The limit of your liability for a lost or stolen credit card is RM250.00 only under Rule 13.2 of the Bank Negara rules on credit card if it has been fraudulently used. Please note this limit and ensure that your bank does not overcharge you should your card have been used illegally.
Cardholders need not pay more than RM250 whenever their lost or stolen credit cards are used by others. Yet, often times, they end up paying much more. This is because Bank Negara has not informed cardholders that they do not have to pay more than RM250for fraudulent transactions carried out using their lost or stolen cards, when they had not acted fraudulently and had informed the banks about the lost or stolen cards as soon as possible.
This protection is given under Clause 13.2 of Bank Negara's Credit Card Guideline:
"The cardholder's maximum liability for unauthorised transactions as a consequence of a lost or stolen credit card shall be confined to a limit specified by the issuer of credit cards, which shall not exceed RM250 provided the cardholde has not acted fraudulently or has not failed to inform the issuer of credit cards as soon as reasonably practicable after having found that his credit card is lost or stolen."
Banks know about Clause 13.2 but have chosen to ignore it. Instead they pursue cardholders for the fraudulent transactions. They will tell cardholders that a clause in the credit card contracts states that all transactions carried out before the loss of the cards are reported to the banks, are deemed to be carried out by the cardholders. Many cardholders then pay up because they are unaware of the RM250 limited liability.
Bank Negara should rule that: *THE RM250 maximum liability on fraudulent ransactions is highlighted to cardholders in the card agreements as well as in the monthly card statements.
*BANKS are not allowed to insert any clause in the card agreement which is contrary to Clause 13.2.
*BANKS should refund all money in excess of the RM250 collected from cardholders whose cases clearly come under Clause 13.2.
S.M. MOHAMED IDRIS,
President, Consumers Association of Penang
Wednesday, November 24, 2010
Tuesday, November 23, 2010
Medical Insurance
WE read of young and healthy people who, without any warning, suffer a heart attack. Closer to home, your child may fall prey to the aedes mosquito and get dengue. Or, you could simply trip and break a leg.
Whatever it is, when the hospital bill comes in, you'll probably suffer another blow when you see how the cost of treatment and medication all add up.
Some people argue that it is too expensive – you pay so much and get nothing in return. But that's the thing with insurance – you take it in the hope that you won't have to use it. But should you ever do, you will definitely be glad to have had the foresight to sign up for it.
And, the earlier you sign up the better. Premiums are lower if you purchase coverage at a younger age, and when you are still medically fit. Those who insure themselves when they're older may have to pay higher premiums or be subjected to certain exclusions. And there have been cases of applicants being rejected because of their health.
As for the cost, there are various types of insurance to meet different needs. And you can tailor medical plans according to your budget, says Heng Zee Wang, chief product and marketing officer of Prudential Assurance Malaysia Bhd.
"The cost of hospitalisation is very high, so it's important that you have a medical card. You can have a basic insurance plan that comes with medical card for as low as RM100 a month, so it will cover room and board for that amount."
Before signing on the dotted line, there are some things to take note of.
"You must know what coverage you want and look at what's available. Even if you take a basic plan initially, you can upgrade it as you go along. Look at the terms and conditions, the inclusions and coverage waiting period. This is important to avoid disputes later on," Heng adds.
Some people reason that as long as they are working, their hospital bills will be taken care of by their employer because "my company already provides medical coverage".
What they may not be aware of is that once they leave the company, the cover will terminate. The same regulations apply come retirement. In Malaysia, most private company do not cover employees after they retire from work.
By then it will not be easy to purchase your own medical insurance because of the age factor, and the state of your health. Even if you do sign up for a policy, the premium will probably be higher, and certain illnesses may not be covered.
If you are aware of the benefits of medical insurance but are baffled by the different kinds of plans out there, here are some guidelines from insurance professionals.
To enjoy comprehensive health care protection, ideally you should have:
* A hospitalisation and surgical insurance plan which covers room and board, laboratory fees, use of special facilities, nursing care, and certain medicines and supplies which are medically necessary.
* A critical illness plan. With this, the policy-holder will get a lump sum cash payment from the insurance company if he/she is diagnosed with any of the critical illnesses listed under the policy.
* A hospital income plan that provides income replacement should the insured person be hospitalised due to an accident or illness.
* A disability income plan that covers the policy-holder's day-to-day expenses if he/she is unable to work due to an accident or illness.
How about complaints that "we pay so much for insurance but don't get anything in return"?
Heng says his company has introduced a medical plan which allows the policy-holder to get a no-claims bonus if he/she does not make any claims. It is an indirect way of rewarding customers for staying healthy.
The plan works very much like motor insurance: those who don't submit any claim during a policy year will get a bonus, which is automatically converted into additional units. These units will be invested in investment-linked funds of your choice, thus increasing the value of your policy.
Claims is another issue that is often the bane of many. Heng's advice is to ask the right questions before buying your policy. If you don't, you may encounter problems when it comes to making claims.
Presently, an e-mail is being circulated concerning the case of a woman in Singapore who found herself in a such a predicament. She says she has three policies which cover her for critical illness but has not been able to make any claims because they do not cover ductal carcinomas-in-situ or Stage 0 breast cancer.
What is the fine print that you should read carefully when it comes to a critical illness plan?
Heng explains that typically, this plan excludes medical conditions such as carcinoma-in-situ (or early stage cancer, where the cancerous cells have not moved out of the area of the body where they originally developed).
In Singapore, each of the critical illnesses stated in a policy contract follows a set of definitions given by the Life Insurance Association of Singapore. These standard definitions apply to the critical illness policies offered by life insurance companies in the country.
Insurance companies here follow definitions laid down by the Life Insurance Association of Malaysia (LIAM).
However, Heng adds, it is possible for the policy-holder who has been diagnosed with carcinoma-in-situ to claim for the cost of treatment for her condition, provided she has an existing medical plan. This may include expenses for her hospitalisation, surgery and post-hospitalisation treatment.
There are also certain insurance plans in the market which provide payouts for early stages of cancer.
So, it is vital to ask questions and know what you need. And be prepared to review your policy as your needs grow. One hopes never to have to turn to medical insurance, but it certainly is reassuring to know there is a security blanket at hand should the need ever arise.
