Discover Discuss Compare Blog About Us

Still waiting ? It may cost you 12% more in insurance premium.

Posted 8 November, 2015 by Surely
in Pitfalls to Avoid

Life Insurance Association of Singapore (LIA) had released a Life Industry Result for Jan – Sep 2015.
Basically there is a 7% increase in growth in the 3rd quarter.
So if you are working in the life insurance industry, do expect a fat bonus !

However that is not what piqued my interest.
With yearly growth in life insurance, is it beneficial to us ? So here we go – a long hard look into the statistics to find that out.

LIA

Click to enlarge

This is the Life Insurance Statistics for number of policies, Premium collected and Sum Insured for both ILP and non-ILP from 2010 – 2014.

Number of life policies, premium and sum insured have risen across the board, except for ILP policies which has a general decreasing trend.
Generally, we are buying less ILPs but each ILPs is now costing more !

 PopulationPolicy per PersonPremium per PersonSum Insured per Person
Non ILPILPTotal

Non ILPILPTotal Non ILPILPTotal
20105,076,7002.000.302.30$1,414.06$278.12$1,692.18$78,820.15$16,498.029$95,318.17
20115,183,7002.040.292.34$1,545.94$303.57$1,849.51$83,340.12$17,132.02$100,472.15
20125,312,4002.070.282.36$1,675.15$318.23$1,993.39$88,931.47$17,571.68$106,503.15
20135,399,2002.100.272.38$1,914.19$330.30$2,244.49$95,768.71$17,838.49$113,607.21
20145,469,7002.120.262.39$2,094.86$352.24$2,447.10$103,058.85$18,166.92$121,225.78

I decided to take Singapore population (from Singstat) into account.
Now we can see how many insurance plan, premium and sum insured that an average person in Singapore is having.
Each person has, on average, covered his life for $121k in year 2014, up from $95k in 2010.
Increase in coverage is definitely a good thing, showing that the Singapore populace is gaining financial awareness.

Non-ILP analysis

 Premium per policySum Insured per policySum Insured per $1 premium
2010$704.94
$39,293.68
$55.74
2011$754.38
$40,667.68
$53.91
2012$805.70
$42,773.46
$53.09
2013$908.02
$45,429.06
$50.03
2014$984.58
$48,437.34
$49.20

The statistics are further examined but for non-ILP product only.
Unsurprisingly, each policy costs more but provides more coverage as time progresses.
An average non-ILP plan will set you back by $984 and at the same time, covers you for $48,000.

The last column is where things get really intriguing.
Every dollar you pay in premium, you are getting LESS and LESS in coverage !! In 2010, a regular consumer will get back $55.74 for each dollar whereas he/she will be covered for only $49.20 for the same dollar in 2014.
That’s a 12% decline, if you are keeping scores at home.  

ILP analysis

 Premium per policySum Insured per policySum Insured per $1 premium
2010$917.67
$54,435.00
$59.32
2011$1,029.20
$58,081.26
$56.43

2012$1,122.16
$61,960.45
$55.22
2013$1,204.49
$65,050.96
$54.01
2014$1,313.38
$67,737.17
$51.57

Next, the ILP shows a similar direction.
An average ILP costs and cover more but provides less value-for-money from 2010 to 2014.Since typically ILP is purported for investment returns, it is not necessarily a negative occurrence because higher percentage of the dollar may be going towards the investment units.
However, currently I am unable to find any data to support the hypothesis.

Conclusion
We are happy to report that there are some goods and bads in our data analysis.
The general population are getting more policies and coverage which reflects a positive outlook for insurance industry.
At the same time, insurers seem to be providing less Sum Insured for every dollar. Not a very good trend for the consumers.

However, we acknowledge that the above study may not be comprehensive due to data shortage. Therefore, we will leave you with some underlying questions.

  • Are Singaporeans (Citizens & PRs) really buying more policies and coverage, or the increase is due to influx of financial savvy immigrants ?
  • What are the reasons behind the decrease in Sum Insured per dollar ? Less term & wholelife policies ? Increasing claims ?
  • Although there is an increase in Sum Insured per person, is the coverage sufficient ?
  • Will the DPI (Direct-Purchase Insurance) improves the Sum Insured per dollar ?

We hope to address the above questions in depth when the necessary data is available.
Do let us know if you have leads to the information!

www.ClearlySurely.com aims to eradicate the knowledge gap between consumers and Life Insurance. Our Vision is that one day, every Man, Woman, and Child will be properly insured.

Leave a Reply