With Bank Negara’s introduction of a new insurance framework to increase penetration and transparency, there is bound to be renewed interest in what life insurance is and whether it is even necessary at all.
Even though the national insurance and takaful penetration rate is up four-fold from 11% in 1988 to 56% today, the fact remains that this number falls far short of the country’s targeted penetration rate of 75% by 2020.
Complicating matters are the fact that those who do have some form of insurance, generally do not have sufficient coverage for their loved ones.
Given this situation, more than 44% of Malaysians will struggle to cope with a health crisis, while loved ones will face difficulties after a breadwinner’s death simply from a lack of sufficient insurance coverage.
U for Life Sdn Bhd general manager Iskandar Ezzahuddin pointed out that based on the “2013 Protection Gap in Malaysia” study commissioned by the Life Insurance Association of Malaysia (Liam), four to five out of every 10 Malaysians did not have life insurance.
“Reasons commonly cited include a lack of financial means to support monthly premium payments and an inadequate understanding of what life insurance is and how it works.
“Bank Negara’s LIFE Framework is a very promising initiative that helps address these issues and hopefully get more, if not all Malaysians, adequately covered by an insurance policy by the year 2020,” he said.
In a statement, Bank Negara said, “Currently, most consumers buy life insurance or family takaful products through an intermediary such as an agent.
“But there are those who are financially literate and savvy enough not to need financial advice or product recommendation.
“Online products will then appeal to them with straightforward, easy-to-understand and solely for protection products.”
Iskandar said this was what U for Life set out to accomplish when it was launched in early 2015.
“As Malaysia’s first online life insurance portal, we have made it a point to keep the process of getting a life insurance policy simple, affordable and instantaneous.
“Simply by completing a step-by-step questionnaire online, the applicant will be issued an e-certificate for their life insurance policy instantly.
“As we double down for challenging financial times ahead, we cannot overstate the importance of keeping something as necessary as a life insurance policy as affordable as possible,” he added.
Since its introduction, U for Life has signed up RM300mil in sum assured within eight months of its launch. For details on U for Life and its products, visit www.uforlife.com.my