Chinese Kapitan in Malaysia Yap Ah Loy and American oil magnate John D.Rockefeller were figures of the same Age. Yap was born in 1837 and Rockefeller was born two years later. Both had experienced very difficult childhood. Yap was a cowherd while Rockefeller raised chickens.
When Yap was travelling all the way from China to Malaya, Rockefeller had to suffer humiliation before getting his first job as an assistant bookkeeper. Yap got his first tin mine in his 20s and started to make rapid advances in his career; while Rockefeller got his first oil well and started to make fortune.
Yap had become one of the most power and wealth concentrated people in Malaya while Rockefeller rose as the richest man and the greatest philanthropist in the US.There are so many similarities between Yap and Rockefeller but at the same time, there are also great differences between the two of them.
Today, the Yap family has declined but the Rockefeller family is still so wealthy with more than US$300 billion assets. It is expected to continue being wealthy in the foreseeable future.
The objective of such a comparison is not to belittle the Yap family. On the contrary, I have full appreciation of Yap’s great grandchildren who are open-minded and contented with the ordinary. However, the contrast still tells us some life principles.
Perhaps, Yap was limited to his personal factors and had neglected the management knowledge of sustainability. He had also failed to grasp the transformation trend of social change and as a result, his wealth turned zero.
Meanwhile, Rockefeller started from oil exploitation and expended his business to the oil refining market, as well as the financial and manufacturing industries, reaching all aspects of the US economy.
He was specialised in using levering power to expand the industrial development under his business group and from industrial production, he accumulated capital to control the financial network.
Rockefeller’s success was the success of the US capitalism. He said that: “If I am broke and thrown to a desert, I can still rebuild the dynasty as long as there is a camel caravan crossing.”
Rockefeller and Western enterprises believe in professionalism and industrial power, that is why their wealth and status can be maintained. This is the condition lacked by Yap and many Chinese entrepreneurs.
The Rockefeller is able to pass its wealth to the sixth generation and it is actually closely related to its family education. Although he is the richest man in the United States, Rockefeller still required his children and grandchildren to do house work in exchange for their pocket money. His eldest grandson recalled that his first business trade was made when he sold his rabbit to a scientific laboratory.
Rockefeller told his son that the starting point is not the end. Regardless of a person’s origin, his success or failure in the future lies on his own efforts. Therefore, his children and grandchildren do not use the family wealth to buy British castle, French manor or Italian fine arts. Instead, they accumulate the money and made contribution to hospitals, universities and global philanthropy.Rockefeller’s story of success and wisdom of life do not only educated his children and grandchildren, but have also affected the values of the Americans.
From the decline of the Yap family and the attitude of a parvenu’s son in China who hit a person to death with his car but still said arrogantly that: “My father is Li Gang”, we know where the problems lie.
Monday, December 27, 2010
Monday, December 20, 2010
Protection & Assurance
Life insurance can be an important investment as it provides protection and assurance against life's many uncertainties.
However, it is also a necessity that those who have existing medical conditions may find themselves without. In many instances, these consumers must battle against denied applications, higher premium payments and increased uncertainties about the future well-being of their families.
But, by pursuing the right strategies, these consumers may find that they are able to obtain life insurance at great prices, as long as they understand how to properly navigate the market.
Life insurance costs are based on as many as 80 different rating factors, which must be examined before a price can be determined. In many cases, those looking to compare life insurance quotes may find that only a few questions are asked upfront, with many more coming after coverage is secured, according to industry business Life Quotes.
Despite these challenges, many consumers who compare insurance rates could find savings. In fact, many individuals may be losing out simply by not taking the extra time and effort needed to find good quotes from respected insurers.
Still, others lead busy lives, and in an uncertain economy it may not be the easiest thing to put aside the hours of research required. In addition, life insurance applications can take as little as two weeks or as much as two months to be completed, which in turn can lead many consumers to be discouraged with the process.
These consumers may benefit by seeking outside assistance, as those familiar with the industry can hold insights to which average individuals are not privy to.
"The first thing you should do is seek the advice of an agent that you trust to guide you through this process," says Susan Mancione, sales director at Life Quotes, Inc. "That can make all the difference."
These agencies can assist consumers with tips about the application process, such as how insurers handle information regarding medical conditions and which additions to an application can help improve rates. They can also give individuals a more accurate picture of what potential life insurance options are available and what they should expect from the coverage.
By taking the time to compare insurance rates, or by finding others to help in the search, consumers could save on their annual payments, and even find increased coverage. This, in turn, will help provide assistance to consumers with medical conditions, while ensuring the necessary protection for their families in the future.
However, it is also a necessity that those who have existing medical conditions may find themselves without. In many instances, these consumers must battle against denied applications, higher premium payments and increased uncertainties about the future well-being of their families.
But, by pursuing the right strategies, these consumers may find that they are able to obtain life insurance at great prices, as long as they understand how to properly navigate the market.
Life insurance costs are based on as many as 80 different rating factors, which must be examined before a price can be determined. In many cases, those looking to compare life insurance quotes may find that only a few questions are asked upfront, with many more coming after coverage is secured, according to industry business Life Quotes.
Despite these challenges, many consumers who compare insurance rates could find savings. In fact, many individuals may be losing out simply by not taking the extra time and effort needed to find good quotes from respected insurers.
Still, others lead busy lives, and in an uncertain economy it may not be the easiest thing to put aside the hours of research required. In addition, life insurance applications can take as little as two weeks or as much as two months to be completed, which in turn can lead many consumers to be discouraged with the process.
These consumers may benefit by seeking outside assistance, as those familiar with the industry can hold insights to which average individuals are not privy to.
"The first thing you should do is seek the advice of an agent that you trust to guide you through this process," says Susan Mancione, sales director at Life Quotes, Inc. "That can make all the difference."
These agencies can assist consumers with tips about the application process, such as how insurers handle information regarding medical conditions and which additions to an application can help improve rates. They can also give individuals a more accurate picture of what potential life insurance options are available and what they should expect from the coverage.
By taking the time to compare insurance rates, or by finding others to help in the search, consumers could save on their annual payments, and even find increased coverage. This, in turn, will help provide assistance to consumers with medical conditions, while ensuring the necessary protection for their families in the future.
Malaysia Insurance Sector
PETALING JAYA: The insurance sector is expected to continue its growth momentum, albeit at a slower pace, with the life insurance business projected to grow by at least 12% next year.
Life Insurance Association of Malaysia (LIAM) president Md Adnan Md Zain said: “With the economic growth projected to be around 5% next year coupled with the recent Economic Transformation Programme initiatives such as the Employee Insurance Scheme, Private Pension Scheme and the Foreign Workers Health Insurance Scheme, we should see the industry topping at a pace of at least 12% in new business sales next year.”
New business sales rose by 19% on a weighted premium basis in the first three quarters of 2010 attributed by a strong performance in regular premium sales which went up by 21% compared with the same period last year. Single premium business, however, registered a small decline of 1%.
With the low interest rate environment and higher disposable income, he said there was fresh impetus for consumers to seek high yielding products like insurance.
There was also a lot of potential in the life insurance market as the current penetration rate of 41% was lower than the more developed Asian economies, Md Adnan told StarBiz.
With rising medical costs and a slight uncertainty in the market, he said products such as health/medical, protection and savings related products would be the dominant types that would take the lead in seeking better penetration and growth.
Expressing a more optimistic outlook, Great Eastern Life Assurance (M) Bhd its director and CEO Koh Yaw Hui said the insurance market was projected to grow very strongly in the region of 15-20% next year. He added that the growth was underpinned by the strong growth momentum expected from the takaful business, especially with the issuance of four new family takaful licences this year.
General Insurance Association of Malaysia (PIAM) executive director Lim Chia Fook said the association expected the outlook for the general insurance sector next year to be positive with an increased demand for general insurance in all sectors. The medical and health insurance (MHI) sector was expected to remain strong in terms of growth which would be driven by growing consumer awareness and an increasing need for protection against escalating costs of medical and health care services, he noted.
Lim said the recently announced medical insurance plan for foreign workers to be implemented early next year would add further impetus to the MHI sector.
Apart from further pick-up in demand for property and liability insurance, the automotive sector would provide the stimulus for growth in the motor insurance sector, he said.
He said PIAM expected new areas of growth in micro-insurance products, especially in view of the fast developing small and medium enterprises sector as well as the biotechnology sector.
ING Insurance Bhd president and CEO Datuk Dr Nirmala Menon said that besides medical, protection and savings-related products having the biggest potential for growth, the industry would also be seen formulating a more comprehensive financial solutions plan for women to help them plan ahead better.
She also reckons that education plans would be popular as parents opt to give the best education to their children and that financial planning would be crucial to ensure there are sufficient savings for their children's future education.
Special focus would also be given to takaful products to capture the under-penetrated Muslim population which currently stood at below 10%, she noted.
Prudential Assurance Malaysia Bhd (PAMB) CEO Charlie E. Oropeza said the company's nine-month performance to September 30 had been really strong with total new business sales (conventional life insurance and takaful ) increasing to RM655mil, up 40% from the same period in 2009.
He said investment-linked products have been the mainstay of PAMB's business and would continue to be the driving force behind the company's long term growth, adding that it also expected to see a strong demand for medical/health riders.
