Insurance For All Seasons

60 percent of Malaysian households have no form of life insurance whatsoever, leaving millions to struggle to cover day-to-day expenses if a main breadwinner were to pass away. Even if you already have life insurance, financial and insurance professionals recommend that you review your policy periodically to make sure you and your loved ones are properly covered.

The amount of life insurance you need really depends on where you are in your life and your individual circumstances.
When wedding bells ring
Anyone getting married should also say "I do" to life insurance. Without a policy in place, there's no guaranteeing that your spouse and children would be provided for in the event of the unthinkable.

When you buy a home
Just purchased your dream home? Congratulations! In addition to taking out a homeowner's policy, you'll also want to take out a term life insurance policy. It may cost less than a whole life policy - and can cover the cost of your mortgage until it's completely paid off.

When you have a baby
Becoming a parent changes everything - including insurance requirements. Many families with a new baby haven't updated their life insurance protection. If you already have a policy, take the time to update your beneficiary designations.

When one spouse decides to stay home
The thing to remember here is that stay-at-home spouses continue to make a financial contribution to the family. Should that spouse pass away prematurely, the surviving spouse would have to cover expenses for child care, cleaning, cooking and other forms of home maintenance - and those can add up quickly.

When a child enters university
With the cost of higher education increasing every year, many parents end up co-signing on their kids' education loans. It's great that you want to help, but know that you'll be liable for the loan should tragedy strike. A life insurance policy on both the student and the parent will ensure school loans are one less worry.

When you open a business
Many lenders require life insurance on small business loans. It's with good reason since a separate policy protecting the business can help ensure that the business debts and operating expenses are handled. It can also give you peace of mind knowing that the policy you have for your family remains available for them when they need it.

When retirement is imminent
Leaving the workplace may mean leaving some life insurance benefits behind, so make sure you do a thorough review before the final quitting time.

When a divorce happens
Even though you're no longer married, you may still have people who depend on you financially. Review your policy's beneficiaries and what coverage is in place to protect any children you and your former spouse had together.

ETIQA Takaful Wins

ETIQA Takaful added another feather on its cap when it grabbed the Best Takaful Institution award at the prestigious The Asset Triple A Islamic Finance Awards in Kuala Lumpur recently. Just last week, Etiqa Takaful won three awards at the International Takaful Summit in London.

“Winning this award is another reflection of Etiqa’s success in leading the industry through our platform of humanising insurance and takaful. It is also a testament of our excellent business growth, profitability and financial strength,” said Etiqa Insurance and Takaful CEO Hans De Cuyper.

 The Asset Triple A Awards for Islamic Finance are Asia’s defining recognition for excellence in what has become one of fastest growing and most promising sectors of global finance. De Cuyper said, “We are honoured to win this award and we thank our customers, business partners and employees for making this happen. The award will spur Etiqa Takaful to continue to lead the industry in all aspects of our business”.

Etiqa continues to garner various international awards as testimonies of its leadership in the industry since 2007.

MDRT Goes Takaful

Many Malaysians do not understand the importance and difference between takaful and the conventional insurance, says Zuraidah Hanim Ibrahim, the first lady agent from Takaful Ikhlas Sdn Bhd to break into the Million Dollar Round Table (MDRT) ranks.

She said Malaysians were not aware of takaful coverage, as they often had the misconceptions on the differences between the Islamic and the conventional insurance. Only 10 per cent of Malaysians have takaful coverage compared to 42 per cent who have insurance coverage. The untapped market is actually is in the high-income market.  This is because they have no time to explore what is takaful and usually, they are insurance policy holders, yet looking for more and better coverage.

Zuraidah said takaful, an Islamic insurance concept grounded in Islamic muamalat (Islamic banking), observed the rules and regulations of Islamic law.  "In reality, it is better to have both kinds of coverage for a person, as both insurance structures give benefits in different ways," said Zuraidah, who manages over 1,500 Takaful Ikhlas policyholders.

On MDRT, Zuraidah said, with a personal production of family takaful for the first year contribution of RM461,000, she was able to make it to MDRT 2011, along with 7,000 other insurance and takaful agents from around the world. The minimum premium qualifying mark will increase every year, and for the MDRT 2011, the mark was RM420,000.  With the induction, Zuraidah, who runs her own financial consultancy via Subang Jaya-based Darul Asiah Consultant Sdn Bhd, joined the ranks of some 36,000 life insurers and financial services professionals from over 430 companies in 78 countries.  

