Insurance Basics in Singapore

How it works

• Life insurers in Singapore are regulated by the Monetary Authority of Singapore (MAS); insurance representatives must be registered on the MAS representatives register, which can be checked online.
• Before recommending, licensed advisers must understand the client’s financial situation, needs and risk tolerance (needs analysis) and explain the reasons for the recommendation.
• The policy contract, the Product Summary and the Benefit Illustration are the three most important documents for understanding a policy.

Key concepts

Concept	Meaning
Free-look period	After receiving a life policy you have a 14-day review period, during which you can cancel it and generally get back the premiums paid (actual costs such as medical check-ups may be deducted; investment-linked policies are calculated by unit value).
Guaranteed and non-guaranteed	Benefits stated as “guaranteed” are paid according to the contract; “non-guaranteed” benefits depend on the insurer’s future operating or investment performance and may be higher or lower than illustrated.
Benefit illustration	Participating and investment-linked policies use two illustrative rates of return to show possible outcomes; neither rate is an upper or lower limit.
Beneficiary nomination	Revocable nomination: can be changed at any time, with no restriction on beneficiaries. Trust nomination: only a spouse and children can be nominated; once made, the policy benefits belong to the beneficiaries, and changes require the consent of the trustee or beneficiaries.
Policy Owners’ Protection Scheme	Administered by the Singapore Deposit Insurance Corporation (SDIC), it provides a limited level of protection for eligible policies if an insurer fails.
Duty of disclosure	You must truthfully declare your health, occupation, financial and other information when applying; failure to do so may lead to claims being rejected or the policy becoming void.

Usually suitable for

• Individuals and families learning about insurance in Singapore for the first time
• People who want to check the terms of policies they already hold

Risks to note

• Surrendering early usually means losing part of the premiums paid, especially for long-term policies.
• Policies in foreign currencies carry exchange rate risk.
• Cost structures differ considerably between policies; read the cost section of the Product Summary.

Questions to ask

• Which benefits of this policy are guaranteed?
• How much would I get back if I surrendered in the early years?
• What are the fees, and where are they deducted from?
• Which type of beneficiary nomination suits me better?