Great Eastern's Koh said the challenge for the industry was to design suitable and affordable products that suit people's needs and boost the penetration rate of insurance in the country, noting that Taiwan has an insured rate of about 200% compared with 41% in Malaysia.
ING's Nirmala said that besides educating consumers on the importance of financial planning, the training of agency force would need to be intensified further as the professionalism of financial planners would affect consumers' ability to trust their advisers when it came to financial purchases.
Oropeza said besides enhancing the quality and professionalism of agents, another major challenge would be in attracting and retaining talent in the industry as finding the right people was a common probleml faced by all financial institutions.
Life Insurance Association of Malaysia (LIAM) president Md Adnan Md Zain said: “With the economic growth projected to be around 5% next year coupled with the recent Economic Transformation Programme initiatives such as the Employee Insurance Scheme, Private Pension Scheme and the Foreign Workers Health Insurance Scheme, we should see the industry topping at a pace of at least 12% in new business sales next year.”
New business sales rose by 19% on a weighted premium basis in the first three quarters of 2010 attributed by a strong performance in regular premium sales which went up by 21% compared with the same period last year. Single premium business, however, registered a small decline of 1%.
With the low interest rate environment and higher disposable income, he said there was fresh impetus for consumers to seek high yielding products like insurance.
There was also a lot of potential in the life insurance market as the current penetration rate of 41% was lower than the more developed Asian economies, Md Adnan told StarBiz.
With rising medical costs and a slight uncertainty in the market, he said products such as health/medical, protection and savings related products would be the dominant types that would take the lead in seeking better penetration and growth.
Expressing a more optimistic outlook, Great Eastern Life Assurance (M) Bhd its director and CEO Koh Yaw Hui said the insurance market was projected to grow very strongly in the region of 15-20% next year. He added that the growth was underpinned by the strong growth momentum expected from the takaful business, especially with the issuance of four new family takaful licences this year.
General Insurance Association of Malaysia (PIAM) executive director Lim Chia Fook said the association expected the outlook for the general insurance sector next year to be positive with an increased demand for general insurance in all sectors. The medical and health insurance (MHI) sector was expected to remain strong in terms of growth which would be driven by growing consumer awareness and an increasing need for protection against escalating costs of medical and health care services, he noted.
Lim said the recently announced medical insurance plan for foreign workers to be implemented early next year would add further impetus to the MHI sector.
Apart from further pick-up in demand for property and liability insurance, the automotive sector would provide the stimulus for growth in the motor insurance sector, he said.
He said PIAM expected new areas of growth in micro-insurance products, especially in view of the fast developing small and medium enterprises sector as well as the biotechnology sector.
ING Insurance Bhd president and CEO Datuk Dr Nirmala Menon said that besides medical, protection and savings-related products having the biggest potential for growth, the industry would also be seen formulating a more comprehensive financial solutions plan for women to help them plan ahead better.
She also reckons that education plans would be popular as parents opt to give the best education to their children and that financial planning would be crucial to ensure there are sufficient savings for their children's future education.
Special focus would also be given to takaful products to capture the under-penetrated Muslim population which currently stood at below 10%, she noted.
Prudential Assurance Malaysia Bhd (PAMB) CEO Charlie E. Oropeza said the company's nine-month performance to September 30 had been really strong with total new business sales (conventional life insurance and takaful ) increasing to RM655mil, up 40% from the same period in 2009.
He said investment-linked products have been the mainstay of PAMB's business and would continue to be the driving force behind the company's long term growth, adding that it also expected to see a strong demand for medical/health riders.
Great Eastern's Koh said the challenge for the industry was to design suitable and affordable products that suit people's needs and boost the penetration rate of insurance in the country, noting that Taiwan has an insured rate of about 200% compared with 41% in Malaysia.
ING's Nirmala said that besides educating consumers on the importance of financial planning, the training of agency force would need to be intensified further as the professionalism of financial planners would affect consumers' ability to trust their advisers when it came to financial purchases.
Oropeza said besides enhancing the quality and professionalism of agents, another major challenge would be in attracting and retaining talent in the industry as finding the right people was a common probleml faced by all financial institutions.
Thursday, December 16, 2010
Syriah Financial Planners
MALAYSIA will be able to produce about 500 syariah financial planners annually which would help meet the future financial needs of investors said the Malaysian Financial Planning Council.
Its president Kee Wah Soong said the number can steadily increase in a year from now as the MFPC ties up with more local institutes of higher learning.
According to the Economic Transformation Programme, Malaysia has less than 300 syariah financial planners.
"Under the ETP, with emphasis on wealth and asset management, there is a need for more competent and qualified people with technical knowledge and expertise. As for syariah financial advisers, there is a need for more than the traditional advisers," he said after the signing of several memorandums of agreement (MOA) yesterday.
The MFPC signed a MOA with Open Unviersity Malaysia to develop and executive Master in Financial Planning programme as well as memorandums of understanding with four other universities for registered financial planner and syariah registered financial planner (RFP) programmes.
They are Universiti Kebangsaan Malaysia, Universiti Utara Malaysia, Universiti Sains Islam Malaysia and University College Sedaya International.
The MFPC has held two Capstone Syariah RFP programme, a fast track pathway for existing practitioners, accountants, lawyers or academicians to become a qualified syariah financial planner.
Meanwhile Bank Negara deputy governor Datuk Mohd Razif Abd Kadir, who was also present at the event, said it is important that financial planners and advisers be equipped with knowledge on the syariah requirements to be in tandem with growth of the Islamic finance industry.
He said Islamic banking assets have expanded to reach 21.6 per cent of the total banking sector in Malaysia.
The Malaysian Islamic banking sector has registered double-digit growth over the recent eight years with an average annual growth rate of 20 per cent in terms of assets.
Enough For Retirement
Put your eggs in many baskets. That’s the best way to ensure you will have enough to spend after retirement.
A Million ringgit just isn’t what it used to be. So if you’re thinking of retiring at 40 after making your first million, you might have to make new plans.
Simply having a chunk of money in the bank will not guarantee security, especially after you retire and face a completely different lifestyle with new financial needs. What you need is a sustainable retirement fund that will protect you from the uncertainties of the global financial situation and the increasing cost of living.
Personal financial coach and financial planner Carol Yip encourages people to plan their retirement savings wisely. She believes that people should have various reserves of funds, and regularly review their lifestyle to assess whether their nest egg will be sufficient.
Aside from daily living expenses and post-retirement luxuries, medical costs are our biggest concern during this period.
Even if we are in relatively good health, old-age diseases will start to creep up on us and take their toll in our fifth or sixth decade.
With the rising costs of healthcare, will our savings be enough to cover doctors’ bills, medications and annual checkups? We cannot leave this up to fate.
A 2008 survey conducted by a local insurance company found that although 72% of the respondents claimed they were saving for retirement, 41% did not have a concrete plan for how to build their retirement funds. They just saved as much as they could and hoped that it would be enough.
(The survey interviewed 1,024 Malaysians with a monthly household income of RM3,000 and above, living in urban centres in Peninsular Malaysia and Sabah and Sarawak.)
Of those who saved, 64% did not consciously separate their savings for retirement. The survey was repeated in 2009, where as many as 91% of respondents said they were not sure how much would be needed for retirement.
“Many people have no clue about saving for retirement. We are so immersed in our daily work and challenges that financial planning becomes our lowest priority,” Yip laments.
This has led to far too many people who save haphazardly, or not at all, only to face the cruel truth when they lose their fixed income.
Children can be a form of life insurance, says a financial consultant - File photo The key point in retirement saving is not to begin only when you are retired or close to it! Instead, you should start saving as soon as you have a salary, so that you’ll have more time to set funds aside and grow it into a handsome pot of money.
“Knowing what you want to do at retirement and how much it costs to live the lifestyle you desire are crucial factors to consider. This should form the basis of a good retirement plan,” advises David Lee, senior wealth manager of Prudential Assurance Malaysia Bhd.
If you don’t know where to begin, there are many tools (see below) or experts available to help you work out your retirement “number” and plan your savings accordingly.
Retirement saving isn’t about hoarding money. It is about devising a plan that meets your unique financial situation and needs. It is also important to understand where you are in life now and where you are heading before making any plans.
Yip advises people to treat their lives as a business. “When you run a business, you have business plans, budgets, management meetings, and projections.
“Similarly, look at your own life and ask yourself, ‘Am I going to make more money next year, or is it going to be tough? Will I get a promotion or more bonuses? Is my lifestyle getting more expensive? Am I going to get married and have children?”
Constant review of your lifestyle, priorities and needs will help you determine whether your plan needs to be modified. For instance, if you get a salary raise, you can afford to make new investments, rather than spend it all on a bigger car.
People should create their own forms of retirement funds, or what Yip calls “self-insurance”. One is spoilt for choice, as you can choose to invest in fixed deposits, unit trusts, equities (stocks and shares), investment-linked insurance, property or even investment in a business.
Your choice of financial tool(s) depends on how much time you have, how much risks you are willing to take and your income level.
If you are in your 20s or 30s and are just establishing your career, regular investing and saving is an effective and convenient way to help you reach your retirement goal, says Lee.
