This article was written in collaboration with DIYInsurance. All views expressed in this article are the independent opinion of DollarsAndSense.sg
(Editor’s Note: DIYInsurance is now MoneyOwl. MoneyOwl is Singapore’s 1st Bionic Financial Adviser where human wisdom and technology come together to deliver best-in-class financial advice that integrates national schemes. Visit www.moneyowl.com.sg today.)
One of the most important financial decisions that we have to decide as a young working adult is to consider the type of insurance policies we need.
Though most folks would agree that protecting themselves with the right insurance policies is important, not as many people may know what they need or even where to get their policies from.
Most of us tend to rely on advice and recommendations from insurance agents, particularly if this is the first time we are buying an insurance policy. Since they are the subject matter experts, we may go along with any recommendations they make.
But just how likely is this approach, of simply trusting the first agent we meet, likely to pan out for us? To answer this, we spoke to three young working adults in Singapore to find out their personal experience when they bought their first insurance policy.
(All the names of the individuals interviewed have been changed)
Scenario 1: Buying from A Friend
Mark, Early 30s, Entrepreneur
Mark, who is married and in his early 30s, bought his first insurance policy more than a decade ago from an insurance agent who was also a friend. The agent was representing one of the biggest insurers in Singapore.
DollarsAndSense (DNS): How did you meet your first insurance agent and why did you decide to buy a product from him?
Mark (M): I started my first business right after I completed full-time National Service. That was when I started drawing an income for myself, and an old friend of mine messaged me out of the blue, asking to meet up. We caught up over a nice dinner and beer, and when he learned that I wasn’t covered with a whole-life plan, he started introducing the topic of insurance to me.
I’ve always known the importance of having insurance protection. However, back then, I wasn’t aware of the different types of insurance policies available in the market.
In the end, I bought an Investment Linked Policy (ILP) that was recommended to me. In retrospect, I didn’t know better, and thought that since he was on the same ILP plan too, it would be a good fit for me as well. It was only later on that I found out that he was on the same plan only because his dad bought it for him years ago.
DNS: Are you still holding the ILP that you bought years ago today?
M: No, I’ve let the policy lapse a while ago.
A few years after I bought the ILP, I’ve got myself more educated and realised that it was not right for me since there was no need for me to invest through an ILP, particularly since I invest in equities myself, and have a fairly disciplined savings habit.
I’ve also learned about why term insurance would be a better fit for me if I want higher level of coverage at a lower cost.
DNS: Have you bought any further policy from this same agent?
M: No. I didn’t see the need to. I prefer to get myself educated and then evaluate all options, rather than to listen to salesman talk.
DNS: Where do you now buy your insurance policies from?
M: I trust DIYInsurance a lot because of their transparent nature of doing business. But other than that, I spend quite a bit of time reviewing my own insurance policies and plans for the future.
DNS: On hindsight, would you have bought the policy from your first agent?
M: No.
Read Also: Using DIYInsurance? Here Are The Pros And Cons That You Should First Consider
Scenario 2: Buying At A Roadshow
Ariel, late 20s, media professional
Ariel, who is in her late 20s, is a media professional. She bought her first policy shortly after she graduated from university and started working. Unlike Mark who bought his policy from a friend, Ariel met her agent at a roadshow and subsequently bought a policy from her.
DNS: Where did you meet your first agent?
Ariel (A): I was at the Singapore Expo when I met my then-agent. Usually I reject pitches from agents, but she seemed very friendly and sincere, so my dad and I just decided to see what she had to say.
One thing that drew me to my agent was that she wasn’t trying to hard sell and knew how to draw me in because we had similar backgrounds. She told me I didn’t have to decide then, and it was only during our second meeting did I decide to buy a savings plan from her.
DNS: Do you still have this savings plan today?
A: I still have it, and I think that it’s a good ‘investment’ because it’s another form of ‘forced savings’ for me.
DNS: After buying this policy, have you bought more policies from the same agent?
A: No. Her servicing period was actually relatively short before she jumped to another company (following a huge inter-company scandal), and I decided not to ‘follow’ her because one of my good friends (Agent ‘C’) joined the company and took over my portfolio.