Checklist
WHAT to do when buying medical insurance:
1) Understand what your needs are and how much you can put aside regularly. Seek your agent's advice before choosing a plan that suits you best.
2) Understand what the terms and conditions are, as well as the scope of cover provided under the policy. What are the benefits? What is NOT covered? How long is the coverage for? What is the waiting period? What is the limit (both annual and lifetime) you can claim?
3) Is there any co-insurance? Co-insurance is a cost-sharing arrangement between the insurer and policyholder. For example, co-insurance on a 10/90 basis means the policyholder will pay 10% of the bill, and the insurer will pay the balance, subject to the terms and conditions of the policy.
4) Will the premium remain the same amount throughout the duration of the policy, or will it increase according to age?
5) It is important to disclose details of your or your family's medical history (if any) at the time of purchase, to avoid any dispute in the future.
6) Take time to talk to your agent about the claims procedure, so you are aware of what's involved.
7) All insurance companies offer a 15-day free look. If you do not find the policy suitable and return it within that period, you are entitled to a refund of the premium paid (subject to terms and conditions).
8) Review your medical insurance plan at least once a year. This is important, especially with the cost of health care outpacing inflation. Chances are the plan you bought some years back may not be enough to meet future needs. Upgrade if you can afford it, so you will have the financial resources to meet rising medical costs, particularly after retirement.
Whatever it is, when the hospital bill comes in, you'll probably suffer another blow when you see how the cost of treatment and medication all add up.
Some people argue that it is too expensive – you pay so much and get nothing in return. But that's the thing with insurance – you take it in the hope that you won't have to use it. But should you ever do, you will definitely be glad to have had the foresight to sign up for it.
And, the earlier you sign up the better. Premiums are lower if you purchase coverage at a younger age, and when you are still medically fit. Those who insure themselves when they're older may have to pay higher premiums or be subjected to certain exclusions. And there have been cases of applicants being rejected because of their health.
As for the cost, there are various types of insurance to meet different needs. And you can tailor medical plans according to your budget, says Heng Zee Wang, chief product and marketing officer of Prudential Assurance Malaysia Bhd.
"The cost of hospitalisation is very high, so it's important that you have a medical card. You can have a basic insurance plan that comes with medical card for as low as RM100 a month, so it will cover room and board for that amount."
Before signing on the dotted line, there are some things to take note of.
"You must know what coverage you want and look at what's available. Even if you take a basic plan initially, you can upgrade it as you go along. Look at the terms and conditions, the inclusions and coverage waiting period. This is important to avoid disputes later on," Heng adds.
Some people reason that as long as they are working, their hospital bills will be taken care of by their employer because "my company already provides medical coverage".
What they may not be aware of is that once they leave the company, the cover will terminate. The same regulations apply come retirement. In Malaysia, most private company do not cover employees after they retire from work.
By then it will not be easy to purchase your own medical insurance because of the age factor, and the state of your health. Even if you do sign up for a policy, the premium will probably be higher, and certain illnesses may not be covered.
If you are aware of the benefits of medical insurance but are baffled by the different kinds of plans out there, here are some guidelines from insurance professionals.
To enjoy comprehensive health care protection, ideally you should have:
* A hospitalisation and surgical insurance plan which covers room and board, laboratory fees, use of special facilities, nursing care, and certain medicines and supplies which are medically necessary.
* A critical illness plan. With this, the policy-holder will get a lump sum cash payment from the insurance company if he/she is diagnosed with any of the critical illnesses listed under the policy.
* A hospital income plan that provides income replacement should the insured person be hospitalised due to an accident or illness.
* A disability income plan that covers the policy-holder's day-to-day expenses if he/she is unable to work due to an accident or illness.
How about complaints that "we pay so much for insurance but don't get anything in return"?
Heng says his company has introduced a medical plan which allows the policy-holder to get a no-claims bonus if he/she does not make any claims. It is an indirect way of rewarding customers for staying healthy.
The plan works very much like motor insurance: those who don't submit any claim during a policy year will get a bonus, which is automatically converted into additional units. These units will be invested in investment-linked funds of your choice, thus increasing the value of your policy.
Claims is another issue that is often the bane of many. Heng's advice is to ask the right questions before buying your policy. If you don't, you may encounter problems when it comes to making claims.
Presently, an e-mail is being circulated concerning the case of a woman in Singapore who found herself in a such a predicament. She says she has three policies which cover her for critical illness but has not been able to make any claims because they do not cover ductal carcinomas-in-situ or Stage 0 breast cancer.
What is the fine print that you should read carefully when it comes to a critical illness plan?
Heng explains that typically, this plan excludes medical conditions such as carcinoma-in-situ (or early stage cancer, where the cancerous cells have not moved out of the area of the body where they originally developed).
In Singapore, each of the critical illnesses stated in a policy contract follows a set of definitions given by the Life Insurance Association of Singapore. These standard definitions apply to the critical illness policies offered by life insurance companies in the country.
Insurance companies here follow definitions laid down by the Life Insurance Association of Malaysia (LIAM).
However, Heng adds, it is possible for the policy-holder who has been diagnosed with carcinoma-in-situ to claim for the cost of treatment for her condition, provided she has an existing medical plan. This may include expenses for her hospitalisation, surgery and post-hospitalisation treatment.
There are also certain insurance plans in the market which provide payouts for early stages of cancer.
So, it is vital to ask questions and know what you need. And be prepared to review your policy as your needs grow. One hopes never to have to turn to medical insurance, but it certainly is reassuring to know there is a security blanket at hand should the need ever arise.
Checklist
WHAT to do when buying medical insurance:
1) Understand what your needs are and how much you can put aside regularly. Seek your agent's advice before choosing a plan that suits you best.
2) Understand what the terms and conditions are, as well as the scope of cover provided under the policy. What are the benefits? What is NOT covered? How long is the coverage for? What is the waiting period? What is the limit (both annual and lifetime) you can claim?
3) Is there any co-insurance? Co-insurance is a cost-sharing arrangement between the insurer and policyholder. For example, co-insurance on a 10/90 basis means the policyholder will pay 10% of the bill, and the insurer will pay the balance, subject to the terms and conditions of the policy.