“There are insurance products that ‘force’ you to save on a regular basis, and subsequently pay you a stream of guaranteed monthly income at retirement. As you have more time to ride the ups and downs of the market, you can also afford to take more risks investing in equities.”
If this article is sounding alarm bells because you are nearing retirement but have nothing apart from your EPF savings, it’s not too late to begin.
“At this age, you should ideally have adequate insurance protection, especially medical insurance,” Lee says, adding that people starting in their 40s or 50s should take far more conservative investment risks.
Most people would have FD savings, but if you are concerned that FD returns cannot keep up with the inflation rate, you could put the lump sum money in single premium insurance plans that offer a shorter accumulation period and provide guaranteed monthly income upon retirement, he adds.
It is important to look for an insurance plan that will ensure you get an income payout, regardless of the market situation in the near future.
Yip advises people to learn about the features of an insurance policy before buying it, just as they would understand the “specs” of a car before a purchase. “Many people are very confused by the description of the coverage, so they face confusion when they make a claim.
“You cannot blame the insurance company for not serving your needs. The onus is on you to find out more information about what you are buying,” she stresses.
Yip says, frankly, that an insurance policy may not be able to cover a person for every eventuality that occurs, or be enough to cover all the medical costs in the event of an illness.
This is why she strongly advocates getting the family involved.
“Family is a very important part of financial and retirement planning. Family members should think about how to save collectively for the future. Be creative. For instance, create a fund which members can chip in, for medical emergencies later on. This will also prevent any arguments or ugly scenes when the time comes.”
Yip also suggests that children can be a form of life insurance. So, involve them in your retirement savings and support.
“The Singapore Government has made this law through the Maintenance of Parents Act, which requires children with appropriate income level to support elderly parents who are not able to subsist themselves,” she explains.
If possible, delay retirement, she adds. “Continue to work for as long as possible so you can have peace of mind that you are able to support yourself and your family until much later. Having a job is a form of insurance by itself!”
Lee’s advice is to diversify your retirement portfolio. In other words, spread out your eggs into several baskets, so that your retirement plan will not be affected by just a single financial event.
Retirement planning is nothing to fear, even if you don’t have a mind for numbers. So start planning for your nest egg today, to ensure a comfortable and enjoyable life in the years to come.
A Million ringgit just isn’t what it used to be. So if you’re thinking of retiring at 40 after making your first million, you might have to make new plans.
Simply having a chunk of money in the bank will not guarantee security, especially after you retire and face a completely different lifestyle with new financial needs. What you need is a sustainable retirement fund that will protect you from the uncertainties of the global financial situation and the increasing cost of living.
Personal financial coach and financial planner Carol Yip encourages people to plan their retirement savings wisely. She believes that people should have various reserves of funds, and regularly review their lifestyle to assess whether their nest egg will be sufficient.
Aside from daily living expenses and post-retirement luxuries, medical costs are our biggest concern during this period.
Even if we are in relatively good health, old-age diseases will start to creep up on us and take their toll in our fifth or sixth decade.
With the rising costs of healthcare, will our savings be enough to cover doctors’ bills, medications and annual checkups? We cannot leave this up to fate.
A 2008 survey conducted by a local insurance company found that although 72% of the respondents claimed they were saving for retirement, 41% did not have a concrete plan for how to build their retirement funds. They just saved as much as they could and hoped that it would be enough.
(The survey interviewed 1,024 Malaysians with a monthly household income of RM3,000 and above, living in urban centres in Peninsular Malaysia and Sabah and Sarawak.)
Of those who saved, 64% did not consciously separate their savings for retirement. The survey was repeated in 2009, where as many as 91% of respondents said they were not sure how much would be needed for retirement.
“Many people have no clue about saving for retirement. We are so immersed in our daily work and challenges that financial planning becomes our lowest priority,” Yip laments.
This has led to far too many people who save haphazardly, or not at all, only to face the cruel truth when they lose their fixed income.
Children can be a form of life insurance, says a financial consultant - File photo The key point in retirement saving is not to begin only when you are retired or close to it! Instead, you should start saving as soon as you have a salary, so that you’ll have more time to set funds aside and grow it into a handsome pot of money.
“Knowing what you want to do at retirement and how much it costs to live the lifestyle you desire are crucial factors to consider. This should form the basis of a good retirement plan,” advises David Lee, senior wealth manager of Prudential Assurance Malaysia Bhd.
If you don’t know where to begin, there are many tools (see below) or experts available to help you work out your retirement “number” and plan your savings accordingly.
Retirement saving isn’t about hoarding money. It is about devising a plan that meets your unique financial situation and needs. It is also important to understand where you are in life now and where you are heading before making any plans.
Yip advises people to treat their lives as a business. “When you run a business, you have business plans, budgets, management meetings, and projections.
“Similarly, look at your own life and ask yourself, ‘Am I going to make more money next year, or is it going to be tough? Will I get a promotion or more bonuses? Is my lifestyle getting more expensive? Am I going to get married and have children?”
Constant review of your lifestyle, priorities and needs will help you determine whether your plan needs to be modified. For instance, if you get a salary raise, you can afford to make new investments, rather than spend it all on a bigger car.
People should create their own forms of retirement funds, or what Yip calls “self-insurance”. One is spoilt for choice, as you can choose to invest in fixed deposits, unit trusts, equities (stocks and shares), investment-linked insurance, property or even investment in a business.
Your choice of financial tool(s) depends on how much time you have, how much risks you are willing to take and your income level.
If you are in your 20s or 30s and are just establishing your career, regular investing and saving is an effective and convenient way to help you reach your retirement goal, says Lee.
“There are insurance products that ‘force’ you to save on a regular basis, and subsequently pay you a stream of guaranteed monthly income at retirement. As you have more time to ride the ups and downs of the market, you can also afford to take more risks investing in equities.”
If this article is sounding alarm bells because you are nearing retirement but have nothing apart from your EPF savings, it’s not too late to begin.
“At this age, you should ideally have adequate insurance protection, especially medical insurance,” Lee says, adding that people starting in their 40s or 50s should take far more conservative investment risks.
Most people would have FD savings, but if you are concerned that FD returns cannot keep up with the inflation rate, you could put the lump sum money in single premium insurance plans that offer a shorter accumulation period and provide guaranteed monthly income upon retirement, he adds.
It is important to look for an insurance plan that will ensure you get an income payout, regardless of the market situation in the near future.
Yip advises people to learn about the features of an insurance policy before buying it, just as they would understand the “specs” of a car before a purchase. “Many people are very confused by the description of the coverage, so they face confusion when they make a claim.
“You cannot blame the insurance company for not serving your needs. The onus is on you to find out more information about what you are buying,” she stresses.
Yip says, frankly, that an insurance policy may not be able to cover a person for every eventuality that occurs, or be enough to cover all the medical costs in the event of an illness.
This is why she strongly advocates getting the family involved.
“Family is a very important part of financial and retirement planning. Family members should think about how to save collectively for the future. Be creative. For instance, create a fund which members can chip in, for medical emergencies later on. This will also prevent any arguments or ugly scenes when the time comes.”
Yip also suggests that children can be a form of life insurance. So, involve them in your retirement savings and support.
“The Singapore Government has made this law through the Maintenance of Parents Act, which requires children with appropriate income level to support elderly parents who are not able to subsist themselves,” she explains.
If possible, delay retirement, she adds. “Continue to work for as long as possible so you can have peace of mind that you are able to support yourself and your family until much later. Having a job is a form of insurance by itself!”
Lee’s advice is to diversify your retirement portfolio. In other words, spread out your eggs into several baskets, so that your retirement plan will not be affected by just a single financial event.
Retirement planning is nothing to fear, even if you don’t have a mind for numbers. So start planning for your nest egg today, to ensure a comfortable and enjoyable life in the years to come.
Sunday, December 5, 2010
Takaful Insurance - Malaysia
Unlike conventional insurance, this scheme is about the intention to help one another in financial protection.
BEFORE Prophet Muhammad and the coming of Islam, tribes in the Arab desert lived by a social code whereby a group would bind together, in good times and bad.
If an individual member of their unit suffered harm, loss of property or death, the unit would cover such loss by revenge, blood-letting, or payment of blood money.
“Bound by these principles of al-aqilah (societal responsibility) and diat (blood money), they believed that if you harm somebody, you have to recompense another person for the harm caused. But if you cannot pay, then the community will come together to pay,” says Datuk Syed Moheeb Syed Kamarulzaman, chairman of the Malaysian Takaful Association.
Syed Moheeb adds that the concept of a group sharing in one’s misfortune was also prevalent among Chinese traders of yore.
“For instance, if those in a caravan group were attacked by bandits, if something happened to their camels, or if they faced trouble on their ship, then the rest of the group would chip in to pay for any losses.”
These age-old practices form the basis of the Takaful insurance system, which became more clearly defined under the spiritual beliefs of Islam, guided by the rules and regulations of Syariah.
Driven by the value of mutual protection, a Takaful scheme is similar to conventional insurance in many ways.
“In Takaful, many pay into a pool and funds from the pool are used to help the unfortunate few,” says Syed Moheeb.
“The difference is that, in Takaful, people put their money into the pool with the specific intention of helping the unfortunate.”