The MDRT annual meeting is also designed to expose participants to innovative sales ideas in the life insurance-based and financial services business.  It will have about 100 speakers during its sales ideas breakfast sessions, motivational main platform presentations, educational afternoon sessions, and what it badges as insightful evening sessions. MDRT members demonstrate exceptional professional knowledge, strict ethical conduct and outstanding client service.

Aviva 4 Potential Suitors

Four potential buyers, including Prudential Plc and Manulife, have made it through to a second stage of bidding for Aviva's insurance business in Malaysia in a deal worth about US$500mil. The hunt for the Aviva stake underscores the industry's focus on growth opportunities in emerging Asian markets, where life insurance premiums are forecast to double the world average next year.

AIA Group Ltd and Sun Life Financial Inc have also been short-listed in an auction process that attracted about 10 suitors in the first round. Britain's second-ranked insurer is selling its 49% stake in an insurance joint venture with Malaysia's second biggest lender CIMB Group Holdings Ltd as part of a global retreat.

Some analysts estimate between 45% and 50 % of all new insurance products in Asia are sold through the so-called bancassurance agreements, compared to between 70% and 80% in France and Spain. Bancassurance deals are expected to drive insurance sales in Asia, which is encouraging global insurers to tap into bank distribution deals in the region.

CIMB formed the joint venture with Aviva in June 2007, but the business has failed to perform to its potential, analysts say.

Term Is Practical and Economical

Being the safest and most effective way to provide an income for your family in the case of an early death, life insurance is crucial to the financial security of most families.

The process of buying life insurance is equivalent to a large number of people pooling their resources (paying premiums), with any who die early receiving a large percentage of the pool for their estate and families.

The simplest form of life insurance is “term.” Term insurance is exactly what it sounds like: you pay premiums for simple life coverage for a period of time, and then the coverage expires. The policy can be renewed under different situations. Most commonly, term policies are sold at a fixed premium for a number of years (10 year “level” term is one example) during which the premium doesn’t change.

At the end of the term, the policy cost increases significantly. As there is no savings program (see below) or significant commissions, term policies are the least expensive way to provide life insurance and are the usual choice early in life.

“Cash Value” life insurance comes in a variety of forms, including universal life, variable life and whole life. However, all cash value insurance involves a term policy combined with a savings side fund. The initial premiums are always much more than a term policy for the same death benefit. The extra money is invested in stocks or a fixed-income portfolio and is used at least partially to offset the yearly increasing premiums for the term policy. This insurance is usually designed to be permanent.

Now the costs of buying the term insurance for, say, a 90-year-old can be quite significant, so the calculations of how much premium needs to be paid to insure coverage can be precarious. However, the savings component of whole life insurance benefits from a quirk in the tax law, in that the earnings are not taxed as long as the policy is kept in force.

Until your family has saved enough assets to ensure retirement security, the primary concern in buying life insurance is the amount of the death benefit. Term insurance is usually the best choice, as it allows enough of a death benefit at an affordable price.

ING - Puff For Sale

Dutch insurer ING Groep NV will likely carve up its Asian life-insurance franchise rather than sell it whole after no successful bidder emerged for the big regional operation. Separate deals could still fetch more than $7 billion for the Dutch financial-services firm, but selling the business in pieces complicates matters for ING, which is under pressure to shed assets, and prevents a rival insurer from making a transformative deal.

The sale, one of the biggest insurance disposals in the region, had been touted as potentially transformative for a U.S. or European insurer because it would instantly have given them a pan-Asian business.

ING had offered potential suitors the option of bidding for the entire franchise or parts of the business, but they had told all comers they strongly favored selling the franchise as a whole. A disposal to one bidder would have been simpler and minimized the likelihood that ING would be left holding parts few people wanted, such as the variable-annuity business in Japan.

However, no bid emerged that was a sure thing to win approval from regulators around the region. Instead, ING hopes to maximize proceeds by selling the Japanese, South Korean and Southeast Asian assets separately, barring any surprise revised offer.

Korea's KB Financial Group Inc. is the leading candidate to win the South Korean franchise, some of the people said. ING is looking to raise about US$2.5 to US$3 billion from this part of the business.
Meanwhile, global investors J.C. Flowers & Co. and Apollo Global Management LLC are slugging it out for ING's Japanese insurance operations, some of the people said. The company has two businesses there. One is a variable-annuity book that the investors are likely to let shrink as annuities are paid off. The other is a relatively successful life insurer for small businesses. Japan's financial-services regulator was taking a cautious stance on the private-equity investors' interest.

