At Prudential Insurance Company, its customer director Goh Theng Kiat told me that the company’s customers prefer to buy life insurance policies through an insurance agent, despite the boom direct online purchasing channels.

Prudential, like most life insurance companies, offers IPR.

“They (use an agent) after establishing trust with their agent, who helps them understand the different types of insurance plans available, thereby ensuring peace of mind for themselves and their loved ones,” said Mr Goh said.

Mr Timothy Ho, co-founder and editor-in-chief of investment site Dollars and Sense, said one of the reasons people prefer to buy through an insurance agent is that the Life insurance has complex terms that may not be clear to the average consumer.

“An agent can help tailor these policies to individual needs, ensuring buyers fully understand what they are getting, potential exclusions and how the coverage fits into their overall financial plan,” he said. added.

Another disadvantage of IPRs is that they have limited coverage.

The maximum coverage for a whole life DPI – which covers you for life – is S$400,000 (US$297,000). A term life IPR – which covers you for a specific period of time – has a maximum coverage of S$200,000.

Experts and insurance companies have explained that this regulatory limit is due, for example, to the lack of financial advice.

There are no limits for life insurance policies purchased through insurance agents, although insurance companies take into account, among other things, the person’s age and salary when deciding definition of coverage.

Mr Ooi said consumers could purchase multiple IPRs to increase their coverage, but he indicated it might be cheaper to purchase a single policy through an insurance agent.

Buying multiple IPRs would also mean doing so from multiple insurers, complicating the claims process, he added.

Mr Ooi suggested that IPRs could function as “top-up insurance” to increase your coverage without needing to adjust your existing insurance policies.

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If someone ultimately decides to purchase a DPI, what should they do?

Mr Ho said that, as with any insurance policy, it is important to review the terms and conditions carefully. He said some things to look out for include exclusions and understanding what the policy covers.

Ms Dawn Cher, editor at personal finance site SG Budget Babe, said: “The problem with insurance policies is that they are very complicated, because different policies and insurers cover different things. This is why you need to carefully review the terms and conditions and decide what you need.

She added that people should also carefully consider the cost of premiums and how they will increase over time in order to budget for them correctly.

Beyond that, people need to fully understand the policies they are purchasing and what they cover. This is so they don’t buy too many policies or don’t buy enough to cover certain needs like critical illnesses, Ms. Cher said.

To ensure customers have no problem claiming from their DPI if necessary, Mr Ooi said people must report their health status accurately.

If an insurance company discovers that a person has an underlying illness, they may choose to cancel the insurance policy. This means that the client may not benefit from any life insurance coverage.