Before year 2000, there are only traditional life insurance policy available to the market. Since then, some insurance companies in Malaysia had come up with many investment-linked insurance products. Let’s look at some major differences between the 2 type of policies: Investment-linked vs Traditional policy.
In the illustration below, I had used the Great Eastern 2 best-selling products: Greatlife Portfolio Insurance (Investment-linked) and Supreme Livin‘ Care (Traditional policy).
The 3 major differences:
1. Protection or Sum Assured
For traditional policy, the protection is guaranteed to increase to double of the initial protection over 20 years. In this case, from 50K to 100K. If the policy owner keeps paying the premium, the protection will just keep increasing.
For investment-linked, the life assured can choose from a range of protection. In this case, from 24k to 200k. The protection will remain fixed unless you request for changes.
2. Insurance Charges
Traditional policy charge the premium on an average. It is known as level premium. Meanwhile, the insurance charges of investment-linked policy will increase over time, according to your age. This make the it cheap when young, but more expensive when you are getting older. This is known as natural premium.
3. Cash Value or Return
Traditional policy: The bonus is declared in yearly basis. Once it is declared, it is said to be vested. It means when insurance company declared a certain amount of bonus to you, it is kept with your policy and won’t be taken away disregarding the market performance.
Investment-linked: Policy owner invest the remaining premium in the fund they choose. It can be a low risk fund such as fixed income fund, or other equity funds which are higher risk comparatively. Even though policy owner may get higher return or cash value when the market is bullish, but all the return might be wiped away when market turn bearish. 
Conclusion
So which policy suits you? I bought both. I know that traditional policy is the one I will keep for whole life. However, I might terminate my investment-linked policy when I retire. If not, I will at least reduce the protection to save on the ridiculous insurance charges at older age.
Downloads
Traditional Insurance Vs. Investment-Linked Plan InfographicYou might want to "right-click" and "save-link-as" to download this PDF file to your computer.
139 replies to "Investment-linked vs. Traditional Insurance"
Hi Mr Lau,
I am 60 and just retired. Before retirement, my medical insurance was purchased by my employer throughout. Hence post-retirement, I need to buy a medical insurance on my own.
I am considering 2 quotes as follows :-
1) Alliance which is a ILP – rm850k al, nil for overall limit, rb rm150. Current annual premium rm6700.00. No claim refund of 10% (yr1), 15% (yr2) and 20% (yr 3 n above) based on allocated insurance cost (refund to be credited to account value). But the medical card rider is till age 80 only.
2) HLA which is traditional – rm 1mil al, nil overall limit, rm180 rb. Current Annual premium rm3.8k pa (61-65 age), rm5.1x (66-70), rm6.5m(71-75), rm8.8k (76-80) , rm11.8k (81-85). Renewal till age 99. 15% no claim refund per annum in cash to start after initial 18 months.
For a person of this age, which would be a better option ?
I will choose the coverage that can last longer.
I will choose the plan that can actually pays out when I need to claim my medical expenditure haha
Hi KC, I have an ILP that I brought when I started working (15 years ago) that covers medical but with lower coverage/sum assured, I don’t think I can top up it now to increase the protection. I’m thinking to buy another ILP and keep maintaining the current ILP, do you think this is a good move? if now what will be your advice? thanks! -Poh
The old plan might not be compatible with the new riders. Different companies treat their investment-linked policies differently too.
You will need to check with your agents to find out the details, and the alternatives.
I am 42 years old.I still not very clear how the investment link plan work.
AiA life signature is a life investment plan, pay premiun for option either 10 years or 20 years.
if I selected the plan and pay for 10years plan premiun.
How do the insurance company earn and the cash value given is increasing from 11 years till maturity age at 73years old.And I only pay up for 10 years only.
As part of the cash value is use to pay off for premium from 11years onwards.
pay 10 years from 42 years when age 73years maturity age withdraw all cash value will pay extra 20 % on the cash value.
is it to good to be true.
TQ
Regards
David
You can email me a copy of your full quotation.
