Life Insurance Malaysia Covid19 Impact

Life Insurance Association of Malaysia (LIAM) has launched its inaugural consumer awareness program on social media called #BukanExtra to help accelerate the country’s life insurance penetratiion rate to 75%. During the Movement Control Order (MCO) period in April, the activity recovered about 48% of the previous year, it recovered to 75% in May and 86% in June. Many in the industry agreed that in July, the activity has gone up close to the normal activity.

Covid-19 situation has created more awareness, adding that the industry would like to continue engaging with the youth, single professionals, newly-married couples and young families.

#BukanExtra campaign, which starts from Sept 9-Oct 6, LIAM together with its 16 member companies aim to generate awareness and educate consumers on the importance of life insurance protection; encourage financial planning among the younger generation; and create a sense of urgency to act early. It also intends to bring the insurance industry closer to the younger generation and demystify life insurance through social media engagements.

The life insurance penetration rate has been hovering around 54% for the past five years and has been reduced to 41% after eliminating multiple ownership of life insurance/takaful policies.

Out of the 41%, only 4% of households in the lower-income group have some form of life insurance/takaful cover, while over 90% of them do not have sufficient coverage for themselves and their loved ones.

In 2019, the average sum assured for individual policy categories reached RM130,000 per policyholder. This means that each policyholder will have an average life insurance protection of RM130,000 to take care of their family in the event of a loss of the breadwinner.

However, the level of protection is still not adequate and there is a wide protection gap in terms of insurance coverage needed. The average protection gap for the group headed by a breadwinner who is not covered by either life or medical insurance is the largest, at about RM723,000 per family.