The Life Insurance Association Singapore (LIA Singapore) recently released statistics and results of the industry over the first half of 2017. The trends and findings provide some good insights on the attitude of the population towards insurance.
1. People are placing more emphasis on securing more coverage for themselves and their loved ones even in the midst of a challenging economic climate.
LIA Singapore lauded the continued momentum of strong growth from the first quarter, having achieved a total of S$1,682.0 million in weighted new business premiums for the first half of 2017. Accordingly, the industry recorded a significant 10 per cent increase in sum assured for new business compared to the corresponding period in 2016, totalling S$55.9 billion. This is a positive development in the context of economic uncertainties, an ageing population and a soft labour market.
2. Growing popularity of regular payout plans for retirement planning.
“We see a steady take up of products designed to provide regular payouts from retirement age. This shows that people are appreciating the importance of preparing ahead for their future years.
Retirement planning is an ongoing concern for both pre-retirees and their children because by 2030, there will only be two working adults supporting one retiree, as compared to about five per retiree last year. The younger generation will be shouldering a greater financial burden of supporting the ageing population and ensuring that they have enough for other milestones, such as marriage and setting up their own families.”
– Mr. Patrick Teow, President of LIA Singapore
Compared to the past, where traditional endowments providing a single lump sum payout at a fixed maturity date, regular and annuity payouts over the retirement period is increasingly gaining popularity, with the CPF Life payouts leading the way. In the first half of 2017, a total of 10,680 policies designed to provide regular payouts to policyholders during retirement years were taken up, accounting for roughly S$84 million of weighted new premiums recorded over the half year.
One possible reason is the possible increase in returns coming from such annuity plans compared with traditional endowment plans since policy owners will receive their payouts over a longer period of time, allowing insurance companies more time to invest and reap better returns with the premiums. If such payout stream policies are still not a part of your retirement plans, it could be a good time to consider this option.
3. Consistent growth in business placed with Financial Advisory firms.
Another interesting statistic that has been seeing a consistent and gradual rise is the amount of business placed with Financial Advisory firms. Number of policies purchased from FA firms rose from 11% in 2015Q2 to 13% in 2016Q2 and 17% in 2017Q2. This is a testament that clients are getting more receptive of the idea of having consultants from FA firms, since consumers these days are more savvy and like the option of comparing various plans across different companies.
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