Insurance can be defined as a form of risk management. Through insurance people pay a specific amount and transfer the risk associated with something to another entity. Insurance is used as a hedge against the risk of an unforeseen and uncertain loss. An insurance provider sells insurance which is bought by a person who becomes the policyholder. The amount of money that a customer pays for a certain amount of risk coverage is known as premium. This insurance premium can be payable monthly, quarterly or yearly.
The insured person receives an insurance document as a promise that the insurance provider will compensate the insured in case of any calamity that results in personal or financial loss.
What is Insurance?
Insurance is a policy agreement between two parties wherein, the insurance company guarantees to compensate the policyholder in the event of losses or damages borne by the policyholder for a fee. The policyholder is supposed to pay a fee in the form of premium to the insurance company every month.
Different Types of Insurance Policies in Malaysia
Listed below are the different types of insurance policies available in Malaysia:
- Life Insurance - Life insurance policy offers cover against any loss or damage incurred to the policyholder’s life. The beneficiary will be paid the benefit in case anything should happen to the policyholder.
- Travel Insurance - Travel insurance offers cover against any loss or damage incurred while travelling. This includes expenses incurred from flight delay, luggage delay, missed flights and more.
- Health insurance - Health insurance covers medical bills arising from hospitalisation, sickness, diseases and in some cases, critical illness.
- Home insurance - Home insurance offers cover against damage to the belongings of the house.
- Car Insurance - Motor insurance refers to insurance that is offered as financial assistance when your vehicle meets an accident or undergoes a major overhaul.
- Investment link insurance - An investment link insurance comes with the combination of life cover and investment returns. The policy not only offers life cover but also lets you earn money through investment options.
- Personal accident insurance - Personal accident cover offers cover for any damage or injury incurred from an accident.
Difference between Insurance and Takaful
More often than not, people get confused between Takaful and Conventional Insurance. Though they are based on the same idea of offering protection for a fee, there is quite a bit of difference between conventional insurance and Takaful. Takaful is a protection scheme that is based on the Shariah principles of the Islamic law. In case of Takaful, an individual contributes a certain amount of money to a common takaful fund and undertake a contract to become one of the participating members of the Takaful fund. In this contract, the participants agree to help each other out in case one of the participants suffers a defined loss. In addition, under the takaful plan, you can enjoy a share of the surplus from the takaful fund, based on a pre-agreed ratio if you have not made any claim during the year. A common misconception that most people have is that only muslims can avail takaful and this is very far from the truth as takaful is open to everyone regardless of their religion and beliefs.
Why should you buy Insurance Online?
There are several advantages to buying an insurance policy online. Let us look into some of the best reasons to purchase Insurance online:
- Purchasing insurance online saves a lot of time. Purchasing insurance online eliminates the need to visit the bank, thus saving one quite a bit of time.
- Applying for insurance online is much more convenient than doing it offline.
- Online insurance policies come with lower premiums as the insurance company saves on other expenses such as distribution channel expenses, infrastructure and other overheads.
- It is much easier to compare between policies online than offline. You can compare between insurance policies from the same bank or different banks and decide on the one that best suits your insurance requirements.
- There is lesser paperwork when you apply online compared to when you apply for the policy offline. While you will still have to upload documents, there is not much paperwork involved since you will be uploading scanned copies of the documents.
Basic Principles of Takaful
There are several principles applicable to Takaful. Listed below are some of the general, important principles of Takaful:
- The candidate wishing to be a participating member of a Takaful fund should have a genuine financial interest in the fund.
- Takaful is based on the Shariah principles which also includes principle of good faith/trust and hence, it is important that the applicant disclose all the information required.
- As a participating member of a Takaful fund, one can only recover their financial loss and not gain any profit as a result of quantifiable loss.
- The takaful operator will identify the most important cause for the loss when determining compensation.
- Once you have been compensated for the loss, the takaful operator has every right to claim from any third party for the loss.
Different Types of Takaful
There are different types of takaful plans one can opt for. Let us look into the different types of takaful policies available in Malaysia.
- Pure Family Takaful- Family Takaful plan provides the customer the double benefit of protection and long term savings plan. The policyholder and the beneficiary will be provided with financial benefits in case they suffer a loss. The policyholder also gets to enjoy investment returns because a part of their investment savings will be deposited to their account as savings.
- Investment linked Takaful - An Investment linked Takaful plan is a combination of investment and takaful. The policyholder’s contribution to the takaful fund gives them takaful cover including death and disability benefit along with investment options in a wide range of Shariah approved investment funds. The policyholder can change their contribution according to their financial situation. Another advantage of the scheme is that the policyholder can change between investment funds anytime they want.