I will take a look at it
Hi KC
I would need your advise to review on my existing insurance policies as I might be over insured with high premium and need some recommendations. Can you please contact me?
Hi Vinc,
Please send a support ticket at https://kclau.com/support
I will connect you with an advisor.
Hi KC,
Thanks for the article. I am 37 but I have not had any insurance other than the one from my company. I am thinking to start getting but am stuck with the options – is it better to buy conventional medical insurnace + Term Life or ILP plan? My objective is to get highest protection with lowest premium possible, I do have my own stock investments and passive incomes (dividends & rental) besides my income from employment. Besides, I have 2 MLTAs from my mortgage which cover me for > 1mil the next 10-15 years.
Thanks for any inputs.
ILP will be very effective to structure insurance with highest protection and lowest premium.
Talk to several agents, or financial planner to get a few quotation to compare.
Hi,
What are your thoughts of buying term insurance and investing in unit trust separately? As I noticed
1. term premium are really low as the insurance company doesn’t have to insure you when you are old and more likely to have problems
2. You don’t really need things like life and critical for your whole life
3. if you invest separately in unit trust you can choose the best funds in the market while if you buy an investment link you are stuck with whatever the insurance company has.
4. I would assume fees are lower as fundsupermart only charges 1.75% entry fees and during promos it is lower while if you buy an investment link insurance I am sure the sales charge is at least 4%
Any comments. Thanks.
Hi EL, the concept of buy term and invest the difference definitely work, as you have pointed out the advantages.
The situation here in Malaysia is that you can find the lowest cost of insurance by getting ILP policy.
There are some term insurance that you can buy online at low cost, but most don’t cover medical, which you can only package with ILP.
Hi KC,
Comparing buying regular premium Investment-linked plan vs Mutual funds + Term life insurance. May I know which option is more appropriate? Does it make a difference if it is a single premium investment-linked policy? Appreciate your advice. thanks.
There are pros and cons:
Advantage of ILP – you can pay with credit card (might get cash back, points), can do proper nomination and skip estate probate
Advantage of Unit Trust – might get lower investment cost (some funds only charge 1-3% up front).
Hi Kc,
I have brought AIA medical standalone from year 2006 , Yearly Premium RM 800 , RB180,AL RM110k, and LL RM330k . These current medical card coverage are insufficient .
My plan to have ILP from GE, Monthly Premium RM 300 , RB200 , AL RM1200K , LL No limit.
My question is, Does it worth to surrender my AIA medical premium one year later ,since I brought so many year?
Hi, I am not sure if my reply still going to help you but with what you have right now on GE, it is considered surplus holding your A company standalone medical card unless you are saying that you might need to claim more than 1.2mil annually (limit to 1.31mil – adding both AL together).
Don’t get me wrong. Keeping 2 medicals does help too. We still have to go back to the ground and think about what you really need. Dont forget that standalone medical card will have higher insurance charges for every 5 years averagely. ILP from GE does but the extra amount paid for investment will assist to cover the increase of actual charges.
Dear KC,
i bought a HLA Evergain Plus in 2014. Paid annual premium of RM6k. Currently, when i check my account, the balace is only RM13k plus. How can it be? Since i have paid for 4yrs already. May i know what am i missing in my calculation?
Check the quotation. Normally it is attached together at the back of your policy.
For life insurance, the commission for agency is during the first 6 years. So it is quite normal if you see low cash value during the first few years.
Hi KC Lau, I am 38 yr old. If I plan to claim further RM 700k, which types of insurance will be more suitable for me? Currently, I had investment linked insurance that included critical illness and medical card.
For lowest premium with higher protection, you can still look into ILP.
Dear KC Lau, I plan to get medical protecttion for my parent (Mother age 56, father age 62). Which one should i choose for, Traditional policy or ILP ? My aim is to get best medical protection for them and I can commit rm800 per month for the premium payment ? What is the difference of taking traditional policy or ILP at elderly age ? Which one should be the better option to take at elderly age ? Thank you in advance .
Hi CL, there are many options now. It is best to speak to insurance agents or licensed financial adviser for the comparison.
