The first impression about Life Insurance is unsavory, to say the least.
Everyone has heard of some rogue Insurance agent selling some overpriced policy to some poor old lady who can least afford to pay the premiums. Stories abound about rejected claims, fraud, and misrepresentation – the list goes on.
The average man on the street can be forgiven for having a less than stellar impression about Life Insurance. But did you know that over the years, there has been various safety nets, clauses, and organizations that are entirely dedicated to ensuring consumer interests are protected?
You may not have heard of the following Guardian Angels, but rest assured they are always around to protect you.
Carry on reading when you are ready to have your old perspective blown to pieces.
Guardian Angel 1: The Free Look Period
What is it
The most important Guardian Angel, in our opinion. This is a clause that comes with every Life Insurance Policy, stipulating that the consumer has the right to a full refund of premiums within 14 days of policy inception.
This is an option given to every policy owner, exercisable at his or her own sole discretion. Yes, the policy is cancellable for any reason at all, even if you do not like the paper it was printed on.
How to use it?
From the moment your policy becomes “live” or is incepted, the 14 calendar day countdown begins. Should you be not entirely satisfied with the suitability of the policy, you may inform the insurer (in writing) that you wish to cancel the policy.
The Insurer will be obligated to return the full premiums you paid (less any medical examination fees incurred in the application process).
For Investment Linked Plans, you also have to bear the potential losses if the fund value drops within the period. You will not be awarded any gains though. No free lunch in this world!
Guardian Angel 2: Singapore Deposit Insurance Corporation (SDIC)
What is it?
The SDIC is a company limited by guarantee that is designated by the Minister to be the deposit insurance and policy owners’ protection fund agency. As SDIC is a company limited by guarantee, it has no shareholders but it has members who were appointed by the Minister.
In other words:
It is meant to be a government administered company that protects the interests of small deposit holders and Policy Holders (against the failure of banks, Insurers, or Financial Institutions in general).
You have a safety net provided by the government that prevents you from losing all of your claims or cash value in your insurance policies, in the unlikely event that an insurer goes bust.
How to use it?
No action required on your part. As far as insurance goes, SDIC administers a the Policy Owners’ Protection Scheme. This scheme applies to insurance only, and there is a separate scheme that covers bank deposits (Deposit Insurance Scheme).
If you really want to know:
The Policy Owners’ Protection Scheme (PPF Scheme) protects policy owners in the event a life or general insurer which is a PPF Scheme member fails. The PPF Scheme provides 100% protection for the guaranteed benefits of your life insurance policies, subject to caps where applicable. For example, for individual life and voluntary group life policies, there are aggregate caps applicable, namely S$500,000 for the guaranteed sum assured and S$100,000 for the guaranteed surrender value per life assured per insurer. The PPF Scheme also provides 100% coverage for the types of general insurance policies covered under the Scheme. No caps are applicable for protection of your general insurance policies.
Insurance for your insurance. Not bad at all. We wrote about it waaaaay back in the day, read about it here.
Guardian Angel 3: Financial Dispute Resolution Centre (FIDReC)
What is it?
An independent and impartial institution specializing in the resolution of disputes between financial institutions and consumers.
FIDReC provides an affordable and accessible one-stop avenue for consumers to resolve their disputes with financial institutions. It also streamlines the dispute resolution processes across the entire financial sector of Singapore.
They provide independent adjudicators who do not any affiliations with the Insurers or even FIDReC. These adjudicators are selected through a stringent process and are made up of judges, lawyers, and retired industry professionals.
How to use it?
If you have a dispute with your insurer regarding your policy and are unable to resolve it satisfactorily, you can approach FIDReC for help.
As long as the amount disputed is $100,000 and below, FIDReC is able to adjudicate the dispute. While their adjudication is by no means binding, it provides an inexpensive way for the layperson to settle disputes in a legal setting without having to actually go to court (which can be costly and lengthy).
For more information about FIDReC, click here.
Guardian Angel 4: Conditional Interim Cover
What is it?
The final Guardian Angel of Insurance might just also be the most obscure as well. It goes by different names such as: Interim Cover Against Accidental Death, or Interim Accidental Death Benefit.
This is a temporary accidental death insurance that most insurance plans provide you while you apply for a policy. Because Insurance plans are not “live” the moment you hand over the premium and application forms, there is often a lag period between application and actual policy commencement.
Conditional Interim Cover is meant to address the risk of accidental death of the applicant during this lag period, which can take anywhere from a few days to a few months (especially for the complex cases).
This Interim Cover can be sizable in some cases, so do not scoff at it.
How to use it
Hand in all the relevant application forms as well as the premium, when you apply for any policy. The Conditional Interim Cover will be activated once the insurer receives the forms as well as the premium.
Do note that if the complete set of forms together with the premium must be received together, for the Interim Cover to be activated.
There were documented cases (albeit rare) where premiums were not submitted punctually, and the applicant’s estate could not claim the Accidental Death benefit this Interim Cover confers.
This revelation article was meant to demonstrate that Insurance is more friendly and accommodating than most people think.
There are various safety nets, consumer friendly clauses, and organizations that are dedicated to making the customer experience of purchasing insurance a positive one.
Share this article with your friends, family, and colleagues! Who knows, they may need angels of insurance on their shoulder as well.
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.