4) Will the premium remain the same amount throughout the duration of the policy, or will it increase according to age?
5) It is important to disclose details of your or your family's medical history (if any) at the time of purchase, to avoid any dispute in the future.
6) Take time to talk to your agent about the claims procedure, so you are aware of what's involved.
7) All insurance companies offer a 15-day free look. If you do not find the policy suitable and return it within that period, you are entitled to a refund of the premium paid (subject to terms and conditions).
8) Review your medical insurance plan at least once a year. This is important, especially with the cost of health care outpacing inflation. Chances are the plan you bought some years back may not be enough to meet future needs. Upgrade if you can afford it, so you will have the financial resources to meet rising medical costs, particularly after retirement.
Planning For Child Education
WITH inflation and the cost of education going up year after year, parents need to plan ahead if they want to send their children for further studies. A child education policy should have medical protection as well as savings, says Andrew Liao, a senior wealth planner with Prudential Assurance Malaysia Bhd.
A lot of people place savings as low priority, thinking they only need to worry about it when the child is older. In fact, it is a long-term commitment and one can begin, painlessly, by putting aside a small amount monthly, until it becomes a habit to save.
“When a child is born, you should have both medical plus education insurance,” Liao adds. “You can design a plan for protection, and add to it later according to your budget.”
Now, there is even a policy which protects both the foetus and the expectant mother.
Liao emphasises the need to look at protection for the parents as well because, should anything happen to them, their child will be protected. “It does not have to cost a lot. You can start with as little as RM100 a month, and adjust the policy as the years go by.”
What are the savings and investment tools available for those who want to finance their children’s tertiary education? Normal savings plans, fixed deposits and unit trusts are the more common options. There is also the National Education Savings Scheme (SSPN), designed especially by the National Higher Education Fund Corporation.
Then there is the child education policy. Basically, this is a life insurance plan designed to provide the child with a sum of money for university or college. By combining protection with savings, it is one up on the savings plan. Besides, there is the “continuity” factor.
An ordinary savings plan stops should something unfortunate happen to the parent paying for it. But with child education policies, most insurers offer a payor rider. This means future premiums will be paid for if that parent becomes disabled, or dies.
Thus the child’s education fund is secured and will continue to grow. And when the policy matures, she will have the financial means to further her studies. In view of how the cost of higher education is expected to increase over the years starting early will give parents more time to accumulate enough funds for their children.
But what are the things they need to know before signing up for a policy?
First, decide where you plan to send your child (a local university or abroad?), the field of study and how long the course will take. This will influence the expected cost of education. Often, parents fail to save enough and have to resort to loans when the time comes.
Determine your budget. Decide the amount you can set aside monthly, or annually, and ensure that you can afford the premiums in the long run.
Factor in inflation and escalating costs for tertiary education. Review your policy every one to two years because as the economy changes, your financial situation may change too.
Diversify your financial portfolio. If possible, get a wealth planner to help you find the best products for your needs. Having different kinds of investments – which give different returns – means better protection because you won’t have to depend on just one form of investment.
Finally, buying a child’s education fund entitles you to tax relief of up to RM3,000 for the payment of premiums.
Visit the Inland Revenue Board’s website (www.hasil.gov.my) to see how you can save for your child’s education and pay less tax, too.
A lot of people place savings as low priority, thinking they only need to worry about it when the child is older. In fact, it is a long-term commitment and one can begin, painlessly, by putting aside a small amount monthly, until it becomes a habit to save.
“When a child is born, you should have both medical plus education insurance,” Liao adds. “You can design a plan for protection, and add to it later according to your budget.”
Now, there is even a policy which protects both the foetus and the expectant mother.
Liao emphasises the need to look at protection for the parents as well because, should anything happen to them, their child will be protected. “It does not have to cost a lot. You can start with as little as RM100 a month, and adjust the policy as the years go by.”
What are the savings and investment tools available for those who want to finance their children’s tertiary education? Normal savings plans, fixed deposits and unit trusts are the more common options. There is also the National Education Savings Scheme (SSPN), designed especially by the National Higher Education Fund Corporation.
Then there is the child education policy. Basically, this is a life insurance plan designed to provide the child with a sum of money for university or college. By combining protection with savings, it is one up on the savings plan. Besides, there is the “continuity” factor.
An ordinary savings plan stops should something unfortunate happen to the parent paying for it. But with child education policies, most insurers offer a payor rider. This means future premiums will be paid for if that parent becomes disabled, or dies.
Thus the child’s education fund is secured and will continue to grow. And when the policy matures, she will have the financial means to further her studies. In view of how the cost of higher education is expected to increase over the years starting early will give parents more time to accumulate enough funds for their children.
But what are the things they need to know before signing up for a policy?
First, decide where you plan to send your child (a local university or abroad?), the field of study and how long the course will take. This will influence the expected cost of education. Often, parents fail to save enough and have to resort to loans when the time comes.
Determine your budget. Decide the amount you can set aside monthly, or annually, and ensure that you can afford the premiums in the long run.
Factor in inflation and escalating costs for tertiary education. Review your policy every one to two years because as the economy changes, your financial situation may change too.
Diversify your financial portfolio. If possible, get a wealth planner to help you find the best products for your needs. Having different kinds of investments – which give different returns – means better protection because you won’t have to depend on just one form of investment.
Finally, buying a child’s education fund entitles you to tax relief of up to RM3,000 for the payment of premiums.
Visit the Inland Revenue Board’s website (www.hasil.gov.my) to see how you can save for your child’s education and pay less tax, too.
Friday, November 19, 2010
Bancassurance - Growth
Analyst Prathima Rajan has written a couple blogs on bancassurance as a growing distribution channel in Asia-Pacific. Continuing her work in that vein, her recent research backs up her previous statements that while Asia-Pacific is agent-dominated in terms of both life and non-life distribution, bancassurance is quickly growing.
According to Rajan’s research, penetration of bancassurance in the life insurance market ranges from 10% in countries such as India, Japan and Thailand to as high as 50% to 70% of total insurance distribution in countries such as Taiwan and Malaysia.
Celent recognizes that life insurance products are most suited to be sold via bancassurance, but eventually bancassurance should grow in the P&C segment, noting that in the most mature markets, such as South Korea, property insurance sold via bancassurance already accounts for 5%.
