Last Saturday morning, I attended the inaugural workshop organized by DIY Insurance.
When Providend first set up DIY Insurance, they wanted a way to connect with their audience better, while at the same time empower folks that prefer to take a more active approach in their insurance and investment planning.
These workshops provide financial education on insurance products so that members can have a better understanding for their insurance planning. I was hoping that I can get some helpful learning points from the 3 hour event.
Why DIY Insurance was set up
The event started off with Christopher Tan, the CEO of Providend explaining about how MAS undertake an financial advisory industry review of the life insurance industry. They pose as mystery shoppers to evaluate the competency, standard of advice provided by financial advisors.
The evaluation of advice and competency shocked the evaluators. In one company its very obvious that despite the difference in situation of the shoppers, the products recommended was the same. indicating more product pushing than tailored advice.
One of the recommendations was to set up a portal where consumers can compare the products so that consumers can then purchase direct from the insurance companies. MAS didn’t set up the portal, and looks like they never would. Providend took up the challenge to set up something like this and perhaps offer a little bit more.
Introduction to services
The project manager of DIY Insurance, Eddy, went through with us the functionalities of the portal
- how consumers can be educated and empowered to plan basic insurance by themselves
- calculate or come up with a rough estimate their insurance requirements and the amount of shortfall they have not address
- compare the insurance plans in each category to find the suitable plan
- get a quotation and go through the insurance purchase
If you have visited the portal, this part of the presentation should be rather intuitive to you.
Eddy and Chris took time to go through a few topics on insurance and retirement planning.
While not going into detail, Eddy explain the differences between Disability Income and a key benefit that was usually purchased with life insurance policies, total permanent disability.
Eddy also brought to our attention of a new type of whole life insurance that is getting more popular, or hybrid whole life insurance. Eddy didn’t go in deep detail but he brought to our attention how a whole life can have a closer premium to term insurance yet provide as high of a coverage as term insurance.
Without him mentioning it, I wouldn’t have thought of these whole life plans that provide 2 times normal whole life coverage as a combination of whole life and a decreasing term.
This should be rather intuitive to me if I have critically think about it, but I didn’t have the bandwidth nor a previous interest in it. Previously, if someone introduce a product, it is because they want me to purchase it, so the product introduction is tailored that way.
In a workshop like this, Eddy provides the objective of such a plan and the possibilities how we can use it. Its up to how we see this plan will fit into our overall protection or retirement strategy.
Eddy and Chris provided more in depth introduction to segments of protection and retirement planning, long term care insurance and wealth distribution.
Long Term Care Insurance
Long term care insurance is something that for the most part, wasn’t extensively discussed. It may not be mentioned to you, because you may not reach an age group that this kind of protection needs to be seriously considered.
It could be because the commission earned is not lucrative enough to mentioned it.
Eddy provided the scenario where the monetary impact of not having such an insurance can be very troubling for a family.
The problem consumers have is that, we do not have good data to let us make a fast evaluation of why long term care insurance can be critical. Its not everyday we check the price of hiring a maid, or the prevailing aged care facilities.
Through the morning’s sharing we have an idea of the escalating level of costs that we need when we cannot take are of ourselves.
I felt this is more important for singles in their old age, since they might not have close people to depend on, or they want to depend on them.
Long Term Care are much more discussed in USA where most of these needs are formulated and products created based on the needs so its good that we get exposed to these seldom mentioned instruments.
Wealth Distribution Approach
What if you have accumulated $X and are looking to spend it down, usually during your retirement? What should be your constraints and concerns?
Chris presented some of these points and also brings us through how Providend would look at retirement planning.
He also explains to a large degree CPF Life, how this annuity acts as the minimum cash flow in retirement.
What i gather from this sharing is the general wealth distribution framework that is applicable across bonds and equities.
Providend prefers a bucket approach to wealth distribution and through 2 examples, one for a highly affluent individual and one for someone closer to our networth, showed us how the bucket approach insures against outliving our wealth.
Personally, i felt that the bucket approach is a rehash of a simple equity and bonds, but you need to present it in a different way to let people understand it. At the end of the day, it boils down to cash, annuities, bonds and equity.
Depending on the savviness of the audience and the applicability of the subject at this stage of the audience life stage, I can understand why there are less queries in this area.
Perhaps someone close to retirement would be more interested in this topic.
The workshop also share with the audience some trends within the industry, products that industry companies are more active in.
Eddy highlighted the fight for the 1 million term life insurance bounty that many insurers were engaged in. Premiums were slashed to make their 1 million dollar term life insurance more attractive.
Overall, it was a good workshop. This was the first workshop and the company is still figuring out its members and so are its members trying to size up the company.
The value to the members, I felt, depends on how much advance topics and questions that they would like to find out and discuss. It will add value to all members when members push the firm to answer questions beyond your standard presentation.
If you are planning insurance and retirement yourself, it is important to make yourself an expert and what better way to get your burning questions address in a forum such as this with no obligation to purchase.
The firm in this case, gains insight to specific needs for this niche segment of consumers. I felt that the company can better sense what the members likes to be educated on by sending early polls and surveys, which would make a more lively discussion.
The firm should really poll their members what are some of the topics they would like to discuss. You won’t know what are some of the most pressing insurance and retirement issues.
The stupid thing is that I should have told you guys ahead of this and I didn’t. I would try to inform if there is another session.
A note to all is that I do earn a fee from Providend Ltd for introducing a prospective client to Providend’s DIYInsurance portal and their related financial advisory services. Providend Ltd is a licensed financial adviser under the Financial Advisers Act and a Registered Fund Management Company under the Securities and Futures Act of Singapore.
I prefer to work with businesses that I know will take a holistic view of the clients’ unique situation and planning processes that I have reviewed and trusted.
As an introducer, I am not permitted to give advice or provide recommendations on any investment product, market any collective investment scheme or arrange any life insurance contract, to or for any particular client, except to the extent of carrying out introducing activities. Thus, for your specific financial needs, I strongly recommend that you speak to a licensed representative from Providend as they will be able to help you.
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