Hi KCLau, I would like to ask for your suggestion about getting a insurance. I am age 27 and still doesn’t have any insurance policy, would like to ask which type of insurance should I get 1st? ILP or Traditional? And when is the right time to switch or surrender my ILP plan. Because some peoples told me that ILP may need you to top-up premium in the future. Even my uncle he was buying a life term policy which only pay for 10 years and cover you for 50 years but after 10 years he still needs to pay the premium. What is your advice to me? Thanks
Hi John, ILP will be the most suitable for young people like you. You can get the highest coverage with the minimum premium possible.
Insurance plans also keep changing and become better over time. You can always review after a few years. But for now, an ILP will be good as a start.
Hi KC, I been contact by HLA agent about HLA evergeen 2035. Request paid out RM 20K subsequent 6 year. I can get interest after 7 year. If plan roll over, I can get > RM 300K with guarantee after due. Detail you may refer here. https://www.hla.com.my/CMS/Product-Services/Programs/Programs-Details.aspx?Product=73&Sub=299. I would seek you advice as usual agent promise too good to be true.
http://prismawealth.com/2017/05/17/%E4%B8%B0%E9%9A%86%EF%BC%88hla%EF%BC%89%E7%9A%84hla-evergain-plus%E5%A6%82%E4%BD%95%E8%BF%90%E4%BD%9C%EF%BC%9F/
For investment link insurance, what’s difference i put small amt across 18 year compare put big lump sum in 6 year ? one of info received was related to agent commission as only can received within 6 year.
Any cooling period if i plan cancel? contract in draft.
Thank you
Dear KC,
I have a question. I bought a so call “saving plan” 2 years ago (AIA empower plan) whereby I have to pay 5k premium for the next 10 years and the agent guaranteed the return is more than 10%.
However, I realized that it is not a saving plan but an investment linked plan upon going through the policy yesterday. Furthermore, the guaranteed return is not stated in the policy (unlike my Hong Leong Wealth Builder Plan).
Besides that, I noticed that there are an increasing “other charges” and “fund management charge” in the plan narration. I’m a bit confused here, the total of the “insurance component” (10%) and the ” investment component” (40%) are actually lesser than my total premium paid in 10 years.
I felt like being cheated by the agent and thinking to surrender this policy in view that this might not be a good option to make money after 10 years. Do you think that surrender this policy is a good idea as I’m afraid that I am going to lose out if I wait for another few years to surrender? And, how much premium can I get back?
Appreciate your advice.
Thanks.
Hi Lai Heng, obviously you bought the policy for the wrong reason. Insurance policy won’t give you high return unless it is those high investment allocation type that works almost like unit trust. The agent get the most commission in the first 2 years. In your case, you might have already incurred the highest cost in purchasing this plan. If you can invest better with the 5k every year, it makes sense to surrender if you are not buying for the protection purposes.
Good morning KC Lau Sir ,
I plan to get medical protecttion for my father which is currently 59 years old . Which one should i choose Sir . Traditional policy or ILP ? My aim is to get best medical protection for my father and I can commit rm400 per month for the premium payment ? What is the difference of taking traditional policy or ILP at elderly age ? Which one should be the better option to take at elderly age ? Thank you in advance .
For medical card coverage, the options now is either standalone medical card, or the rider attached with ILP.
It is better to go with ILP although the initial payment might be higher compared to standalone option. The insurance charges is discounted for the rider. Get quotation from several company and do a comparison. If you want to speak with one of my associate, please email me with your phone number.
[…] Up to this point I’ve only spoken about investment-linked insurance. It’s the most popular type of insurance sold today. But there’s actually another type of insurance: traditional. […]
hello dear KC
I am a foreign residence in malaysia,I just graduated from university.I would like to be a insurance agent and set up a insurance agency,can you guide me step by step what should I do?
thanks
How does the Smart Extender works? Deductible is very high right? Can you explain further?
Hi Shal,
I am Mandy, associate of KC Lau.
Please refer to the below link to understand how Smart Extender works.
http://www.greateasternlife.com/my/en/insurance/products/products_health.htm
In regards of the deductible, I would say in most of the cases, the life assured needs not worry about the deductible.
