April 2007
Insurance Planning Guide for Malaysians
Hospitalization & Surgical Insurance /Medical Insurance / Health Insurance (Updated on 9 May'07)
Directory of Insurance Companies in Malaysia
Investment-linked insurance
This is a whole life term insurance which combines protection and investment.
Coverage for whole life policy is extended to a person’s entire life as long as the premium is paid. Some companies use age limit to represent the term of whole life insurance like age 87, 93, 99 or 100.
A portion of the premiums are used to buy insurance benefits e.g. death benefit, total & permanent disability (TPD) benefit, critical illnesses benefit, waiver of premium benefit , accident death benefit, etc. The rest of the premiums will be invested in investment funds of your choice.
This type of insurance doesn’t have minimum surrender value or maturity value. The policy value varies according to the performance of the investment funds of your choice.
Things to note when buying investment-linked insurance:
1) You have the flexibility to choose the amount of protection that best suits your needs. It allows you to increase or decrease coverage as insurance needs change.
However, Bank Negara Malaysia has set a minimum sum assured for every investment-linked insurance which is 40 times the annual premium.
2) You can increase or reduce the annual premium according to your financial circumstances.
However, the minimum annual premium for an investment-linked insurance is RM1, 200 or RM1, 800 depending on the practice of insurance companies. So, you can’t reduce your annual premium below the minimum amount set by the insurance companies.
3) It offers the potential for higher returns compared to traditional life insurance if you invest in equity related funds. However, you have to remember that higher returns always come with higher risks.
The investment return is NOT GUARANTEED and you have to absorb all the investment risks. It has no guaranteed minimum surrender value like endowment or whole life insurance.
Still remember your purposes of buying life insurance? Invest in the funds with the lowest risk if your purpose of buying insurance is to get protection.
4) Even though the amount of premiums you pay every year is the same, but the insurance charges start off low when you are young and increase as you get older. The insurance charges is subject to change.
For example, if you purchase a RM100,000 investment-linked insurance at age 20, the annual insurance charges for death & TPD benefits for that particular year is RM135. When you reach age 30, it is RM138. When you reach age 50, it is RM540 and so on. The insurance charges will increase based on your age but the annual premiums (which include insurance charges) you pay remain unchanged. Please refer to Table 1 below for better understanding.
Table below: Annual premiums and insurance charges for RM 100,000 sum assured
|
When you reach age… |
Annual premiums (RM) |
Annual insurance charges for death & TPD benefits (RM) |
|
20 |
1,800 |
135± |
|
30 |
1,800 |
138± |
|
40 |
1,800 |
180± |
|
50 |
1,800 |
540± |
|
60 |
1,800 |
1,360± |
|
70 |
1,800 |
2,920± |
|
80 |
1,800 |
7,300± |
|
90 |
1,800 |
16,392± |
When the annual premiums are insufficient to cover the insurance charges, like at age 70, your investment fund value will be deducted to pay the insurance charges. But, if the investment fund value is insufficient due to poor investment performance, then you have to pay extra premiums to cover it.
Table below: A comparison of annual premium rates among various types of insurance in Malaysia
Annual premium rates for male, RM100, 000 sum assured, cover death and total & permanent disablement only. Note: Remember your purpose is to get the protection you need with the lowest premium./to get the highest protection with the premium paid.
|
|
Investment-linked insurance |
Whole life with 36 critical illnesses (participating) |
Endowment ( for 30 years plan) |
Term assurance ( coverage until age 75) |
||
|
Age |
|
|
|
Premium |
|
|
|
20 |
1,200±* or 1,800±* |
1,800± |
700± |
2,500± |
6,700± |
800± |
|
25 |
1,200±* or 1,800±* |
2,000± |
800± |
3,000± |
6,800± |
900± |
|
30 |
1,200±* or 1,800±* |
2,500± |
1,000± |
3,500± |
6,900± |
1,100± |
|
35 |
1,200±* or 1,800±* |
3,000± |
1,200± |
4,000± |
7,000± |
1,400± |
*The minimum annual premium for an investment-linked insurance in Malaysia is RM1, 200 or RM1, 800 depending on the practice of insurance companies. Please refer to Table 1 for more information.
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The following insurance companies in Malaysia are offering investment-linked insurance. Please refer to 'Directory of Insurance Companies in Malaysia' for their contact details.
Allianz Life Insurance Malaysia Berhad
AmAssurance Berhad
American International Assurance Company, Limited
Asia Life (M) Berhad
AXA AFFIN Life Insurance
Berhad
Commerce Life
Assurance Bhd
Great Eastern Life Assurance (Malaysia) Berhad
Hong Leong
Assurance Berhad
ING Insurance Berhad
Malaysia
National Insurance Berhad
Malaysian Assurance Alliance Berhad
Manulife Insurance (Malaysia) Berhad
(formerly known
as John Hancock Life Insurance (M) Bhd.)
Mayban Life
Assurance Berhad
MCIS ZURICH
Insurance Berhad
Prudential
Assurance Malaysia Berhad
Tahan
Insurance Malaysia Berhad
Uni.Asia Life Assurance Berhad