As illustrated by the historical perspective above, Takaful is based on the simple community practice of coming together to help one another.
“In Takaful, there are many edicts that encourage us to take care of other people, to ensure the financial stability of our kin, as well as to ensure that there is responsibility and bond with the society as a whole. In conventional insurance, which is purely a commercial transaction, these values are absent.”
The belief is that if you join a Takaful scheme with the pure intention of protecting the unfortunate, such good will be recompensed to you in the form of divine blessings later on.
Although Syed Moheeb quotes theQuran – “Help ye one another in righteousness and piety but help ye not one another in sin and rancour” (Al Maidah: 2) – he also notes that the concept of divine blessing is shared by all religions and philosophical beliefs.
However, he is not out to make Takaful sound more noble than conventional insurance.
“Insurance companies provide a service. They take heavy risks, and aim to be compensated for that. It is simply that the altruistic nature of Takaful works to the advantage of participants because it promotes the spirit of cooperation and brotherhood. If there is a surplus, then the participants will get something back.
“In Takaful, everyone’s risk is shared. So, the pool of money does not belong to the Takaful operator, who is only managing it. It belongs to all those who participate in the scheme,” he explains.
On the other hand, when you buy conventional insurance, you are transferring your risk to the insurance company. Hence, your money belongs to the company, which will use the funds to pay the unfortunate and keep the balance.
In practice, there are also other differences between Takaful and conventional insurance policies.
Although the types of available Takaful products are similar to conventional insurance in terms of classes (life, family, motor, medical), they are based on Syariah-compliant principles that create differences in the way a person contributes to the fund and receives benefits.
Syed Moheeb explains: “In Islamic law, any exchange must be fair in value (fair exchange or equality), and it must take place within a stipulated time frame (certainty).
“Therefore, to make the concept of insurance applicable under Syariah law, the wording of the contract is changed, so that it is not a contract of exchange, but a contract of donation.
“In the proposal form, the policyholder declares that ‘I donate into this pool and appoint a Takaful operator as the managing agent to handle the funds according to the best practices’.”
Malaysia is the No.2 Takaful market in the world, second only to Saudi Arabia. With eight companies and four more to come, the Takaful industry here has been growing at an average rate of 40% per year, compared with 12% for the conventional insurance industry, he adds.
It is significant that Syed Moheeb uses the phrase “joining a Takaful scheme”, instead of “buying Takaful”. “We do not sell Takaful, but we invite people to participate in the scheme or the fund.”
He is also quick to refute the perception that Takaful is only for Muslims.
“This was never the case. Perhaps this perception came about because our target market was Muslims, due to the fact that only one in 20 Muslims had any life insurance, so it made more sense to sell family or life Takaful to them.
“But of course, non-Muslims can join the Takaful scheme as well. Anybody who wants to protect his financial risk can benefit from Takaful.”
In most Takaful companies in Malaysia, an average of three or four out of 10 policyholders are non-Muslims, demonstrating their increasing interest in Takaful products, of which there is a wide range of choices.
Syed Moheeb advises consumers to do their research well before choosing which fund to join.
Even if you have already purchased conventional insurance for life, family, medical, or motor coverage, you can still consider Takaful funds to plug any gaps in your existing coverage.
“One should compare the product features, ensure the pricing is commensurate with that and look for a company that is able to provide good service.
“Do check the claims-paying capabilities of the company, as well as its reputation.
“Make sure you have a good and responsible Takaful broker or agent who will help you determine if you have protected yourself to the optimum level. Our priority is helping you ensure that all your needs are addressed,” he assures.
BEFORE Prophet Muhammad and the coming of Islam, tribes in the Arab desert lived by a social code whereby a group would bind together, in good times and bad.
If an individual member of their unit suffered harm, loss of property or death, the unit would cover such loss by revenge, blood-letting, or payment of blood money.
“Bound by these principles of al-aqilah (societal responsibility) and diat (blood money), they believed that if you harm somebody, you have to recompense another person for the harm caused. But if you cannot pay, then the community will come together to pay,” says Datuk Syed Moheeb Syed Kamarulzaman, chairman of the Malaysian Takaful Association.
Syed Moheeb adds that the concept of a group sharing in one’s misfortune was also prevalent among Chinese traders of yore.
“For instance, if those in a caravan group were attacked by bandits, if something happened to their camels, or if they faced trouble on their ship, then the rest of the group would chip in to pay for any losses.”
These age-old practices form the basis of the Takaful insurance system, which became more clearly defined under the spiritual beliefs of Islam, guided by the rules and regulations of Syariah.
Driven by the value of mutual protection, a Takaful scheme is similar to conventional insurance in many ways.
“In Takaful, many pay into a pool and funds from the pool are used to help the unfortunate few,” says Syed Moheeb.
“The difference is that, in Takaful, people put their money into the pool with the specific intention of helping the unfortunate.”
As illustrated by the historical perspective above, Takaful is based on the simple community practice of coming together to help one another.
“In Takaful, there are many edicts that encourage us to take care of other people, to ensure the financial stability of our kin, as well as to ensure that there is responsibility and bond with the society as a whole. In conventional insurance, which is purely a commercial transaction, these values are absent.”
The belief is that if you join a Takaful scheme with the pure intention of protecting the unfortunate, such good will be recompensed to you in the form of divine blessings later on.
Although Syed Moheeb quotes theQuran – “Help ye one another in righteousness and piety but help ye not one another in sin and rancour” (Al Maidah: 2) – he also notes that the concept of divine blessing is shared by all religions and philosophical beliefs.
However, he is not out to make Takaful sound more noble than conventional insurance.
“Insurance companies provide a service. They take heavy risks, and aim to be compensated for that. It is simply that the altruistic nature of Takaful works to the advantage of participants because it promotes the spirit of cooperation and brotherhood. If there is a surplus, then the participants will get something back.
“In Takaful, everyone’s risk is shared. So, the pool of money does not belong to the Takaful operator, who is only managing it. It belongs to all those who participate in the scheme,” he explains.
On the other hand, when you buy conventional insurance, you are transferring your risk to the insurance company. Hence, your money belongs to the company, which will use the funds to pay the unfortunate and keep the balance.
In practice, there are also other differences between Takaful and conventional insurance policies.
Although the types of available Takaful products are similar to conventional insurance in terms of classes (life, family, motor, medical), they are based on Syariah-compliant principles that create differences in the way a person contributes to the fund and receives benefits.
Syed Moheeb explains: “In Islamic law, any exchange must be fair in value (fair exchange or equality), and it must take place within a stipulated time frame (certainty).
“Therefore, to make the concept of insurance applicable under Syariah law, the wording of the contract is changed, so that it is not a contract of exchange, but a contract of donation.
“In the proposal form, the policyholder declares that ‘I donate into this pool and appoint a Takaful operator as the managing agent to handle the funds according to the best practices’.”
Malaysia is the No.2 Takaful market in the world, second only to Saudi Arabia. With eight companies and four more to come, the Takaful industry here has been growing at an average rate of 40% per year, compared with 12% for the conventional insurance industry, he adds.
It is significant that Syed Moheeb uses the phrase “joining a Takaful scheme”, instead of “buying Takaful”. “We do not sell Takaful, but we invite people to participate in the scheme or the fund.”
He is also quick to refute the perception that Takaful is only for Muslims.
“This was never the case. Perhaps this perception came about because our target market was Muslims, due to the fact that only one in 20 Muslims had any life insurance, so it made more sense to sell family or life Takaful to them.
“But of course, non-Muslims can join the Takaful scheme as well. Anybody who wants to protect his financial risk can benefit from Takaful.”
In most Takaful companies in Malaysia, an average of three or four out of 10 policyholders are non-Muslims, demonstrating their increasing interest in Takaful products, of which there is a wide range of choices.
Syed Moheeb advises consumers to do their research well before choosing which fund to join.
Even if you have already purchased conventional insurance for life, family, medical, or motor coverage, you can still consider Takaful funds to plug any gaps in your existing coverage.
“One should compare the product features, ensure the pricing is commensurate with that and look for a company that is able to provide good service.
“Do check the claims-paying capabilities of the company, as well as its reputation.
“Make sure you have a good and responsible Takaful broker or agent who will help you determine if you have protected yourself to the optimum level. Our priority is helping you ensure that all your needs are addressed,” he assures.
Saturday, December 4, 2010
Protect Yourself
MY son said to me while I was driving, Daddy, please drive properly. Use both your hands!
I had momentarily taken my left hand off the steering wheel and was placing it on the arm rest. I was pleasantly surprised by his sensible remark and promptly obeyed.
It seemed like only yesterday that he was born, and then in the blink of an eye, my son has grown up!
It was more than three years ago when I first came to Malaysia to work. At that time, my wife had just conceived our first child, a boy.
Today, besides being a chatty and active two-and-a-half year old boy, he is even giving me tips on safe driving! I wonder where he learnt such things, perhaps from his nursery school.
Engage any parents in a conversation regarding their children and you will hear the excitement in their voice and see the sparkle in their eyes. And what would parents do to protect their children? Just about everything and anything!
Such commitment is perfectly understandable.
Someone recently pointed out an in-flight safety procedure that seems to contradict the parental instinct.