The report provides region-specific information, including:
• Mainland China. Bancassurance accounted for 27% of insurance sales; the agent channel dominated (37%) in 2009. The insurance market in China is undergoing structural changes that are expected to boost the premium income of insurers using the banking channel.
• Hong Kong. Banks have become an important distribution channel for life, health and mandatory provident funds, supplying up to 40% of new business. HSBC and Hang Seng Bank together held 40% of the Mandatory Provident Fund (MPF) market.
• Taiwan. The "one-stop shop" has become a common approach for banks. Premium income for individual life insurance new business from bancassurance accounted for 68% in 2009. Banks contributed 88% to new individual annuities, 66% to new investment-linked business, and 51% to new life insurance business. Agents and brokers dominate the P&C market (67%), while the personal accident/ health Insurance is mostly undertaken by insurance companies (91%).
• Singapore. Insurance agents make up the main sales channel for life insurance. The market share, however, has declined from 66% in 2004 to 61% in 2009. Bancassurance accounted for 22% of the total weighted new business premium income.
• Malaysia. Bancassurance has grown from 45% in 2005 to 51% in 2008. The agency network had traditionally been the main distribution method, but it has gradually lost some ground to bancassurance. Agency network accounted for 47% of the market in 2004 but was down to 44% in 2008. Domestic insurers account for over 80% of bancassurance market.
• South Korea. Solicitors and internal employees make up the main sales channel for the life insurance industry. In 2008, the bank channel grew to 37%, second only to solicitors and employees of insurance companies at 54%. In India, tied agents dominate life insurance, more so with the state-owned Life Insurance Corporation of India (LIC). Individual agents generate more than 75% of new business premium. However, individual agents in private companies account for less than 50% of total sales, while more than 40% is attributed to the bank and direct selling channel. Banks and brokerage firms have 30% and 20% respectively of the P&C insurance market.
Celent says the relationship between bank and insurance partners is a vital part of a successful bancassurance strategy. As insurers actively look at partnering with several banks in the days to come, Celent sees banks and insurers venturing into multiple partnership agreements. The analyst firm is of the opinion that the many-to-many concept, where banks are partnering with multiple insurers, will not be sustainable in the long run. This will result in lack of focus and dilution in product specialization, making the channel less effective.
Insurance companies need to understand the importance of banks’ brands, and thereby help banking customers maintain long-term relationships rather than focus on short-term revenues via commissions or fees. Additionally, banks and insurers need to forge exclusive partnerships that are mutually beneficial, which in turn shifts the industry away from the current many-to-many model. It is of utmost importance to offer innovative products via bundling/packaging, white-labeling, etc., Celent says.
According to Rajan’s research, penetration of bancassurance in the life insurance market ranges from 10% in countries such as India, Japan and Thailand to as high as 50% to 70% of total insurance distribution in countries such as Taiwan and Malaysia.
Celent recognizes that life insurance products are most suited to be sold via bancassurance, but eventually bancassurance should grow in the P&C segment, noting that in the most mature markets, such as South Korea, property insurance sold via bancassurance already accounts for 5%.
The report provides region-specific information, including:
• Mainland China. Bancassurance accounted for 27% of insurance sales; the agent channel dominated (37%) in 2009. The insurance market in China is undergoing structural changes that are expected to boost the premium income of insurers using the banking channel.
• Hong Kong. Banks have become an important distribution channel for life, health and mandatory provident funds, supplying up to 40% of new business. HSBC and Hang Seng Bank together held 40% of the Mandatory Provident Fund (MPF) market.
• Taiwan. The "one-stop shop" has become a common approach for banks. Premium income for individual life insurance new business from bancassurance accounted for 68% in 2009. Banks contributed 88% to new individual annuities, 66% to new investment-linked business, and 51% to new life insurance business. Agents and brokers dominate the P&C market (67%), while the personal accident/ health Insurance is mostly undertaken by insurance companies (91%).
• Singapore. Insurance agents make up the main sales channel for life insurance. The market share, however, has declined from 66% in 2004 to 61% in 2009. Bancassurance accounted for 22% of the total weighted new business premium income.
• Malaysia. Bancassurance has grown from 45% in 2005 to 51% in 2008. The agency network had traditionally been the main distribution method, but it has gradually lost some ground to bancassurance. Agency network accounted for 47% of the market in 2004 but was down to 44% in 2008. Domestic insurers account for over 80% of bancassurance market.
• South Korea. Solicitors and internal employees make up the main sales channel for the life insurance industry. In 2008, the bank channel grew to 37%, second only to solicitors and employees of insurance companies at 54%. In India, tied agents dominate life insurance, more so with the state-owned Life Insurance Corporation of India (LIC). Individual agents generate more than 75% of new business premium. However, individual agents in private companies account for less than 50% of total sales, while more than 40% is attributed to the bank and direct selling channel. Banks and brokerage firms have 30% and 20% respectively of the P&C insurance market.
Celent says the relationship between bank and insurance partners is a vital part of a successful bancassurance strategy. As insurers actively look at partnering with several banks in the days to come, Celent sees banks and insurers venturing into multiple partnership agreements. The analyst firm is of the opinion that the many-to-many concept, where banks are partnering with multiple insurers, will not be sustainable in the long run. This will result in lack of focus and dilution in product specialization, making the channel less effective.
Insurance companies need to understand the importance of banks’ brands, and thereby help banking customers maintain long-term relationships rather than focus on short-term revenues via commissions or fees. Additionally, banks and insurers need to forge exclusive partnerships that are mutually beneficial, which in turn shifts the industry away from the current many-to-many model. It is of utmost importance to offer innovative products via bundling/packaging, white-labeling, etc., Celent says.
Tuesday, November 16, 2010
Dual Agency Distribution
PETALING JAYA: The dual agency concept, where conventional and takaful policies are sold by the same agents, is gaining popularity, especially among bigger insurance players, as an effective way to boost market share and deepen the penetration rate of insurance in the country.
Some may not agree to this method and instead sell separate policies, but judging from the pace of its adoption among insurers, it is fast making headway amid new players coming into the market.
Great Eastern Takaful Sdn Bhd chief executive officer Mohamad Salihuddin Ahmad said the company would adopt the dual agency or a single structure concept akin to a one-stop agency system that distribute both conventional and takaful products.
