SINGAPORE: The Monetary Authority of Singapore (MAS) has proposed simplifying requirements for selected insurance policies.
The central published a consultation paper on Friday (2 Feb), seeking feedback on reducing the amount of information that financial institutions are required to collect from clients when recommending specific insurance policies.
This initiative is focused on insurance products aligned with the Basic Financial Planning Guide. MAS, in collaboration with MoneySense, the CPF Board, and finance industry associations, introduced the Basic Financial Planning Guide in October 2023.
The planning kit provides guidelines for Singaporeans on financial well-being, including savings, insurance, and investment needs.
In an effort to simplify the financial advisory process, MAS is proposing a reduction in the information collected by financial institutions when advising on term life insurance and standard critical illness policies, adhering to the principles outlined in the Basic Financial Planning Guide.
The Basic Financial Planning Guide recommends allocating up to 15% of take-home pay for insurance protection and suggests specific coverage ratios for death, total permanent disability, and critical illness. To cater to different life stages, six customised variations of the guide were issued on Jan 31, 2024.
Mr Lim Tuang Lee, Assistant Managing Director (Capital Markets) at MAS said, “The proposals seek to simplify the financial advisory process through which Singaporeans can obtain cost-effective insurance coverage. At the same time, the upper limits stipulated in the Basic Financial Planning Guide on insurance coverage and spending serve as safeguards to protect consumers’ interests.”
MAS is inviting feedback from financial institutions, consumers, and other interested parties until 15 March.
The goal is to create a more streamlined and consumer-friendly approach to financial planning, ensuring that individuals can readily access insurance products that align with their protection needs without unnecessary complications.
To learn more about the proposal, take a look at the consultation paper here. /TISG
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