OJK Closes Saling Jaga

The Indonesian Financial Service Authority (OJK) has closed down a mutual aid platform called Saling Jaga, citing its lack of an insurance license. Saling Jaga was created by Kitabisa, an online donation platform for social causes backed by early-stage investor 500 Startups. 

According to OJK, the company has agreed to shutter its mutual aid platform until it gets an insurance license. Kitabisa previously said that Saling Jaga had been registered with OJK Fintech Sandbox. The startup runs its donation platform under a license from Indonesia’s Ministry of Social Affairs.

On its website, the startup stated that Saling Jaga can’t accept new members right now, but existing members can still access new information through Kitabisa’s app.

Saling Jaga is similar to Ant Group’s Xiang Hu Bao and Tencent-backed Waterdrop in China, where participants can receive medical coverages as long as they agree to pitch in with other participants’ medical expenses.

Kitabisa says that the platform has attracted 650,000 members in March 2021. To date, it has disbursed 2 billion rupiahs (around US$140,000) to 500 members diagnosed with critical illnesses, including Covid-19.

IFG Replaces Jiwasraya Indonesia

State owned Asuransi Jiwasraya's Restructuring Acceleration Team has said that it would return the insurer's business licence to the Financial Services Authority (OJK) after all customers' policies with the insolvent life insurer have been handled.

Thereafter, Jiwasraya will operate as an asset management company, coupled with the policies of Jiwasraya's customers who are unwilling to have their policies transferred to a new insurer IFG, reported CNBC Indonesia.nal stage

State owned Asuransi Jiwasraya's Restructuring Acceleration Team has said that it would return the insurer's business licence to the Financial Services Authority (OJK) after all customers' policies with the insolvent life insurer have been handled.

Thereafter, Jiwasraya will operate as an asset management company, coupled with the policies of Jiwasraya's customers who are unwilling to have their policies transferred to a new insurer IFG, reported CNBC Indonesia.

Jiwasraya technical director Angger P Yuwono revealed that the number of customers who were willing to be restructured up to 18 May in the bancassurance category reached 95% or 16,567 policies. Corporate policyholders who have participated in this programme reached 91.7% or 1,948 policies. Meanwhile, in the retail category, the proportion reached 81.6% consisting of 142,844 policies.

He added, "However, there are thousands of Jiwasraya's policies and many of the places where they live are remote. So it is impossible to achieve 100% completion, there will be someone left behind."

Another issue is that many policyholders could not be contacted because they had changed their telephone numbers and correspondence addresses without informing Jiwasraya.

Customers have up to the deadline of 31 May 2021 to decide whether or not to have their policies transferred to IFG Life. Mr Angger said that Jiwasraya will further discuss the fate of customers who do not transfer their policies.

IFG Life was created by the government to take over the business of Jiwasraya which suffers liquidity problems because of mismanagement and bad investment decisions. The new insurer started operations this month.

Insurance Agent Cheats Customer

An insurance agent in Singapore admitted to cheating his primary school friend of SG$24,900 by issuing a fake insurance policy. Sng Kang Xiang, 37, pleaded guilty to one count of forgery and one count of cheating, with two similar charges to be taken into consideration for sentencing.

The accused had worked as a financial services consultant and insurance agent for AIA Singapore for around 11 years before the fraud occurred in 2018. Sng, who knew the victim since primary school, contacted her in March 2018 and told her about an insurance policy that was available for “absolute assignment”, where the policy would be bought from an existing policyholder.

The court heard that the victim had a “trusted relationship” with Sng, having bought several insurance policies from Sng, including policies for her mother. The victim paid SG$24,900 to Sng by transferring it to his bank account, after being told that she would get back the amount after a year, plus an additional SG$5,293. However, no such policy existed.

The victim said that for the previous policies she bought from Sng, she also transferred the money to his account. This was contrary to AIA’s policy that premium payments should be directly transferred to them and not to an agent’s personal bank accounts, investigations revealed.

Sng allegedly used the money to pay off credit card debt and renovate his flat. When pressed by the victim on the lack of any official policy documents, Sng sent her a forged letter with AIA’s letterhead, stating that the company had received her payment. However, the victim got suspicious and confirmed separately with AIA, causing the fraud to come to light.

AIA has compensated the victim for her losses, and Sng has made full restitution to the insurance company. He will return to court in July for mitigation and sentencing. Each charge of cheating and forgery carries a sentence of up to 10 years’ imprisonment plus a fine.

Life Insurance Claim Denial

For an unfortunate few, it’s denial of life insurance benefits they were relying on to help fill the financial gap created by the loss of their loved one. Life insurance is nearly always settled as expected. According to several life insurers, fewer than one in 200 claims are denied. But that’s of little comfort to beneficiaries who don’t collect on policies, especially since settlements for death benefits tend to be all-or-nothing transactions. Typically, when a claim is denied, the full amount isn’t paid out and there is no partial payout.

Here’s what you need to know about claim denials for a life insurance policy, including what you or your loved ones can do now to minimize ever receiving one.

What prompts life insurance denials?
Knowing what commonly triggers an insurer to deny a claim can provide helpful insight into the decision. Here are some of the most common reasons for denial, along with advance steps that can help to head them off.

An incomplete or misleading application
The number one way to ensure your loved ones get the life insurance benefits you’ve paid for is to be complete and honest when you take out the policy. To omit facts or submit any type of false information about the policyholder is to risk the denial of a claim.

A leading issue is problematic reporting of medical history, and not only for the policyholder. Misstatement of your parents’ causes of death, information that most applications require. If you reported that both parents died of unspecified natural causes, when one actually died young of heart disease and the other of cancer, you have committed fraud, and for an outcome that does not favor the company. If the omissions were to be found in the course of settling your claim, especially with a fairly new policy, it could lead to a denial.