The most contested part is the Southeast Asian franchise, which is smaller but growing faster as an expanding middle class seeks to mitigate risks in the absence of social safety nets in much of the region.

Among the front-runners for this part of the franchise are Canada's Manulife Financial Corp. and Hong Kong's AIA Group Ltd., some of the people said. Also still in the running for Southeast Asia is Richard Li, owner of Hong Kong's dominant fixed-line telecommunications company, as well as Mark Wilson, a former chief executive of AIA, who is leading a consortium comprising Blackstone Group LP and Swiss Re AG; and also Japan's Dai-ichi Life Insurance Co.

Mr. Wilson's consortium did make a bid for all of the Asian life-insurance assets in the early rounds. But regulators around the region have delayed or scuppered private-equity bids for insurance assets, prompting ING to view this consortium's bid with some caution, the people said.

ING, which is slated to hold a supervisory board meeting and report results this week, is expected to pick winners by the end of the month.

In 2009 regulators ordered ING to cut its balance sheet by 45% to win approval for the €10 billion ($12.4 billion) worth of state aid it received in 2008. The order meant ING had to sell its global insurance arm and some banking assets, which had to be completed by the end of 2013. ING still has to repay €3 billion in state aid.

Financial Literacy

Financial literacy is the ability to understand and manage financial resources. The easy part of financial literacy is purely technical and requires you to understand financial discussions and issues. You need to become comfortable with the terminology: How does a redemption yield differ from a running yield; what is a credit default swap; how does a put option work?

The hard part is to develop a mature appreciation of what this all means and how it impacts your life: How you should plan for your children’s education and your retirement; how you can use insurance and guaranteed products to improve the performance of your investments; how you can turn market volatility to your advantage. Once you have developed this mature appreciation, you will have a real sense for money and will be properly financially literate.

Standards of financial literacy in Indonesia have improved substantially over the last decade. That is the good news. The bad news is that we are still way behind many of our Asian neighbors. There are many reasons why we are behind. Singapore and Hong Kong have a head start because they are regional hubs for financial services, so a higher proportion of their population is employed in the financial services industry.

Obviously, if you are employed by a bank or insurance company then you will be dealing with financial matters on a day-to-day basis. Hence, your financial literacy should be high. Indeed, just having friends or family members employed in the financial services sector is enough to improve your financial literacy through social interactions and discussions. The fact that schools in Indonesia teach very little in the way of financial literacy also does not help.

Another reason Indonesia lacks is the low penetration of many financial services products compared with other markets. For example, only around 5 percent of Indonesians have bought an insurance product, while in some Asian markets the majority of consumers have purchased some sort of insurance. Obviously the process of buying a product is a great opportunity to learn about the details and the subtleties.

Chatting with everyday folk in Indonesia highlights the differences with other countries. Taxi drivers, waiters and shop assistants in Indonesia very rarely have a good level of financial literacy. On the other hand, in some other countries, such individuals would often be active investors in the stock market and be all too ready to give you tips on the latest hot stock. They may even try to sell you an insurance policy.

A lot of people in Indonesia think that they need to have a certain amount of money first before they can think about financial planning. They tense up whenever they hear the word "finance" as many people think that it is very complex. They describe themselves with negative words; such as financially illiterate, financially stupid, financially unaware.

Many people also mistakenly believe that financial literacy is a skill or knowledge that they ought to be born with and ought to have picked up naturally as they go through life. And this is precisely what financial literacy is, it is a life skill that needs to be learned, like mathematics, language or social interactions. It is a life skill that needs to be learned and used from an early age, and not a luxury or a science that only a few can understand. Indeed, like any subject in school, some people will be good at it and some others will need help to understand it.

So what can you do to improve your personal financial literacy? Reading the financial section of quality press is a good start, and the fact that you are reading this very blog post shows you have at least a healthy interest in the topic. There are books you can buy which aim to educate you and they can provide a good grounding, but be aware of "get rich quick" type of books. If it was easy to get rich that quick, then everyone would have done it by now.

There are various seminars and courses where you can learn about finances, but again be aware that these are normally promoted by companies and organizations that have something to sell. What they are selling may be a good product, but always go back to the principles we outlined in earlier articles before making any investment decisions.