In one segment of the standard flight safety video, passengers are informed that in the case of an emergency, oxygen masks will automatically drop from the overhead compartment of the cabin. Adults who are travelling with young children are instructed to attend to themselves first before helping the children.
One would think the adult should assist the child first. But this procedure is exactly what is needed to give children the best chance of surviving an emergency.
The adults have to remain conscious and alert to be able to help the children and ensure their safety.
So to help the kids, adults must first help themselves!
This concept illustrates an important concept of wealth management protecting ourselves in order to provide for our children.
When my children were born, I bought additional insurance policies. One would have thought that these were all child-specific policies. Well, yes and no.
Yes, I bought insurance covering health, critical illness, etc, for my children. And no, I did not just buy policies for them, but more importantly, I bought additional life insurance policies for my wife and I.
Why? It is based on the same principle as the oxygen mask safety procedure. In order to ensure that children will be provided for financially, it is vital that parents first protect their income streams, before they can hope to ensure their children's financial safety.
Some years back, a friend's parents were unfortunately involved in a fatal road accident.
Bearing the grief of losing loved ones was significant but at least she had no financial difficulties to worry about as her parents had the whole family and assets well insured.
For the more affluent parents of today, there is also a conscious effort to provide their children with an early head-start in life. This can take the form of funds for post-graduate studies, or for the down-payment for their child's first car or house.
Till today, my parents still say that they are saving the allowance I give them on my behalf!
I certainly would want to provide my children with the very best healthcare and education. And this means that I have to first take care of myself and my wife too.
So the next time you hear the safety flight instructions, remember that they are right. A conscious parent can do a lot more for his/her child than an unconscious one.
So whenever I drive now, I am reminded of my son's comment to drive safely by keeping both hands on the wheel. Ensuring my own safety is the first step in establishing the financial security for my family and loved ones.
Tat Han Chong: Senior Vice-president and senior head of UOB's personal financial services division.
I had momentarily taken my left hand off the steering wheel and was placing it on the arm rest. I was pleasantly surprised by his sensible remark and promptly obeyed.
It seemed like only yesterday that he was born, and then in the blink of an eye, my son has grown up!
It was more than three years ago when I first came to Malaysia to work. At that time, my wife had just conceived our first child, a boy.
Today, besides being a chatty and active two-and-a-half year old boy, he is even giving me tips on safe driving! I wonder where he learnt such things, perhaps from his nursery school.
Engage any parents in a conversation regarding their children and you will hear the excitement in their voice and see the sparkle in their eyes. And what would parents do to protect their children? Just about everything and anything!
Such commitment is perfectly understandable.
Someone recently pointed out an in-flight safety procedure that seems to contradict the parental instinct.
In one segment of the standard flight safety video, passengers are informed that in the case of an emergency, oxygen masks will automatically drop from the overhead compartment of the cabin. Adults who are travelling with young children are instructed to attend to themselves first before helping the children.
One would think the adult should assist the child first. But this procedure is exactly what is needed to give children the best chance of surviving an emergency.
The adults have to remain conscious and alert to be able to help the children and ensure their safety.
So to help the kids, adults must first help themselves!
This concept illustrates an important concept of wealth management protecting ourselves in order to provide for our children.
When my children were born, I bought additional insurance policies. One would have thought that these were all child-specific policies. Well, yes and no.
Yes, I bought insurance covering health, critical illness, etc, for my children. And no, I did not just buy policies for them, but more importantly, I bought additional life insurance policies for my wife and I.
Why? It is based on the same principle as the oxygen mask safety procedure. In order to ensure that children will be provided for financially, it is vital that parents first protect their income streams, before they can hope to ensure their children's financial safety.
Some years back, a friend's parents were unfortunately involved in a fatal road accident.
Bearing the grief of losing loved ones was significant but at least she had no financial difficulties to worry about as her parents had the whole family and assets well insured.
For the more affluent parents of today, there is also a conscious effort to provide their children with an early head-start in life. This can take the form of funds for post-graduate studies, or for the down-payment for their child's first car or house.
Till today, my parents still say that they are saving the allowance I give them on my behalf!
I certainly would want to provide my children with the very best healthcare and education. And this means that I have to first take care of myself and my wife too.
So the next time you hear the safety flight instructions, remember that they are right. A conscious parent can do a lot more for his/her child than an unconscious one.
So whenever I drive now, I am reminded of my son's comment to drive safely by keeping both hands on the wheel. Ensuring my own safety is the first step in establishing the financial security for my family and loved ones.
Tat Han Chong: Senior Vice-president and senior head of UOB's personal financial services division.
Wednesday, December 1, 2010
Up to RM250,000
KUALA LUMPUR: The Malaysia Deposit Insurance Corporation Bill 2010 was tabled for first reading in Dewan Rakyat on Tuesday, paving the way to increase the deposit insurance limit from the current RM60,000 to RM250,000 for next year.
The bill states, under its scope of coverage for deposits, that the corporation would insure Islamic and conventional deposits up to the amount prescribed by the minister on the recommendation of the corporation.
Finance Minister Datuk Seri Najib was reported to have announced on May 11 that the deposit insurance limit would be increased to RM250,000 effective 2011.
He was also reported to have said that the Malaysia Deposit Insurance Corporation would bring forward legislation to enable the government to increase the deposit insurance limit.
Deputy Finance Minister Datuk Dr Awang Adek Hussein tabled the bill set to replace the existing Malaysia Deposit Insurance Corporation Act 2005.
The bill will be debated in this current meeting, said Dr Awang Adek.
The temporary government deposit guarantee would lapse as scheduled at the end of this year and the enhanced protection package would continue to provide increased protection to depositors, said Dr Awang.
The bill seeks to provide for the continuing existence of the Malaysia Deposit Insurance Corporation established under the Malaysia Deposit Insurance Corporation Act.
The bill will also provide for the establishment of an explicit national takaful and insurance benefits protection system and enhancements to the existing national deposit insurance system.
These are part of the legislative proposals to enhance financial consumer protection for Malaysians as Malaysia exits the temporary Governent Deposit Guarantee scheme on Dec 31.
The existing act will be amended to improve the design of its financial safety net mechanism, to equip the Malaysia Deposit Insurance Corporation with adequate powers to effectively deal with troubled member institutions, in line with developments in other jurisdictions following the global financial crisis, the bill stated.
The bill states, under its scope of coverage for deposits, that the corporation would insure Islamic and conventional deposits up to the amount prescribed by the minister on the recommendation of the corporation.
Finance Minister Datuk Seri Najib was reported to have announced on May 11 that the deposit insurance limit would be increased to RM250,000 effective 2011.
He was also reported to have said that the Malaysia Deposit Insurance Corporation would bring forward legislation to enable the government to increase the deposit insurance limit.
Deputy Finance Minister Datuk Dr Awang Adek Hussein tabled the bill set to replace the existing Malaysia Deposit Insurance Corporation Act 2005.
The bill will be debated in this current meeting, said Dr Awang Adek.
The temporary government deposit guarantee would lapse as scheduled at the end of this year and the enhanced protection package would continue to provide increased protection to depositors, said Dr Awang.
The bill seeks to provide for the continuing existence of the Malaysia Deposit Insurance Corporation established under the Malaysia Deposit Insurance Corporation Act.
The bill will also provide for the establishment of an explicit national takaful and insurance benefits protection system and enhancements to the existing national deposit insurance system.
These are part of the legislative proposals to enhance financial consumer protection for Malaysians as Malaysia exits the temporary Governent Deposit Guarantee scheme on Dec 31.
The existing act will be amended to improve the design of its financial safety net mechanism, to equip the Malaysia Deposit Insurance Corporation with adequate powers to effectively deal with troubled member institutions, in line with developments in other jurisdictions following the global financial crisis, the bill stated.
Wednesday, November 24, 2010
Credit Cardholders
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
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
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."
Wednesday, October 27, 2010
Retirement In Malaysia
Retirement may not be the foremost concern for young adults in the prime of their lives. But that does not mean they are oblivious to the fact that they may need to have financial reserves for a rainy day.
FOR many young adults, retirement is not something they are thinking about at this stage of their lives. Those who have been working for less than 10 years have only recently begun to establish their careers, so foremost on their mind would be working to achieve success in their respective vocations.
For them, life still has a lot to offer, and the process of winding down an active lifestyle and retiring is, quite simply, not high on their list of things to do.
FOR many young adults, retirement is not something they are thinking about at this stage of their lives. Those who have been working for less than 10 years have only recently begun to establish their careers, so foremost on their mind would be working to achieve success in their respective vocations.
For them, life still has a lot to offer, and the process of winding down an active lifestyle and retiring is, quite simply, not high on their list of things to do.
According to the findings of the AXA Retirement Scope 2010, a global retirement study conducted across 26 countries in Europe, the United States and Asia, the percentage of the Malaysian working population who have started preparing for their retirement has declined from 48% in 2007 to 38% in 2010. The study also shows that among the 38% who have started to prepare for retirement, most of them did so only at or near age of 40. Meanwhile, 46% said they would start to prepare for retirement when they hit 50.
Among the young, only one in five has started to prepare for retirement. Most of them do plan to start but rather late, at age 46.
Take for example, Anusya Sree, 28, who got married late last year.
