Written by Chew Jing Xuan
Direct Purchase Insurance (DPI) refers to whole or term life insurance products with total and permanent disability (TPD) and optional critical illness (CI) rider that can be directly purchased from life insurers. We have addressed the pros and cons of DPI as well as where to get them so if you are interested in purchasing a DPI, here are some questions to ask yourself whether getting a DPI is suitable for you.
#1 Are you savvy enough to make an informed choice?
It may seem like an attractive idea to get much cheaper premiums for your insurance without having to deal with pesky agents trying to upsell you certain products you don’t really need.
However, let’s be honest with ourselves, buying insurance is not as clear-cut as it may seem – from comparing coverage benefits, to looking at quotes or even understanding the terms and conditions of the products. This is especially so for the average layman who may not be well-versed with common insurance terms. Insurance agents can be of great help in simplifying the process of purchasing insurance.
Purchasing insurance is a long-term commitment and it is important that we buy the right products so we don’t have to be stuck with the wrong one, or even forgo paid premiums should we decide to cancel later.
That being said, we understand that getting the right financial advice is only possible with a good insurance agent who fully understands your needs and genuinely advise on products that truly benefits you. If you believe that you are financially savvy enough to know what products you want, perhaps DPI is a good option for you. It is ultimately up to one’s discretion whether the cost-savings of purchasing a DPI at the expense of sound financial advice is worth it.
#2 Do you mind handling the claims process by yourself? How about general enquiries?
With no agents involved, you would have to contact the insurer directly should you need to make any claims or enquiries.
Getting help via the call center might be a painful process considering that they have to handle hundreds of calls daily. Also, enduring red tapes (albeit necessary) of call centres, figuring your way about claims procedure and reading through long policy documents is the last thing you would like to experience during difficult times. With an insurance agent to serve you personally, you won’t need to find yourself stuck in the mess of settling claims in times of crises.
#3 What insurance products are you looking to buy?
Current DPI products only include term or whole life insurance with TPD cover and an option to add a rider for critical illness (CI).
While DPI products have generally similar features which make them easier to compare, they might not be ideal for those looking for more comprehensive products that will better suit their needs. Policies with additional benefits or riders might be of more value for an individual, but are not offered as DPI. Needless to say, more complicated products like endowment plans still have to be purchased through agents. Therefore it is imperative for you to understand your needs and what kind of products would be able to provide the coverage you need at the best value.
#4 How much coverage do you need?
For DPI, the maximum sum assured that can be purchased from one insurer is $400,000, with a sub-limit of $200,000 for whole life DPI.
This means that if you require higher protection needs than $400,000, you would have to buy from another insurer, with declaration made during application. This then boils down to the individual whether $400,000 is sufficient coverage or whether it’s worth the trouble to purchase from multiple insurers.
Furthermore, the CI rider for DPI only covers 30 out of the 37 CIs listed on the LIA website as these CIs are the most commonly claimed in Singapore. Although the 7 excluded CIs might be less common than the rest, it could still occur to anyone. After all, isn’t the purpose of insurance to cover for the unexpected? This may be an important factor of consideration for those who want to be well-covered for all critical illnesses.
To each his own
Ultimately, it is up to you to decide which method of purchasing life insurance is best suited for your personal needs. You might even consider using a combination of both DPI and buying through an agent to get the best coverage you need. That being said, you can also consider asking our pool of financial advisers who were carefully curated to ensure that you’re engaging with advisers of high caliber.
Been doing lots of research, but not sure who to engage to take the final step? Look no further! fundMyLife connects you to credible and incredible financial advisers privately and anonymously, based on the financial planning questions that you ask. We aim to empower Singaporeans to make financial decisions confidently.
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