The Straits Times reported on 28 January 2019 that it was common for banks to tie up with insurers to offer insurance products at the bank or at a roadshow. The report gave 7 tips to consumers on purchasing insurance from a bank as follows:
1. Savings or endowment plans are not savings accounts - If you terminate the endowment plan early, you may lose all the premiums already paid. You should ask specifically if you are able to get back your "savings" amount if you were to terminate the product. This will help you to differentiate an insurance product from a savings account.
2. Understand your insurance needs - You should consider your financial objectives - is it to protect against death, critical illness or disability? Or is the aim to set aside a fixed monthly sum to grow? Insurance plans require long term commitment so buyers must consider if they can afford the premium payments even if events happen like loss of income or retrenchment. You should also consider your current stage of life, the number of your dependents, and the period and sum assured that the payouts should cover.
3. Understand what you buy - Read the product summary and make sure you understand the terms and features of the insurance plans, such as the coverage, sum assured, yield, tenure and payment terms.
4. Understand the insurance documents - A Financial Needs Analysis (FNA) will be conducted before any recommendations are given to customers. You must answer the questions posed in the FNA truthfully and accurately. Read and understand what you are signing. For example, projected returns in a Benefit Illustration are often for illustration only and are not guaranteed unless stated. Do not rely on verbal promises. If you are not familiar with the language of the sales document, ask for a copy and bring it to a trusted friend or family member to go through before you sign.
5. Don't be swayed by freebies - Gifts and incentives like shopping vourchers or preferential fixed deposit rates for a separate savings product may be offered together with the insurance product. Do not buy a product because of the freebies offered.
6. Compare first - Don't feel pressured to agree on the spot. Check out the prices, features and payouts of various plans before committing.
7. Cooling-off period - Some investment and insurance products come with a 14 day free-look period. If you change your mind within that time, you should quickly inform the company.
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