life insurance in malaysia
Life insurance in Malaysia is regulated by Bank Negara Malaysia by law. The laws are The Financial Services Act 2013 (FSA) and the Islamic Financial Services Act 2013 (IFSA). The Civil Law Act 1956 includes provisions for the payment of life insurance proceeds.
AIA Insurance Malaysia provides conventional and Islamic life insurance products and policies in Malaysia as governed by these regulations and laws.
AIA life insurance agents and life planners in Malaysia have to sit for exams and be licensed to sell insurance products from AIA. They need to have an agent code issued by AIA. And life insurance agents in Malaysia need to be members of the Life Insurance Association of Malaysia (LIAM).
What types of Life Insurance Plans in Malaysia?
All life insurance companies in Malaysia would have a similar set of life insurance products as follows:
1. Term Life Insurance
2. Whole Life Insurance
3. Investment Linked Life Insurance
4. Female Life Insurance Plan
5. Child Life Insurance Plan
Additional Insurance plans that provide benefits for an insured person’s health and life status:
6. Medical Insurance Plan
7. Personal Accident Insurance Plan
8. Cancer Insurance Plan
9. Critical Illness Insurance Plan
Why buy Life Insurance in Malaysia?
The number of Malaysians living to be 60+ years old is around 3 million people. And growing year on year.
In the event a person becomes permanently disabled, which means a total loss of independent existence, they have no more income for cash-flow to survive. To pay for the nursing care or home will cost a lot, especially when people can live longer with the higher quality of healthcare in Malaysia.
A life insurance policy pays out on total and permanent disability. The cash flow loss from the loss of income, can be covered fast by a good life insurance plan.
It should be borne in mind that Malaysia has among the highest road accident rates in region. Even Vietnam has its accident rates dropping. It is most prudent to get a life insurance plan to get fast coverage for such a situation. The screen shot below, from a dashcam, shows the lack of road safety leading to such dangerous accidents.
Additional insurance benefits will be per the insurance plan or policy structure or combination of plans:
1. Outpatient Medical bills payment
2. Hospitalization bills payment
3. Surgical bills payment
4. Special coverage for critical illnesses
5. Special coverage for female critical illnesses
6. Special coverage for child critical illnesses
7. Special coverage for cancers
8. Special coverage for mother’s pregnancy and childbirth complications
9. Special coverage for baby’s birth emergencies and birth defects
10. Special coverage due to accidents
11. Return on premiums paid based on guaranteed payments (Traditional Policy, non-investment linked policy)
12. Return on premiums paid based on fund investment performance
Who can be covered by Life Insurance Plans in Malaysia?
Individuals and Group Members within Malaysia. Life Insurance coverage in Malaysia is for a named insured person. The name or names of the insured persons have to be listed in the insurance policy.
The policy owner has to have an insurable interest in the insured person. This means the policy owner will face a financial loss if the insured person dies or is disabled permanently.
The insurable interest groups are:
1. Immediate family members
2. Company’s key person, employees
3. Registered financial institutions eg. Banks
The non-insurable interest groups are:
The policy owner is not necessarily the insured person. For example, for a baby insurance plan, the parent is the policy owner and the insured person is the baby.
Groups mean companies, businesses and associations registered in Malaysia. Who buy life insurance to insure their named employees or members.
Who benefits from Life Insurance Plans in Malaysia?
By Malaysian law, neither the policy owner nor insured person get the benefits or proceeds.
The named nominee is the named legal entity (trustee, company or person) in the policy that gets the benefits and proceeds of the life insurance plan from the life insurance company.
It is advisable for policy owner to nominate nominees for distribution in the event of death. Policy owner has option not to nominate by writing Will for Estate Planning.
A well established and reputable insurance company in Malaysia would be well versed with the Malaysian laws on insurance, and will state these clearly in its insurance policy.
As the most important part of an insurance policy is how the life insurance claim will be accepted, processed and paid out by the insurance company.
What is the cost of Life Insurance in Malaysia?
It all depends on the life insurance plans selected. To get an idea click on the image below to see indicative prices and premiums to be paid.
Contact our AIA Life Planning Advisor to get in touch with us and start your personal coverage or choose your plan now. Get covered correctly. Be advised correctly. Call today to be advised on the best insurance protection personalized for you. Or send us the form below on your interest.