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Should we buy Life Insurance online or not?

By Published On: September 10th, 2014
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Should we buy Life Insurance online or not?

With rapid technological advances in the 21st century, products and goods are increasingly moving online. Everyone is becoming more tech-savvy, and it is getting harder and harder to spot people without a smartphone on the streets nowadays. Grocery stores, news providers and even stockbroking are also some of the examples we see that have progressively ventured into the world of Internet. Ultimately, it all boils down to the word: Convenience.

In my previous article, titled ‘Now MAS says we can buy Life insurance online!‘, i shared about the latest addition/ update to the Insurance industry. Yes, we can even buy Life Insurance off the web now with a click of a button, and it is rumoured to be cheaper as well. But the question is: Does buying Life Insurance online really bring about that much of convenience and cash savings? Or, does it bring about the opposite instead?

1) First of all, not all Life Insurances are available over the internet, and the options to customise are pretty limited actually. For example, if I want to buy a Whole life plan for myself, the highest coverage that I can acquire is $200,000 per policy and only 2 modes of payment are available: up to age 70 or 85. There will not be an option for customers to pay a limited number of years (e.g. 20 years limited premium). Unless one is totally alright with the idea of paying premiums way beyond retirement, most of my clients would shun away from the thought of paying so long for insurance.

As for Term Policy, the only options i have would be 5 years (with renewability feature), 20 years term, or up to 65 years old.

As for endowment/ savings plans and even Investment-Linked Policy, they could not be bought off the shelves.

2) Next, there will be no more servicing nor advice given by Financial planners.

To be fair, apart from the few black sheeps that we see in every industry, majority of the Financial planners out there are all hardworking people and giving genuine, helpful advices to their clients. In fact, the Financial Advisory Industry works in such a manner whereby the black sheeps would be self-eliminate themselves out of the business because they are not doing the business the sustainable way, and the rest who stick around for the longest time are always highly regarded by their fellow clientele. Imagine Singapore without Financial advisers giving the proper advice that you need for you and your family, there would definitely be situations whereby people buy the wrong policies.

Besides, in a world without Financial Planners, everything has to be DIY. Buying Insurance isn’t as easy as swiping the credit card to buy a selfie-stick off Qoo10.sg. Imagine filling up the tons of administrative work all by yourself, and to do claims on your own as well when you need a Financial Planner the most, how does that even sound?

3) But the worst of all, there will be a potential increase in rejected claims in the future. For example, if i am to be down with a Critical Illness and I approach the Insurance company to make a claim, i may be denied of the claim and end up with no compensation at all. This is a perfect result of misappropriate filling of the application form or a non-declaration of one’s pre-existing conditions. Unaware to many, the role of a financial planner is not only to give proper advice and administer the right solution, but also making sure the application goes through smoothly and helping out with the claims ultimately.

In conclusion, buying Life Insurance directly may sound simple, but there are many hidden steps unknown to many that may cause more inconveniences instead. And like the old saying that goes,” If is not broken, don’t fix it”!