About Protection Insurance

No. List of FAQ’s on Life Insurance 1. What is Life Insurance and what type of Life Insurance policies are available for you? Life Insurance is a contract between the policy owner and the insurer, where the insurer agrees to pay a designated beneficiary a sum of money upon the occurrence of the insured individual’s death or other event, such as terminal illness or critical illness. In return, the policy owner agrees to pay a stipulated amount (at regular intervals or in lump sums). Types of Life Insurance policies available in the market:  Term insurance  Whole Life  Endowment insurance  Investment-linked  Medical and Health insurance  Life annuity plan  Supplementary rider/cover  Mortgage Reducing Term Assurance (MRTA) * For further information on the types of Life Insurance policies, please visit www.insuranceinfo.com.my 2. How does Life Insurance work? For life insurance, a large number of people (called policyholders) pay some money (premiums) into a fund managed by an insurance company. When someone in that group of people suffers a hardship, he/she is given an amount of money based on a pre-determined percentage from the fund to help ease the hardship. 3. Why should you buy Life Insurance?  Savings and protection are always the best reasons to buy an insurance policy. Also, you could have a constant source of income once you’re retired when you purchase an annuity product.  Whilst we always wish we are well and healthy, in case your earnings are reduced due to a serious injury, illness or accident, you would have an extra source of income to ease any burden on you or your family. If you have dependants: You need Life Insurance as a form of security to ensure that your dependants have enough income after your demise which your dependants could use for:  Monthly expenses  Keeping up their standard of living  Children’s education If you do not have dependants: You can use Life Insurance as an investment tool. You can select either a savings policy or an investment-linked policy to start your investment. Both policies have the potential to offer you higher returns in the future. If you’re young, you may want to consider purchasing a whole life policy as the premiums are low. 4. When to buy Life Insurance policy and how much do I need? Buy insurance when you are healthy and buy it as soon as possible. Not because it is cheap and affordable but to get protected when you are able to do so. 5. Can I buy insurance coverage when I’m not healthy? Yes you could, but if you apply for life insurance when you are unhealthy, the tendency of not getting insured by an insurance company is higher due to your health condition or you would be charged more because of your health status. 6. Where to buy Life Insurance policy? You can purchase a Life Insurance policy from:  Insurance Company  Life Insurance Agent  Banks (Bancassurance)  Insurance Broker When dealing with an agent: Always insist on seeing the agent’s authorisation card issued by Life Insurance Association Of Malaysia (LIAM). 7. Which is the best kind of Life Insurance policy to buy? In purchasing a life insurance policy, one should consider their own need for protection as different people may need a different amount of life insurance. It depends on the individual’s financial circumstances as it changes over one’s life cycle. Therefore, there is no rule of thumb that can exactly tell you what products to buy. This is why you should seek advice from a professional financial advisor who will undertake a fact-find with you to evaluate your needs and then make the appropriate recommendations ased on your own circumstances. 8. What is exclusion and what does it apply to? The exclusion is a clause in an insurance policy whereby the insurance company would not be liable for the losses resulting from the specified events. The exclusion clauses remove the insurance coverage for the specified events that the insurance company chooses not to insure. 9. What would be the reasons behind an exclusion or exclusions? Here are some of the reasons:  To exclude extremely high risks (such as the risk of accidental death due to participation in hazardous activities)  To exclude risks which are unquantifiable (such as death associated with war / terrorism)  To protect the insurer against anti-selection. Anti-selection is the tendency of people who suspect or know they are more likely than average to experience loss to apply for insurance than people who lack such knowledge of probable loss. Thus, not uncommonly medical and critical illness policies have waiting periods included. 10. I’m having financial difficulties? What options can I consider to continue paying for my premiums?  Reduce your premium payment: You may want to consider cancelling one or more of your riders which will reduce the premium amount to a range which will make your insurance premium more affordable.  Policy loan: You may take a policy loan against the surrender value that your policy has accumulated instead of surrendering the policy. Assuming that your policy has acquired sufficient surrender value, your policy will still be kept in-force, and you will get your money upon maturity, with the condition that the premium is paid using the policy loan. Please note that interest on policy loan applies.  Converting your policy: This option will allow the policy to be converted to an extended term insurance. By doing so, your policy has now become a term policy with a sum insured equal to the original sum insured less any policy loans. The available amount of surrender value determines the uration of coverage. All of the original riders will be terminated and you are not required to pay any further premiums.  Reduced sum assured: One may also reduce their sum assured and change it to a paid-up policy based on the amount of the surrender value available. With that, you remain covered within the original period and you are not required to pay any further premiums.  Investment Linked Policies: For investment-linked insurance policies, there is an option called 'premium holiday'. With sufficient money built up in your unit fund, you can go on a 'premium holiday' during which you do not pay premiums but still receive insurance coverage. This method is possible as long as your unit fund has sufficient units that can be utilized to pay your premiums. Your policy will only lapse once the number of units is exhausted. The consequences to be taken account when considering this option is the depletion of the unit fund earlier than the expected duration of time.