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Students from the National University of Singapore Pro Bono Group prepared this guide. The guide is for public education and is not legal advice.


What are life insurance disputes and how do they arise?

Life insurance disputes are disputes between the beneficiary or policyholder and the life insurance company or insurer. Life insurance disputes commonly arise from:

  • The insured not realising that the life insurance policy has lapsed or expired.
  • The insurer refusing a claim due to limitations, exclusions, or other policy terms.
  • The insurer refusing a claim or voiding the policy because the insured failed to disclose material information when buying the policy.
  • The insurer refusing a claim due to a pre-existing medical condition.
  • The insured does not receive the expected benefits from the policy.

 

What should I look out for to avoid life insurance disputes?
Before buying a life insurance product, you should:

  1. Understand the type of policy that best suits your financial needs.

You should learn about the features of the policy, and know what coverage you are looking for.

You can use compareFIRST. This is an informational portal to compare the life insurance products offered by all life insurers catering to the retail market in Singapore. It is a collaboration between the Consumers Association of Singapore (“CASE”), the Monetary Authority of Singapore, the Life Insurance Association Singapore (“LIA”), and MoneySense.
 
  1. Ask questions to understand the type of insurance product offered.

There are many different types of life insurance policies on the market.  Besides traditional life policies, there are also investment-linked insurance policies. Terminating an insurance product early may result in losses on the principal sum invested in the policy. There may even be zero surrender value if you terminate the policy within the first two years.
 
  1. Answer all the questions posed to you in a financial needs analysis honestly.

Consider your financial goals, protection needs, the amounts you can afford, your risk appetite, etc. Answer all the questions honestly.
 
  1. Disclose all the information asked for in the proposal form and provide any other details asked for.

A life insurance contract is based on utmost good faith on your part. If you do not provide important information in the proposal form, the policy may not be valid. Disclose facts even if you are not sure whether they are important.

Check to make sure all information told to the financial advisor is written down in the proposal form.
 
  1. Read and understand the terms of any document to buy a financial product before signing it.


For instance, projected returns are often for illustration only and are not guaranteed. Ask the officer if you are unsure. Important terms include the premium amount, any changes in payment over time, the exact coverage, the limits, and the exclusions.


What do I do if I am facing a Life Insurance Dispute?
Step 1: Speak to your insurer first
You should first speak to your insurer to resolve the dispute. If you think that your insurer has treated you unfairly, you can lodge a complaint directly with the insurer.

The insurer usually has instructions on their website on how to make a complaint. You can also contact your representative. The Monetary Authority of Singapore expects all Financial Institutions (“FIs") to handle all consumer complaints effectively and promptly. You can find your insurer's contact details using the Financial Institutions Directory.

Before you contact the insurer, you should have a clear idea of what your concerns are and how you would like the insurer to address these concerns. Do provide the insurer with:

  • Your particulars (name, contact number, etc.),
  • Your policy number,
  • The details of your complaint, including what has happened so far, and
  • Supporting documents, including medical reports and invoices (if applicable).
 
You should follow-up with your FI if you do not get a response from them within 2-3 weeks.
Step 2: Approach FIDReC for Help
If you cannot resolve the matter with your insurer after 4 weeks, you may approach the Financial Industry Disputes Resolution Centre (“FIDReC”) for mediation. There is no cost to consumers to do so.

FIDReC is an independent dispute resolution institution handling disputes between consumers and licensed FIs. FIDReC provides a low-cost and effective avenue to resolve problems that cannot be settled directly with your insurer.

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FIDReC adopts a 2-step process.
 
  1. A case manager will mediate the dispute between you and your insurer. If the dispute is not settled by mediation, you can choose to bring your case to the second stage of adjudication.
     
  2. An adjudicator will decide on your dispute based on the facts and merits of the case. If you choose to proceed to adjudication, there is a nominal fee of S$50 (plus GST).

Please note these limitations before approaching FIDReC:
  1. FIDReC is only able to assist individuals or sole-proprietors.
  2. Claims that exceed S$100,000 cannot be referred to adjudication unless the consumer limits their claim or the insurer agrees to the higher limit.
  3. You must approach FIDReC within 6 months of receiving the final reply from the insurer to ensure that FIDReC is able to assist you.
  4. Your claim must not fall under the types of claims that FIDReC cannot handle under its Terms of Reference. For example, claims already decided in court or settled privately.

You can find out more about FIDReC's Dispute Resolution Process or file a complaint using the Online Dispute Resolution Form. For more information, please visit FIDReC’s Frequently Asked Questions page or submit an enquiry.

You would need to complete and submit a dispute resolution form to FIDReC for them to assess the dispute. You should also submit to FIDReC details of your communications with the FI, and all other relevant supporting documents.

Do note that the adjudication outcome from FIDReC only binds the FI and not the consumer. This means that if you are not satisfied with the outcome, you can continue to pursue other avenues of recourse. This includes taking legal action.

Or you can approach the Consumers Association of Singapore (“CASE”), the Singapore Mediation Centre (“SMC”), or the Small Claims Tribunal (“SCT”). These organisations handle disputes across all types of products and services.

Step 3: Taking Legal Action against the FI

Resolving life insurance disputes through legal action is usually a last resort. Legal action is time-consuming and expensive. You should get advice from a lawyer before taking legal action. If you wish to engage the services of a lawyer, you can access the Legal Services Regulatory Authority for a list of practising lawyers here.

Or you may also approach the Legal Aid Bureau for legal aid and advice. Do note that you would need to meet specific prerequisites to do so. Find out more here.

Step 4: Reporting your FI to the MAS

The MAS is a financial services regulatory authority, and handles regulatory breaches or misconduct by an FI.

You should report to the MAS if you encounter:
 
  • Inappropriate or misleading advice;
  • Misrepresentation of (financial) products and/or services;
  • Lack of disclosure in the sales and advisory process; or
  • Suspicion of fraud, cheating, criminal breach of trust, forgery, or other forms of fraudulent accounting or corruption by your FI.

Generally, the MAS is unable to resolve disputes involving:
  • A FI’s pricing policies,
  • Private contractual arrangements between you and your FI, and
  • Compensation that you want from your FI.


To file a report with MAS, click here. For more general guides or information on resolving banking disputes, click here.


Sources

 

Keywords: Life Insurance