Buying Direct Purchase Insurance
Direct Purchase Insurance (DPI) are term and whole life insurance products that you can buy directly from a life insurance company, without paying a financial advisory (FA) representative.
As DPI is sold without financial advice, no commission is charged, and you pay lower premiums as a result. The broadly standardised features also make it easier for you to compare products when deciding which DPI to purchase.
DPI products can be identified by the prefix “DIRECT” in their product names.
Who it is for
If you know which type of insurance will meet your needs, how much coverage you need and you don’t need any financial advice for your purchase, DPI is for you.
However, if you’re unsure about how much coverage you need or what insurance to buy, you should consult an FA representative.
Types of DPI
The two main types of DPI available are:
- Term life with total and permanent disability (TPD) cover and an optional critical illness (CI) rider
- Whole life with TPD cover and an optional CI rider
Both types cover death and terminal illness.
Here are the key differences between the two types of DPIs:
| Feature | Term DPI | Whole life DPI |
|---|---|---|
| Term | Provides protection coverage for a fixed period of time. | Provides life-long protection coverage or up to a specified maturity age (e.g. 99 years old). |
| What it offers | Pure protection with no savings or investment feature. | Protection and an investment component. Premiums are invested to build up cash value in addition to paying for insurance coverage. |
| Suitable for | Insurance coverage for a limited period of time (e.g. duration in which your dependents are financially reliant on you). | Life-long insurance coverage with an investment component. |
| Cost | Generally cheaper as there is no investment component. | Typically more expensive, as premiums are also invested to build cash value. |
| Cash value | None. | Builds up over time. Note: There may be no or little cash value if you end the policy in the first few years as most of the premiums would have been used to pay for the initial administrative expenses. |
What DPI covers
The features of DPI are broadly standardised for easy comparison. But do read the small print, as not all DPI products are the same across life insurance companies.
Protection amount
You can buy protection of up to $400,000, based on your needs:
Sum assured
- Term DPI: $50,000-$400,000 per insurer
- Whole Life DPI: $50,000-$200,000 per insurer. The maximum sum assured is aggregated for all Term DPI and Whole Life DPI at $400,000
Entry age
- Minimum age: 18 Years old
- Maximum age: 45, 60 or 65 years old depending on the type of DPI purchased
Amount of TPD benefit
- 100% of sum assured
Amount of optional CI rider benefit
- 100% of sum assured (except for illnesses that require angioplasty and other invasive treatments for coronary artery)
- For illnesses that require angioplasty and other invasive treatments for coronary artery, the payout will be 10% of the sum assured, subject to a maximum amount of $25,000
Coverage period
You can choose different coverage periods for a term life DPI. For whole life, consider if you can afford to pay the premiums up to the age you have chosen. Don’t forget, you may not be earning any income after retirement.
| Period | Term DPI | Whole Life DPI |
|---|---|---|
| Policy coverage period | * 5 years (renewable) / 20 years (non-renewable) / Up to age 65 (non-renewable). TPD and optional CI benefits cover up to age 65; death and terminal illness benefits cover up to age 85. | Up to death of insured or up to a specified maturity age (e.g. 99 years old), except for TPD benefits which will be up to age 65. |
| Premium paying period | Same as policy coverage period. | Up to age 70 or age 85. |
Most life insurance companies offer DPI. You may choose to buy directly from their customer service centres or websites, if available.
How to buy DPI
If you’re considering DPI, make sure you understand your own insurance needs. Determine if you can afford the insurance policy and how much coverage you need.
Shortlist three to four products. Compare their features and benefits on compareFIRST, an online portal that helps you compare products among different insurers.
You can compare the different types of DPI, as well as between DPI and non-DPI, in terms of:
- Premiums
- Features
- Benefits
- Cash values
- Distribution cost
Once you have picked the product that meets your needs, you can buy directly from the customer service centres or websites (if available) of the life insurance company.
Before purchasing any DPI, go through the DPI Fact Sheet and complete the checklist that you will receive from the life insurance company. These documents set out important information that you should consider when buying DPI.