What do you think of direct purchase insurance (DPI)?

DPI has been around for a year. So what is your view about it? Is it good for one to buy without a financial advisor, saving distribution cost? Are the benefits as good as other policy if one buys from an agent? However, the sum assured cap is quite low, with 400k for term and 200k for whole life.

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Elijah Lee

27 Nov 2019

Senior Financial Services Manager at Phillip Securities (Jurong East)

Hi anon,

The role of the financial advisor has evolved tremendously over time. But the human touch is not replaced by AI or machines. It simply can't be replicated.

So DPI, while theoretically cheaper due to lower distribution costs, does come with a few caveats: You need to know how to determine what you need (and it's often not that straightforward), and if it's over the SA, you will probably be better off working with an independent financial advisor for an opinion. We're bringing years of experience, wisdom and foresight to the table when executing the work for our clients; this is something that just cannot be replaced by DPI.

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Kelly Trinh

26 Nov 2019

Backoffice technical at financial services firm

Conceptually should be cheaper since DPI should have lower distribution cost (no agent commissions) but due to additional claims cost assumed by insurance companies (there is lighter underwriting due to less queries asked on application), the end cost isn't too different from a normal term. So no real value proposition being direct purchase.

Given this, give your agent a bone, buy it from them - you can pester them for help on admin stuff later on too.

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