Medical Premium Up Up Up

An insurance company has sent a letter to inform me of the 30% increment in the medical insurance that I have bought for more than 10 years. This will mean a RM350 increase bringing the total to RM2,000+. On top of that I have to pay GST of 6% which will amount to RM120+.

I am a retiree and I am not a civil servant. I am neither poor nor rich. I am not entitled to aid for the poor except for BR1M of RM350 this year and I am not surrounded by maids or live a life of luxury. I have contributed to the Malaysian economy and to the Inland Revenue Board. Today, I have to rely on my hard earned savings which is diminishing before my eyes. I will have to pay a lot more for my other insurances and necessary consumption. Who can I turn to?

It is very distressing to note that healthcare and a lot of medications are not GST zero rated. Those drugs that are GST exempted are few as many are replicated from the same molecule. Aging is bad enough and to fork out more money for necessary medication is terrible. Please exempt healthcare medicine from GST.

The prime minister said that healthcare in Malaysia is one of the cheapest in the world. Our income is also one of the lowest in the world. EPF had recently announced that 80% of contributors who retire today have savings below the poverty line. The ringgit weakness and the cost of living are a concern for most Malaysians.

It is sad and painful to hear of billions of ringgit lost in government projects and wastages when the rakyat have to pay more taxes. I see this as the tip of the iceberg as our quality of life declines further. Is there a solution?

Letter from a Retiree

Life Insurance 2014 Updated

 
Malaysia’s life insurance industry recorded a 6.9% growth in insurance protection to RM1.17 trillion for all policies combined in 2014, its industry body said on Friday. The Life Insurance Association of Malaysia (LIAM) said the amount was 6.9% higher than the RM1.09 trillion in 2013.

 

Sum Assured

“The sum assured per capita in 2014 has also recorded an increase to RM38,449 from RM36,387 in 2013,” it said. LIAM president Vincent Kwo said the healthy performance of the life insurance industry reflected the people’s rising awareness on the importance of insurance protection. 

 

Malaysia’s life insurance industry provided insurance protection to 12.4 million lives (counting lives with multiple policies as separate lives) in 2014, an increase of 148,574 when compared with year 2013. Kwo said the increase in the number of lives covered by life insurance and higher sum assured protection reflected a higher level of financial literacy among Malaysians. 

Protection Gap

However, based on the Protection Gap Study undertaken by University Kebangsaan Malaysia and LIAM in 2013, there is still a huge protection gap for families with life insurance. 

 

“On average, the gap ranges from RM100,000 to RM150,000. This means that the average sum assured of RM38,449 is still way below the amount needed to support one family member in the event of the death or disability of the breadwinner,” said Kwo. 

Penetration Rate

He added the current penetration rate, as at 54%, was considered low as the government’s plan was that 75% of Malaysians be insured by 2020. There is a need to develop suitable insurance products to meet the different life stage needs of customers and introduce new delivery channels to reach out to the remainder 50%, of which a high percentage of the population could be concentrated in the rural areas. 

“Additionally, insurers could also leverage on their existing customer base for upselling or cross-selling initiatives given that even among those who have insurance coverage, in most cases they were not adequate,” he added. 

Growth

Based on preliminary figures, the life insurance industry in Malaysia grew by 5.5% in 2014, as measured by new business annual premium equivalent (APE).  APE comprises of the 10% single premium and 100% annualised premium. New business total APE in 2014 was RM4.71bil as compared with RM4.47bil in 2013. 

As for group insurance business, it recorded a 5.1% growth. In terms of individual business, investment-linked policies continued to outpace traditional policies with the former growing at 11.1% compared with the latter which shrunk by 1.6%. On total new premium basis, the industry grew 9.3% in 2014, with total premium volume recording RM8.95bil.

 

The total premium for in-force policies grew moderately at 5.8% in 2014 for individual and group policies combined. The life insurance industry also registered an increase of 21.3% in claims payouts amounting to over RM8.4 billion as compared with RM6.9 billion in 2013.

Claims

The high growth in claims payouts was contributed mainly by higher medical claims and bonus payments to policyholders. Medical claims increase was contributed mainly by strong growth in medical insurance business in recent years and partly by medical inflation. 