Failure to fully and accurately report other personal data can also be problematic. Life insurance applications typically require you to submit detailed information on your income, hobbies, criminal history and habits — including on your consumption of alcohol and illicit drugs, and whether you indulge in dangerous pursuits such as scuba diving.

Fast forward to your accidental death in, say, a scuba-diving accident or from a drug overdose. While settling the claim on your insurance, Lovely says, the insurer may cross-reference the circumstances of your death against the application questionnaire you submitted to get the policy. If the insurance company discovers information that was not included in the application, they often try to deny the claim if those inconsistencies can be positioned as pertinent contributing factors.

Company claims about misrepresentation are likely to be most damaging during what’s know as the policy’s contestability period. Typically two years after the policy is issued, this is the time during which the issuer is the most able to challenge the accuracy of information and to deny coverage. After the contestability period ends, life insurance coverage is usually considered incontestable. However, the association also notes that “some policies have exclusions, or situations in which a benefit may not be paid,” so it pays to check the fine print to confirm contestability provisions.

Failure to pay premiums on time
All too often, a policyholder who is ill or elderly falls behind on paying their premiums. As a result, the policy may lapse due to non-payment. If a claim comes in after such a lapse, it may be denied by the company.

There are, however, requirements that the insurer must meet before such cancellations, and you may have a claim that the insurance policy should not have ended the coverage. While the rules vary by state, the insured must typically be warned that the policy is in danger of expiring and be offered a grace period during which the overdue premium can be paid and the coverage restored.

Some diligence in advance can help head off non-payment complications later. Those who are assisting an ill or elderly family member or friend who has life insurance “keep an eye out for invoices or statements to make sure that any premiums are paid on time.” Some policies, the firm says, include a provision called a waiver of premium, which “allows the insured to stop paying the premiums if the person is very ill — on the assumption that the person might not be working and, as such, is unable to afford the premium payments.”

Also, if the person is going through financial hardship, the insured should contact the insurance company to see if the premium can be waived.

Alcohol and drug use before death
Certain states allow the denial of a life insurance claim due to the insured having alcohol or illicit drugs in their system. The states include Alabama, Alaska, Arizona, Arkansas, Delaware, Florida, Georgia, Hawaii, Idaho, Kansas, Kentucky, Louisiana, Maine, Mississippi, Missouri, Montana, Nebraska and New Jersey.)

Here, too, there are limits to such denials. “It is unlikely that an insurer can deny coverage simply because it is found that the insured had some alcohol in their system.” But if the intoxication is deemed to have caused the death, you could be denied the benefit. The site notes that the language found in alcohol exclusion policies is typically as follows:

“The insurer shall not be liable for any loss sustained or contracted in consequence of the insured’s being intoxicated or under the influence of any narcotic unless administered on the advice of a physician.”

These exclusions underline the need to read the fine print on your policy, or that of a loved one, to be aware of what drug and alcohol provisions are in place.
A suicide during the policy’s contestability period

Contrary to popular knowledge, a death from suicide isn’t necessarily a reason to deny a life insurance claim. But such a determination can be problematic if the death occurs soon after the purchase of the policy — during the contestabiliity period, which is typically two years.

There is a clause that states if the insured dies within the stated number of years, depending on the company, the death benefit will not be paid out. In the case of suicide, if you fall inside of the restricted time period, the insurance company would [not pay the death benefit and] just return all the premiums paid back to the beneficiaries.

What can prompt a partial payout
Rare as partial denials of death benefits are, several other factors can make the payout from a loved one’s policy less than you expected.

The first is that the insured person borrowed a loan against the policy. If the insured dies before the loan is paid off, the company will deduct the loan plus interest from the claim amount, giving the perception that a partial payout was given.

The second reason benefits may fall short of expectations is that the policyholder elected to access the death benefit early, due to the financial pressure of a chronic or terminal illness or permanent disability. Under many policies, such “living benefits” are allowed to cover the costs of treatment or for other quality-of-life expenses.

If beneficiaries are not aware that the benefit has been tapped in either of these ways, it may give the impression that the insurance company has unfairly delivered only a partial payout.

How to get help with an insurance denial
Besides doing your homework in advance, you should carefully scrutinize the letter in which the claim was denied. If there are aspects of he decision that you don’t understand, reach out to the company or your insurance agent for clarification.

An independent agent may be especially willing to intervene on your behalf with the company, at least to assist with clarifying the reasons for the denial. Another potential resource is the insurance commissioner. Most of these officials have a consumer-assistance resources or counselors to help people navigate their insurance policies, including with claims.

If you’re still striking out, consider hiring an attorney. A number of firms specialize in appealing life insurance denials. They typically operate on a contingency basis — as in, they charge little or nothing upfront but take a percentage of any settlement. To help decide if it’s worth hiring an attorney, and for names of reputable firms they may recommend, you could tap other financial professionals in your life, such as your financial advisor.

Prudential Wins Lawsuit Against Former Agency Manager

Prudential Assurance Co Singapore won a lawsuit against its former top group agency manager Peter Tan Shou Yi in High Court on Wednesday, over the poaching of more than 220 agents for rival Aviva.

Compensation will be awarded when it has been assessed, but Mr Tan could appeal against the decision. Justice Chua Lee Ming found the 56-year-old liable for breach of his contractual obligation to conduct his insurance business with integrity and honesty. In mid-2016, Mr Tan orchestrated and executed the en masse migration of the agency leaders and agents from Prudential to Aviva Financial Advisers (AFA).

However, the judge held that of the 244 agency leaders and agents who left Prudential, Mr Tan was liable for the profits that the insurer could have earned for only 227 of them. The number comprised 23 leaders and 204 agents who had jumped ship to AFA because of Mr Tan's solicitation.

Justice Chua had directed the expert witness of Prudential to re-compute the insurer's loss of profits arising from the sales that the 227 departed leaders and agents would have made in about 21/2 months. The time frame was calculated based on when Mr Tan started talking to the leaders about moving to Aviva - in May 2016 - and the expiry of the notice period by the last batch of agents who quit.

