Life Insurance - Options When You Are Alive

Most people assume that a life insurance policy only pays out a settlement when the policyholder dies. Then again, most people in Western cultures don’t talk about death and are even less likely to plan for it. Nevertheless, you can use your life insurance in many ways whilst you’re still alive.

5 Ways to Use and Sell Life Insurance Policy - Depending on your current circumstances and health, you might need cash and sometimes life settlements are the only option. The good news is that you can easily tap into the cash value of your policy without necessarily having to sell life insurance policy, as described below:

A: Loans - Borrowing money and using the cash value of your policy as a collateral is a very common approach when trying to work out what to do with your universal life insurance. You can even borrow up to 90% of the cash value which could be in the tens of thousands or even millions of dollars. Some companies will only allow you to borrow up to the accumulated cash value though so it’s worth checking the rules. Although you should also note that this will impact the final death benefit payout.

B: Withdrawals - Some life insurance policies allow you to make withdrawals by adjusting your policy terms. Again, this assumes that you have accumulated some cash payments. Either way, it’s worth talking to your policy provider to see what’s possible before you even consider selling a life insurance policy. You might be surprised at how useful it is for you and your family today.

C: Surrender - Sadly, there’s still a lot of unknowns around life insurance. This means that when people find themselves unable to pay the premiums, they simply cancel without knowing what other options they have. Of course, surrounding your policy might be what’s best for you and your situation. If that’s the case then it essentially means that you cancel the policy with your provider. They then release all the cash value at that moment in time. Although, bear in mind that this is always going to be less than if you choose to sell life insurance policy.

D: Apply for Living Benefits - Depending on your policy, you could be eligible for a cash payout of up to 50% of the death payout if you meet certain criteria. These usually include chronic or terminal illnesses or even the need for long-term special care. Again, this could be the extra helping hand you need before deciding to sell a life insurance policy.

E: Sell Life Insurance Policy - Once you’ve explored all the other options, then a viable option might be to sell your life insurance. Of course, you should consider how this might impact your family. Either way, it’s a better strategy than surrounding your policy. The idea is that you sell your final death payout for a sum less than that but greater than your surrender value. You’ll have to work with a broker to negotiate the deal with a life settlement company that specializes in buying these types of insurances.

FWD Seeks Listing At USA

FWD, through its holding company PCGI Intermediate, is working towards an initial public offering in the US, which could see the pan-Asian insurer raise up to US$3 billion. In a statement, PCGI Intermediate announced that it had confidentially submitted a draft registration statement on Form F-1 with the US Securities and Exchange Commission (SEC). However, it did not state the timing and the value of the IPO.

FWD is considering an IPO in the US or Singapore, and it aims to raise up to US$3 billion, while keeping its dual-class shareholding structure. The insurer, which is backed by Hong Kong billionaire Richard Li, is also reportedly considering getting listed in the US through a merger with a special purpose acquisition company (SPAC).

FWD came into existence in 2013, after Li’s Pacific Century Group acquired Dutch financial services group ING’s insurance businesses in Hong Kong, Macau and Thailand. It is now present in 10 markets across Asia, having added Cambodia, Indonesia, Japan, Malaysia, the Philippines, Singapore and Vietnam.

According to FWD’s website, it has over 9.8 million customers, 6,100 employees and 33,000 agents across Asia, with US$62.6 billion in assets. Its offerings include life and medical insurance, general insurance, employee benefits, Shariah and family takaful products.

Health & Fitness Apps - Data At Risk

Health and fitness apps, which help mobile-phone users track everything from calorie intake to menstruation dates, can access and share personal data in a way that’s concerning.

The analysis of more than 20,000 apps found that inadequate privacy disclosures for many of them prevented users from making informed choices about their data. One third could collect user email addresses and many more transmitted data to third parties such as advertisers.

The findings come as the pandemic further boosts mobile-phone use and technology companies try to balance privacy demands with the financial needs of developers and advertisers. Google said it would create a new safety section in its Play mobile-app store, while Apple Inc debuted an anti-tracking feature this year.

The sensitive nature of the information users share on health apps – such as health conditions or disease symptoms – poses heightened privacy risks.

Yet among the health apps included in the study, 28% didn’t offer any privacy policy text. And at least a quarter of user-data transmissions breached what was set out in the policies offered. As many as 88% of the apps reviewed could access and potentially share personal information.

The study looked at over 15,000 free health apps in the Google Play store and compared their privacy practices to those of more than 8,000 non-health apps. The authors said the research was currently only an observational finding, and had some limitations, though they said it was a broad assessment of the apps compared with previous research.

MCA (CPRICM) - Assist Insurance Customer

The MCA Civil Society Movement Bureau has set up a non-governmental organization to seek justice for unfairly treated insurance claimants. The Campaign To Protect The Right Of Insurance Consumers of Malaysia (CPRICM) was set up after receiving appeals from over 30 insurance policyholders for help.

Many Malaysian suffered unfair treatment by the insurance companies who terminated their life and medical policies at a time when they and their families needed the protection the most. Most of the cases involved those undergoing life-saving treatment but we left in a quandary after being told that their policies were rejected for breaching the medical history disclosure clause.

CPRICM aims to create better awareness among consumers as to their rights as insurance policyholders while seeking a review of certain practices by the insurance industry. Among them, was the medical history disclosure clause involving some 140 items.

Most insurance agents fail to properly advise their clients resulting in problems cropping up only after the insurance policies are purchased. CPRICM also would like to invite the top management of insurance companies and Bank Negara to dialogue to try and settle the disputes amicably on some policy matters.

