Insurance Planning Guide for Malaysians
Hospitalization & Surgical Insurance /Medical Insurance / Health Insurance
Directory of Insurance Companies in Malaysia
Term insurance (updated on 26 Jan 2008)
What is term insurance?
Term insurance is the simplest form of insurance. It gives you the protection during the specific period of time, typically 5 years, 10 years, 20 years or up to certain age like 55, 60 or 70.
Why choose term insurance?
Term insurance is bought solely for protection purposes. It is an ideal choice for an individual who needs large amount of protection but do not want to buy whole life insurance. It provides adequate coverage at an affordable premium. Unlike other types of insurance, term insurance does not have saving elements; hence, the premium you pay is low.
How much is the premium?
The premium rate is cheap if the term of protection is short. Unlike investment-linked insurance, the premium rate for term insurance is fixed.
Table below: Annual premium rates of a RM 100,000 term insurance for a male (coverage up to age 75)
|
Age |
Term (years) |
Annual premium (RM) |
|
20 |
55 |
800± |
|
25 |
50 |
900± |
|
30 |
45 |
1,100± |
|
35 |
40 |
1,400± |
The annual premium rate for investment-linked insurance is called 'Annual targeted premium'. You have the obligation to increase (top-up) the premium if the premium is insufficient to cover the insurance charges. Do you aware of this?
What are the plans available?
(a) Term insurance with death benefit only
(b) Term insurance with death and total & permanent disability (TPD) benefits
(c) Term insurance with death, TPD and additional benefits
Additional benefits include critical illness, hospitalization & surgical, etc depending on the insurance companies.
If the policy comes with conversion / convertible option, it means you can convert to another type of policy e.g. whole life policy regardless of your current health conditions. Always look for term insurance with conversion / convertible option.
Table below: A comparison of annual premium rates among various types of insurance
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.
|
|
Whole life with 36 critical illnesses (participating) |
Endowment ( for 30 years plan) |
( 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 is RM1, 200 or RM1, 800 depending on the practice of insurance companies.