5 things you may not know about personal insurance in 2020

Insurance has become more important than ever these days, in light of the Covid-19 pandemic, global economic doom and gloom, and all the bad things that have happened in 2020, sending people scrambling to find some measure of protection.

Insurance policies with lower premiums and shorter terms, as well as investment-linked policies, saw increased demand this year as consumers sought more affordable coverage.

Some companies such as AIA, DBS, Great Eastern and HSBC also started offering free Covid-19 coverage for a limited period of time, while others introduced or added dengue coverage to their offerings.

More recently, local insurer Singlife also announced plans to merge with Aviva Singapore — a move that will make them one of the largest insurance companies in South-east Asia and offer more in terms of products and digital experience. 

These are just some developments that highlight how the private insurance industry is evolving and what we can expect when it comes to our personal financial planning. 

Whether you hold existing policies or are considering buying new ones, here are some things to take note of when it comes to insurance this year. 

1. You can defer your insurance premiums for up to 6 months

Paying for insurance can sometimes constitute quite a chunk of your expenses, especially if you’re paying for your parents or children too. 

Good news as the Life Insurance Association (LIA), Singapore has announced a second Deferred Premium Payment (DPP) window to defer payment of insurance premiums, after the first six-month window ends on Sept 30, 2020.  

This means that if you’re facing financial difficulties and your insurance premium is due, or your policy is due for renewal between Oct 1, 2020 to March 31, 2021, you can apply for a premium deferment of up to 6 months. 

Note that if you were already on the first DPP, you can’t apply again. First-time applicants have to approach their respective insurers for deferment and approval will be determined on a case-by-case basis. Not to worry, you’ll still be covered by your policy even if your payment is deferred. 

For those whose policies are currently on DPP and continue to face financial difficulties after the deferment period, you may contact your insurer to work out what options are best for you. 

These may include: 

• Paying in installments for 3 months 
• Extending an individual’s DPP by 3 months
• Converting to a paid-up policy, taking a premium holiday or taking an automatic premium loan (whichever is allowed in your policy contract)

The General Insurance Association also announced that it would extend the premium deferment window for general insurance policies (motor, property insurance) to Dec 31, 2021.  

Similarly, NTUC Income is also extending applications for its Income Support Schemes for its life and health insurance plans from Oct 1 until March 31, 2021. 

2. You don’t need to go through an insurance agent

Many of us buy our insurance from an insurance agent usually recommended by our friends or family, or if you were unlucky, gave in to incessant pressure from an agent and took up some policy that you now can’t get rid of without incurring a fee. 

Regardless, if you’re someone who doesn’t like to be hounded by insurance agents who just want to hit their targets and give the industry a bad name, you’ll be glad to know that there are other options out there. 

Homegrown insurer Singlife changed the game with its mobile app (and Henry Golding as its ambassador), allowing you to get on its Insurance Savings Plan that provides coverage for death or terminal illness. Its other term life insurance and critical illness policies can simply be purchased via its website. 

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FWD Singapore is also known for offering life insurance products online without the need to go through an agent — you can sign up for policies such as critical illness, endowment and term life. 

FWD’s latest product, Essential Life, is a term life insurance that offers coverage of up to $750,000 sum assured and can be renewed up to age 85. The LIA recommends that life insurance coverage should be up to 10 times of your annual income, so $750,000 is a safe bet.

You also don’t have to undergo a medical examination for this policy. Just simply make a health declaration on the application page. It’s really affordable too.

For instance, for a 30-year-old, non-smoking make, prices start from just $21.32 monthly for a 20-year policy with a $500,000 sum assured. 

The Essential Life term life policy also allows you to add a rider for cancer coverage of up to $50,000 for as low as $7 a month (for a 30-year-old non-smoking male). Note that you’ll have to be aged 18 to 40 years old to be eligible for this policy. 

3. There were changes to Critical Illness definitions 

Critical illness coverage is one of the most common types of insurance policies to get. Cancer remains the leading cause of death in Singapore — with ischaemic heart diseases and cerebrovascular diseases (including stroke) — the third and fourth leading causes of death respectively. 

In August this year, changes to the definition of the term “critical illness”, as well as certain terms and conditions used in critical illness policies, came into effect. 

These changes were to express more clearly what is and what is not covered so it makes it easier to understand when a claim is valid. Those with existing critical illness coverage will not be affected. The new definitions apply to all policies purchased from Aug 26, 2020. 

Read more about the changes to critical illness definitions to find out what’s different. 

4. Rise of micro-insurance 

One type of insurance that we’re seeing these days is micro-insurance, which offers cheaper premiums to lower income individuals. 

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One of the first micro-insurance policies in South-east Asia was Grab and NTUC Income’s Critical Illness: Pay Per Trip plan for Grab drivers that launched in Aug 2019.

Grab drivers can pay only $0.10 to $0.50 for a fixed sum assured and accumulate more coverage when they complete a trip. 

Ok… but for those of us who are not Grab drivers, there’s also NTUC Income’s SNACK. 

Launched in June 2020, SNACK is a mobile app that lets you buy micro-insurance policies for just $0.30, $0.50 and $0.70 when you perform certain everyday activities such as taking public transport or clocking steps.

And you can build your coverage for term life, critical illness and personal accidents as you continue to perform these activities. 

5. Insurance companies hiring amidst economic downturn

Other than sectors such as tech and healthcare, one industry that is still hiring is insurance. 

AIA Singapore recently announced that it has created up to 500 new jobs for fresh graduates and mid-career professionals. 

I know what you’re thinking. More insurance agents to hard sell to us? While the company is looking to fill financial services roles, it requires candidates to undergo a 10-month training period. Successful candidates will receive certification in: 

• Associate Financial Planner  / Associate Financial Consultant certification, as part of the AIA Premier Programme
• Institute of Banking and Finance Private Banking Level 1 certification
• Foundation Investment Certification accreditation by AIA Investment Management (AIAIM)

Even after this, there will be further training over a two-year period. Candidates can expect to be paid from $2,000 to $5,000 a month. 

Another insurer that’s hiring is China Life Insurance (Singapore), which also plans to recruit 500 consultants over the next 5 years. 

According to The Straits Times, China Life will hire consultants from different backgrounds including fresh graduates and mid-career professionals. Consultants have to pass exams by the Singapore College of Insurance and also go through a 90-day training programme. 

Apart from consultant roles, a quick search online also shows that there are also digital, product and tech roles available. 

Regardless of all these changes and developments in the industry, if you’re thinking of taking up new policies, it’s best to evaluate the options available out there and take what you can afford. 

For the latest updates on the coronavirus, visit here.

This article was first published in MoneySmart.