“Retirement is not something I am thinking about at the moment; and isn’t it a negative thought with so much yet to do? I am only just experiencing life as a married woman. I am looking forward to spending many happy years with my husband and raising a family of our own,” says the bank executive.
For Anusya, her priority now is to ensure she has a successful career.
“I have been working for five years, and am enjoying the thrill of being an independent working adult. I have not even decided when I will have children, much less when I will retire.”
Similarly for Nicole Tan, 26, a producer for an online travel web portal, retirement is not high on her list of priorities at the moment.
“No, I have not started planning. I would like to build up my career so I have a good platform from where I can start planning for retirement. I am saving up to buy my first property, if that counts.”
However, she is aware that having sufficient funds in her retirement years will require a large amount of money.
“It would be an astronomical amount. I am not capable of reaching even 10% of it at the moment,” says Tan.
Findings of the AXA Retirement Scope 2010 survey confirm the general perception that only 14% of the Malaysian working population know exactly how much their retirement income should be.
However, not all young adults are focused on the here and now.
Badrulsyah, 35, for example, started planning for his eventual retirement five years ago.
“It is vital for one to start planning early. I learnt that if you leave it to the last minute, you will not have enough time to build up sufficient funds.
“I also know I cannot count on EPF savings alone. After making withdrawals to buy a house, for example, there is even less money to last through the retirement years,” says the self-employed entrepreneur.
The AXA Retirement Scope 2010 survey findings show that the working segment’s (especially young and mid-life) level of confidence in their own amount of retirement income suffered a big drop from 2007. Only 37% of the working population now consider their future income to be sufficient compared with 62% in 2007.
Badrulsyah roughly estimates that he will need about RM750,000 in his retirement fund and if invested wisely, should generate an income stream of its own.
“I try to put away 50% of my income every month, and this includes EPF contributions, insurance premiums, property investments and more.
“However, it is not easy as there are other obligations such as the house and car loans, utility bills and food expenditure,” he says.
Lee Yun-Han, 25, is one who had his life mapped out from when he was still in secondary school.
“I came up with my lifetime plan 10 years ago – become a professional chartered accountant, work my way up the corporate ladder and become the CEO of a listed company.”
Lee saysthe accounting path did not work out so well, but his plan is still on course.
“I modified my plan, and today I work as a management consultant. I am now in step two of my plan, and remain hopeful that I will reach step three before I retire.”
Lee also believes it is crucial to start planning early.
“Life goes by really fast, and before you know it, retirement is just around the corner. I have now lived a quarter of a century, and the time seems to have passed in a blink of the eye. With another blink, I will be 50, and in a third blink, I could be pushing up daisies (deceased).”
Lee has done his homework on how much he will need for retirement.
“I estimate that I will require at least RM5.1mil, assuming that I live for another 35 years and need RM5,000 a month to get by.
“I make a conscious effort not only to save, but also to grow my savings by investing in a diversified portfolio of shares and property.
“Right now, 50% of my income goes to servicing my loans on investment properties, 30% to bills, and 20% to cash reserves. There is a separate slush fund for girlfriend expenditure that is not on the books,” quips Lee.
Furthermore, not everyone who is not planning for retirement is living an extravagant lifestyle.
Anusya says that she does not spend money freely.
“Money is hard to come by – that much I have realised over the past few years. I realise now that I am more careful with my own money than I was when getting hand-outs from my parents!”
She says that she does buy the occasional piece of designer wear and her husband sports the latest-generation mobile phone.
“We like to enjoy life, and if this means spending money, then we will. But we only do so after the bills have been paid and there is money to spare.”
Anusya also says that they have other financial priorities besides retirement planning.
“We are saving to buy our own house, and also need a second car. Even after we have enough for that, there is the family issue to think about.
“Quite frankly, I do not see a distinction between the act of saving money and planning for retirement. We put some money away every month for what we call our ‘emergency’ fund, so isn’t that the same?”
Similarly, Tan likes to enjoy life, and she has a passion for visiting new places.
“I have an addiction to travel, so there’s quite a heavy monthly expense there. But I try to save about RM1,000 to RM2,000 every month.”
She says that she does not have any fixed monthly commitments now, but she expects more of them in future. That could be one of the reasons she still puts money away whenever possible, and not necessarily for retirement.
“I started saving five years ago when I got my first full-time job. I would feel insecure if I had no savings. We will always need to save for that rainy day that could hit us anytime – be it being stuck in a period of unemployment, or hospitalisation fees for a close family member, or to cover for those days when we just want to quit and travel the world,” she says.
Ultimately, those interviewed wished that their retirement will come at a time they choose, and not be forced upon them.
“The retirement age is something forced upon you by virtue of policy and legislation. If you enjoy and love what you do, it becomes a passion – and you do not retire from a passion,” says Lee.
“I would want to continue working past the retirement age of 55 – not because of the money, but because I would be able to contribute so much more to society. I would very much want to keep my body active, my mind sharp, and my spirit alive.”
But for Linda Eng, 31, an administration executive with a construction company, retirement planning is not just about saving.
“Yes, I have my own contingency fund for my retirement, i.e. savings in the bank, a small investment amount in unit trust funds and, of course, EPF. I am now planning to buy a house for my retirement. So, I have to work hard to ensure that my retirement life is well planned.
“Recently, however, something happened that made me realise only having savings is not enough. I need to also protect what I have saved.”
She explains that one of her colleagues who seemed to be in perfect health, ate well and kept a balanced lifestyle was diagnosed with cancer.
“It was a terrible shock to all of us, and what was even more shocking was that he had to spend close to RM100,000 for medical treatment. He and his family had to use some of their hard-earned savings, which was meant to be used for later years. It was gone in a blink of an eye!”
While Eng accepts that uncertainties in life cannot be controlled, “It can happen to anyone at any age”, she believes one can take precautions.
“It is not about how much you saved because what you have saved may just disappear overnight when something unexpected happens. And when it does, I do not want my savings to be affected. I want to be sure that my retirement fund will last my lifetime.”
The “AXA Retirement Scope 2010” is a global study conducted across 26 countries around the world. This bi-annual survey by AXA Group aspires to educate and gain insight into consumers’ views of retirement. AXA is represented by AXA AFFIN Life Insurance in Malaysia.
Malaysia Islamic Insurance
KUALA LUMPUR (October 25, 2010) : Malaysia's Islamic insurance industry will surpass its conventional counterpart in 10 years with the entry of new players but it needs more assets to expand further, an Islamic insurer said. The Islamic insurance market has expanded due to more interest in Sharia-compliant investments, and the issuance of four new family takaful licences in September would further drive growth, HSBC Amanah Takaful Malaysia said.
"The takaful industry always outpaced the conventional growth," HSBC Amanah Takaful Malaysia chief executive Zainudin Ishak said in an interview.
He added that takaful's penetration rate, defined as insurance premiums as a ratio of gross domestic product, will overtake that of the conventional market in a decade.
"The conventional industry will have its market because their channels are everywhere. Takaful's tentacles are still small that's why we need the four new players," Zainudin added.
But Zainudin said a challenge in growing the business was to ensure the continued expansion of the Islamic banking and capital markets, which would ensure a sufficient supply of instruments that insurers can invest in,
The Malaysian takaful industry witnessed a growth spurt after the central bank issued licences in 2006 to four consortiums, including HSBC, Malaysia's Hong Leong Bank and Prudential Holdings.
Islamic insurance has a penetration rate of less than 10 percent in Malaysia. The overall insurance industry's penetration rate is 43 percent, according to industry estimates.
Takaful assets accounted for about 8 percent of the insurance industry's assets, below Sharia banking's 20 percent share of the Malaysian banking sector, industry data showed.
Malaysia has eight takaful operators, including CIMB Aviva Takaful, Syarikat Takaful Malaysia Bhd and Prudential BSN Takaful Bhd. Last month, the central bank awarded family takaful licenses to American International Assurance Berhad and Alliance Bank Malaysia Berhad; AMMB Holdings Berhad and Friends Provident Group (UK); ING Management Holdings (Malaysia) Sdn Bhd, Public Bank Berhad and Public Islamic Bank Berhad; and Great Eastern Life Assurance Company Limited and Koperasi Angkatan Tentera Malaysia Berhad.
"If we grow takaful and I have funds to invest but sukuk are not available, then I can't invest," he said. "If you really want to have a quantum leap growth, then a broad strategy for these three industries is needed."
Takaful companies can only invest in assets that comply with Islamic law, ruling out investments involving excessive speculation, gambling, pork and alcohol.
An illiquid sukuk market and a shortage of Islamic assets, especially long-term paper, have generated an over-reliance on regional equity and real estate markets, rendering the $14 billion takaful industry vulnerable to sudden shocks in those markets.
Islamic bond issues are regularly oversubscribed, as there is more demand than supply of sharia-compliant assets, and long term investors such as pension funds tend to hold them until maturity.
HSBC Insurance (Asia Pacific) Holdings Limited owns 49 percent of HSBC Amanah Takaful Malaysia. Jerneh Asia Berhad holds 31 percent and Malaysia's Employees Provident Fund has the remaining 20 percent.
"The takaful industry always outpaced the conventional growth," HSBC Amanah Takaful Malaysia chief executive Zainudin Ishak said in an interview.
