waiting in a pharmacy line at a Wal-Mart in Greenville, S.C. He wanted the rates for a 65-year-old, since he hopes to retire at that age from his job as a machinist at a packaging manufacturer.

 

"Too dad-gum high," Mr. Richards said of the $66.75-a-month cost for a $20,000 life-insurance policy. "Maybe I'd do better putting money in the bank to pay for my funeral."

 

When buyers call a toll-free number at MetLife to activate the policy, employees ask about a dozen specific medical issues. Buyers with heart conditions and certain other illnesses could be offered smaller policies with two-year restrictions on payouts, according to MetLife.

 

Skeptics question whether the direct-sales approach can ever match the effectiveness of real-life insurance agents. "People still have to be moved from the intellectual 'I need to do this' to the actual doing it," said David Woods, 77, an agent since 1966 with Massachusetts Mutual Life Insurance Co.

 

MassMutual, a policyholder-owned insurer based in Springfield, Mass., remains committed to hiring and training a large sales force.

 

For now, MetLife's pilot project with Wal-Mart is limited to Georgia and South Carolina, which rank in the bottom half among U.S. states in median household income. Mr. Burton said the results there are "intriguing" enough that MetLife will expand to a couple of other states soon.

 

"I have to figure out something," said Bob Hester, a forklift driver who looked at a MetLife kiosk while shopping one evening in Commerce, Ga. He decided not to buy a life-insurance policy on the spot because "it seems like $5 here and $15 there. It adds up."

 

Yet other facts of life nagged at him. Mr. Hester has three school-aged children and almost no savings. He ought to buy a policy, he said, but "it's just taking time to do it."

Purchasing Life Insurance Directly

The Monetary Authority of Singapore (MAS) has announced that it will release details of its direct insurance product channel by the end of the month. The channel will allow consumers to purchase term and whole life insurance products directly from insurers and will be released early next year.

MAS said the products on the channel will be “largely standardized”, making them easier for consumers to understand and compare, as well as reducing distribution costs.

It added that the channel is aimed at consumers who do not require financial advice. In its annual report for 2013-2014, the regulator also announced that it is “working closely” with the industry and consumer groups to develop a web aggregator.

Initiatives such as raising admission and ongoing requirements for FA firms and a balanced scorecard remuneration framework that will recognize FA representatives and their supervisors for providing good quality advice will also be implemented next year.

The regulator is also working on complexity-risk framework to help consumers compare the complexities and risks involved in investment products.

 The regulator said it is "working to address" the “limited availability” of simple and low cost products, which it believes has lead consumers to venture into more unconventional products.

Ravi Menon, managing director at MAS said: “Many retail consumers have ventured into unconventional and unregulated financial products promising higher yields. But these products may also entail risks that are not well understood by retail investors.

“MAS has therefore decided to extend to these unconventional products regulatory safeguards that apply to capital markets.”