Guaranteed Return For ILP

Officers of the National Association of Malaysian Life Insurance Field Force and Advisers (Namlifa) are reportedly talking with the Malaysia's central bank to discuss the need to offer a minimum guaranteed sum for investment-linked policies (ILP), a source said.

A minimum guaranteed sum will protect ILP policyholders against aggressive risk-taking by insurers in their investment strategies, the source from Namlifa told StarBiz. ILPs are preferred by some consumers because of more exposure, though with higher risk, which in turn transfers the risk to the consumer. Namlifa is reportedly looking at anywhere between the current fixed deposit rates and Employees Provident Fund returns as minimum guaranteed sum.

The Consumers Association of Penang, however, said consumers have not been made fully aware of how ILP works and the risk involved when the wrong product is chosen, thus the consumer ends up making losses.