The Monetary Authority of Singapore (MAS) today (2 February) published a consultation paper to seek feedback on proposals to reduce the amount of information collected by financial institutions from their clients for selected insurance policies.

Its specific focus is when recommendations are made based on its Basic Financial Planning Guide (Guide). The proposals will enable consumers to meet their protection needs more easily through the purchase of simple and cost-effective insurance policies.

MAS and MoneySense, in collaboration with CPF Board and finance industry associations, launched the Guide in October 2023 to help Singaporeans take steps to enhance their financial well-being.

The Guide outlines a few rules of thumb for individuals to start taking proactive steps to address their savings, insurance and investment needs.

In particular, the Guide encourages Singaporeans to allocate up to 15% of their take-home pay on insurance protection.

Consumers are also advised to obtain insurance coverage of 9 times’ their annual income for death and total permanent disability, and 4 times’ their annual income for critical illness.

Six customised variations of the Guide were issued on 31 January 2024 to illustrate the financial planning needs of individuals at different life stages.

MAS is now proposing to reduce the amount of information which financial institutions are required to collect from clients, when they make recommendations on term life insurance and standard critical illness policies that are based on the rules of thumb in the Guide.

This will simplify the process for consumers, and encourage the offer of simple and cost-effective products to help consumers meet their protection needs, subject to the limits in the Guide.

Lim Tuang Lee, assistant managing director (Capital Markets), MAS, said: “The proposals seek to simplify the financial advisory process through which Singaporeans can obtain cost-effective insurance coverage. At the same time, the upper limits stipulated in the Basic Financial Planning Guide on insurance coverage and spending serve as safeguards to protect consumers’ interests.”

MAS invited financial institutions, consumers, and other interested parties to submit their comments on the proposals by 15 March 2024.