In contrast, Prudential has sought compensation of between S$103 million and S$2.3 billion as a result of the en masse resignation of 244 agency leaders and agents, with the amount computed based on the duration of the business lost.

The insurer was represented by Rajah & Tann Singapore's Senior Counsel Murali Pillai and Luo Qinghui. The high-stakes case has thrown the spotlight on how competitive the insurance industry is, given that it came to light during the hearing that Mr Tan was dangled a S$15.3 million sign-on bonus by Aviva.

Defended by Senior Counsel Thio Shen Yi, the legally-trained Mr Tan rejected any liability. The judge found that the "non-solicitation" clause did not apply to Mr Tan after he left Prudential, because it was not present in his agency agreement. The court also ruled that he did not owe fiduciary duties to Prudential, as he was not entrusted with the management and control of the agents in his agency.

Mr Thio said his client left AFA and the insurance industry in March 2020, and is now doing business consultancy.

Malaysia Life Insurance Industry Update 2020

Malaysia’s life insurance sector recorded moderate single-digit growth in total in-force business in 2020, despite the challenging business landscape due to the Covid-19 pandemic. 

Life Insurance Association of Malaysia (LIAM) said - total in-force premiums increased 5.3 per cent year-on-year (y-o-y) to RM43.4 billion in 2020 from RM41.2 billion in 2019, while the total sum assured in force grew 4.3 per cent y-o-y to RM1.7 trillion in 2020 from RM1.6 trillion previously.

The total number of policies in force also recorded a marginal growth of 0.9 per cent to RM12.8 million units in 2020 from 12.7 million units in 2019. New business total premiums declined 3.2 per cent y-o-y to RM11.4 billion in 2020 against RM11.7 billion in 2019.

New business sum assured also slipped 7.2 per cent to RM437.2 billion in 2020 versus RM471.3 billion in 2019, and the number of new policies also shrank 7.1 per cent to 1.2 million units from 1.3 million units previously.

Total claims payout in 2020 declined 3.1 per cent y-o-y to RM11.6 billion from RM11.9 billion in 2019. Payment for disability and others recorded an increase of six per cent y-o-y and 13 per cent y-o-y, respectively. Payment for medical claims declined 8.7 per cent y-o-y to RM4.5 billion, accounting for 39 per cent of the total claims’ payout in 2020.

Payment for bonuses, which fell 4.2 per cent to RM3.5 billion, constituted 30 per cent of the total claims’ payout in 2020.

On the outlook for 2021, LIAM said the industry is very positive about its performance in the coming months with the resumption of more economic activities and the recovery path for the people and Malaysian economy following the National Immunisation Programme rollout.

AXA Hit By Ransomware

A subsidiary of French insurance giant Axa has been hit by a ransomware attack affecting operations in several Asian countries, the company said Sunday, confirming a Financial Times report.

Asia Assistance was recently the victim of a targeted ransomware attack which impacted its IT operations in Thailand, Malaysia, Hong Kong, and the Philippines. Certain data processed by Inter Partners Asia (IPA) in Thailand has been accessed, saying it would "notify and support all corporate clients and individuals impacted" but that there was no sign further data was touched.

Ransomware attacks, which use security flaws to encrypt systems and lock their owners out until a ransom is paid, have increased in recent months. One such attack hit US firm Colonial Pipeline last weekend, forcing the shutdown of its network shipping gasoline, diesel and aviation fuel across much of the eastern half of the United States and sparking fuel shortages and long lines at gas stations.

Ireland's government said Sunday its Department of Health had also been hit by a ransomware attack similar to one that struck its health service earlier in the week, which forced the authority to shut down computer systems.

Psychopath Bully In Office

Psychopathy in the general population is around 1 in 100. The chances that your Manager is a psychopath are pretty unlikely. But if you are working for someone who behaves in a bullying, combative, or otherwise toxic way, the impact on you can be devastating. So what can you do about it? Here are some suggestions that can help you cope with a bad boss.

1. Make the decision to stay or go - The first step in dealing with a toxic boss is to make a realistic decision about whether to stay or go. If you feel trapped, realistically evaluate how severely the situation is impacting you emotionally and mentally. If you decide to stay, it’s important to develop some coping mechanisms to limit the effect of their behavior on your mental well-being.

2. Do the work: Don't be a target - If you decide to stay, avoid being a target – or by extension, a victim. You might think that means keeping your head down and staying out of trouble (which can be necessary), but it can also mean just the opposite. Do your work – and do it well. Consider going as far as you can to help your boss succeed (but that doesn't mean you have to suck up to them). It will make you less of a target, and others will notice your professionalism despite poor leadership -and trust me, you won’t be the only one to notice that. Yes, you might help your boss appear better in the eyes of his/her superiors, and maybe they’ll even get promoted as a result. But if they get promoted away from you, that may not be such a bad thing.

3. Don't get drawn in - Toxic people love to pull you into their drama. Don’t fall for it. Stay a safe emotional distance away from them. Be polite, honest, and clear. Maintaining a safe emotional distance means that you are insulating yourself from them by not letting their negative behaviors or actions negatively impact you while you continue to work in a professional and functional way. They may find this frustrating at first, but by keeping things 'strictly professional,' it leaves them with little room to maneuver and get under your skin. Work to treat them as just another aspect of your workplace – no worse than the printer that constantly jams or the terrible coffee from the vending machine.

4. Don't gossip - To help keep your sanity intact, distance yourself from the source. That means seeing the toxic person as separate and distinct from you. You may not like or respect them, but don’t disparage them. Speaking positively of others – or at least resisting the temptation to speak negatively – is a strong demonstration of emotional intelligence. If you do need to vent, do it outside the workplace. If your colleagues are also being negatively affected, you can lend support by offering an understanding ear, but make sure any discussions don’t devolve into negativity or personal attacks. If you feel like there is a legitimate case for bullying, intimidation, or harassment, consider getting HR involved ... which brings us to my next point.