It is due to the Smart Extender rider is packaged together with a basic medical card.
The deductible amount will be covered by the basic medical card.
Only when the basic medical card lifetime limit exhausted, then only the client have to use own money to pay for deductible.
Thanks Mandy for helping out here.
Thanks Mandy.
Please see the following statement from brochure:
Q: Under what circumstances will SmartMedic Xtra be
terminated?
A: This rider will be terminated on … the policy anniversary on which the Life claim amount under this rider has exceeded the Overall Lifetime Limit, or ….
Q: Under what circumstances will Smart Extender be
terminated?
A: This rider will be terminated on … when the attached basic policy has lapsed, is surrendered???? or terminated.
In this event, if i already exhaust basic policy lifetime limit, my basic card will be terminated, and will my extender rider will be terminated too?
I 26 old , male , Saleman
I friend say GE got new medical card
One year can claim 1.3 million ,
Coz I wanna buy 1 more medical card.
How much per month?
Hi Anthony,
My name is Stanley and I am GE insurance agent serving around Klang valley. Indeed lately GE has come out a new product call Smart Extender under ILP, where you can get annual limit equivalent to the lifetime limit. In fact from tomorrow (15Sep2014) onwards, for those holding old ILP medical card can also top up small premium to enjoy the same benefit with Smart Extender. If you need more info can always contact me at 012-2644800. Thank you
Dear KC,
I am looking into the SmartProtect Essential 2 which provide coverage for death benefit until 99 years old. Is there any clause(s) that prohibit one from claiming it as it do seem to be too good to be true.
@K, the claim clauses is pretty much standard.
[…] These are just a few best selling products from Great Eastern. Which product you bought from Great Eastern? Feel free to ask any question at the comment section for further details. If you are keen to find out whether Investment link or traditional plan suits you better, you can refer to my earlier post Difference Between Investment Link Plan and Traditional Plan. […]
Hi, KC
Currently i have a traditional insurance under HLA (Excel cash II) with Medical card of RM100, it is advisable to terminate the said traditional plan & purchase a new traditional plan under GE Traditional Plan & purchase another investment-link with GE? if yes, which tarditional plan under GE i should consider?
Hi Tan, in usual case, terminating your existing policy is not very beneficial because certain years (6 years in fact), there are no more commission paid to the agent. Hence, you are getting almost full value of your premium paid after 6 years.
See if it makes more sense to top up with new plan, instead of terminate and buy new.
Hi, KC
If that is the case, top up means wat i dont cover in my traditional plan?
[…] Investment-linked vs. Traditional Insurance […]
I plan to buy medical card for my new born baby. I come across AIA and prudential.Please advise which company is better? Traditional or investment link better?
Appreciate for input. TQ
I have an ING – investment link policy with me since 201l which cover life – RM100k, critical illness – RM25k, PA -15k . Currently i’m planing to get medical insurance, should i get a standalone medical card or an investment link medical insurance? I’m a lilttle bit stucked.
I have fortunately or unfortunately got an Investment Link insurance policy (whole life insurance) from ING or currently AIA. That was early 2012. However, as time passes by, am a little skeptical.
If I were to surrender my insurance policy back at age say 2020, what will I get back? Will I get back the premium amount? Or just the earnings from the investment? Hope that you can advise, thank you. I think it is still not too late for me to give up something without any returns.
HI Witty Kitty, the normal ILP is more for protection purposes. Depending on the amount of rider add-on to the policy, it might take 20-30 years to break-even if you buy at a young age. If you prioritize on the protection part, then the investment value you will get if just an icing on the cake. Unless you are sold on how much money you will be getting back from the policy.
I am 25 years old. Just Graduated. My current take home pay after EPF,SOCSO & TAX deduction is RM1800.00. My personal expenses (all) per month is RM800.00. I don’t smoke & drink. I want to take an insurance policy and I am looking at a Tradional policy and an Investment Link Policy. Can you recommend a good GE policy for both. What should I add to my Basic Sum Assured? Please assist. Thank you.
