6 comments

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  aw

  1 year ago

  Also, the agents in Malaysia always tell you, "It does not matter you don't need it now, the sooner you buy, the cheaper it is!" - I think this is REALLY misleading. The premiums always increase as you get older, no matter when you started the policy! What they mean is, "If you start the policy earlier, we will invest the money for you, and later on the potential returns will help cover the higher premiums as you get older."
  
  If the returns are not enough to cover the increased premiums, they will actually start to reduce your coverage, or ask you to pay more. This is an important point that most agents will gloss over. They will say this is "unlikely" to happen. Or they don't mention this at all, to keep up the illusion that, "The earlier you buy insurance, the cheaper it is" < a cheap marketing gimmick.
  
  I agree with you, only buy insurance when you actually need it, ie have loved ones.
  
  You can simply invest the money elsewhere first and do much better, because of the horrible commissions that insurance agents charge.
  
  I'd like to see a post on commissions as well. I looked at my policy, and it goes something like this - 1st year, a whopping 80% of the entire premium is commission. 2nd year, 60%. 3rd year, 30%. After that, 20-15%. After the 6th year, the agents gets no more commission, and that's why they usually "disappear", or only reappear when they want you to increase the coverage or sell you something else.
  
  That's an exorbitant amount of commission. And that's why most of them appear to do so well. My agent drives an expensive Japanese SUV, while another drives a 5 series. I don't hold it against them if they are providing a good service to those who need it, but most of them don't tell you the whole picture about
  1) you don't really need life insurance
  2) a huge chunk of your earlier premiums goes to them
  
  OK, that's my 2 cents. But do you think we need medical insurance?
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• 

  KCLau

  1 year ago

  Very clear explanation about the real "need" for insurance protection.
  
  I also agree with Aw's point of view. That's why choosing a good and sincere insurance agent is so important.
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• 

  yowchuan

  1 year ago

  Aw,
  
  I am not sure if the "80% of the first year premium goes to commission" applies to every insurance companies, but your estimate shouldn't be too far off the mark. The ones I knew ranges from 40-50%, and commission for every life insurance policies are capped to 6-years.
  
  As for medical insurance, I believe you need it as part of a comprehensive coverage, as explained in my topic "Comprehensiveness of Coverage". Again, one should practice moderation as well.
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• 

  MOHD.JEFFRI

  1 year ago

  hi, can u elaborate between endowment policy and term life? tq
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  yowchuan

  1 year ago

  Jeff,
  
  Technically speaking, any insurance with a maturity date is a termed policy. A whole-life policy is just a "very long-termed" insurance policy, usually up to the policyholder's 87th birthday.
  
  However, term life insurance policy in Malaysia usually refers to non-participating life insurance policies, with their terms usually ranging from 5 years to 20 years. Upon the maturity of the term policy, the policy is automatically terminated without any further option to renew. The renewalibity is subject to each Insurer's terms and conditions. Since the insurance industry is rather competitive, the renewal is usually guaranteed for as long as the premium is paid on time.
  
  Non-participating also meant that the policy will not be paying out any form of dividends, regardless of the premium paid. Hence the policy is said to have no cash value. Generally, term life insurance (non-participating) are very much cheaper than participating policies, and is a good risk management tool if budget is your main concern.
  
  Endowment is a participating policy with a fixed term. Hence, you can also technically classify endowment as a form of term insurance, but let's not get too bogged down by the terminologies. The term is usually start from as short as 12 years to a maximum of 30 years. An endowment policy is usually used for education fund planning and for structuring one's retirement needs.
  
  Hope that answers your queries.
  
  YC
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  yowchuan

  9 months ago

  Hi Jeffri, please read my article on Endowment Plans to find out more about it.
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