There is more to insurance than we think we know. Everyone should know at least the basics of insurance to be aware of its benefits. Since insurance covers almost all aspects of one’s life, it is essential to know how each type of insurance works. Read on to know the basics of different types of insurance available in Malaysia.
What is Insurance
When you buy an insurance policy, you become the policy owner. You need to pay the insurance company a certain premium amount, which varies from one insurer to the other. You can pay the premium amount monthly, yearly, quarterly, or half-yearly for a fixed tenure. The aim of the policy is to protect you (and your family) by providing compensation for any loss/damage for what you have insured – yourself or your possessions..
Types of Insurance
The three most common types of insurance in Malaysia are:
Life Insurance: This is a policy that pays out a sum of money to the beneficiaries upon the insured person’s death or critical illness or permanent disability. You can take this policy when you start earning and/or have responsibilities such as dependant parents, spouse or kids. The most common types of life insurance plans are:
- Whole Life Insurance: This plan guarantees lifetime coverage for your life. You can make periodic cash payments until maturity. After your death, your beneficiaries will receive a fixed amount of money as payout. This is especially helpful in case you have a loan to settle or a family who is dependent upon you. This plan also gives you savings benefits where if you live until the maturity, you will enjoy a payout.
- Term Life Insurance: This plan also provides coverage for the life just as whole life insurance but the insurance period is shorter. This policy does not provide any savings benefit. Your beneficiaries will get a lump sum in the event of your death but if death does not occur, then no payout will be given.
Medical and Health Insurance: This type of insurance covers you in case of an illness or injury caused due to an accident. It covers all the medical expenses as well as hospitalisation cost. If you an independent adult, it is a good idea to take this insurance as soon as possible. Here are the types of medical and health insurance covers that are available:
- Medical Card or Hospitalisation and Surgery Cover: This insurance provides cover for any expenses incurred during hospital stay due to an illness, major injury, or an accident.
- Critical Illness Cover: This policy will pay you a lump sum amount upon the diagnosis of a critical illness including cancer, stroke, heart attack, blindness, Alzheimer’s, and Parkinson’s.
- Hospital Income Insurance: This insurance pays out an agreed amount of money to you when you are hospitalised. This is especially beneficial for you if you have a family to take care of.
General Insurance: You can buy this insurance mainly to protect your possessions such as your home, or car. Mostly, you can get general insurance with the purchase of your first car or motorcycle. It is mandatory in Malaysia to buy insurance for the vehicle that you own. Also, if you have an ongoing home loan, you are required to buy fire insurance or house owner insurance. The most popular types of general insurance are:
- Motor Insurance: Third Party Liability Motor Insurance is mandatory in Malaysia. If you accidentally hurt someone while driving, then the insurance company will pay on your behalf. Additionally, you can buy any damage protection due to theft or fire to protect your vehicle.
Travel Insurance: This insurance can prove to be beneficial both for you and your travel companion as it provides protection for flight delays, loss of baggage, trip cancellation and many more. You should consider taking a travel insurance if you:
- Travel frequently.
- Are planning your next business trip or vacation time with family and you need to protect your belongings.
- Need constant medical assistance during travel given that you have a medical condition that may increase during travel.
- Need medical evacuation and repatriation services.
- Need home protection plan while you are away.
- Need medical and personal accident coverage.
- Are travelling to war-prone areas.
- Are travelling with a special needs person.
- Personal Accident: This insurance provides coverage for accidental death or disability (total or partial).
Things to Consider While Taking an Insurance
- Consult an experienced agent who will give you the right advice.
- Opt for a policy as per your needs. You can even get riders attached to your policy based on your requirements.
- Assess your affordability of paying the premium amount with the help of an online premium calculator.
- Check out the fees and charges, limitations of your policy, claim procedures and cover for hospitalisation outside Malaysia before you buy a policy.
Getting an insurance policy is easy and convenient nowadays. Most insurers allow you to buy a policy online. You can always get a quote to calculate your premium before you purchase any policy. So compare different quotes and choose a plan that will fulfill your and your family’s needs.