Another way of learning is to trade in some stock market investments. Most on-line broker companies offer a trial or "phantom" account where you can practice building a shareholding without owning any actual shares or costing you any real money. When you gain more confidence you can then buy and sell stocks with your own money and can start with a low amount. This can be a great learning opportunity as well, and you will certainly learn about risk in these current times when most markets are fluctuating greatly on a regular basis.

Another good way of learning is through financial education games which are being adopted increasingly by several organizations and governments globally as a fun and interactive way to learn about finances. Some of these enable you to learn about business cycles, stock markets, how insurance works, how savings plans work and how properties can be part of an investment portfolio. Indeed they can be great fun to play – within your family, or in teams at your place of work. It’s nice to make a million dollars – even if it is only pretend money.Financial literacy is the ability to understand and manage financial resources. The easy part of financial literacy is purely technical and requires you to understand financial discussions and issues. You need to become comfortable with the terminology: How does a redemption yield differ from a running yield; what is a credit default swap; how does a put option work?

The hard part is to develop a mature appreciation of what this all means and how it impacts your life: How you should plan for your children’s education and your retirement; how you can use insurance and guaranteed products to improve the performance of your investments; how you can turn market volatility to your advantage. Once you have developed this mature appreciation, you will have a real sense for money and will be properly financially literate.

Standards of financial literacy in Indonesia have improved substantially over the last decade. That is the good news. The bad news is that we are still way behind many of our Asian neighbors. There are many reasons why we are behind. Singapore and Hong Kong have a head start because they are regional hubs for financial services, so a higher proportion of their population is employed in the financial services industry.

Obviously, if you are employed by a bank or insurance company then you will be dealing with financial matters on a day-to-day basis. Hence, your financial literacy should be high. Indeed, just having friends or family members employed in the financial services sector is enough to improve your financial literacy through social interactions and discussions. The fact that schools in Indonesia teach very little in the way of financial literacy also does not help.

Another reason Indonesia lacks is the low penetration of many financial services products compared with other markets. For example, only around 5 percent of Indonesians have bought an insurance product, while in some Asian markets the majority of consumers have purchased some sort of insurance. Obviously the process of buying a product is a great opportunity to learn about the details and the subtleties.

Chatting with everyday folk in Indonesia highlights the differences with other countries. Taxi drivers, waiters and shop assistants in Indonesia very rarely have a good level of financial literacy. On the other hand, in some other countries, such individuals would often be active investors in the stock market and be all too ready to give you tips on the latest hot stock. They may even try to sell you an insurance policy.

A lot of people in Indonesia think that they need to have a certain amount of money first before they can think about financial planning. They tense up whenever they hear the word "finance" as many people think that it is very complex. They describe themselves with negative words; such as financially illiterate, financially stupid, financially unaware.

Many people also mistakenly believe that financial literacy is a skill or knowledge that they ought to be born with and ought to have picked up naturally as they go through life. And this is precisely what financial literacy is, it is a life skill that needs to be learned, like mathematics, language or social interactions. It is a life skill that needs to be learned and used from an early age, and not a luxury or a science that only a few can understand. Indeed, like any subject in school, some people will be good at it and some others will need help to understand it.

So what can you do to improve your personal financial literacy? Reading the financial section of quality press is a good start, and the fact that you are reading this very blog post shows you have at least a healthy interest in the topic. There are books you can buy which aim to educate you and they can provide a good grounding, but be aware of "get rich quick" type of books. If it was easy to get rich that quick, then everyone would have done it by now.

There are various seminars and courses where you can learn about finances, but again be aware that these are normally promoted by companies and organizations that have something to sell. What they are selling may be a good product, but always go back to the principles we outlined in earlier articles before making any investment decisions.

Another way of learning is to trade in some stock market investments. Most on-line broker companies offer a trial or "phantom" account where you can practice building a shareholding without owning any actual shares or costing you any real money. When you gain more confidence you can then buy and sell stocks with your own money and can start with a low amount. This can be a great learning opportunity as well, and you will certainly learn about risk in these current times when most markets are fluctuating greatly on a regular basis.

Another good way of learning is through financial education games which are being adopted increasingly by several organizations and governments globally as a fun and interactive way to learn about finances. Some of these enable you to learn about business cycles, stock markets, how insurance works, how savings plans work and how properties can be part of an investment portfolio. Indeed they can be great fun to play – within your family, or in teams at your place of work. It’s nice to make a million dollars – even if it is only pretend money.