5. Keep detailed records - If you find yourself the target of inappropriate or abusive behavior, keep detailed, accurate records – and don’t embellish. There may come a point when you are asked to corroborate a complaint – either your own or someone else’s. Either way, your ability to make concrete, detailed references to your personal experiences will significantly support your case. Vague references, unsubstantiated anecdotes, hearsay, or third-party opinions do little to move a complaint forward. Proving a pattern of toxic behavior through verifiable documentation will strengthen your case. Without detailed and accurate records, you are unlikely to get very far.

6. Don't derail your career - The last thing you want to do, or allow to be done to you, is to have your career derailed. This means doing your job to the best of your ability, and not giving the toxic leader the means or reason to start making you a target. This might mean you have to bite your tongue. It may also mean you have to do work – or redo work – that you don’t think needs to be done. The secret here is to basically keep your head down, stay out of trouble, and wait the situation out. Speaking out against something like subjective standards of work, or a manager’s "style" of leadership are hard cases to make, and the actions taken against the dysfunctional manager are often minor or non-existent. Some employee come out on the losing end of that situation and end up as persona non grata as a result. In worst cases, promotions blocked and educational opportunities withheld or withdrawn. Take a long-term view here. As discussed in point No. 1, you must make a stay/go decision for yourself, and if you decide to stay, then you may have to put up with some questionable situations.

7. Remember, it's not forever - For many toxic leaders, the lure of more power, prestige, and control means that they move positions frequently, so you may not need to deal with the toxicity for long. While you wait them out, focus on developing your skills and your network so you can find a new position if necessary.

One final note: You're not alone if you're wondering why organizations tolerate toxic people in their leadership ranks. The problem is these types of dysfunctional leaders are often very adept at projecting a successful image upwards in the organization. The can be well-versed in political maneuvering, glossing over or blaming others for past mistakes, and manipulating people’s emotions.

During the hiring process, a charming and engaging candidate can easily pull the wool over the eyes of less than experienced hiring manager. By the time they are safely in the organization and past the probation period, its often too late to easily do anything about their behavior. Hopefully you never have to work for a manager like this, but if you do, hopefully these steps will help.

Covid19 Vaccination Does Not Invalidate Your Coverage

A fake document that was originally spotted by Allianz in Australia, and which has now also been circulated to clients in the UK. The fake policy document says: ‘If you consent to taking a Covid-19 vaccine your consent is ‘self-inflicted’, it was your choice to have the experimental medical procedure and therefore insurance will not cover any damage or death. All injuries for insurance must not be accidental and a treatment by consent is not an accident.’

As far as scams go - it shatters some people’s views of the safety of the Covid-19 jabs and place doubt onto insurance company’s promises that they will pay out. As far as insurance experts and insurers are concerned getting vaccinated by a qualified medical practitioner is not deemed a ‘self-inflicted’ or ‘experimental’ exercise and would still be covered.

The Covid-19 vaccine will not affect your life insurance cover. There has been a huge amount of speculation on social media, spreading the message that life insurance companies will not pay claims if a person dies within one year of receiving a Covid-19 vaccine, and that taking the vaccination will invalidate any life insurance policies.

The Association for Insurers has been clear to point out that having the Covid-19 vaccine won’t affect your cover. Although life insurance providers have started asking about an applicant’s history of coronavirus, none have made steps to exclude it as a claimable event, nor have they raised any issue around having or not having the vaccine.

Life insurers don't ask any questions about Covid-19 vaccinations, either as part of a new application or to their existing customers. Therefore, being vaccinated will not affect a current or new policy in any way. 

If you have had Covid-19 recently, you may find that an insurer asks you to apply after a period of time, in order to receive a decision - typically 30 days. However, this is only for a small number of people, and is usually in association with another underlying condition.

Life insurance policies very rarely include exclusions and there are none that involve non-payouts for pandemics or viruses. In fact, any death is a claimable event, which includes those for Covid-19.

Cash Value Is Not Guaranteed

If you’re shopping for a cash value life insurance policy such as investment-linked life insuranceor whole life insurance (endowment life insurance), buyer beware: The life insurance quote you get might be a lot lower than what you’ll actually have to pay. And what you must pay could dramatically increase over time.

How could this happen? Because life insurance quotes for cash value policies can be based on not only guaranteed projections in policy illustrations but also very optimistic non-guaranteed projections.

As it turns out, many quotes for all forms of universal life and whole life insurance are based on the non-guaranteed portions of policy illustrations (this does not apply to term life insurance, which has no cash value.)

Essentially, it’s a bait and switch: You think your life insurance quotes reflect what you’ll pay as long as you own the policy, but years later you could be hit with a need for unexpected, extra premiums. It does not make any sense to buy a policy with a low premium initially and have to pay more later?

What Is Cash Value Life Insurance - Life insurance typically is meant to provide protection for those who count on you financially. However cash value life insurance is also marketed by some agents as a retirement planning tool.

Permanent life insurance policies such as whole life, endowment and investment-linked policy have a cash value feature. When you pay premiums for permanent policy, your premium first goes toward the actual cost of insuring you, the insurer’s fees and operating expenses. Anything left over goes toward the cash value component of your policy.

The cash value typically earns interest and it grows tax-deferred. What makes cash value policies appealing for retirement planning purposes is that they can be a source of income in retirement if you take a withdrawal or loan from the cash value.

Agent Sales Pitch - In the hands of a savvy insurance agent, a cash value life insurance policy—particularly an investment-linked policy—can be made to look quite appealing. In a typical sales pitch, the agent might say it’s a great financial product to accumulate money for retirement and that it can participate in the upside of equities and never go down. The agent will point out the investment return on the cash value is guaranteed to never drop below 0%.

