Direct purchase term insurance (DPI): buying without commission
DPI is a class of standardised term and whole life products sold without advice and therefore without commission. Here is what the standard features are, who it suits, and how to buy it properly.
Most life insurance in Singapore is sold through a financial advisory representative, and part of every premium pays for that advice. Direct Purchase Insurance, usually shortened to DPI, is the exception. It is a class of term and whole life products that insurers must offer directly, without advice, and price without a distribution cost. If you know what you need, it is the cheapest way to buy a given amount of cover.
What makes a product a DPI
A DPI is recognisable by the word DIRECT at the start of its name. The features are broadly standardised across insurers so that products can be compared like for like, though the MoneySense guide cautions that the small print still differs and is worth reading.
The two DPI types are:
- Term DPI with total and permanent disability cover and an optional critical illness rider.
- Whole life DPI with the same TPD cover and optional CI rider.
Both cover death and terminal illness. TPD pays 100% of the sum assured. The CI rider also pays 100%, except for conditions requiring angioplasty or other invasive coronary treatment, where the payout is 10% of the sum assured up to $25,000.
The standard parameters
| Feature | Term DPI | Whole life DPI |
|---|---|---|
| Sum assured | $50,000 to $400,000 per insurer | $50,000 to $200,000 per insurer |
| Cover options | 5-year renewable; 20-year; to age 65 | To death or a maturity age such as 99 |
| Premium term | Same as cover term | To age 70 or 85 |
| Cash value | None | Builds over time |
| Entry age | From 18; maximum 45, 60 or 65 by product | From 18; maximum by product |
The combined maximum across all term and whole life DPI you hold is $400,000. On the term products, death and terminal illness cover runs to age 85 but TPD and CI benefits stop at 65. On whole life DPI, TPD cover also ends at 65.
A DPI product is otherwise a normal life policy. It has the same 14-day free-look period, the same duty to disclose your health honestly, and the same protection under the Policy Owners' Protection Scheme as an advised product from the same insurer.
Who it suits, and who it does not
DPI is designed for a buyer who can answer three questions without help: what type of cover they need, how much, and for how long. A single person covering a parent's support for the next 15 years, or a couple wanting a straightforward top-up to their DPS, often can.
It is a poor fit if any of those questions is open. Buying online means no financial needs analysis, and MoneySense is explicit that the buyer takes on the job of deciding suitability. Nobody will point out that the cover ends before your youngest child finishes school, or that a CI rider capped at 65 leaves a gap in the years when claims are most likely. If you find yourself guessing, stop and get advice; the cost of the advice is small against the cost of the wrong policy.
How to buy it well
- Size the need first. Our coverage gap check gives a starting estimate. Include debts, the years until dependants are self-reliant, and what savings already exist.
- Shortlist on compareFIRST. The portal, run jointly by CASE, MAS, the LIA and MoneySense, lists every retail life product in Singapore and lets you filter DPI by category, then compare premiums, features and cash values for up to four products. The premiums shown assume a standard life with no medical conditions; your quote may differ after underwriting.
- Read the DPI Fact Sheet and checklist. Each insurer must give you these before you buy. They set out the product's features and the questions you should be able to answer.
- Read the Product Summary and Policy Illustration. For whole life DPI, the illustration separates guaranteed values from projected bonuses; for term, it shows exactly when each benefit ends.
- Answer the health questions carefully. An untruthful answer can void the policy at claim time. If you have minor pre-existing conditions, some insurers offer a moratorium underwriting option that covers them after a period.
- Buy from the insurer's own website or customer service centre. DPI is not sold through advisors.
Comparing DPI with advised term products
Because DPI strips out distribution cost, the same insurer's advised term product will usually cost more for the same sum assured. But the advised product may offer things DPI does not: higher sums, cover to older ages, conversion rights, guaranteed renewability, or riders beyond CI. compareFIRST lets you compare DPI and non-DPI products in one view, including the distribution cost line, so the difference is visible rather than assumed.
Whole life DPI deserves a particular note. MoneySense points out that early surrender can return little or nothing because the first years' premiums cover set-up costs, and that whole life premiums continue into retirement. A buyer who wants only protection will usually find term DPI does the job at a fraction of the outlay.
Talk to an advisor
DPI is the right tool when you already know the answer. If you would like a second opinion on how much cover you need, or on whether a DIRECT product or an advised one fits better, a licensed advisor can review your figures without committing you to anything. Use the portal's advisor matching to find one, or ask our assistant to explain any product you have shortlisted.
Sources
This content is educational information from a licensed advisor, not financial advice. Product details vary by insurer — verify specifics with an advisor.
