LIFE Framework 2018

Consumers know insurance is a must but protection for some is just too pricey. Nurse Jamie Chin, 24, doesn’t have coverage but has been thinking about it a lot. She graduated a year ago, but with a salary of less than RM2,000 a month, she just doesn’t have enough for insurance. I work in a private hospital. I know how expensive treatment is. Insurance premiums are also going up.

Clerk S. Maria, 35, says her husband buys basic insurance for the family but admits that she doesn’t know what it covers. Something is better than nothing,” she says, adding that if the premiums increase a lot, they won’t be able to continue paying.

Insurance agents are worried that the proposed “LIFE Framework” could push insurance further out of reach for consumers. Already reeling from the 6% Goods and Services Tax for medical and health-related coverage, Agent fears “profit-minded” insurers will again hike up the premiums soon.

Allowing the free market to determine the commission of agents is a good move but it mustn’t be used as a reason to make consu­mers pay more for coverage. Now, agents’ commissions are capped. By 2018, LIFE Framework will be fully rolled out and the industry will be open like Singapore. Our commissions will be determined by the market. This is fair and timely but Bank Negara must ensure that premiums are affordable or the central bank’s goal to increase penetration will fail. The perception that agents are rich because they drive big cars is wrong.

Agents claimed that - half of an agent’s income is used to cover the costs of meeting prospective clients and follow-ups. Agents are not greedy but they must be better compensated for their work. Often, an agent see 10 people in a day but only make one sale. Yes, some agents go around in luxury cars and nice suits but this investment is necessary to grow our business.

Many Agent claimed that buying insurance online will lead to cheaper premiums because Malaysians still prefer the human touch. You can buy insurance online but who is going to chase for your claims? Premium prices go up because of rising medical costs and profit-driven companies. Agents aren’t the cause.

Most people buy what the agents propose and some agents tend to push products with higher commission earnings, Federation of Malaysian Consumers Association secretary­general Datuk Paul Selvaraj observes.

Insurance is a complex product. Investment is an add-on benefit of certain policies. It’s cheaper if you are only getting a protection policy. If you want to know about investment, talk to an expert. Let’s be clear – insurance is to protect you.

In 2014, the highest number of reports received by the National Consumer Complaints Centre was about online purchases. So Bank Negara must monitor all online transactions closely. We cannot have a situation where someone who buys insurance online is denied a claim because of a technical glitch.

Insurance agents don’t know the details of your financial situation. There may be a mismatch between what is needed and what is bought. A financial adviser will take into account factors like the assets available and dependants’ needs to calculate how much insurance is needed and the various investment options available according to the budget.