Martin Lee @ Sg
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Deposit Insurance and Policy Owners Protection Schemes Amendment

Key changes to be implemented:

  • For Deposit Insurance Scheme, an increase of of deposit insured amount from $20,000 to $50,000
  • For Policy Owners Protection Scheme, to cover insurance liabilities from 90% to 100% subject to a cap. The guaranteed benefits of individual life policies and voluntary group policies will be aggregated and subject to caps of S$500,000 for sum assured and S$100,000 for surrender value on a per life assured per insurer basis (excluding annuities).

The Insurance Act will also be amended to give MAS greater control to take over or effect transfer of ownership.

The summary of changes that was read by the Second Minister for Finance Mrs Lim Hwee Hua during the recent Parliamentary sitting can be found here:

Deposit Insurance and Policy Owners’ Protection Schemes Bill and Insurance (Amendment) Bill

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5 comments
sender says 8 years ago

btw, what’s is “par” and “pops”?

Reply
    lioninvestor says 8 years ago

    POPS= Policy Owners Protection Scheme

    PAR is the short form of participating.

    This refers to insurance plans that participates into the bonuses declared by the insurance company due to the performance of the life funds. ie whole life plans and most endowment plans.

    Reply
      sender says 8 years ago

      Thanks for explaining.

      Does it means POPS only cover all PARs up to maximum of $500k for all insured policies per insurer?

      What about other non-PAR policies, are they covered by POP?

      Reply
        lioninvestor says 8 years ago

        The POPS covers both par and non par. Just that for most non-par policies, there won’t be a surrender value.

        In any case, the ideal scenario is to let another insurer take over all the existing policies. That is why the regulations have been amended for that as well.

        My guess is that POPS will come in after an insurer has defaulted and there are some claims coming in before the transfer (to a new insurer) has been completed.

        Reply
Nuts says 8 years ago

$100K cap for surrender value protection is not high, especially compared with the corresponding $500K cap for sum assured. The focus of POPS is to preserve the integrity of the protection aspect of insurance policies, not so much for the cash value or surrender value. This shows that even the authorities and “experts” involved are of the view that insurance should be for protection, and not for savings. I.E. Insure yourself as much as needed for as low & reasonable premium cost.

Anyway, I think this POPS will result in some increase in insurance premiums as companies pass on extra costs to customers. And some of the more investment-aggressive companies will throttle back on risk profiles to lower their POPS insurance costs, and may result in lower par fund performance and smaller bonuses. But of course less chance of the company imploding like AIG almost did. Again, this will further call into question the usefulness of par insurance policies as vehicles to meaningfully grow your long-term funds.

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