He added that takaful's penetration rate, defined as insurance premiums as a ratio of gross domestic product, will overtake that of the conventional market in a decade.
"The conventional industry will have its market because their channels are everywhere. Takaful's tentacles are still small that's why we need the four new players," Zainudin added.
But Zainudin said a challenge in growing the business was to ensure the continued expansion of the Islamic banking and capital markets, which would ensure a sufficient supply of instruments that insurers can invest in,
The Malaysian takaful industry witnessed a growth spurt after the central bank issued licences in 2006 to four consortiums, including HSBC, Malaysia's Hong Leong Bank and Prudential Holdings.
Islamic insurance has a penetration rate of less than 10 percent in Malaysia. The overall insurance industry's penetration rate is 43 percent, according to industry estimates.
Takaful assets accounted for about 8 percent of the insurance industry's assets, below Sharia banking's 20 percent share of the Malaysian banking sector, industry data showed.
Malaysia has eight takaful operators, including CIMB Aviva Takaful, Syarikat Takaful Malaysia Bhd and Prudential BSN Takaful Bhd. Last month, the central bank awarded family takaful licenses to American International Assurance Berhad and Alliance Bank Malaysia Berhad; AMMB Holdings Berhad and Friends Provident Group (UK); ING Management Holdings (Malaysia) Sdn Bhd, Public Bank Berhad and Public Islamic Bank Berhad; and Great Eastern Life Assurance Company Limited and Koperasi Angkatan Tentera Malaysia Berhad.
"If we grow takaful and I have funds to invest but sukuk are not available, then I can't invest," he said. "If you really want to have a quantum leap growth, then a broad strategy for these three industries is needed."
Takaful companies can only invest in assets that comply with Islamic law, ruling out investments involving excessive speculation, gambling, pork and alcohol.
An illiquid sukuk market and a shortage of Islamic assets, especially long-term paper, have generated an over-reliance on regional equity and real estate markets, rendering the $14 billion takaful industry vulnerable to sudden shocks in those markets.
Islamic bond issues are regularly oversubscribed, as there is more demand than supply of sharia-compliant assets, and long term investors such as pension funds tend to hold them until maturity.
HSBC Insurance (Asia Pacific) Holdings Limited owns 49 percent of HSBC Amanah Takaful Malaysia. Jerneh Asia Berhad holds 31 percent and Malaysia's Employees Provident Fund has the remaining 20 percent.
Friday, October 22, 2010
Life Insurance - 20% Growth
PETALING JAYA: The Life Insurance Association of Malaysia (LIAM) projects the insurance industry will grow by more than 20% this year and also expects a stronger performance by the insurance industry in 2011.
In a statement, LIAM said the projection for 2011 was in view of the numerous initiatives by the Government to propel the country into a high-income nation by the year 2020.
It pointed out that the life insurance industry performed very well in the first half of this year as new business sales grew by 24% on weighted premium basis, adding that the growth was contributed by a very strong performance in single premium sales that went up by 51% and, to a large extent, by regular premium sales that grew 22%, compared with the same period last year.
“Meanwhile the outlook for the second half continues to be promising. In fact, historically, the second half of the year normally contributes on average 55% to 60% of the full-year business,” it added.
It said the percentage of individuals with life insurance coverage, education and retirement savings, medical and health protection etc currently was still at a low of 41% of the population.
“The percentage is even lower if the fact that there are individuals subscribing to more than one policy is taken into account,” it said.
Compared with many other developed countries, this level is inadequate as the remaining population of 59% doesn’t have any form of insurance protection. This is a cause for concern as the Government moves towards making Malaysia a high-income nation,” it said.
LIAM lauded the Government for earmaking the insurance industry as one of the key areas that would contribute to the nation’s economic growth as it provided perks and incentives aimed at promoting financial planning among Malaysians.
It noted that the insurance-related highlights that were tabled during the Economic Transformation Programme (ETP) Open Day on Sept 21 would propagate growth with the insurance penetration rate reaching 4% of gross domestic products (GDP) by 2020 and the number of policies per population hitting the 75% mark as compared with the current 41% level this year.
“With these new initiatives arising from the programme, we believe almost all aspects of life insurance will benefit immensely. The boost to the insurance industry will depend on how fast the ETP initiatives can kick in,” it said.
LIAM president Md Adnan Md Zain said what could spur tremendous growth would be the personal tax relief of RM6,000, which is now given for life insurance, medical, education and annuity.
“Another area would be the private pension scheme which was tabled in the breakout session of the ETP. How soon the initiatives for allowing EPF fund to be channelled out for private pension funds will also be a factor,” he added.
In a statement, LIAM said the projection for 2011 was in view of the numerous initiatives by the Government to propel the country into a high-income nation by the year 2020.
It pointed out that the life insurance industry performed very well in the first half of this year as new business sales grew by 24% on weighted premium basis, adding that the growth was contributed by a very strong performance in single premium sales that went up by 51% and, to a large extent, by regular premium sales that grew 22%, compared with the same period last year.
“Meanwhile the outlook for the second half continues to be promising. In fact, historically, the second half of the year normally contributes on average 55% to 60% of the full-year business,” it added.
It said the percentage of individuals with life insurance coverage, education and retirement savings, medical and health protection etc currently was still at a low of 41% of the population.
“The percentage is even lower if the fact that there are individuals subscribing to more than one policy is taken into account,” it said.
Compared with many other developed countries, this level is inadequate as the remaining population of 59% doesn’t have any form of insurance protection. This is a cause for concern as the Government moves towards making Malaysia a high-income nation,” it said.
LIAM lauded the Government for earmaking the insurance industry as one of the key areas that would contribute to the nation’s economic growth as it provided perks and incentives aimed at promoting financial planning among Malaysians.
It noted that the insurance-related highlights that were tabled during the Economic Transformation Programme (ETP) Open Day on Sept 21 would propagate growth with the insurance penetration rate reaching 4% of gross domestic products (GDP) by 2020 and the number of policies per population hitting the 75% mark as compared with the current 41% level this year.
“With these new initiatives arising from the programme, we believe almost all aspects of life insurance will benefit immensely. The boost to the insurance industry will depend on how fast the ETP initiatives can kick in,” it said.
LIAM president Md Adnan Md Zain said what could spur tremendous growth would be the personal tax relief of RM6,000, which is now given for life insurance, medical, education and annuity.
“Another area would be the private pension scheme which was tabled in the breakout session of the ETP. How soon the initiatives for allowing EPF fund to be channelled out for private pension funds will also be a factor,” he added.
Wednesday, October 20, 2010
3 Policies But No Coverage
Ms Theresa Tan's policies with Prudential saw her dutifully forking out a total of $600 in insurance premiums every month.
She believed she had forked out about $77,000 for them over the years. But when it came to coverage, the mother of three, 42, thought wrong.
She was diagnosed with early stage breast cancer, or stage 0, in June.
That same month, she went through a 12-hour operation at Gleneagles Hospital to remove her right breast and to have reconstructive surgery done, using skin and fat from her stomach. The operation and hospitalisation cost $30,000 and was covered by another insurance policy she had with Aviva.
Ms Tan then tried submitting her claim to Prudential this month for loss or potential loss of income. She thought she could claim up to $100,000 for one policy and up to $107,000 for another policy.
But her claims were rejected by Prudential, which explained to her in a letter that her condition was non-invasive and "does not fulfil the definition of cancer". Ms Tan's condition is known as ductal carcinoma in situ (DCIS) in her right breast.
This is a condition where the cancer starts in the milk ducts of the breast. It was considered non-invasive at that stage as the cancer had not spread beyond the milk ducts into the surrounding breast tissue. In Ms Tan's case, she had a mastectomy because the cancer cells were located in various parts of her breast.
Prudential's decision has surprised Ms Tan, especially since her family's medical history was known to her insurance agents. Her mother was diagnosed with breast cancer when she was 19 years old. She subsequently died in 2003 after a long battle against cancer.
Her mother's illness was what made Ms Tan buy her first insurance policy when she was 22.
Said Ms Tan, who is the co-partner of nanzinc.com, an online portal set up with her friend, entrepreneur Nanz Chong-Komo: "Fortunately, my mum had a pension plan so her treatment was covered.
"But seeing what she went through and given I was not under pension, I wanted to make sure that I was provided for. "I thought by buying three policies I was covering myself in every circumstance, but it didn't work out that way."
She claimed the gaps in her policy - it did not cover early stage cancer - was not explained to her by her insurance agents. Neither was the option of a rider to supplement her existing policies offered.
"What does this term mean?"
Did she think she should have read the fine print in her policy documents? She said: "Even if I had read the fine print, I don't think I would have understood what DCIS meant as a layman."
Ms Tan, who set up a blog - A Clean Breast of It - about her battle with breast cancer, said she later found out that most insurers do not pay out for non-invasive, early stage cancers.
Critical illness coverage typically covers the loss of income that comes from up to 30 critical diseases. These include major cancers, heart attack, coronary artery bypass, stroke and kidney failure. Fortunately, Ms Tan, who is on three months' medical leave since her operation, has not suffered loss of income as she is still being paid.