The advanced pitch, will involve arranging for a bank to lend you money to buy an even bigger policy (known as premium financing). The agent promises that the big policy will essentially pay for itself. The proposal relies on very optimistic assumptions that show the policy accumulating enough value to pay back the loan to the bank and still have hundreds of thousands of dollars available in your policy to take out tax-free in retirement. Using this sales strategy, policyowner supposedly won’t have to pay anything out of pocket for the policy.

How Cash Value Life Insurance Quotes Are Calculated - The premium you’ll pay for a cash value life insurance is a function of these three factors:
a: The cost of insurance
b: Expenses (policy fees, underwriting, administrative costs and agent's remunerations)
c: Interest, or rate of return on the cash value

Typically, 85% of the premium you pay goes toward the cost of insurance, with 15% going toward expenses. Interest earned on the cash value can offset those costs and reduce the premium you would have to pay. So the premium formula would look like this: Premium = cost of insurance plus expenses minus interest. The higher the interest rate, the lower the premium will be.

How the Quotes Can be Misleading - Most insurance laws allow agents to provide life insurance policy illustrations that show non-guaranteed elements as long as the corresponding guaranteed values of those elements are shown first. 

A policy illustration uses text and graphics to provide consumers with an example, based on certain assumptions, of how a policy’s costs and benefits may develop over time. These illustrated values must meet certain tests to ensure they are reasonable and supportable.

It’s common for agents to show projected returns on the cash value as high as allowable. That will make the premium supposedly needed to cover the cost of insurance and expenses look lower. This practice is most egregious with investment-linked life policies. Consumers are pitched a product that will supposedly earn a high interest rate and have a low premium. But when the high interest rate on the cash value fails to materialize, policyholders may have to shovel more premium into the policy in order to keep it in force—especially if they’ve already taken a loan or withdrawal that depleted the cash value.

To be clear, insurers must disclose any potential for increased premiums in the illustration. By showing the values based on guaranteed maximum charges and minimum credited interest rates for universal iife or based on $0 dividends for whole life, the risk of additional premiums down the road are disclosed since these values are the worst-case scenarios for the policyholder.

But if consumers don’t pay attention to guaranteed elements of the policy, meaning the worst-case scenario—and the policy doesn’t perform as well as they hoped—they’ll be in for a surprise when they get a notice from the insurance company that the interest rate that was calculated at the time of sale is now lower. “If it doesn’t work out, the client has to pay more. Often, it’s dramatically more, he says.

When indexed universal life purchases involve bank loans to buy big policies, the policy illustrations can look even brighter because of the leverage between the projected high rate of the policy accumulation and the lower bank loan rate. The fallout for consumers if those projections don’t pan out can be worse for consumers who took out loans to purchase their policies. They not only might lose the policy but also other collateral they pledged as part of the bank loan.

The return on the cash value might not be enough to cover the payments on the bank loan that’s being used to make premium payments. Without the necessary premium, the policy could lapse, and policy owners who borrowed against the cash value of their policy to make payments on their bank loans will end up with a potentially big tax bill—and a big bank loan to pay off.

How To Protect Yourself When Buying Life Insurance - To be clear, life insurance is a good product for protecting your family. Consumers just need to understand what it is they actually are buying with a cash value life insurance policy versus what they are being sold through potentially misleading illustrations.

The problem of life insurance quotes that are tied to non-guaranteed portions of policy illustrations does not apply to term life insurance, which does not have any cash value. And be especially cautious if your agent suggests you buy a larger policy by getting a bank loan to pay for it.

If you’re shopping for investment-linked life insurance, insist on getting the detailed expense pages. These pages, also called policy accounting pages, will show year by year what the insurance company will charge for the policy. Don’t compare hypothetical premiums. Focus on compare what company says it will charge. Rarely do companies charge less than what they say they will charge.

If you’re shopping for whole life insurance, ask for the “dividend interest crediting rate” used to calculate non-guaranteed values. Premiums are calculated based on the cost of insurance, expenses and the dividend interest rate credited to the policy.

There are companies that are calculating premiums based on 5% to 7% or so rate of return. This makes premiums appear lower than what they will actually be because a return that high is questionable. Whole life policies are required by regulation to invest cash values predominantly in high-grade bonds and government-backed mortgages that have historically earned only 5%, and that was before the current and persistent low-interest-rate environment, Flagg says. So question any projected interest rates that are higher than that.

Ask the life insurance agent for the worst-case scenario policy illustration—what would the premium be and what would happen if only the guaranteed rate of return is achieved rather than non-guaranteed rate. Understand what the downside is. It’s very easy to focus on the possible upside when you’re buying a policy.

Most importantly, keep in mind that, unless otherwise stated, a policy illustration is not a guarantee of future performance. It is meant to be a guide for consumers to help them find a policy that fits their unique needs. Consumers should read and thoroughly understand all material they receive about a policy before signing the policy contract.

So if you don’t understand what you’re being sold, ask questions. If you still don’t understand, you probably shouldn’t buy the policy. If you already own a cash value life insurance policy, you can ask your insurer for an in-force policy illustration. This will show you how your policy is actually performing.

Medical Premium Hike - FOMCA

The Federation of Malaysian Consumers Association (Fomca) has called on people with medical insurance policies to report any price hike in their premiums. Fomca president Datuk Dr Marimuthu Nadason urged consumers who have not been notified of price increases in their medical insurance to contact their agents and enquire if there is indeed any increase in their premiums.

"Fomca has been recently receiving many complaints from medical insurance policy holders of indiscriminate increases in the price of their premiums. We are concerned of how extensive this issue is and how many consumers have been affected by the price increase. Currently, with conditional lockdowns, many consumers have been severely affected, either through loss of jobs or reduction in incomes. This is certainly not the time to increase insurance premiums," he said in a statement today.