- Child Education Takaful - Child Education Takaful as the name indicates is a takaful plan that not only offers protection but also offers the chance to invest in a long term savings plan to finance your kid’s higher education costs. Your child will be eligible for financial benefits if you suffer any of the losses mentioned in the plan.
- Medical & Health Takaful - Medical & Health Takaful offers cover for a wide range of private medical treatments such as hospitalisation, surgery and other treatment. The policy also pays up if you are diagnosed with a certain illness or get injured in an accident. This can be opted for as a stand alone policy or an add on for a family takaful plan.
- Home Takaful - There are two types of Home Takaful- The Houseowner's home takaful and the Householders takaful. While the first policy covers the house owner’s property against loss or damage caused by floods, fires and other such perils, the second policy offers cover against the damage to the contents or belongings of the house. The houseowner’s home takaful not only offers cover for the house but it also offers cover for the garage, fence and more.
- Motor Takaful - Motor takaful as the name suggests offers cover against loss or damage incurred to the policyholder’s vehicle due to accidental fire, theft or accident. It also covers bodily injury or death of a third party as well as loss or damage of a third party’s property.
- Personal Accident Takaful - Personal accident (PA) takaful is an annual plan that provides you or your beneficiaries with compensation in the event of death, disablement or injuries arising from an accident.
How to apply for a Takaful cover?
One can apply for takaful online or offline:
- They can apply for the policy at takaful providers.
- They can apply for it through registered or licensed brokers.
- They can apply for it from banking institutions that have bank assurance arrangements with takaful operators.
How to apply for insurance online?
One can also apply for insurance online without any hassle. The applicant can visit the bank’s official website or a third party website and apply for the product there. They can compare between schemes and decide the best one based on the features and benefits of the policy. The applicant can fill the form, upload the necessary documents online, and pay the fee all at once. Purchasing insurance online will not only save a lot of time but it will save a lot of physical paperwork.
Top 10 insurance companies in MalaysiaTop 10 Insurance Companies in Malaysia Our top picks for best insurance companies in Malaysia is based on several factors, such as product offering, brand name, claim settlements and things like customer feedback etc. These companies have existed in Malaysia and hold a base here in one of the main cities in the country.
- AIA Insurance:
AIA Malaysia has operated in the country for more than 60 years and is often quoted as being the largest insurance providing company in the nation. The tied up agency force of AIA is close to 17,000 strong along with exclusive bancassurance partnership, which helps serve more than 2.6 million policy holders in Malaysia. People not only have access to great life insurance products but also a wide range of general insurance. From medical insurance, that provides instant source of financial aid at emergencies to car insurance product based on the Malaysian car insurance requirements.AIA Insurance is said to to majorly be the largest of its kind because of its humongous multichannel distribution system, which is majorly driven with the help of their agency force that is both dense and efficient.
- ACE Insurance:
A part of the ACE Group ACE Jerneh Insurance is said to be one of the largest insurance providers in the world, operating in 54 countries around the globe. ACE insurance is supposed to highly specialised in insurance solutions for both personal and commercial property insurance, accident insurance, casualty insurance, along with the regular life insurance products. Like AIA Insurance, ACE Jerneh also thrives on their large multi channel distribution system. They are more than 2000 agents strong supporting 23 branch offices across the country. Some of their major general insurance products include Health and Life insurance plans, motor insurance and even dental insurance.
- AIG Insurance:
AIG Insurance have always been known to industry leader, when it comes to insurance for property casualty along with retirement insurance and of course the quintessential life and mortgage insurance. They are even well reputed for their aircraft leasing insurance products. Based out of Kuala Lumpur, in Malaysia as early as 1953 was eventually locally incorporates in 2008. In less than a decade the company is the proud owner of 14 offices supported by over 3000 professional agents, staff and brokers. AIG Insurance is indeed said to be one of the best insurance providers in the world with over 88 million satisfied customers, globally.
- Allianz Insurance:
Allianz is said to be stably positioned even when it comes their quarterly earnings results also doing well in the Malaysian stock markets. In the quarter ending in March 2015 the company made over RM 73.6 million which is equal to USD 17.4 million. The company also has 12.2% of the total industry market share as of December, 2013. Allianz has over 35 branches spread across major cities in the country.The customer base is around 24 million people strong with simple microinsurance products, as of 2013. They even released their first Sustainability Report in 2011 to project transparency detailing on their performance that is non - financial. Allianz Insurance, established only 14 years ago have established a stronghold in the insurance industry in Malaysia.