Great Eastern Takaful Sdn Bhd CEO Mohamad Salihuddin Ahmad
He added the three major conventional insurance players like Great Eastern Life Assurance Malaysia (GELM), Prudential Assurance Malaysia Bhd (PAMB) and American International Assurance Bhd (AIA) were adopting the single structure system.
Salihuddin said having almost two thirds of the conventional market share amongst themselves, these three players, by adopting a single structure or dual agency concept, would definitely make a huge impact in the takaful industry with their local joint venture partners respectively.
By adopting the one-stop or dual agency approach, he said the takaful operators, especially the new ones, would have an immediate access to the experienced and professionally-trained agency force .
It would also assist them to make a quick entry into the takaful industry and help manage the initial set-up costs, he noted.
Furthermore, adopting this approach was a huge step towards developing or moulding the agency force to be a complete and well rounded professional financial advisor, he said.
The only disadvantage for this approach, he said, would be the possibility of “mis-selling” by some of these dual agents, adding that the onus here would be on the takaful operators to provide structured training programmes to ensure they knew the difference between takaful products and conventional insurance products.
Great Eastern Takaful, he said, would leverage on the strength of its sister company GELM’s 17,000 strong agency force to kickstart its takaful operations where they could sell conventional and takaful policies provided they passed the Takaful Basic Examination (TBE). Great Eastern Takaful at the moment has more than 4,000 agents which had passed the TBE and was in the final phase of consolidating its dual agency structure.
Great Eastern Takaful was one of the four companies which were recently awarded a takaful licence from Bank Negara. The other three were joint ventures between AMMB Holdings Bhd and UK’s Friends Provident Group plc; Public Bank Bhd, Public Islamic Bank Bhd and ING Management Holdings (M) Sdn Bhd; and AIA and Alliance Bank Malaysia Bhd.
PAMB CEO Charlie E. Oropeza said the company’s agents distribute both conventional life insurance products as well as takaful produts underwritten by its sister company Prudential BSN Takaful.
He said the company adopted a single structure for supporting and developing its agency force to ensure unity, fairness and transparency across the organisation.
“We run a single structure to support the agency distribution channel both for bumi and non bumi agents. However, we do make sure that we have staff that are representative of the diversity of the agency force that we support.
“From our experience, having a single structure that is sensitive to the various backgrounds of agency is most advantageous,’’ Oropeza added.
ING Insurance Bhd president and CEO Datuk Dr Nirmala Menon, however, felt that the takaful concept was different from that of conventional insurance and was important to actually build the right expertise to penetrate the Muslim market.
“Being different in approach, it is important to have the right training so that the right customer segment is penetrated. There is a huge opportunity in the existing Muslim/bumi market and this is something that we would like to tap on to increase the overall penetration of the local market and will focus our efforts in areas with a larger Muslim population.
“Cannibalisation is something that we would like to avoid and minimize at all costs and so this will be carefully managed as the ultimate aim is to increase the overall spend on insurance and takaful as we develop into the future,’’ she noted.
Meanwhile, MAA Takaful Bhd CEO Salim Majid Zain said the company would maintain a separate structure as conventional insurance companies and takaful ones were regulated differently.
Some may not agree to this method and instead sell separate policies, but judging from the pace of its adoption among insurers, it is fast making headway amid new players coming into the market.
Great Eastern Takaful Sdn Bhd chief executive officer Mohamad Salihuddin Ahmad said the company would adopt the dual agency or a single structure concept akin to a one-stop agency system that distribute both conventional and takaful products.
Great Eastern Takaful Sdn Bhd CEO Mohamad Salihuddin Ahmad
He added the three major conventional insurance players like Great Eastern Life Assurance Malaysia (GELM), Prudential Assurance Malaysia Bhd (PAMB) and American International Assurance Bhd (AIA) were adopting the single structure system.
Salihuddin said having almost two thirds of the conventional market share amongst themselves, these three players, by adopting a single structure or dual agency concept, would definitely make a huge impact in the takaful industry with their local joint venture partners respectively.
By adopting the one-stop or dual agency approach, he said the takaful operators, especially the new ones, would have an immediate access to the experienced and professionally-trained agency force .
It would also assist them to make a quick entry into the takaful industry and help manage the initial set-up costs, he noted.
Furthermore, adopting this approach was a huge step towards developing or moulding the agency force to be a complete and well rounded professional financial advisor, he said.
The only disadvantage for this approach, he said, would be the possibility of “mis-selling” by some of these dual agents, adding that the onus here would be on the takaful operators to provide structured training programmes to ensure they knew the difference between takaful products and conventional insurance products.
Great Eastern Takaful, he said, would leverage on the strength of its sister company GELM’s 17,000 strong agency force to kickstart its takaful operations where they could sell conventional and takaful policies provided they passed the Takaful Basic Examination (TBE). Great Eastern Takaful at the moment has more than 4,000 agents which had passed the TBE and was in the final phase of consolidating its dual agency structure.
Great Eastern Takaful was one of the four companies which were recently awarded a takaful licence from Bank Negara. The other three were joint ventures between AMMB Holdings Bhd and UK’s Friends Provident Group plc; Public Bank Bhd, Public Islamic Bank Bhd and ING Management Holdings (M) Sdn Bhd; and AIA and Alliance Bank Malaysia Bhd.
PAMB CEO Charlie E. Oropeza said the company’s agents distribute both conventional life insurance products as well as takaful produts underwritten by its sister company Prudential BSN Takaful.
He said the company adopted a single structure for supporting and developing its agency force to ensure unity, fairness and transparency across the organisation.
“We run a single structure to support the agency distribution channel both for bumi and non bumi agents. However, we do make sure that we have staff that are representative of the diversity of the agency force that we support.
“From our experience, having a single structure that is sensitive to the various backgrounds of agency is most advantageous,’’ Oropeza added.
ING Insurance Bhd president and CEO Datuk Dr Nirmala Menon, however, felt that the takaful concept was different from that of conventional insurance and was important to actually build the right expertise to penetrate the Muslim market.
