Health insurance products make a comeback

Stumbled upon a series of AIA one-paged poster on the Straits Times a week ago. Followed by other scream-in-your-face series by HSBC and NTUC Income (today), if I remember correctly.

A sign of market revival in health insurance products?

Following the collapse of AIG due to the financial downturn, Great Eastern has become the top player locally. I would think this means GE has the greatest market share; hence the almost ubiquitous ads on double-decked buses.

My take is that there will be a gradual surge in life/health insurance products selling in time to come. But whether or not this is done in compliance with MAS or Life Insurance Association's (LIA) guidelines, and in compliance with the Insurance Act, is another story.

You shall hear more from your colleagues, friends, relatives and/or indirect contacts of your personal network who are all insurance agents.

Photo captured from The Straits Times, 14 Sept 2009
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If there's any similarity

in healthcare concerns between Singapore and the US, it's that the people in both countries severely lack health insurance. A study conducted by NTU Professor David Yee reports that Singaporeans are grossly underinsured by two-thirds of what is needed; in the US, it has become common knowledge that nearly 50 million are, altogether, uninsured.

While the US administration is still deliberating on the insurance approach needed--health insurance cooperatives vs. government-run plan--with President Barack Obama doing what it takes to appease multiple stakeholders of one of the world's most abused healthcare system... thankfully, Singapore has in place a health insurance system that is more sound and stable and less subject to the vagaries of politics.

In the US, healthcare reform is politically driven by the different aims between the Democratic and Republicans. Whereas in Singapore, the situation is more controlled with the insurance department of the MAS already taking steps to clamp down on incorrect and unethical sales advisory conducted by insurance agents.

In an Aug 21 article in the Straits Times, it is reported that the average Singaporean "needs life insurance protection of $494,851. However, his existing life cover is only $165,628 on average, even after including mortgage insurance and CPF savings", which translates to an alarming shortfall to the tune of over $300,000.

The article lists the following as what the sum insured of the insurance policies should cover, in the event of death of policyholder:

• Outstanding debts and funeral expenses
• Housing costs
• Allowance to parents
• Children's expenses, including education

And this lack, according to MAS, has to do with the fact that insurance advisers are known to promote products that yield most commissions, rather than those that meet the needs of consumers.

Not forgetting that the nature of life insurance is to provide long-term protection to policyholders. Life insurance, contrary to unit trusts, investment-linked plans or penny stocks, is not an investment, but a form of protection of a person and his family against future, unknown risks.

Unfortunately--I personally feel it is lamentable that--we have left the decisions of insuring our loved ones against fortuitous risks to supposed [untrained] insurance advisers that belong to a system that continues to be unregulated and is made up of agents who do not know what to do when a claim arises or who disappears altogether after a few years since policy inception.

Agreed? Do you have similar experience with agents who do not conduct themselves in meeting your insurance needs in healthcare?

Reference articles: "State-run insurance plan may be ditched", ST, 18 Aug 09 and "S'poreans grossly under-insured: Study", ST, 21 Aug 09

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