- AXA Affin Insurance:
AXA Affin Insurance has been operating in Malaysia with a license as an insurance provider since 1975. So far they have served over 500,000 customers and counting. It has a well spread network of offices with 22 branches all over Malaysia and counting. Some of the major highlights of their insurance product include low premium rates, easy paper work, great customer name and a brand name recognised all over the World. They also have a reasonable turn around time for claim settlements at 10 working days. They specialise in general insurance products including car and medical insurance.
- Etiqa Insurance:
This insurance provider is an arm of the Maybank Group which is one of the largest financial institutions in Malaysia. Their main intention and goal is to eradicate complexities of insurance products especially when it comes to understanding complicated jargons or hidden clauses in policies that not only confuse people but often let them feeling cheated. They do have aggressive approach with a gigantic network of over 27,000 Etiqa Insurance agents operating across Malaysia. The range of products is bespoked to the needs and requirements of the Malaysian residents for both regular life insurance and general insurance products as well savings and retirement plans.
- Kurnia Insurance:
Established and based out of Petaling Jaya since 1977 in Malaysia Kurnia insurance, provides comprehensive insurance solutions for casualty, property, medical, motor, accident, and something as exclusive as pet insurance. Kurnia Insurance also has huge distribution channel with over 7000 agents and counting. Under Ambank this company is well reputed in general insurance products and have a very positive image when it comes to their corporate profile.
- Lonpac Insurance:
Lonpac has been operating in Malaysia since 1999. Within less than 2 decades in the country they have already grown as a company to have a network of 21 branches in the country and an office in Singapore. The company provides a wide variety of insurance products that include health insurance. comprehensive insurance cover for personal accidental protection, vehicles etc. Lonpac Insurance has both personal and business based insurance products based on the prospective customer’s requirements from insurance. Lonpac Insurance Bhd is said to be one of the leading market players in the industry with experience in Malaysia with in-depth knowledge of customer relations as well as bespoking their service to meet consumer needs.
- MSIG Insurance:
One of the quickest ways to spot a company’s performance is to see how they are doing in the market. Hence it is essential to quote that this insurance providing company made a gross premium sum of RM1.5 Billion in 2014. In 2014, MSIG Malaysia had an excellent market share of 8.7%. MSIG insurance also caters commercial insurance along as well as foreign worker insurance. They operate as a subsidiary of MS&AD Insurance Group Holdings, Inc in Malaysia. They are also well-known for having a very efficient customer service base which has become extremely important in the market today.
- RHB Insurance:
This bank operates in all the South-east Asian countries and Myanmar as well and has established themselves in financial products with much efficiency. They have a wide range of general insurance products as well as regular life covers and savings plans when it comes to this industry. They are well known for motor insurance as well. The product range is comprehensive and well-designed. RHB Insurance also has bancassurance products as well.
- What is meant by a participating insurance policy?
A participating insurance policy enables a policyholder to share in the profit of the insurance company.
- How do I know whether an insurance agent is authorized to sell insurance policies?
All authorized insurance agents are supposed to have valid LIAM (Life Insurance Association of Malaysia) identity cards which should be produced when you ask.
- Can I pay policy premiums through the agent?
Yes. Policy premiums can be paid either directly to the insurance provider or via the insurance agent. In both the cases, you should ensure you receive the relevant receipt.
- What if I miss paying my insurance premium on time?
In case you miss paying your insurance premium, a grace period will be given to you after which a certain late payment fee might be levied. In case of repeated or prolonged non-payment of premium, the insurance policy may be canceled or may lapse which can then be renewed by getting in touch with the insurance provider.
- What is a free-look period?
Free-look period is the time that an insurance provider gives its customers to read up the policy and return it if he/she is not satisfied. In such cases, the premium paid by the customer is refunded entirely.
News about Insurances
Code launched by Insurance association to boost consumer confidence
The PDPA (Code of Practice on Personal Data Protection Act) launched a code to boost the consumer confidence in the reliability of takaful and insurance industry. This code is an initiative of Life Insurance Association of Malaysia, Malaysian Takaful Association, and General Insurance Association of Malaysia. The code has set up strict procedures so as to safeguard the personal data in takaful, general, and life insurance. The data will be capped, protected, and accurate. The code of practice was consolidated so that there is consistent practice by the insurance players. Training will be provided to the takaful and insurance staff.
1st March 2017
Takaful industry saw a double-digit growth
The Islamic insurance industry in Malaysia saw a double-digit growth in 2016. The Malaysian Life Insurance industry saw a growth by 16.2% with a total annual premium of RM5.71 billion. The growth was partially because of the sale of products for smaller premium terms. The coverage that the life insurance industry saw for 2016 was priced at RM1.3 trillion which was 4.85 more than 2015. The coverage of life insurance industry was RM1.24 trillion in 2015. The president of Life Insurance Association of Malaysia, Toi See Jong said that the life insurance industry is rooting for a single-digit growth for 2017.