“Being different in approach, it is important to have the right training so that the right customer segment is penetrated. There is a huge opportunity in the existing Muslim/bumi market and this is something that we would like to tap on to increase the overall penetration of the local market and will focus our efforts in areas with a larger Muslim population.
“Cannibalisation is something that we would like to avoid and minimize at all costs and so this will be carefully managed as the ultimate aim is to increase the overall spend on insurance and takaful as we develop into the future,’’ she noted.
Meanwhile, MAA Takaful Bhd CEO Salim Majid Zain said the company would maintain a separate structure as conventional insurance companies and takaful ones were regulated differently.
EPF - Nominations
Upon the death of a EPF Contribution (member)
1: The Nominees of contributors receive the full sum upon the death of members.
2: If the contributor was a Non-Muslim, the nominees are effectively beneficiaries and are allowed to keep the moneys for themselves.
3: If the contributor was a Muslim, the nominees receive the moneys as administrators or trustees of the estate and are to distribute them in accordance with Islamic Law principles e.g if the deceased did not leave a Will, then the moneys will be distributed according to the Faraid rules.
4: If a contributor has named more than one nominee, he may choose to allocate the appropriation percentage for each person. If he does not, then they will receive the moneys in equal shares.
5: If the nominees are minors, EPF will retain the moneys and pay to them upon reaching the age of 18 years.
6: If no nominee is named, the moneys will be deemed as part of the estate and will be administered accordingly i.e. testate and intestate procedures will apply.
7: If one of the nominees named by a member predeceases him and he did not make a fresh nomination, then only the portion of the deceased nominee will fall under the estate of the deceased, to be administered and distributed accordingly. The surviving nominees will receive their portion of the moneys.
8: If the member dies as a bankrupt, EPF will still pay out moneys to the nominees. This does not prohibit creditors from pursuing the nominees to recover their debts as the moneys are considered part of the estate of the deceased as subject to his debts.
1: The Nominees of contributors receive the full sum upon the death of members.
2: If the contributor was a Non-Muslim, the nominees are effectively beneficiaries and are allowed to keep the moneys for themselves.
3: If the contributor was a Muslim, the nominees receive the moneys as administrators or trustees of the estate and are to distribute them in accordance with Islamic Law principles e.g if the deceased did not leave a Will, then the moneys will be distributed according to the Faraid rules.
4: If a contributor has named more than one nominee, he may choose to allocate the appropriation percentage for each person. If he does not, then they will receive the moneys in equal shares.
5: If the nominees are minors, EPF will retain the moneys and pay to them upon reaching the age of 18 years.
6: If no nominee is named, the moneys will be deemed as part of the estate and will be administered accordingly i.e. testate and intestate procedures will apply.
7: If one of the nominees named by a member predeceases him and he did not make a fresh nomination, then only the portion of the deceased nominee will fall under the estate of the deceased, to be administered and distributed accordingly. The surviving nominees will receive their portion of the moneys.
8: If the member dies as a bankrupt, EPF will still pay out moneys to the nominees. This does not prohibit creditors from pursuing the nominees to recover their debts as the moneys are considered part of the estate of the deceased as subject to his debts.
Sunday, November 7, 2010
Planning For Retirement
For many Malaysians, having children seems to be their main trigger to start saving for retirement. IT is true what they say – having children changes your outlook on life.
For engineer Timothy Lim, having sufficient savings for later years is crucial for him and his family. A father of two children, aged 7 and 14, his priority is to ensure his children’s future in terms of health, education and social needs are well taken care of.
“I like to plan. My wife says I’m a total control freak but to me, it is important to have a plan.”
According to AXA Retirement Scope 2010, a global retirement study conducted across 26 countries in Europe, the United States and Asia, 55% of working Malaysians said having children is the main trigger to start saving for retirement.
“There may also be an increase in the cost of living in the future because the price of petrol will go up, toll charges will increase and cost of dining out will be higher, so we must have a good retirement plan,” she notes.
She believes someone who survives on RM3,000 a month now would probably have to look at doubling the amount in 20 years. That is why saving for her future is constantly on Mala’s mind, and she has been investing her money in property, stocks and bonds and investment policies.
The future is also constantly on the mind of 38-year-old accountant Chang Siew Li, especially since she had her baby five years ago. In fact, says Chang, she started saving for retirement after giving birth.
“My daughter is the love of my life. When she was born, I realised I had to start saving for my retirement. I want to provide her with the best that I can give and ensure that she has a bright future. I do not want to burden her when I’m old.”
When she was younger, she confides, she would spend most of her pay on new handbags and clothes. Her lifestyle did not change much even after she got married, she adds.
“When we first got married, my husband and I worked hard to ensure we had a comfortable life. We frequently went for movies, dined out and jetted off for holidays at least twice a year.”
But when they had their baby, they realised they needed to change their spending habits and start saving for their retirement.
Chang concedes that it is not easy to raise children today, especially to provide them with a good tertiary education. “As parents, we want to make sure our child will have a good life. We know that her education will use up a lot of our savings, but we are ready to sacrifice everything to give her the best education.”
In addition, they are saving to prepare for the unexpected. “We do not want unforeseen events to affect her future or burden her with our medical costs later,” she says. Their planning for retirement is quite simple, she shares.
“We started with regular savings first before making fixed deposits in the bank. Recently, we started investing, small amounts at first, in trust funds. We know we can’t just rely on our EPF savings; it will not be sufficient,” she adds.
AXA Retirement Scope 2010 shows that working Malaysians have become more concerned about their ability to finance a comfortable retirement experience. Only 37% consider their future income will be sufficient compared with 62% in 2007.
Chang and her husband also worry that their retirement planning may not be adequate. “We wish to have peace of mind when we retire at 55. We do not expect a high lifestyle after retirement – we just want to maintain a modest lifestyle and, most importantly, enjoy good health.,” she says.
“We do worry sometimes that our planning may not be enough. Although we lead a healthy lifestyle, we know we might still fall ill one day. When we retire, we do not want to burden our child. Some people may believe that children should take care of their parents when they retire but we prefer to be independent,” she stresses.
For engineer Timothy Lim, having sufficient savings for later years is crucial for him and his family. A father of two children, aged 7 and 14, his priority is to ensure his children’s future in terms of health, education and social needs are well taken care of.
“I like to plan. My wife says I’m a total control freak but to me, it is important to have a plan.”
