I joined the industry in 2001 while I was pursuing a Mechanical Engineering degree at the National University of Singapore. That gives me more than 2 decades of observing how things has evolved over the years. I think this post might be a reflection piece on my part as I document my perspectives on the evolution.

Forms and Signature – Physicals transition to electronic

I earned decent enough to support my own car during university. In the boot of my car was a file divider rack that contained various forms for various policy service changes. It carried various brochures for the many products that the insurer had at that time. Proficiency with forms was important to minimize back and forth return trips to the customer. To think that I even kept a thumbpad for persons who prefer to use thumbprint when it comes to putting down their signature. No one I knew, bit their thumb to affix their blood on any piece of paper form, in case you are wondering.

When camera phones were not so prevalent, having a digital camera to take photographs of the person’s NRIC was a norm because the insurer required a copy as part of case submission. I had the Casia Exilm back then. Phone cameras eventually killed those range of digital cameras anyway.

Some agents went as far as to owning portable printers to generate benefit illustrations. Those disappeared quickly when the stylus came about to capture electronic signatures on those forms instead. Thank God that trees were saved as the number of pages and documents for case submission simply grew and grew… and still growing actually. All in the name of disclosure and facilitating buyer awareness before committing to a policy.

When I started out, rate books were already gone. Those are a part of history definitely, but I was also handling cash premium payments from customers to be handed over to the cashier. The practice slowly gave way to cheques only, and now cheques are starting to phase out or already phased out.

Laptops of the past have now given way to mobile tablets of today. Brochures are available on company websites and all forms are pretty much have their electronic equivalent now.

Products then – Par and Non-Par

Back when I started out, there were non-par whole life policies with absolute guaranteed cash values already specified for the end of each policy year. There were of course the participating plans, either with cash dividends or reversionary bonuses. People do and still do mistake reversionary bonuses as cash bonuses.

Reversionary bonus is an insurance amount which also has a cash value of its own, depending on age. This means the cash value of the same $1000 reversionary bonus increases with age. You can surrender the reversionary bonuses for their cash value without affecting the basic policy.

Cash bonuses can be left to accumulate with the insurer at a rate generally higher than rates of bank fixed deposit accounts. They can be withdrawn anytime without affecting the basic policy. And of course, some thought that at some point in the future, it can be used to fund premium payments moving forward past that supposed critical year.

But nope, past performance is not indicative of the future, and projections do fail. People were unhappy that they were told to keep paying for that particular participating whole life policy with cash bonuses.

The insurers realize that people did not want to keep paying for their insurance policies for WHOLE life and there came about Limited Premium payment whole life plans. The rest became history. So came limited premium endowments and today we even have limited premium term-to-99 plans.

Moving on, came those single premium whole life policies even, the Universal Life. Which many well-heeled persons have the idea of implementing and straightaway borrow against its cash value.

Now I did not mention about the infamous investment linked plans because I already have a separate write up on it. Knowing its history provides context to why it came about and the problem it sought to solve. I am neutral about it, only that it is to be deployed when you properly understand it and the fees that come with it. Are ILPs good? – you can read here.

Definitions and Features

Compiling portfolio summaries was the fastest way to gain knowledge and experience back then. From there can see the various insurers’ definitions for various insurable events. So critical illnesses’ definitions were not standardized back then but both the Life Insurance Association (LIA) and Monetary Authority of Singapore (MAS) decided that it just makes sense to. Why would one insurer pay out a lump sum to a cancer patient but another did not for the same cancer condition? The answer lay with the definitons that were not standardized. Cancer payouts for the standardized definitions were henceforth for stages 3 and 4. And one more thing, the cancer had to be of a major organ, so breasts and testes are not considered major organs where cancer at such locations will trigger a payout.

Insurers then had coverages that cater to female dreaded diseases, covering ovarian cancers as well as osteoporosis. I think United Overseas Bank’s ladies’ credit card inspired a lot of businesses to target specifically women. Insurers are not exception.

As sure as there is market demand, so will supply appear to meet it. Early critical illness (CI) policies came about to cover earlier stages of cancer amongst other conditions. They are a step up from normal CI policies that had standardized definitions. They costs more than normal CI policies and rightfully so. If normal CI policies are earthly pricing, early CI policies are sky pricing. Is there heavenly pricing? Yes, those would be multi-pay CI policies. The problem with conventional CI policies is that once there is a payout, the policy ends, and you are also uninsurable in most cases. Cancer is known to recur and people want to be covered still, plus be covered for other CI conditions while at it too.

Change in Life assured is actually a step up from secondary life assured. For legacy considerations, regular payouts from a policy can be extended across one generation to the next. Such features were absent from the past, when only ownership of the policy gets assigned to another, with no changes to the insured person. Some trivia pertaining to life insurance, is that the policy owner, insured person, beneficiary and payor can be 4 different persons. A grandfather who so loves his grandson can be the payor of a life insurance policy while his son is the owner of the policy while the insured is his daughter-in-law and the beneficiary of the policy is his grandson.