Increase in bonus payments was mainly due to the increased popularity of the cash bonus type of policies in recent years. The increase in death claims meanwhile was moderate at 7.6% in line with the increase in in-force sum assured 

Commenting on the outlook for 2015, Kwo said the economy’s strong fundamentals would continue to underpin the life insurance industry with expectations of a robust strong single digit growth.

EPF Updated 2015

Nearly 80% of workers who will turn 55 this year will not have enough savings in their Employees Provident Fund (EPF) to live above the poverty line, according to figures released by the fund’s chief executive officer.

Datuk Shahril Ridza Ridzuan said for the next 20 years, the workers would not have enough in total EPF savings to enable them to live on RM800 a month, which is close to Malaysia’s average poverty line income of RM830. This is because most of them had low wages when they started contributing to the fund in 1980s, and continued earning relatively low salaries till they turned 55, said Shahril, who did not provide a number for this batch of retirees.

The revelation shines the spotlight on the problem of low incomes among a majority of Malaysian workers, even as Putrajaya said it aims to make Malaysia a high income nation in five years’ time. According to Shahril, more than 75% of its 14 million EPF contributors earn less than RM2,000 a month.

About 15% earn between RM2,000 and RM5,000 a month, while those earning more than RM5,000 are in the top 10%. The EPF has set RM196,800 as a savings threshold that would allow a contributor to spend at least RM800 a month for the next 20 years. The threshold is revised every three years to take into account inflation.

Only about 20% of its contributors who turn 55 this year are expected to have RM196,800 in total savings. That percentage is likely to stay about the same in the coming years, said Shahril.

“Historically, we have a low wage environment, so that percentage has inched up only a little. “This is why we tell contributors not to take out their savings till they are 60, when they really retire. “That extra five years can earn them an extra 40% through compound interest,” Shahril said when met after a talk organised by the Chevening Alumni Association in Kuala Lumpur last night.

These figures, he said, reflect the new reality of working life in Malaysia, as people will have to work beyond 55 in order to save enough to live out the rest of their lives. “This is the trend in developed countries and we are getting there. The reality is that you cannot retire and enjoy yourself at 55 any longer.”

 That age was set in the 1950s and has not been changed to take into account longer life expectancies, he said, adding that these days, people expect to live through their 70s. This trend is compounded by the fact that Malaysia is a rapidly ageing nation. In 2030, 17% of the population will be aged above 65, he said.

In 2040, people aged 65 will outnumber younger individuals. “So we need policies to deal with this, such as financial literacy training so that young people are aware of the need to save for retirement and how to integrate old workers into the market.

 “These are issues that advanced economies have to deal with and we are getting there,” said Shahril.

Health Insurance

In Malaysia - health insurance is not that big a deal, especially when it comes to women. You either have a cover from your job that pays a certain percentage of your expenses - maternity included - or you share a plan with your family members and not really look into too many details. And you really can't be blamed either.

Life insurance takes more importance over health any day and a glance through a regular 20-something woman's investment portfolio will show a huge chunk of her savings going into life insurance with health as only a secondary option. The reason? We pretty much think that we are never going to fall sick, ever!

It's surprising that we have this lackluster attitude towards health when we are probably the ones who need it the most. Just pause and reflect on your daily routine. You are a homemaker in the morning, probably getting your kid ready for school while cooking a meal for the family and also rushing to finishing off your daily commitments. The stress continues as you deal with a job, family, household chores and unexpected emergencies. Quality me-time, if any, comes in the form of toilet breaks. Phew! With so many parts to play, it's almost imperative for you to take care of your health. Here are five reasons your health needs a plan:

You can't predict your health: You may be healthy now, but tomorrow can be a different story. Even if you lead a healthy lifestyle, dealing with uncertain emergencies and stress are a part of our daily routine. Events such as accidents can affect you, regardless of your age, and the expenses will continue till the time you are cured completely. Make sure you have a fall back option to manage such unforeseen medical expenses and their impact.

The best laid plans can go awry: A critical illness can let your financial goals go for a toss. Uncovered medical expenses have to be paid off with funds earmarked for buying a new house or taking an international vacation. If you are the sole earning member in the family, you might find yourself in the middle of medical debt.

