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22-08-20, 21:33
MAS acts to stop misleading sale of critical illness plans
Fri, Aug 21, 2020
Natalie Choy
https://www.businesstimes.com.sg/banking-finance/mas-acts-to-stop-misleading-sale-of-critical-illness-plans
SOME unsavoury financial advisers have tried to upsell critical illness (CI) plans on exaggerated claims that more illnesses are due to be harder to claim - a move that has prompted the regulator to step in to put a stop to it.
In response to queries from The Business Times, the Monetary Authority of Singapore (MAS) on Thursday said it received feedback on misleading insurance sales practices relating to fresh changes on CI coverage as outlined by the Life Insurance Association (LIA) Singapore.
It is understood that some financial advisory (FA) representatives, as part of their advisory process, have conveyed to customers that the scope of CI coverage would be narrower under the new set of CI definitions with effect from Aug 26 this year, and that making claims would become more difficult.
These FA representatives were found to be using such reasons to pressure customers to purchase insurance policies before Aug 26. No firms have been named.
According to MAS, the LIA had in June clarified that changes to CI names and definitions were meant to provide greater clarity to CI coverage, and that there is no change to the intended scope of coverage.
The regulator confirmed with BT that it recently issued a circular to all MAS-licensed and exempt FA firms, including insurers, to remind their representatives to not engage in such sales practices.
"FA representatives should provide proper advice to consumers and not use aggressive sales tactics to rush consumers into purchasing insurance policies or other investment products before they have taken the time to fully understand whether these products are suitable for them," said an MAS spokesperson.
In August 2019, LIA announced that people buying life insurance polices from Aug 26 this year will notice changes to definitions of critical illnesses, which may impact their insurance coverage.
Of the 37 critical illnesses defined under the LIA framework, changes have been made to the headers of 14 of them; and changes have been made in 21 of the definitions.
On June 22 this year, LIA reiterated in a press statement that the latest round of changes is meant to "express the intent of the coverage with greater clarity, so that customers do not misunderstand what is being covered and what is not".
There is no change to the intended scope of coverage when compared against CI definitions from 2014.
LIA said standardisation provides greater transparency for customers to easily assess and compare the different plans available.
Policyholders will have greater assurance in claims results with a reduced incidence of one insurer paying a claim and another rejecting it due to differences in definition applied for severe stage of the 37 common CIs.
CI insurance pays out a lump sum in the event that the life insured is diagnosed to be suffering from one of the critical illnesses, or has undergone a surgical procedure covered by the policy.
CI plans can be sold as a stand-alone policy or as an optional rider attached to a main policy.
Should a dispute arise over the definition, and the final claim outcome remains unsatisfactory to the policyholder, he can approach the Financial Industry Dispute Resolution Centre for assistance.
Fri, Aug 21, 2020
Natalie Choy
https://www.businesstimes.com.sg/banking-finance/mas-acts-to-stop-misleading-sale-of-critical-illness-plans
SOME unsavoury financial advisers have tried to upsell critical illness (CI) plans on exaggerated claims that more illnesses are due to be harder to claim - a move that has prompted the regulator to step in to put a stop to it.
In response to queries from The Business Times, the Monetary Authority of Singapore (MAS) on Thursday said it received feedback on misleading insurance sales practices relating to fresh changes on CI coverage as outlined by the Life Insurance Association (LIA) Singapore.
It is understood that some financial advisory (FA) representatives, as part of their advisory process, have conveyed to customers that the scope of CI coverage would be narrower under the new set of CI definitions with effect from Aug 26 this year, and that making claims would become more difficult.
These FA representatives were found to be using such reasons to pressure customers to purchase insurance policies before Aug 26. No firms have been named.
According to MAS, the LIA had in June clarified that changes to CI names and definitions were meant to provide greater clarity to CI coverage, and that there is no change to the intended scope of coverage.
The regulator confirmed with BT that it recently issued a circular to all MAS-licensed and exempt FA firms, including insurers, to remind their representatives to not engage in such sales practices.
"FA representatives should provide proper advice to consumers and not use aggressive sales tactics to rush consumers into purchasing insurance policies or other investment products before they have taken the time to fully understand whether these products are suitable for them," said an MAS spokesperson.
In August 2019, LIA announced that people buying life insurance polices from Aug 26 this year will notice changes to definitions of critical illnesses, which may impact their insurance coverage.
Of the 37 critical illnesses defined under the LIA framework, changes have been made to the headers of 14 of them; and changes have been made in 21 of the definitions.
On June 22 this year, LIA reiterated in a press statement that the latest round of changes is meant to "express the intent of the coverage with greater clarity, so that customers do not misunderstand what is being covered and what is not".
There is no change to the intended scope of coverage when compared against CI definitions from 2014.
LIA said standardisation provides greater transparency for customers to easily assess and compare the different plans available.
Policyholders will have greater assurance in claims results with a reduced incidence of one insurer paying a claim and another rejecting it due to differences in definition applied for severe stage of the 37 common CIs.
CI insurance pays out a lump sum in the event that the life insured is diagnosed to be suffering from one of the critical illnesses, or has undergone a surgical procedure covered by the policy.
CI plans can be sold as a stand-alone policy or as an optional rider attached to a main policy.
Should a dispute arise over the definition, and the final claim outcome remains unsatisfactory to the policyholder, he can approach the Financial Industry Dispute Resolution Centre for assistance.