Those who have been unfairly treated by their insurance companies to contact the CPRICM secretariat at 011-1093 3109.

Insurance Claim - Missing Person

Many people goes missing each year in natural disasters - cyclones, incessant rains, landslides etc. Claiming insurance for a missing person can be slightly tricky as it is uncertain whether the person is dead or alive.

If the missing person is the breadwinner and has a life insurance policy, the family can get financial support by claiming life insurance. But how does one go about 'declaring' a missing person dead to initiate a life insurance claim?

A family submits the death certification with other documents to claim the insurance amount in the usual process. But in the case of a missing person, there is no death certificate. However, there's a law where a missing person can be presumed dead.

Every nation has the Evidence Act, Section 108 (or equivalent), where presumptions of death can be made after seven years of filing the FIR (first information report). To claim life insurance of a missing person, the family must wait for seven years before the insurance company can give them the claim money.

Once a person goes missing, the family members need to pay the premium and continue the policy else the policy could lapse, especially a term plan.

The family will first need to obtain a death certificate. Then, approach the court. The court will release the order to the insurance company. Along with the court order, the legal heirs will also need to submit a copy of the FIR and a non-traceable report by the police.

Sometimes the insurance company can settle a claim for a missing person before seven years. If there's reasonable proof of loss and there are clear circumstances for the occurrence of death. However, in the case of natural calamities, insurance would not settle claims as there's no incidental proof of death.

Since there is no incidental proof of the loss for missing cases due to natural calamities like floods, earthquakes, drought, etc.; it becomes very difficult to release the claims before seven years. But if the government releases a list of missing persons assumed dead, the insurance company would pay the claim without waiting for seven years.

Lower Returns On Sales Proposal (Singapore)

From July (2021), when life insurers in Singapore do policy illustrations for Singapore-dollar denominated participating policies, they will have to abide by lower caps of illustrative investment returns. The aim of the change is to provide consumers with a more realistic range of projected investment returns and will not affect the actual returns of existing and future participating policies, the Life Insurance Association (LIA) said on Wednesday (June 2).

The upper illustration rate will be capped at 4.25 per cent a year, down from 4.75 per cent, and the lower illustration rate will be capped at 3 per cent a year, down from 3.25 per cent.
As these are caps, the general rule for insurers is that the lower illustration rate must be at least 1.25 percentage points a year below the upper illustration rate.

Life insurers are expected to illustrate these scenarios to provide consumers with a reasonable potential range of the level of benefits. The downward revision of the caps was made "primarily in consideration of the sustained low interest rate environment. The objective in doing so is to provide consumers a more realistic range of projected investment returns so individuals can make better informed financial decision.

Consumers are reminded that these upper and lower illustration rates are for illustrative purposes only. We strongly encourage individuals to engage with their financial advisers to decide on policies aligned with their personal needs and risk profile. The actual returns received from a participating policy will depend on the actual experience - including investment performance - of the participating fund that will develop over the lifetime of the policy.

Actual investment returns in the future depend on future economic conditions, actual asset class returns, and asset allocation of the participating fund. Eventual actual returns received by policyholders may be higher or lower than those reflected within the policy illustration.

The Monetary Authority of Singapore has been informed of the downward revision to the caps, LIA said.

The last revision of caps on illustrative investment returns used in policy illustrations was in 2013, when the upper illustration rate cap was reduced from 5.25 per cent to 4.75 per cent a year. The lower illustration rate was set to be at least 1.5 percentage points lower than the upper rate.

The practice of having such illustration caps began in 1994. LIA said it reviews these caps annually "to ensure its ongoing relevance and appropriateness, considering recent and potential future economic market dynamics".

The annual review factors in any changes to the long-term outlook of economic markets, to determine if the caps still reflect a realistic range of projected investment returns going forward. The association said it will revise the caps "when the realistic range of projected investment returns have shifted materially".

IFG Seeks Additional Fund

Asuransi Jiwa IFG (or IFG Life) is seeking additional funds following the commencement last month of operations that include taking over the restructured portfolio of the financially stricken state-owned life insurer, Jiwasraya. The move is to ensure that IFG Life will be financially healthy.

IFG Life will obtain the additional funds through fundraising or fresh capital injections through additional state capital participation (PMN) in 2022. IFG Life president commissioner Pantro Pander Silitonga said the company's main target this year is to complete the migration of Jiwasraya's business portfolio to IFG Life. This task itself requires significant funding.

IDR30tn ($2.1bn) to IDR35tn is required for the portfolio transfer and PMN of IDR22tn, there is still a shortfall of IDR13tn. IFG Life is looking at various sources of funding that include the sale of assets of Jiwasraya that would raise around IDR12tn. The company also plans to conduct additional fundraising of around IDR4-5tn. Additional PMN in 2022 to be around IDR2tn when the migration is complete.

Jiwasraya, which defaulted on payouts to customers, had suffered three fundamental problems. 

First, solvency and liquidity problems had been present for a long time but were not resolved. Instead, there was window dressing of financial statements. Liquidity issues arose because the company had sold savings-type insurance products that carried guaranteed high interest rates.

Second, Jiwasraya had weak corporate governance and engaged in risky investment activities. There were no guidelines on curbing investments in high-risk assets. 

Third, customer confidence declined accompanied by increased withdrawals or payouts and lower sales. There were not enough assets to meet liabilities.