You need a wholesome cover: During a critical illness, you not just incur medical expenses but you might have to think of pending bills.  This is where your health insurance comes in. Life and Health insurance covers your expenses for the medical treatment and also gives you the liberty to use the compensation amount as per your own discretion. Also the premium that you pay towards your health insurance is eligible for tax deduction.

You might not have the money: As per a Forbes article, for every Ringgit you spend for medical treatment, RM0.70 goes in buying drugs. With the addition of good quality private hospitals, treatment charges have shot through the roof. The improvement in technology and services has pushed up the medical cost. With everything from medical costs to doctors' bills on the rise, it is better to have a separate health cover that deals with your expenses.

Lifestyle changes have an adverse effect: Over the last 10 years, there has been a marked change in the lifestyles and eating habits of people. Add to it long working hours, late night parties and smartphone addiction and we have a host of newer medical problems to deal with. It is advisable to have a good cover that takes care of all your medical bills while you recover from the illness, rather than worry about cash.

No Commission Life Insurance

Singapore - Consumers may be able to start buying basic life policies directly from insurance companies from as early as next month, bypassing financial advisers and saving on commission, the Monetary Authority of Singapore (MAS) said yesterday.

The much-anticipated move is aimed at giving consumers another avenue to buy insurance products and encourage more people to be insured. However, industry professionals told TODAY they do not expect the take-up rate to be high due to the limited coverage of the plans and the typically complex nature of insurance policies that many might have difficulty understanding.
            
“My guess is 10 to 20 per cent of people, which is not a big number, will buy directly from the insurance companies. The MAS has also imposed a maximum sum assured per person per insurer of S$400,000. If you want more, you will have to buy from another company, which can be cumbersome. I don’t think many people have the time and financial expertise to do everything on their own,” said Mr Christopher Tan, chief executive of financial advisory firm Providend.

The direct purchase initiative is a result of the Financial Advisory Industry Review (FAIR) introduced in 2012 to raise the standards of the insurance sector. Another initiative, a single information portal where consumers can look up and compare available life insurance products, will also be launched in April, the MAS said yesterday.

Last July, the MAS laid out the features of the term and whole life policies that consumers can buy directly from the companies.

It emphasised yesterday the direct purchase products will be “a new class of life insurance products for basic needs that is ‘retail-access friendly’.”

“It will be simpler as the features are broadly standardised. This allows a consumer to make straightforward product comparisons when deciding which (product) to purchase,” MAS deputy managing director Ong Chong Tee said yesterday. “Consumers who know what they want and do not need financial advice will be able to buy (the products) directly from life insurers. It will be cheaper as no commissions will be charged,” he added.

On concerns expressed by some financial advisers that their livelihoods might be affected by this initiative, Dr Khoo Kah Siang, president of Life Insurance Association Singapore, said this was unlikely.

“The products available through the direct channel are those with very simple proposition; there are safeguards to make sure people who purchase them really understand what they’re buying without advice,” Dr Khoo said. “But if you look at the range of insurance (products in the market), it’s very wide. They can also be very complex and because of the complexity, advisory is very important.”

In addition to providing advice, financial advisers also “follow up with clients if anything were to happen to them” — something that the direct purchase channel cannot provide, noted Mr Rave Peh, agency development manager at AXA Singapore.

Consumers concurred that the personal touch provided by advisers is hard to replace. “I would like to feel more secure, that there is someone I can trust, an individual to provide that connection to the insurance agency. I’m willing to pay commission to get that kind of service,” said Mr Steven Chung, head of events and programming at Sentosa Leisure Management.

Synergy Financial Advisers executive director Jeff Lee said the move could force the industry to improve. “If advisers don’t improve their skills and don’t add value, then they’re just out there to sell and will lose out. But if they improve their competency ... and give good advice to clients, I don’t think (the initiative) will put many out of jobs.” Lee Yen Nee, with Additional reporting by Angela Teng

Top Insurance Brand

Global leader in life insurance and investments, AXA, was recently named ‘Number One in insurance’ by Interbrand for the sixth consecutive year. According to Interbrand, the brand strategy and design consultancy whose “Best Global Brands” ranking has become an industry benchmark, AXA moved up six slots to 53^rd place, with a brand worth of $8.120 billion.