27th February 2017
RM213.45 million penalties imposed on general insurers
The general insurers will take action and protect themselves from the Malaysia Competition Commission’s decision to fine the members of PIAM for breach of anti-competition laws. Allianz Malaysia told that Allianz General Insurance Company’s share of the penalty is RM27.48 million. The rates were applied based on the circular issued by PIAM which rose from Bank Negara Malaysia’s directive to resolve the issues of labour hourly rates and parts trade discounts.
3rd February 2017
Public support needed to implement national health insurance policy
The Health Minister, Datuk Seri Dr. S Subramaniam said that there is a need for public support to implement the national health insurance policy. The public cries each time there is an increase in charges. Most doctors in Malaysia want a single payer policy and the multiple provider systems should be managed by the Health Ministry and bridge the gap between public and private hospitals. While this looks good on paper, the implementation will take time.
16th January 2017
Limited pay Insurance Savings plan launched by CIMB and Sun Life
CIMB and Sun Life launched a savings plan with wealth protection and guaranteed benefits. There has been RM21 million sales since the soft launch. This is the latest limited pay insurance savings plan that has been launched by CIMB. This plan is developed exclusively for CIMB and its bancassurance partner. This is a non-participating universal life plan which provides guaranteed wealth preservation of basic premium. It offer potential growth from investment returns. The guaranteed acceptance and enrolment makes it hassle-free for the customers.
21st November 2016
Allianz Malaysia may possibly take over HSBC Amanah Takaful
There have been talks by Allianz to acquire 100% equity interest in HSBC Amanah Takaful as it wants to secure Islamic insurance business. Allianz said that Bank Negara had no objection in principle for the company to begin the negotiations. The central bank’s approval will be subject to all the parties concluding their negotiations within 6 months. Before entering the agreement, the parties will have to get prior written approval from Bank Negara or the Finance Minister. Allianz had approached other banks in Malaysia, but they were mostly overpriced.
4th November 2016
BNM Governor says that the Malaysian Insurance industry is not up to the mark yet
Bank Negara Malaysia Governor, Datuk Muhammad Ibrahim says that the insurance industry has not delivered the required results that were expected. The total assets of insurance and takaful sector has expanded at an annual rate of 13.3%. He pointed out that the growth of the insurance industry has started to plateau in the recent years. He also said that the industry has been approaching the point of inflection in the S-curve. He however mentioned that the growth potential for the insurance industry remains significant.
27th October 2016
Several insurance companies getting investigated by MyCC
Several general insurance companies are being investigated by the Malaysia Competition Commission for allegedly being involved in the anti-competition agreements in the motor vehicle repair industry. The commercial activities are being investigated, especially activities concerning discounts, labour cost, etc. MyCC will monitor the activities of the associations to ensure that the related industries are not involved in activities that can prevent, prohibit and interfere with the competition in the market. If there has been any violation of the act, it will result in monetary penalty of 10% of the total revenue throughout the violation period.
25th October 2016
AmGeneral Insurance Berhad to provide cover for Snatch Thieves
Considering the huge demand for insurance coverage in Malaysia caused by car accidents, AmGeneral Insurance Berhad has decided to provide a lump sum amount of RM1, 500 to insured individuals who have enrolled for its Perfect Rider Plus Personal Accident Protection Plan. The main purpose behind the launch of this additional benefit is to compensate for “Snatch Thieves” in Malaysia.
These days driving on Malaysian roads has become complicated because of poor road condition, and it has lead to many car accidents that have led people seek more insurance coverage. This additional benefit would take care of repairing of broken car windows, windscreens, and loss of personal items from vehicles.
16th May 2016
Hong Leong Assurance Introduces New plan For Disabled
Hong Leong Assurance Bhd (HLA) recently launched the new plan called HLA Prime Living with the aim to help ease the financial burden of those with loss of income due to disability.
In a statement on Thursday, HLA mentioned that this is a simple plan which comes with a hassle-free application process, gives the life assured a yearly allowance upon total and permanent disability or old age disablement as well.
The group also mentioned that the dual income families are generally the trend in Malaysia, and hence would suffer from strained finances if one of the partner become disabled.
Based on a research conducted by Life Insurance and Family Takaful Framework by Bank Negara Malaysia last November, only 55.5% Malaysians were insured as of 2014.
HLA finally added that, “We will continue to drive innovations and provide more value-added products to meet the evolving needs of consumers at different stages of their lives.”
21st April 2016