M9 100-200

Acknowledgement of Conditional Acceptance

  • Direct life insurers must inform clients of any conditions that may apply to their policy acceptance, such as:
    • Special exclusions
    • Additional premium loadings due to underwriting assessment
  • Client acknowledgment is required to ensure they understand these conditions before policy purchase.

Incorporation of Prominent Statement(s)

  • Financial advisers must alert clients prior to completing a life policy purchase online about important aspects, including:
    1. Policies are not savings accounts or deposits.
    2. Premiums paid may not be refunded if the policy is terminated early.
    3. Benefits may not be guaranteed.
    4. 14-day free-look period post-purchase.
    5. Clients can request explanations of product features from the adviser.
    6. Seeking independent advice on policy suitability is recommended.
    7. If clients decide against additional advice, they should assess the policy's suitability for their needs.

Encouraging Use of Tools and Calculators

  • Clients should use Annex B tools to:
    1. Calculate required life insurance coverage.
    2. Check premium affordability against their income & expenditures.
    3. Compare Direct Purchase Insurance (DPI) and other life policy options to ensure suitability for their financial needs.

Handling Queries, Complaints, and Claims

  • Insurers must provide clear communication channels for addressing client inquiries, including phone and email helplines.
  • Important information regarding the claims process and complaint filing should be easily accessible.

Internal Controls, Policies, and Procedures

  • Insurers must have measures to address risks related to:
    1. Money laundering and terrorism financing.
    2. Technological risks through:
      • Robust technology risk management frameworks.
      • Strong system security, reliability, and recoverability.
      • Business continuity plans for online channels.

Application of the Guidelines

  • Insurers must demonstrate their adherence to these guidelines. If deficiencies are noted, authorities may impose additional requirements or measures to be taken.

Important Concepts in Life Insurance

  • Term Insurance: Temporary coverage for a fixed period, with no payout if the policy expires without a claim.
    • Level Term Insurance: Fixed premium and sum assured throughout the term.
    • Decreasing Term Insurance: Coverage decreases over time, often linked with loans or mortgages.
    • Increasing Term Insurance: Coverage increases to counter inflation, less common.

Riders (Supplementary Benefits) Overview

  • Riders allow customization of basic policy benefits, including:
    1. Waiver of Premium Rider
    2. Total and Permanent Disability (TPD) Rider
    3. Critical Illness Rider
    4. Additional benefits for specified conditions under the policy.

Detailed Explanation of Selected Riders

  • Waiver of Premium Rider:

    • Allows premiums to be waived if the insured suffers from TPD or specified critical illnesses.
    • The waiver may have exclusions for specific causes, such as self-harm or involvement in illegal activities.

  • Critical Illness Rider:

    • Provides a lump sum payment upon diagnosis of covered critical illnesses.
    • Two types exist:
    1. Acceleration Benefit - advances a portion of the death benefit if a critical illness is diagnosed.
    2. Additional Benefit - pays out a separate sum, maintaining the full coverage amount of the main policy.

Conclusion

  • Riders enhance flexibility and coverage, focusing on maintaining client protection needs effectively through tailored solutions.