Marimuthu stressed that it was wrong and unacceptable for insurance companies to raise premiums to make excessive profits at a time when consumers were suffering. If many consumers come forward with similar complaints, he said, Fomca would launch a national campaign to urge Bank Negara Malaysia to stem the increase in medical premiums.

"As a responsible regulator, Bank Negara should have already pre-emptively directed insurance companies not to increase premiums at this point to protect consumers. Please provide the feedback to Fomca to enable us to know if you have been affected by the price increase of your medical insurance premium. We need the name of the insurance company, current annual insurance premium and new annual insurance premium."

The details can be emailed to insurance@fomca.org.my or via this online form.

Malaysia Motor Insurance - Unfair To Policyowner

Motor insurance practices that are allegedly unfair to consumers are now being sorted out by the authorities and the Federation of Malaysian Consumers Association (Fomca).These alleged practices include failure to cover the full amount of repair costs quoted, lengthy claim settlements that drag on for months and refusal to compensate consumers for loss of use of the vehicle.

Fomca said Bank Negara must protect consumers in such situations. Bank Negara has contacted Fomca, saying it took such matters seriously and is reviewing the issues. BN have asked Fomca for more information on specific cases and the points we have raised in order for them to respond.

Between January and March, a total of 86 complaints on motor insurance and workshops were received by Fomca through the NCCC. From 2019 to 2020, we received 1,354 complaints involving insurance for vehicles and property.

When claiming motor insurance, one common issue faced by consumers was being denied their right to choose the workshop to repair their vehicles even though the workshop is registered under the General Insurance Association of Malaysia (PIAM) and Road Transport Department. Consumers may want their regular mechanic as they have more confidence in them, adding however that they were only allowed to send their cars to workshops under the insurer’s panel.

Insurers will appoint their own adjuster to evaluate the amount of damage so there is no need to insist that consumers send the vehicles to the insurer’s panel workshop. Panel workshops should be taken out in the terms and conditions of insurance policies and Bank Negara should come up with standard operating procedures on this to be fair to consumers.

Fomca called on the central bank to ensure that third party claims (when a driver claims from the insurer of the driver at fault) to be made easier and done within a specified time. For some consumers, the waiting period is agonising, with several cases dragging on over three months. If the driver only has one vehicle, it is troublesome as the car is kept in the workshop for months. No temporary car for use is offered or payment for loss of use is given to the policy holder.

Bank Negara must impose rules whereby consumers are compensated if their vehicles are kept too long without any repair work done beyond a stipulated time. Consumers faced with this situation are advised to email to the authorities such as Bank Negara, Ombudsman for Financial Services, the insurance companies involved and PIAM.

Nippon Life Enters Microinsurance

Japan's Nippon Life Insurance will start selling "micro" plans targeting low-income customers in Asia, with the goal of issuing at least 350,000 policies in the next five years. Nippon Life will first make the policies available in Indonesia as soon as this month through the local group company Sequis Life. The business will then expand to three more group companies in India, Thailand and Myanmar.

The Nippon Life group looks to enter the microfinance business, which is estimated to have a global market topping $90 billion. But microinsurance is a domain that contains potential pitfalls that Nippon Life must navigate.

Nippon Life will offer life insurance policies that grant payouts of roughly $1,300 on monthly premiums of about 38 cents. The provider will mainly target employees at companies that do business with multinationals.

To extend the reach of the business, customers will be able to bypass background checks to be eligible. Nippon Life sees demand among local companies that seek to broaden employee benefits from a social responsibility standpoint.

Major local banks, including affiliates at Japanese banks, have found success in the microfinance sector. Such operations generate annual yields of 10-20%. But there is no proven business model for microinsurance. Many parts of the emerging world have not developed health insurance infrastructure. When it comes to low-income customers, providers are exposed to substantial insurance payouts due to the unstable quality of life.

Nippon Life looks to reap stable earnings by selling policies to workers through their employers. The company will tap the know-how accumulated from domestic workplace sales.

Global rivals such as Germany's Allianz have taken the lead in this field. But policies targeting low-income clients are normally marketed directly to individuals, and the business has yet to take off. Nippon Life is entering Asian microinsurance in part to shore up its overseas business by developing a new business groupwide. The company has twice injected capital into Australian life insurance affiliate MLC since the unit encountered financial trouble last year.

Insurance Fraud Hong Kong

The Insurance Authority (IA) has issued a trio of warnings about possibly fraudulent websites and mobile applications purporting to insurance companies in Hong Kong.

On May 03, the regulator identified a website with the domain name “cmbwinglunginsurances.com” which is pretending to be the official website of a regulated Hong Kong insurer, CMB Wing Lung Insurance Company Ltd. The company has confirmed it is not connected to the website.

The following day, May 04, the IA issued another alert related to CMB Wing Lung, this time a fraudulent mobile application using the insurer’s name. The application, located at “https://appsliner.com/cmb-wing-lung-insurance-for-pc-how-to-install-free-download-windows-mac/” purports to be the insurer’s official mobile app. However, Wing Lung has denied this.

The IA also highlighted another potentially fraudulent website at ““https://www.hangfungins.com” containing false or misleading information about a firm known as Hang Fung Insurance Services Limited (HFIS). However, HFIS is currently not a licensed insurance intermediary in Hong Kong, and the company said that it has no official website.

Interacting with these unauthorised websites and applications may expose users to cyber risks such as spyware, ransomware, and hacking. The IA has advised individuals who have transacted through these websites and apps to report the incident to their insurer, the IA, and the Hong Kong Police Force. The public must also make sure that the company they are transacting with is registered by searching for it on the Register of Insurers and Register of Licensed Insurance Intermediaries on the IA website.

Taking Insurance To Rural Doorstep

The IRDAI has suggested selecting several villages throughout the country as models of insurance so as to increase insurance penetration in rural areas. The concept was mooted by the IRDAI in a discussion paper on insurance in rural areas with a special focus on agriculture and allied activities, reported Press Trust of India.

