Sep 06 2022
Types of insurance policies that every Malaysian needs
By Tanichka Achan
There is a lack of awareness of the importance of buying life insurance. Even if one is insured, one cannot assume that they are adequately insured. Many Malaysians think they have enough coverage from a policy that was bought years ago, or that was purchased by their parents when they were younger.
As such, there continues to be plenty of opportunities for financial advisors to pitch and sell insurance policies to meet either their protection or investment needs. Lo Nyok Mooi, CFP, who is a 16-year MDRT member with Court of Table qualifications from Malaysia, shares the top three types of insurance policies that every Malaysian should have.
1. Personal Accident Insurance
First and foremost, Lo believes that the most basic insurance coverage that one should have, is personal accident. Malaysia has one of the highest rates of road accidents in Southeast Asia. According to the Ministry of Transport Malaysia, the road accidents and fatalities rate has been on the rise for the past ten years. In fact, Lo shares it is considered as one of the leading causes of death in Malaysia.
“Due to the growing number of road accidents each year, this underlines the importance of having a basic personal accident insurance to be covered. The possibility of meeting one is unpredictable, hence it is advisable for all clients to have this fundamental insurance. Such numbers may be grim to share with clients, but it is sometimes necessary for them to recognise the necessity and urgency of financial protection,” says Lo.
To encourage clients to purchase personal accident insurance, she asks if they are the sole breadwinner of the family, or if the loss of their income is significant enough to leave their family in stressful financial circumstances. If they answer yes, she encourages them to consider getting coverage for personal accident.
2. Medical Plan
Lo shares that another insurance policy that every Malaysian should have, is a comprehensive medical plan to help lift their financial burden when they are struck with a health issue.
“Rising affluence and urban lifestyles have led to significant health changes and risk factors throughout the country. We are seeing more and more younger people contracting lifestyle diseases such as diabetes, cancer, and chronic heart disease. Therefore, access to fast and quality treatment has become necessity.”
The Malaysian Government has recently reported that it spends a large amount of RM9.65 billion (USD2.15 billion) every year to treat noncommunicable diseases such as heart attacks, diabetes, and cancer. A study on coronary artery disease among Malaysian youths found that almost 70% of participants aged 15 to 24 have at least one cardiovascular risk factor. In other reports, one in five adults in Malaysia has Type 2 diabetes.
Lo says it helps to share with clients these types of statistics and figures for them to recognise and understand the importance of medical plans. She mentions that many young Malaysians have the misconception that they are young and healthy, and do not require financial protection when it comes to their health. But the reported figures don’t lie. Lo believes it is important to remind clients that the evidence clearly shows that health issues do not discriminate people based on age or background as it can happen to anyone.
Furthermore, she adds that clients need to be told that medical plans cover a range of services related to health care, such as preventive care, doctor office visits, diagnostic lab tests and x-rays, hospital stays, surgery, and prescription drug benefits. Once they understand the amount of coverage they can gain, they are more likely to consider it.
3. Investment-linked Policies (ILPs)
The third insurance policy Lo believes Malaysians can benefit from are investment-linked policies (ILP). While ILPs may be not everyone’s cup of tea, clients should understand clearly how ILPs are structured and work before they make a decision.
Lo shares that ILPs continue to be popular among Malaysians looking for investments and have become a core of any insurer’s portfolio of products. She shares, “Investment-linked policy is a great policy to introduce to clients as it is a flexible and versatile policy. Today, people look for a policy that is diverse, as it will allow them to covert certain parts of their policy and make it a better fit, and an advantage for each client. “To help close a sale, she believes in explaining the benefits of ILPs which are known for their flexibility and bonuses to clients first.
Lo believes no insurance or financial product is considered bad or good. They are just designed to suit people of different needs. “Always remember it is our responsibility to identify and guide our clients into making the right purchase or investment to fulfil their financial goals.”