First of all, you most likely already have an investment-linked insurance policy (ILP).
Maybe your agent might not have told you about it, but if you are like many others who has a medical health plan, it is most likely to have been tied with one.
When it comes to ILP, there are many different views on it. Some says it’s the future of the insurance industry (well, to the extend that some companies ONLY have ILP products) while some say they would rather not risk their insurance coverage with investments. Do you still remember why you got yourself an ILP?
Do you understand the risks you are taking all these while as an ILP policyholder?
Also why must your medical card plan be tied to an ILP? I can’t be sure, but I can speculate on a few possible reasons:
1) a medical health plan is a very important defensive financial tool to help you guard against expensive medical expenses. Since the inflation for medical and hospitalization stands at about 6-7% on an average, it’s not surprising that the profit margin for medical health plan is the lowest for the Insurance Companies (IC). So, what better way to rebalance it with a tie-up with insurance policy.
Note: You can take up the medical health plan on its own without tie-up, as I’ve explained it in my previous post: Ruling against Profiteering Hospitals.
2) Why an investment-linked insurance policy and not other insurance policy? Well, in case you wonder, they are many other types of insurance policy, such as endowment, whole-life, term etc.
So why the tie-up with investment-linked? It’s a relatively new product and most ICs marketing team decides that the best way to market and “educate�? the public is via a tie-up with medical health-plan.
Well, those are just my speculations. No hard feelings yah.
So, how long has investment-linked policy been around? ILP has been around in Malaysia for about 10 years. Most of the established IC carries ILP as part of their product portfolios.On the legal end, here’s how Section 7 of the Insurance Act 1996 describes ILP as:
So, how long has investment-linked policy been around? ILP has been around in Malaysia for about 10 years. Most of the established IC carries ILP as part of their product portfolios.On the legal end, here’s how Section 7 of the Insurance Act 1996 describes ILP as:
Contracts of insurance on human life or annuity where the benefits are wholly or partly to be determined by reference to the value of, or the income from, property of any description or by references to fluctuations in, or in an index of, the value of property of any descriptions.
Simply put, an ILP consist of 2 major elements, the insurance elements and the investment elements. Think of it as a hybrid product between Mutual Fund and Conventional Insurance policy. We will go into detail on these elements later.
Related article:
Investment-Linked Insurance Policy: An Overview- Part 1
Investment-Linked Insurance Policy: How Mutual Fund Works- Part 2
Investment-Linked Insurance Policy: Premium Allocation- Part 3
Investment-Linked Insurance Policy: Insurance Charges- Final Part
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You might want to read these too...
- Investment-Linked Insurance Policy: Premium Allocation- Part 3
- Investment-Linked Insurance Policy: How Mutual Fund Works- Part 2
- Investment-Linked Insurance Policy: Insurance Charges- Final Part
- Whole-life Insurance Policy
- Surrendering and Replacing Your Insurance Policy
- AMIslamic to Launch New Takaful Plan
- Malaysia's Personal Finance Articles
- Ruling against Profiteering Hospitals
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Manop