"The concept may be implemented in a minimum of 500 villages in different districts of the country in the first year and increased to a minimum of 1,000 villages in the subsequent two years," the paper said.

The paper says that the choice of villages is to be made carefully, considering various relevant aspects and parameters in order to implement the concept successfully for a period of three to five years.

General insurers and reinsurers - Every general insurance and reinsurance company with an office in India needs to be involved in piloting the concept, and the efforts in selected villages need to be continued for a minimum period of 3-5 years so as to make the insurance benefits visible to the community.

The IRDAI paper says insurers can set up a dialogue with state governments and ministries that run various developmental programmes/schemes for farmers, rural and vulnerable sections of society. Insurance companies can integrate insurance with such programmes, it adds.

Target market - The discussion paper says the target segment consists largely of rural low-income households or individuals who have little savings and limited financial capacity.

The central government's initiative through Pradhan Mantri Fasal Bima Yojana (PMFBY) — the government-sponsored crop insurance scheme — has helped improve insurance protection for crops in recent years. However, a large number of crops and cropped areas remain outside the scope of the PFMBY and are still uninsured. These can be served through tailored indemnity-based /weather index-based products. Allied farm risks, MSMEs, agro-businesses, livestock and other personal insurance needs of the rural population are also largely unserved.

Lack of awareness, limited choice of insurance products, absence of a people-friendly and transparent claim settlement mechanisms, and a weak network of insurers, are some of the issues and challenges in advancing growth of rural insurance business.

The IRDAI has invited feedback from stakeholders on the proposal, with 17 May as the deadline for submissions.

InsureTech Trending

Insurtech has long been a factor in the sector, but arguably never more so than during the Covid-19 pandemic. With lockdowns and social distancing, life insurance companies have been forced to reach out to customers by alternative means. They've been encouraged to tailor communications that suit present realities and digitize unwieldy underwriting processes. On top of that, many have automated data processing via artificial intelligence and machine learning.

Insurtech firms raised $2.5 billion in funding during the third quarter of 2020, an increase of 63% over the second quarter. Offerings should be customized to the individual in the interest of meeting their special needs.

Clunky processes on the part of insurers likely contributed to this shortfall. Consider something as simple as getting a physical examination, which is often required to purchase a policy. In 2018, over 50% of respondents indicated that they would be more likely to purchase if they could skip this invasive step.

There’s also a matter of the data insurers have accumulated on customers and what they are able to do with it. These companies tend to be “data rich and information poor.”

An insurtech infusion could address both of these problems, as it would provide the tools to analyze existing data while also collecting new information. Additionally, it could make predictive modeling possible, which would expedite the application and underwriting processes. This could lead to customized products (i.e., it would likely eliminate the need for things like physicals, in most cases). It could also improve efficiency, result in more affordable coverage and decrease costs for the insurers themselves.

There’s the personalization of the industry — be customer-centric, and in the end, it'll benefit all concerned.

Digital Gaining Traction - insurtechs gaining greater traction recently, the trend is not new. In 2010, a German company known as Friendsurance launched a peer-to-peer model designed to make the process of searching for and purchasing policies more customer-friendly. A similar model has been adopted in the U.S. by insurance company Lemonade.

Momentum continued to gather from there, showing that global investment in insurtech, which stood at $348 million in 2012, had reached $4.15 billion six years later. There is no going back now. Nor should there be. A report in 2020 honed in on the underwriting/onboarding process when it described the following best practices for those life insurance firms that are still getting up to speed technology-wise:

• Evaluate the entire operation: This includes stepping back and examining the entire customer experience — which is where personalization can come into play.

• Make sure everyone’s in step: This includes shattering silos and coordinating every phase of the operation, from underwriting to actuarial work and from risk to compliance departments.

• Trust the process: Digital transformation takes time, so that needs to be understood up front. There will be missteps. Mid-course corrections will be required. It is a matter of keeping the faith and maintaining momentum.

• Maintain short-term goals: There is value in getting immediate wins in that they demonstrate to shareholders and customers alike that you are headed in the right direction.

There is more to come. A day in the not-too-distant future where insurance follows a pay-as-you-live model. That is, your life insurance premiums could be determined by the lifestyle you maintain, as tracked by various wearable devices. Is your blood pressure trending up? Then so too will those premiums. Are you training for a marathon? Then your premiums will hit a downslope.

Internally, marketing and communications leaders need to continue to bang the drum for digital transformation, making it clear that this is what consumers want, and indeed, what they already have in other sectors. They can order virtually anything they want through their phones, up to and including their groceries; why should insurance be any different?

It's vital to build a culture that ties compensation to customer outcomes (NPS and CX journey scores) and create a marketing/UX “center of excellence.” The industry often falls into the trap of creating cultures focused on tech and operations — with an emphasis on driving these functions with meeting dates and revenue goals. There should also be an emphasis on operationalizing consumer focus (or centricity).

A marketing/UX “center of excellence” should apply discipline to customer experience and the idea of delivering consistently with design thinking and experimentation approaches; executing on user research, behavioral tracking and reporting; building advanced analytics/big data capabilities; and applying measurements and learnings based on those capabilities. The center of excellence enables marketers and UX experts to incorporate human-centered design and empathy into product offerings and build solutions for customers that are transparent and easy to understand. Moreover, they can use their learnings to pivot based on customers' needs.

Personalization is needed and expected, and insurtech illustrates how the industry can accomplish that. This may sounds strange: The machines will bring us closer together? Absolutely. And I that will continue to be the case going forward.

Universal Life Insurance

Universal life insurance — which may also be referred to as adjustable life — is a type of permanent life insurance that’s intended to provide benefits until the day you die. However, this type of policy may be more flexible than a traditional whole life insurance policy.

While both whole life insurance and most universal life insurance policies build cash value, universal life insurance policies generally earn “a market rate of interest” - which is used in part to keep your premiums lower and to add to the cash value portion of the policy.

