Things to Watch Out for


Long term affordability

Some, like life insurance policies, are long term commitments. So make sure you buy what you need and what you can afford. It could be a costly mistake if your policy fails to meet your expectations and you don’t have the insurance protection you want when you need it. Also, some life insurance policies build up cash values over time. If you terminate such policies prematurely, the cash value you receive can be substantially less than the premiums you paid.

While you may want to provide for your dependants’ current lifestyle after you are gone, do consider carefully if the premiums are affordable. Remember, you will have other expenses and financial commitments and if you are unable to keep up with paying the premiums, your insurance policy may lapse or be terminated.

Bundled insurance protection and investment products

Some life insurance products are bundled, i.e. they provide both insurance protection and build up cash values or investment benefits. Such products cost more than comparable pure insurance products. If you do not need to build up cash values (you might prefer to invest in other financial products) you could consider term insurance.

But if you are considering a bundled insurance-investment product, make sure it covers your insurance needs first. Part of your premiums will pay for insurance coverage and the rest will be invested (after meeting certain charges). If you are trying to keep premiums low, do not accept lower insurance coverage in return for building up cash values, or your dependants may not be adequately protected.

Short-term policies

Some insurance policies may be shorter term or meant to be renewed upon expiry. You need not always renew the policy with the same insurance company. Do shop around to see if you can find better terms.

Switching

If you are thinking of replacing a life or health insurance policy, make sure the new policy covers you for all the same conditions as the previous one. Your health may have deteriorated since you bought your old policy, so make sure any medical or health conditions you now have are not excluded under the new policy.

What limitations are there?

Do find out if the policy has any exclusions. In the case of health insurance, find out how much co-insurance and deductibles you have to pay first before the policy reimburses your medical bill.

Shopping around and getting comparisons

Get a few quotes from different insurance companies and compare the details of the coverage provided. Cheaper policies will not be more attractive if they do not provide the coverage you want.

Disclosure

You must truthfully disclose all the information asked for in the proposal form (application form), even if you are not sure whether to include something. Make sure that the form is properly completed. If you spot any inaccuracies or missing information, you must ask for the document to be amended immediately.

Do not accept an insurance policy based on inaccurate or missing information as it could lead to the policy being voided (or invalidated) and the insurance company will not pay out in the event of a claim.

Check with your insurer if and when you need to tell them of changes in circumstances.

How do you submit a claim?

Most life insurance companies’ websites will provide instructions on submitting a claim. Do visit the websites for more information.

Depending on the type of claim, the documents to be submitted will include the following:

  • Claimant’s claim form
  • NRIC(s) of claimants
  • Documents to support the claim, as indicated in the claim form

Once all the required documents are received, the insurer will process the claim and advise the claimant on the outcome. In some general insurance cases, an insurer may appoint a loss adjuster who will look into the circumstances of the loss.

14-day free look (Cooling-off period) for life, accident and health insurance products

All insurance companies grant a 14-day free look period. It starts from the date you receive your policy document. During this period, you should review your policy carefully to see if it meets your needs.

If you decide that the policy does not suit your needs and you do not want to keep it, write to the company to give them notice of your intention to cancel the policy. Written notice must be given to the company within 14 days from the date you received your policy. The company will refund all your premiums less medical and other expenses they have already incurred. If your policy is an investment-linked policy, the insurance company may, after deducting any medical expenses, reflect any change in the market value of the units the policy holds when working out how much to return to you.

How can you stop telemarketing calls?

You can ask the financial institution to place your contact details on its Do Not Call List.

Under the CCAS guidelines, financial institutions should maintain a "Do-Not-Call" list for consumers who request not to be called for or on behalf of any particular goods or services.


The above information is prepared in collaboration with the Life Insurance Association of Singapore and the General Insurance Association of Singapore.