Apart from the online portal, Ms Tan also runs a writing agency, earning on average $5,500 per month. But she said: "It does limit my options. I can't continue to keep being paid if I'm not working. What happens if I still don't feel well after three months? Or if I need to take a six-month break to rest?"
Currently, she suffers from stomach cramps and can barely sit up for two hours at a go, she said. Ms Tan said: "I hope telling my story will create more awareness. I tell my friends to check their coverage and to make sure they are covered in full."
What she wishes is for the insurance industry to broaden its definition of critical illness to include non-invasive and early stage cancers. Or to at least make it compulsory to offer to customers other options which cover the gaps in any policy, she said.
Ms Tan lives in the east with her husband, 43, a civil servant, their son, 11, two daughters, four and nine, and her parents-in-law, both retirees in their 70s.
A spokesman for Prudential Singapore said Ms Tan's policies "unfortunately do not qualify for stage 0 cancer." She said coverage of early stage cancers depend on the kind of policy purchased and the definition of cancer in that particular policy.
She said: "Standard critical illness (CI) policies typically do not cover stage 0 cancer... It is important to know that each and every critical illness stated in the CI policy is precisely defined.
"They are based on standard definitions given by the Life Insurance Association (LIA). Unless the person's disease or surgery has fully satisfied the definition in the policy, no claim is payable."
But the spokesman pointed out that Prudential has policies like PruSmart Lady, which provide coverage for female-related illnesses that are non-critical in nature such as DCIS.
Policy booklet
She added that all information pertaining to a specific policy is provided in the policy booklet given to customers.
Dr Wong Seng Weng, 40, consultant oncologist at The Cancer Centre, drew a distinction between cancers where the person's longevity is compromised versus conditions which are treatable.
He said: "DCIS, if diagnosed and treated early, usually the survival rate is 100 per cent. Usually life insurers pay out when a person's longevity is compromised." But this doesn't mean that the cancer has to be very advanced, before a claim can be made, he clarified. Even if the cancer is at stage 1, the insurer can pay out if it is an invasive form that spreads, he said.
Ms Tan is grateful she caught her cancer early. She said: "I'm thankful I caught it earlier so I didn't need to go through chemotherapy and radiation. "But I believe cancer is cancer, whether in the early or late stages."
WHY do the bulk of standard critical illness policies not include non-invasive cancer?
MsPauline Lim, executive director of Life Insurance Association (LIA), explained: "Carcinoma in situ is specifically excluded from cover as these cancers can be treated and is not viewed as a 'critical' condition."
She said: "Insurers base their premiums on the extent of coverage. "There is a much higher incidence of the less serious cancers, so if they are also covered, it means premiums will cost much more and become less affordable for most ordinary people.
"This is not beneficial from a public policy perspective. LIA reviews its standard CI definitions from time to time."
The LIA standardises the definitions of critical illnesses.
Ms Lim said consumers should look out for the following:
•The scope of coverage and the circumstances under which policy will pay out.
She believed she had forked out about $77,000 for them over the years. But when it came to coverage, the mother of three, 42, thought wrong.
She was diagnosed with early stage breast cancer, or stage 0, in June.
That same month, she went through a 12-hour operation at Gleneagles Hospital to remove her right breast and to have reconstructive surgery done, using skin and fat from her stomach. The operation and hospitalisation cost $30,000 and was covered by another insurance policy she had with Aviva.
Ms Tan then tried submitting her claim to Prudential this month for loss or potential loss of income. She thought she could claim up to $100,000 for one policy and up to $107,000 for another policy.
But her claims were rejected by Prudential, which explained to her in a letter that her condition was non-invasive and "does not fulfil the definition of cancer". Ms Tan's condition is known as ductal carcinoma in situ (DCIS) in her right breast.
This is a condition where the cancer starts in the milk ducts of the breast. It was considered non-invasive at that stage as the cancer had not spread beyond the milk ducts into the surrounding breast tissue. In Ms Tan's case, she had a mastectomy because the cancer cells were located in various parts of her breast.
Prudential's decision has surprised Ms Tan, especially since her family's medical history was known to her insurance agents. Her mother was diagnosed with breast cancer when she was 19 years old. She subsequently died in 2003 after a long battle against cancer.
Her mother's illness was what made Ms Tan buy her first insurance policy when she was 22.
Said Ms Tan, who is the co-partner of nanzinc.com, an online portal set up with her friend, entrepreneur Nanz Chong-Komo: "Fortunately, my mum had a pension plan so her treatment was covered.
"But seeing what she went through and given I was not under pension, I wanted to make sure that I was provided for. "I thought by buying three policies I was covering myself in every circumstance, but it didn't work out that way."
She claimed the gaps in her policy - it did not cover early stage cancer - was not explained to her by her insurance agents. Neither was the option of a rider to supplement her existing policies offered.
"What does this term mean?"
Did she think she should have read the fine print in her policy documents? She said: "Even if I had read the fine print, I don't think I would have understood what DCIS meant as a layman."
Ms Tan, who set up a blog - A Clean Breast of It - about her battle with breast cancer, said she later found out that most insurers do not pay out for non-invasive, early stage cancers.
Critical illness coverage typically covers the loss of income that comes from up to 30 critical diseases. These include major cancers, heart attack, coronary artery bypass, stroke and kidney failure. Fortunately, Ms Tan, who is on three months' medical leave since her operation, has not suffered loss of income as she is still being paid.
Apart from the online portal, Ms Tan also runs a writing agency, earning on average $5,500 per month. But she said: "It does limit my options. I can't continue to keep being paid if I'm not working. What happens if I still don't feel well after three months? Or if I need to take a six-month break to rest?"
Currently, she suffers from stomach cramps and can barely sit up for two hours at a go, she said. Ms Tan said: "I hope telling my story will create more awareness. I tell my friends to check their coverage and to make sure they are covered in full."
What she wishes is for the insurance industry to broaden its definition of critical illness to include non-invasive and early stage cancers. Or to at least make it compulsory to offer to customers other options which cover the gaps in any policy, she said.
Ms Tan lives in the east with her husband, 43, a civil servant, their son, 11, two daughters, four and nine, and her parents-in-law, both retirees in their 70s.
A spokesman for Prudential Singapore said Ms Tan's policies "unfortunately do not qualify for stage 0 cancer." She said coverage of early stage cancers depend on the kind of policy purchased and the definition of cancer in that particular policy.
She said: "Standard critical illness (CI) policies typically do not cover stage 0 cancer... It is important to know that each and every critical illness stated in the CI policy is precisely defined.
"They are based on standard definitions given by the Life Insurance Association (LIA). Unless the person's disease or surgery has fully satisfied the definition in the policy, no claim is payable."
But the spokesman pointed out that Prudential has policies like PruSmart Lady, which provide coverage for female-related illnesses that are non-critical in nature such as DCIS.
Policy booklet
She added that all information pertaining to a specific policy is provided in the policy booklet given to customers.
Dr Wong Seng Weng, 40, consultant oncologist at The Cancer Centre, drew a distinction between cancers where the person's longevity is compromised versus conditions which are treatable.
He said: "DCIS, if diagnosed and treated early, usually the survival rate is 100 per cent. Usually life insurers pay out when a person's longevity is compromised." But this doesn't mean that the cancer has to be very advanced, before a claim can be made, he clarified. Even if the cancer is at stage 1, the insurer can pay out if it is an invasive form that spreads, he said.
Ms Tan is grateful she caught her cancer early. She said: "I'm thankful I caught it earlier so I didn't need to go through chemotherapy and radiation. "But I believe cancer is cancer, whether in the early or late stages."
WHY do the bulk of standard critical illness policies not include non-invasive cancer?
MsPauline Lim, executive director of Life Insurance Association (LIA), explained: "Carcinoma in situ is specifically excluded from cover as these cancers can be treated and is not viewed as a 'critical' condition."
She said: "Insurers base their premiums on the extent of coverage. "There is a much higher incidence of the less serious cancers, so if they are also covered, it means premiums will cost much more and become less affordable for most ordinary people.
"This is not beneficial from a public policy perspective. LIA reviews its standard CI definitions from time to time."
The LIA standardises the definitions of critical illnesses.
Ms Lim said consumers should look out for the following:
•The scope of coverage and the circumstances under which policy will pay out.
•Whether the amount of critical illness (CI) payout is sufficient.
•If the CI premiums are fixed or if they increase as the policy holder gets older.
•If there are exclusions for any of the CI conditions
Recent policies
Recent policies in the market do offer early stage coverage or multiple critical illness coverage.
These typically cost more than policies based on LIA's standard definitions, said the spokesman.
One such policy is Great Eastern's Early-Payout Critical Care (EPCC), which provides payouts at earlier stages of critical illness. Its Great Eastern PinkLife plan pays out 25 per cent of the sum assured for carcinoma in situ, for cancers in the female organs.
Source: The New Paper.
Recent policies
Recent policies in the market do offer early stage coverage or multiple critical illness coverage.
These typically cost more than policies based on LIA's standard definitions, said the spokesman.
One such policy is Great Eastern's Early-Payout Critical Care (EPCC), which provides payouts at earlier stages of critical illness. Its Great Eastern PinkLife plan pays out 25 per cent of the sum assured for carcinoma in situ, for cancers in the female organs.
Source: The New Paper.
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