By GENEVIEVE CUA

AGAINST the backdrop of an ageing population, insurance companies should re-examine their underwriting practice for health policies.

M Salim, president of the Association of Financial Advisers (Singapore), yesterday said applicants who experienced relatively minor conditions, such as benign cysts and fibroids in female generative organs, are being declined cancer cover.

'Currently the majority of such cases have been excluded for cancer cover in the female generative organs however minor (the conditions) appear. Life companies must work with their reinsurers towards offering other options to policyholders instead of excluding the condition.'

Mr Salim was speaking at the AFAS congress.

On exclusions by insurers, Great Eastern Life said it depended on the history and severity of the condition. 'Some conditions, for example, ovarian cysts or growths for which the underlying nature is unclear have to be properly investigated as they may increase the risk of cancer,' said a spokesperson.

Mr Salim also said insurers should reinstate bonuses once their financial positions warrant it. 'Cutting bonuses, especially terminal bonus, must be the last resort if we do not want to turn customers away from traditional life insurance policies.'

Following a poor investment year for 2008, several insurers appear to have resorted to cutting their terminal bonus rather than the annual bonus.

Terminal bonus is the non-guaranteed amount that is paid when a policy matures. It may be quoted at an aggressive rate - a percentage of all annual bonuses accrued to date.

Speaking to reporters, Mr Salim said the terminal bonus typically forms a 'large portion' of a policy's projected values, 'more sizeable than the annual bonus'. 'It's an important consideration for a lot of people . . . When you remove the terminal bonus, it's usually a substantial portion.'

The terminal bonus is also a major reason a policyholder was convinced to buy the product, he added.

In his speech, Mr Salim said advisers should raise the standards of their advisory practice. 'We should not allow this channel to be exploited by unscrupulous people who use unspoken rules and compete unfairly with those of us who play by the rules. I call on all FAs and their reps to uplift and maintain their standard of practice and make this a viable channel for those who seek good financial advice.' AFAS is promoting the ISO 22222 for standards of financial planning. To date three FA reps are certified under it.

From this year, the Monetary Authority of Singapore has stripped away the exemption status in the Financial Advisers Act of three insurance brokers - Acclaim Insurance Brokers, Leadenhall Insurance Brokers and Magnetron Insurance & Financial Services. These brokers are no longer exempt from the requirement to hold a financial adviser's licence, and are barred from offering financial advisory services in Singapore.

The three are registered insurance brokers and enjoyed exempt status under the single licencing regime. But MAS found they did not have adequate management oversight or control policies and procedures for their FA operations.

This article was first published in The Business Times.