According to AXA Retirement Scope 2010, a global retirement study conducted across 26 countries in Europe, the United States and Asia, 55% of working Malaysians said having children is the main trigger to start saving for retirement.
It is my responsibility as a parent to make sure that their future is secure and to give them the opportunity to experience life to its fullest. That’s what my father did for me – he made sure I got a good education and grew up in a comfortable environment,” he shares.
Timothy also believes in protection from unpleasant surprises.
“Nowadays, you hear many cases of strong, healthy people being stricken by scary diseases. Life is so unpredictable! I’ve signed my family up for a medical programme; I certainly do not want to use my retirement savings if I need to check into the hospital,” he says.
The AXA retirement survey found that 92% of Malaysians look at retirement as a period when they will have more time to spend pursuing their interests. However, some 75% of working Malaysians said they could only continue to enjoy life if they keep working.
Lim is one who plans to continue working after retirement.
“I’d probably work as a consultant to maintain the lifestyle I’m enjoying now. When my children are able to fend for themselves, I can relax with my wife and truly enjoy our remaining years – that is our retirement goal,” he says.
Public relations practitioner Mala Chandran is in no rush to retire early either. “I don’t want to lose the comfort zone I currently enjoy. When I am old, I want to have more than enough to pay for my holidays, beauty and wellness and exercise programmes,” says the 30-something professional.
Although many people think their obligations will decrease as they age, Mala disagrees. “The more you earn, the more high maintenance your life becomes. I believe I will need more money in my old age because the cost of living will escalate in the future,” she says.
“Right now, we cannot anticipate what our medical condition will be like in years to come and we have to make allocations for the medications we may need.” Old age, Mala stresses, can bring about unforeseen changes in one’s health conditions.
Everyone should have money in hand for medical bills, she says, adding that it is the thought of falling sick in her old age without substantial savings to pay for medical bills that prompted her to review her savings plan.
“There may also be an increase in the cost of living in the future because the price of petrol will go up, toll charges will increase and cost of dining out will be higher, so we must have a good retirement plan,” she notes.
She believes someone who survives on RM3,000 a month now would probably have to look at doubling the amount in 20 years. That is why saving for her future is constantly on Mala’s mind, and she has been investing her money in property, stocks and bonds and investment policies.
The future is also constantly on the mind of 38-year-old accountant Chang Siew Li, especially since she had her baby five years ago. In fact, says Chang, she started saving for retirement after giving birth.
“My daughter is the love of my life. When she was born, I realised I had to start saving for my retirement. I want to provide her with the best that I can give and ensure that she has a bright future. I do not want to burden her when I’m old.”
When she was younger, she confides, she would spend most of her pay on new handbags and clothes. Her lifestyle did not change much even after she got married, she adds.
“When we first got married, my husband and I worked hard to ensure we had a comfortable life. We frequently went for movies, dined out and jetted off for holidays at least twice a year.”
But when they had their baby, they realised they needed to change their spending habits and start saving for their retirement.
Chang concedes that it is not easy to raise children today, especially to provide them with a good tertiary education. “As parents, we want to make sure our child will have a good life. We know that her education will use up a lot of our savings, but we are ready to sacrifice everything to give her the best education.”
In addition, they are saving to prepare for the unexpected. “We do not want unforeseen events to affect her future or burden her with our medical costs later,” she says. Their planning for retirement is quite simple, she shares.
“We started with regular savings first before making fixed deposits in the bank. Recently, we started investing, small amounts at first, in trust funds. We know we can’t just rely on our EPF savings; it will not be sufficient,” she adds.
AXA Retirement Scope 2010 shows that working Malaysians have become more concerned about their ability to finance a comfortable retirement experience. Only 37% consider their future income will be sufficient compared with 62% in 2007.
Chang and her husband also worry that their retirement planning may not be adequate. “We wish to have peace of mind when we retire at 55. We do not expect a high lifestyle after retirement – we just want to maintain a modest lifestyle and, most importantly, enjoy good health.,” she says.
“We do worry sometimes that our planning may not be enough. Although we lead a healthy lifestyle, we know we might still fall ill one day. When we retire, we do not want to burden our child. Some people may believe that children should take care of their parents when they retire but we prefer to be independent,” she stresses.
Life Insurance Agent
YOU always know you're dealing with a veteran insurance agent when he responds promptly and politely to your phone message. On top of that, he's incredibly punctual when it comes to appointments - like Raymond S.C. Wong was, for this interview.
Wong, 48, who has been a financial services consultant for 24 years, says: "Insurance is, unfortunately, a career that people look at last. It is something they think about only when times are bad or if they're opting for a career change."
Insurance is also a subject people used to broach reluctantly, equating it with accidents, illness and death.
But things have changed a lot in the industry and while agents today continue to sell policies related to the above, they also offer advice on wealth planning, and recommend financial products that best meet a customer's needs.
Which means that not everyone is qualified to just approach a potential client and start talking about insurance.
An agent must possess at least SPM/MCE qualifications or its equivalent, not be an un-discharged bankrupt, and register with the Life Insurance Association of Malaysia (LIAM).
He is required to pass the pre-contract examination for insurance agents (PCEIA) conducted by the Malaysian Insurance Institute (MII). To qualify as a wealth planner, he must pass the certificate examination in investment-linked life insurance (CEILI) conducted by MII and complete a certain number of hours of training.
The training does not stop after he becomes a full-fledged agent: he can obtain relevant licences and undergo programmes on specific products and professional development, to equip himself to serve his customers better.
Wong, from Johor, has an accounting background. But after crunching numbers for awhile, he decided it wasn't his cup of tea. The pull towards sales was very strong, and he went straight into insurance at 26.
"I joined this industry because it offers personal advancement and I can continuously learn. Sales is not easy and insurance is a product you need to sell, as no one would walk up to you to buy it. Of course, the commission was important, but it came with the challenge of personal growth that I was looking for."
How does a customer ensure that an agent is accredited to an insurance company, and that he will keep her financial information confidential? And, more importantly, that he has his client's interests at heart .
To ascertain the legitimacy of an agent, Wong says, call up the insurer he represents to confirm that he is part of the team.