Today, I have also bought more insurance policies such as life insurance and hospitalisation plans from other agents.
DNS: What prompted you to find other agents?
A: I had another agent from a competitor company (Agent ‘B’) who was actually an acquaintance of mine.
I chose to get 2 policies from Agent ‘’ because I wanted to diversify my portfolio a bit. I just felt that it would be better.
DNS: On hindsight, would you have bought the policy from your first agent?
A: If I knew that my good friend (Agent ‘C’) was going to join the insurance industry, I definitely won’t have!
The thing about agents is that it’s honestly tough to know who you can trust. I’ve had 3 agents so far, and all three of them have criticised each other’s policy recommendations.
For example, Agent ‘C’ told me that Agent ‘B’ was overselling me some stuff (like he sold an investment-linked policy, which ‘C’ told me actually gives agents the most commission), and got me to cancel my existing policy and to buy another one from her company.
In the end, I have to say that I’m now paying less for more coverage – so I guess that’s good?
But to be honest, all this has made me quite jaded with insurance and agents.
Read Also: I Need To Make A Claim On My Insurance Policy. Do I Need To Look For My Agent?
Scenario 3: Buying From A Recommended Adviser
Rachel, Mid 20s, Teaching professional
Rachel is a teacher in her mid 20s. Two years ago, she moved to Singapore after getting married to her Singaporean husband. Moving to a new country required lots of preparation including the purchase of insurance.
Rachel met her insurance agent via a recommendation from her husband.
DNS: What led to you buying your first insurance policy?
Rachel (R): After I got married and moved from Hong Kong to Singapore, my husband made sure I got a hospitalisation plan. I did think it was important but did not act on it until he urged me to.
DNS: Whom did you buy it from? How did you meet your agent?
R: My husband introduced me to my agent who is also his friend’s mother. He also bought his policy through the same agent.
DNS: Can you still remember the policy which you bought from your first agent? Do you still have the policy today?
R: Yes. I have the Enhanced Incomeshield Preferred Plan with NTUC Income and I still have it today. It meets my hospitalisation needs at present.
DNS: Have you bought any further policies from this same agent?
R: No. But it has nothing to do with the agent but rather, the kind of insurance that I need, and what I can afford at this point in time.
DNS: Have you engaged other agents?
R: No. I don’t plan to get additional insurance at this point in time, so I have not met or engaged any other agents.
DNS: On hindsight, would you have bought the policy from your first agent?
R: Yes, I probably still would.
Editor’s Note: Do Your Own Research When Buying Insurance
While insurance planning is important, buying the right insurance policies can be challenging because of two main reasons.
Firstly, most people may not be savvy when it comes to insurance planning. They do not have sufficient knowledge or information to know which insurance policies meet their needs, based on the budget that they have.
The alternative is to rely on the advice of an insurance agent. But as seen from the personal experiences of the individuals featured in this article, it’s also hard to know who you can trust, particularly if this is the first time that you are buying an insurance policy.
One solution to consider is DIYInsurance, which coincidentally, is also the platform that our first interviewee, Mark, is using. Whether it’s a protection plan, savings plan or retirement income plan that you need, DIYInsurance can help you find and compare various plans available in Singapore, based on your personalised requirements.
Beyond just comparing policies online, DIYInsurance also has a team of salary-based financial advisers who are responsible for providing appropriate advice to their clients.
Of course, this isn’t to say that the existing DIYInsurance platform is perfect. There are occasions where it may not fulfil your needs and we have highlighted some of the pros and cons that you need to consider if you are using DIYInsurance for the first time.
Christopher Tan, CEO of Providend, which is the parent company of DIYInsurance, did share with us in a recent conversation that major improvements are currently in the company’s plan and that the company hopes to better serve their customers through an improved product. According to him, an announcement will be made by end October.
DIYInsurance believes that its ‘hybrid’ model, where a human adviser provides personalised and unbiased advice to complement the comparison provided by its platform provides the right balance that clients will want. This way, clients get to compare and select the products they want without having to compromise on the recommended advice provided to them by a qualified financial adviser.
If you are looking to get an insurance policy, but are unsure of what you should buy, or who you should get it from, you can consider giving DIYInsurance a go today.
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