However, unlike standard whole life policies, which have fixed premiums for the life of the policy, the premiums on universal life insurance can fluctuate depending on the market and the policy’s related investments. That means you could be looking at higher premiums if the market or the investments you choose don’t pan out as expected.

Since the policyholder is taking on more risk with a universal life insurance policy, the cost of universal life insurance is generally lower than regular whole life policies.

How does universal life insurance cash value work - One of the attractive features of universal life insurance policies is its cash value component. The cash value component describes the investment portion of any life insurance policy, including universal life insurance. To build cash value, insurers set aside a portion of your life insurance premiums in a separate account, which are then invested over time. Life insurance policies that build cash value provide options for accessing that cash in an emergency.

Some people borrow against the cash value of their life insurance policy when they need it for major life events or in an emergency. Others might use it to help pay their life insurance premiums later down the line when their income is lower after retirement. Another option is to access part of the cash value of your policy by surrendering it if you no longer want to keep paying for the policy.

A universal life insurance policy that builds cash value can be useful if you want to have a cushion down the road. It can also help if the premiums on your policy become difficult to manage, as you can rely on the cash value to extend the policy for a while even if you stop paying the premiums. But keep in mind that using the cash value in this way will lower your overall death benefit.

Types of universal life insurance - Under the universal life insurance umbrella, you can drill down to find specific types of universal life insurance. Policy options include the following:

A: Indexed universal life insurance

This is a type of permanent coverage that offers its own cash value component, but the main difference is where that money is kept. With indexed universal life insurance, you can invest the money in your cash value account and earn interest based on a stock market index. In addition, many indexed universal life policies offer a guaranteed interest rate “floor” that promises you’ll never receive a return lower than that rate.

The main benefit of this type of policy is the fact that you have the potential for greater returns over time, and that you also receive a guaranteed minimum rate of return. You also get tax-deferred growth on the cash value of your policy as well as a death benefit that won’t require any federal taxes to be paid by your heirs.

On the downside, your returns with indexed universal life insurance may be low if the stock market isn’t performing well, and your returns will always trail an index since your insurer makes money by keeping a portion of the gains.

B: Guaranteed universal life insurance
If you’re looking for life insurance with near lifetime coverage for a lower price point, you might consider a guaranteed universal life insurance policy. Unlike other forms of universal life insurance, there’s no cash value component with this type of policy, which means the premiums don’t change over the life of the policy.

However, the flip side of that trade-off is that since there’s no cash value, if you stop paying the premiums, your policy will lapse since there’s no cushion to fall back on to cover the cost of the policy.

While the lack of cash value may dissuade some people from considering this option, keep in mind that the premiums on guaranteed universal life policies are significantly lower when compared to other permanent life insurance options.

Guaranteed universal life can be an interesting “middle ground” choice for people in their 60s to consider if they previously had a term life policy that expired and don’t want to commit to the high cost of a new permanent whole life policy in the retirement stage of their life.

Guaranteed universal life insurance can be an option for people in their 60's looking for a new policy at a lower cost.

C: Variable universal life insurance
With variable universal life insurance, you get permanent life insurance coverage that comes with a cash value component. The main difference is that you have the option to put some or all of your cash value into a separate account that’s made up of investments you choose.

This type of life insurance provides a tax-free death benefit to your heirs, but you also get more control over how the cash value component of your policy is invested and managed. This gives you the potential for much higher returns based on how aggressively you invest, yet you’ll also endure the market risk that comes anytime you invest in the stock market.

Variable universal life insurance also lets you pay flexible premiums, so it may sound like it represents the best of all worlds. However, many experts don’t recommend variable universal life insurance due to the high fees these policies often require.

How does universal life insurance compare to whole and term life policies - Broadly, the main two types of life insurance are term life insurance and whole life insurance. Term Life insurance only lasts for a specific length of time — usually 10 to 30 years — while whole life insurance lasts for a lifetime and often has a cash value component.

Universal life insurance typically comes in the form of whole life insurance, which means that like most whole life policies, premiums usually cost significantly more than a comparable term life policy, since your heirs are guaranteed to receive a death benefit so long as you continue to pay the premiums over the course of the policy.

Also, term life insurance policies are occasionally offered without a medical exam, whereas whole life policies — including most universal life insurance policies — generally require you to go through a physical to qualify for coverage.

Is universal life insurance a good choice for you? Many people who expect to have lower costs later in life don’t need permanent life insurance and shouldn’t pay the higher costs associated with a universal life policy. But if you think you do need that coverage and don’t want to have to worry about being covered as you get older, you may want to consider universal life insurance as an option.

Prudential Indonesia & OVO

Indonesian e-wallet unicorn OVO has expanded its partnership with Prudential Indonesia to launch a digital shariah life insurance product with affordable premiums. The Asuransi Jiwa Kumpulan Syariah PRUTect Care product is provided by Prudential Indonesia through insurance broker PT Salvus Inti and can be accessed through OVO’s app.

It is designed to offer users a highly affordable, highly accessible, shariah-compliant life insurance product. This arrangement gives Prudential Indonesia access to OVO’s large user base nationwide, spanning all of Indonesia’s 34 provinces. Users have a choice of monthly or yearly contribution payment schemes, starting from around IDR 5,000 (US$0.34) per month.

The product provides basic death-benefit and other preferred protections, such as daily hospital cash (non-ICU-Intensive Care Unit), daily hospital cash (ICU), permanent disability due to total accident benefit, death benefit due to infectious diseases and death benefit due to accident.

In 2019, Prudential Indonesia established a long-term partnership with OVO to expand access to life insurance for the Indonesians. In early 2020, OVO and Prudential Indonesia collaborated to provide premium-free accident and COVID-19 life insurance to help Indonesians at the onset of the COVID-19 pandemic. Approximately 222,000 individuals registered through the OVO platform during the programme period, which ran until 31 May 2020.