Following the code of ethics and conduct for the Malaysian life insurance industry, all agents are required to disclose the company they represent and the type of financial services they are authorised to sell.
"When looking for an agent, choose someone trustworthy - someone who will not over-promise or under-deliver. This is very important as we're dealing with contractual agreements," Wong advises.
"Soft skills are crucial for an agent. It is not enough to be knowledgable about your products; how you communicate with your client can make or break your relationship with her."
During the initial appointment, a customer can expect the agent to ask how long she has been working, how much insurance coverage she has, and what financial products best suit her needs and budget. Armed with such information, he can then advise her on making informed decisions.
"The industry is moving very fast, with new products being introduced. While a professional agent can continuously keep himself updated, he may not be able to answer all your queries. What is important is that he admits it, and finds out for you," Wong says.
Over the years he has learnt that agents "need to listen more and let the prospective client talk about what she needs."
What if one encounters a "forceful" agent?
"You should follow your instincts and not deal with him, as the trust has already been lost."
Alternatively, the client can ask the insurance company to assign her another agent.
Integrity and product knowledge aside, after-sales service is important, he adds.
An agent needs to keep in touch with his client, several times a year, to review her insurance and financial needs. "People get promoted or start a family and that affects coverage."
A good agent reminds a client about premium due dates, and ensures her personal details are updated, and that she has nominated a beneficiary for her policy.
In the old days, conventional policies were life insurance and endowments, and insurers would declare dividend or bonus annually. There was also the guaranteed cash value of a policy. But after 1990, Wong says, changes came in and investment-linked insurance products were introduced.
"The risk shifts to the policy-holder. When the market is doing well, the customer will enjoy a higher yield, but when it is down, the returns are lower. The good thing is that there's a lot of transparency with investment-linked policies."
According to LIAM, investment-linked plans combine investment and protection, and the client has the option of choosing what suits her.
"Insurance is something you purchase when you don't need it yet. But when you finally need it, you can't buy it immediately. So it's very important to have a good financial planner to advise you," adds Wong.
Besides financial security, what he enjoys most about his job is helping people take care of tedious processes at a time when they are most vulnerable. Nothing beats the satisfaction of handing a cheque to a family when they need it most.
"When clients are satisfied with my service and say so, it makes me feel that what I'm doing is extremely worthwhile."
Wong, 48, who has been a financial services consultant for 24 years, says: "Insurance is, unfortunately, a career that people look at last. It is something they think about only when times are bad or if they're opting for a career change."
Insurance is also a subject people used to broach reluctantly, equating it with accidents, illness and death.
But things have changed a lot in the industry and while agents today continue to sell policies related to the above, they also offer advice on wealth planning, and recommend financial products that best meet a customer's needs.
Which means that not everyone is qualified to just approach a potential client and start talking about insurance.
An agent must possess at least SPM/MCE qualifications or its equivalent, not be an un-discharged bankrupt, and register with the Life Insurance Association of Malaysia (LIAM).
He is required to pass the pre-contract examination for insurance agents (PCEIA) conducted by the Malaysian Insurance Institute (MII). To qualify as a wealth planner, he must pass the certificate examination in investment-linked life insurance (CEILI) conducted by MII and complete a certain number of hours of training.
The training does not stop after he becomes a full-fledged agent: he can obtain relevant licences and undergo programmes on specific products and professional development, to equip himself to serve his customers better.
Wong, from Johor, has an accounting background. But after crunching numbers for awhile, he decided it wasn't his cup of tea. The pull towards sales was very strong, and he went straight into insurance at 26.
"I joined this industry because it offers personal advancement and I can continuously learn. Sales is not easy and insurance is a product you need to sell, as no one would walk up to you to buy it. Of course, the commission was important, but it came with the challenge of personal growth that I was looking for."
How does a customer ensure that an agent is accredited to an insurance company, and that he will keep her financial information confidential? And, more importantly, that he has his client's interests at heart .
To ascertain the legitimacy of an agent, Wong says, call up the insurer he represents to confirm that he is part of the team.
Following the code of ethics and conduct for the Malaysian life insurance industry, all agents are required to disclose the company they represent and the type of financial services they are authorised to sell.
"When looking for an agent, choose someone trustworthy - someone who will not over-promise or under-deliver. This is very important as we're dealing with contractual agreements," Wong advises.
"Soft skills are crucial for an agent. It is not enough to be knowledgable about your products; how you communicate with your client can make or break your relationship with her."
During the initial appointment, a customer can expect the agent to ask how long she has been working, how much insurance coverage she has, and what financial products best suit her needs and budget. Armed with such information, he can then advise her on making informed decisions.
"The industry is moving very fast, with new products being introduced. While a professional agent can continuously keep himself updated, he may not be able to answer all your queries. What is important is that he admits it, and finds out for you," Wong says.
Over the years he has learnt that agents "need to listen more and let the prospective client talk about what she needs."
What if one encounters a "forceful" agent?
"You should follow your instincts and not deal with him, as the trust has already been lost."
Alternatively, the client can ask the insurance company to assign her another agent.
Integrity and product knowledge aside, after-sales service is important, he adds.
An agent needs to keep in touch with his client, several times a year, to review her insurance and financial needs. "People get promoted or start a family and that affects coverage."
A good agent reminds a client about premium due dates, and ensures her personal details are updated, and that she has nominated a beneficiary for her policy.
In the old days, conventional policies were life insurance and endowments, and insurers would declare dividend or bonus annually. There was also the guaranteed cash value of a policy. But after 1990, Wong says, changes came in and investment-linked insurance products were introduced.
"The risk shifts to the policy-holder. When the market is doing well, the customer will enjoy a higher yield, but when it is down, the returns are lower. The good thing is that there's a lot of transparency with investment-linked policies."
According to LIAM, investment-linked plans combine investment and protection, and the client has the option of choosing what suits her.
"Insurance is something you purchase when you don't need it yet. But when you finally need it, you can't buy it immediately. So it's very important to have a good financial planner to advise you," adds Wong.
Besides financial security, what he enjoys most about his job is helping people take care of tedious processes at a time when they are most vulnerable. Nothing beats the satisfaction of handing a cheque to a family when they need it most.
"When clients are satisfied with my service and say so, it makes me feel that what I'm doing is extremely worthwhile."
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