Find the key terms of a policy in its product summary.
Ask for the product summary of any life insurance policy you're offered, and read it before you read the brochure. In Singapore, a life insurance policy you're offered should come with a product summary. A brochure is marketing. A product summary is a plain account of what the policy does and doesn't do. It follows a format the insurance industry uses, and it sets out the policy's most important terms.
Aisyah is 28 and works as a nurse at a polyclinic in Bedok (an invented example). After a friend's wedding, an adviser she met there sent her two glossy brochures, one for a savings plan and one for a critical illness plan. They showed families on beaches, a few large numbers and a phrase about peace of mind. She asked for something more detailed, and the adviser sent two PDFs called product summaries, with no photos. She wasn't sure where to start. Asking for the product summaries was the right thing to do.
A product summary describes the policy's main features in plain terms: what it covers, what it excludes, what you pay and for how long, and how it can end. A policy with a savings or investment part usually also comes with a benefit illustration, which lesson 5.2 covers. The Life Insurance Association (LIA) and MAS MoneySense both publish consumer guides that explain what these documents contain. Skim them before you read your first product summary. Most product summaries follow a similar order, and once you know it, each new one is quicker to read.
The benefits section says what the policy pays, to whom, and on what event. A critical illness policy lists the illnesses it covers and gives a definition for each. A savings plan describes what it pays at maturity, on death, and on surrender.
Read each illness definition as well as its name. Two policies can cover an illness with the same name and define it differently, for example by how severe it must be before the policy pays. The product summary often gives a shortened version of each definition and points you to the policy contract for the full wording.
When Aisyah read the critical illness plan's summary, she saw that some conditions paid out only at a severe stage, while others were covered at an earlier stage. The brochure had only said the plan covered "major illnesses".
Exclusions matter as much as cover, because they decide when the policy doesn't pay. The product summary lists the main ones. Typical exclusions are conditions you had before the policy started, and certain causes of death or illness the insurer won't cover. As you read the list, note the exclusions that could apply to you.
Then look for a waiting period, which is a stretch of time after the policy starts during which some claims aren't paid. For example, a critical illness policy may not pay for certain conditions diagnosed in the first months. The product summary states how long the waiting period is. If something happens during that time, the cover you thought you had doesn't apply.
Aisyah wrote down the three exclusions most likely to matter to her, plus the waiting period. None of them had appeared in the brochure.
The premium section says how much you pay, how often, and for how long. Make two checks here.
First, check whether the premiums are guaranteed or can be revised. Some policies fix the premium for the whole term. Others let the insurer review it, for example as its claims experience changes. A premium that can rise is a different commitment from one that can't, and the product summary tells you which kind you have.
Second, check the premium term, which is how long you pay premiums for. A policy may cover you up to a certain age but need premiums for a shorter period, or it may need them for as long as the policy lasts. The same monthly premium paid for ten years costs you a very different total from the same premium paid for thirty years.
The product summary explains how the policy ends. It may mature on a date, end when a claim is paid, end when you stop paying, or carry on until you reach a certain age. If you surrender a policy that has a savings part, you usually get back its surrender value. In the early years, this can be far less than you have paid in. Lesson 5.3 covers this cost.
The product summary is a guide to the policy. The policy itself is the policy contract, the legal document you receive when the policy is issued. If the summary and the contract seem to differ, the contract's wording is what counts. Even so, the product summary is the clearest place to see the main terms before you commit, and to work out which questions to ask. If a point really matters to you, such as how an illness is defined, ask to see the contract wording as well.
Deciding what kind of cover you need is a separate question, and the Insurance Decoded course teaches it. This module is about reading the policy you've been offered.
Have one policy's product summary open, whether it's one you already hold or one you're considering, before you start the activity.
Pick one policy you hold or have been offered. Write down its cover, three main exclusions, the premium term and whether the premiums can change.
Junxiong-WFG Organisation is an authorised representative of AIA Financial Advisers Private Limited (Reg. No. 201715016G).