Total Permanent Disability (TPD) coverage use to end at age 65 some 60, now I do see 70 and 75. Definitions then was what I called 6 choose 2, ie 2 arms 2 legs and 2 eyes you got to have a loss of use of either 1 eye 1 arm or any combination of 2. The definitions have expanded these days to include activities of daily living (ADL). Some cases require that you are unable to perform at least 3 ADLs, or in some cases 2 ADLs, to qualify for the TPD payout. This is a good development.

These days, life policies allow you to buy another policy without evidence of insurability at specific life events (newborn baby arrival for example). Such features are unheard of in the past. But more likely a revamp of the OPAI (option to purchase additional insurance) rider of past.

Recently there are policies that allow the policyholder to make policy value withdrawals without penalties albeit terms and conditions apply. Case example here is NTUC’s Invest Flex Vantage. It allows charge-free partial withdrawals during specific life events. The plan allows charge-free partial withdrawals during the minimum investment period when certain life events occur, including turning 21 or 65, marriage, purchasing a residential property, or becoming a parent. I think this has the effect of improving the liquidity of insurance plans. I am expecting more insurers to jump on this bandwagon soon. Then the facilitating decision making framework needle, tilts at better liquidity compared against direct CPF contributions for long term wealth accumulation.

I noticed Tokio Marine just launched an ILP (investment linked plan) that has a feature that resembles an advisory wrap fee for ILP funds. They called feature Optional Advisory Service Fee (OASF). I definitely think the other insurers are going to follow suit. For the longest time, insurer representatives are not financially incentivized to watch over the clients’ ILP portfolio once incepted. This is quite a game changer in my opinion.

Rules and regulatory changes drive narrative changes

Back in the days before private insurer shield plans came about, there was only medishield paid from medisave account and people had Hospital & Surgical (H&S) riders attached to their life policies. When private insurer shield plans came about, it was on a replacement basis, that means the private shield plans replaced medishield. One upmanship competition led to increasing yearly as well as lifetime policy limits, then came moratorium underwriting and subsequently as-charged shield plans to guard against medical inflation. The problem was the private insurers were cherry picking good risks over time which led to a poor risk pool left behind with medishield. Furthermore, there were instances where the agent should not have replaced the medishield that was already covering the pre-existing condition.

So the integrated plan came about, where everyone with CPF had to be on basic medishield and allowed to enhance it with any private insurer. Part of the premiums collected by the private insurer will be paying for the medishield as a base that will even cover pre-existing conditions regardless of the number of integrated private shield plan switches a person makes.

Previously, people were not allowed to contribute directly into their CPF special accounts for retirement planning. If they contribute, it has to across all 3 accounts: ordinary, medisave and special. Now you can directly contribute to CPF special account (before age 55 that is) as part of your long-term retirement planning. 4% returns is not shabby to me considering the mental freedom though the monies are locked up for a specific goal.

Online influence and lesser information asymmetry

The industry churned enough representatives for more and more people to come to realize the alignment of interest issues with the industry. It is just too bad that simple budgeting and voluntary contribution (as opposed to a financial commitment) to the CPF special account, does not earn commissions. Selling a financial product and getting people to take up financial commitments do. At the very core of things, when financial products are developed, actuaries already factor in distribution costs. If you fully understand this statement, commissions cannot be zero.

For a long time, finfluencers escape being regulated by indicating that their online advice is simply generic, and not specific because they did not collect information before any recommendations. There are good ones out there. But there are bad apples as well. Some have sponsorship deals which might taint objectivity, but some are scams too. Well regulations are coming so this space will develop further. I believe the definition of financial advice will be expanded to include “reasonably expect the reader to act on the advice or recommendation.” and so remove the excuse of not collecting specific information to be deemed financial advice, thereby requiring a license.

FIRE – Financial Independence Retire Early is quite a movement and an ongoing one. I am neutral about it, as with most things actually. Yes, I can be quite an emotionally detached person. But I think this neutrality grants me an open mindedness to be as unbiased as possible as an advisor representative. FIRE folks keep themselves up to date and their existence have removed much of the information asymmetry there is out there.

What is to be anticipated in future?

Some changes can be instantaneous but most take time. New entrants into the Singapore market have been reluctant to sustain an agency force so more partnership distributions will take place. New brokers bring down transaction-based revenue will lead towards the push for more investment advisory revenue. More straight through processes harness technology to replace formerly pen and paper methods of onboarding and servicing. SGfindex is capable of collating data across financial institutions, for free.

I think it is possible for an artificial intelligence to scrape my facilitating decision making method off my website and apply on a specific use case. But that is for you to pull off. Then much of the Do-it-yourself (DIY) heavy lifting is done. I should look into a prompt for that. So watch this space.

Pardon my lack of time stamps for there will be too many, but which I think will not change the fact that things are constantly changing. Just as case law changes drive the legal landscape evolution, circumstances and needs drive the changes in the financial advisory industry as well. Thanks for reading all of this post, we can have a chat over tea too if you want. You know how to contact me.