Some key achievements in 2014 such as expansion in new territories, investment in technology labs and start-ups, partnerships with leading technology companies and universities, and various CSR activities have been particularly highlighted by Interbrand to reflect AXA’s leadership in the insurance industry and its brand strengths.

According to Interbrand, “AXA is adapting intelligently to a changing world, strengthening its connection in both the enterprise and consumer spaces.”Interbrand has also assessed AXA as the Best Green Brand in the insurance industry worldwide; particularly underscoring its role in addressing climate change through improving the understanding of the environmental risks, as well as the reduction of AXA’s environmental footprint.

“We are all very proud to be the leading insurance brand for the 6th year in a row, one of the world’s 100 best brands across all industries. “AXA” is a strategic asset to attract and retain customers, partners and talents worldwide. The strength of our brand is instrumental to our expansion in higher growth markets and a competitive advantage in the digitization of our business,” said Véronique Weill, Chief Operating Officer of the AXA Group, whose headquarters are in Paris, France.

AXA is a global leader in insurance serving 102 million customers in 56 countries. In 2013, AXA released US$ 15 billion in benefits to its policyholders. AXA is also ranked as the 16^th largest corporation according to the 2014 Fortune Global 500 list and 33^rd by Forbes Global 2000.

Imortal Need No Life Insurance

Abhilesh Ranjan, 32, a successful businessman based in one of the fastest growing city in India, Gurgaon suddenly got worried about his family’s financial security. He is blessed with two children and both are studying in well-reputed schools. His parents get a decent level of retirement income from real estate and thus only his immediate family i.e. his wife and two kids are dependent on him.

So, what is keeping him awake at night? Actually, he recently came across an unfortunate incident wherein one of his friends Rajneesh Jain lost life in a car accident. Rajneesh and Abhilesh had similar profiles. The mishap was a massive setback for his family. Rajneesh was running a flourishing business and had a happy family with two kids, both studying in a good school.

It was just 5-6 weeks after Rajneesh’s demise, his family started bearing the brunt of financial crunch. Naturally, Abhilesh was feeling bad. Had Rajneesh been covered under a life insurance plan, things could be very different. Nothing can compensate the loss of a loved one, but life has to go on. No one wants his family to get into financial troubles and live a miserable life, even in his absence.

That explains the significance of life insurance cover.

Just look around. You will find several such stories. Of course, you cannot change the past or predict future. But you can always fulfil your responsibility towards your family by taking care of certain elements. Covering unforeseen risks is an imperative and there is no reason why you should not have sufficient levels of life insurance coverage.

Why do you need life insurance?
You need life insurance not for one reason but many. Life insurance not just provides you guarantee but it also lets you live with ease. Given that your life is exposed to various risks you need life insurance to:

• Fulfil your family’s financial requirements:
Sustenance is impossible without an intact cash resource. Your family is dependent on your income more than you are. You need to keep their present as well as future financial requirements in the view. Your family members need to carry on with their lives even when you are not with them.

Without you their financial sources will cease. So it is your responsibility to arrange for an alternative source of income for them or anything that can make them move on.

• Repay debt:
Loans and debts are an inseparable part of financial planning for most of the people. It gives you an additional source of funds. There is no harm in taking loans. However, you should also be able to pay it back what so ever is the case. If you have taken a loan you should definitely have a life insurance policy also. Having an appropriate life insurance plan will save your family to take the burden of repayment of loan in case you are no more. Calculate how much debt you need to clear and add it to the sum insured of your life insurance policy.

• Get emergency funds:
A life insurance policy can let you avail loan against the amount you have paid as premium. So it is not just for your family but also to fulfil your own needs.

• Avail other benefits
There are many riders available with a life insurance policy. These riders help you to extend the benefits you get from your life insurance plan. Besides death benefit, you can get many more benefits which add value to your plan. Disability benefit, accidental death benefit and dismemberment benefit, critical illness benefit, waiver of premium, accelerated death benefit and the list goes on. The rider you choose is subject to the kind of life insurance plan you choose.

How much does it cost?
Many cannot afford to pay life insurance premium. More cannot afford not to be insured!! If you can afford to pay life insurance - you probably have no need for life Insurance