My husband is 31years old,he bought a tradisional insurance policy from great eastern from 2003.So it’s been 10year since then.Then we refer back to th policy we notice that his policy was trap for kidney and cancer disease for only Rm15000 a years,that sound much on 2003 but not in 2013.So we decide to upgrade the policy.With premium of Rm240,great eastern agent also cannot offer me life to 100k,36I to 100k,she can only offer me till 65k with co-insurance,but if I buy new insurance from prudenitial it can give us both to 100k without co-insurance.I’m headache of thinking of buying new or surrender my old policy (since it’s been 10years we’ll lose those cash valuev we accumalate).My husband born on 1981,non smoker,class 3,no medical record,actually with sum of Rm240 what should we get?And may I know diffrence payer and waiver?
@Chirley, in your case, Prudential sounds like a better option. If you can afford both policy (the new and the existing), it would be great to keep the existing one and buy new with Prudential.
[…] Investment-linked vs. Traditional Insurance […]
Female 24+ years old
I bought GE life+medical IL plan in 2006 when I am 18.
Annual premium RM 1,560
Life sum RM 50,000, Medical sum RM 150,000, 36 Critical RM 30,000, PA RM 20,000
Now I just upgrade premium to RM 3,000
This will increase medical to RM 1.6m & 36 critical to RM 130,000, other remains the same sum insured.
Please comment on my plan whether over insured or what changes in plan should I inform the GE agent
i just bought an ILP with a premium payment of RM220 per month at the age of 32. The coverage is 100k TPD , 100k Disease payout. Just want to check whether the premium of RM220 will increased to get the same coverage. If yes, what is the amount of increase and when it will increase. thanks
I bought a ilp with medi card 2 years ago. I am 50 yrs now. My question what happens if i do not “top up”? I received a letter from the insurance company requesting for top up. Will my policy lapse although I am paying my premium annually thru auto debit. My agent assures me that as long as my payment is made, my coverage is on.
hi Nikki,
Top up or not? It depends on how much the insurance companies revise their medical plan. You may need to top up when the premium is not enough to cover the insurance charges after revision. Talk to your agent about that.
As i know, there is a high charges from insurance company. Is there worth to invezt in these traditinal product such as saving or retirement plan?
Any other product for low charges with better return?
Hi Koh, you are right that insurance saving plan has high charges. If you have the discipline, you can save and invest on your own.
I plan to buy investment-linked insurance, i’m 25 yrs old nw, and i not understand how does it work when we are getting older, since you all said tat the protection wil get low and insurance charges increase? So how i need to ensure that my protection secure and yet still can get back the money once premium mature (i don’t expect to get 100%, but at least can have 70-80% to cover my life after retired)
Hi WNN, you can contact an insurance agent to have a look at the exact quotation of investment-linked plan.
I have been looking around for some insurance that meet the criteria or feature below. Can you advise?
1. Critical care until at least 70 y/o (growing with inflation)
Less important
2. Death benefit that grows with inflation
3. TPD that grows with inflation
I was quoted the great Enhanced Living Care by an agent recently. Without the policy wordings however, I am not sure whether the critical care cover is as per my requirement.
Also, can you please let me know the difference between the guaranteed and non-guaranteed schedules? Seems like the agents kept giving me non-guaranteed schedules only- I take it that non-guaranteed means that the return on the insurance is non-guaranteed?
Will greatly appreciate any advise you can give.
I am in dilemma to choose a life insurance.
Currently, I am holding AIA whole life insurance, RM100k critical illness (CI) and RM200k death benefit. Pay till age 99. It has been with me for 8 years.
I am 36 and having a kid now, hence I am thinking to increase my protection.
I found 2 options.
Plan A: Traditional whole life traditional plan and pay for 25 years term only.
Pan B: Investment link whole life plan
Option 1) Buy Plan A and have approximate RM140k+cash value CI/TPD/death benefit till age 65, and RM84k+cash value CI/death benefit after 65. I just need to pay RM2400 per year for 25 years. If either CI or death occurs, the policy will terminate. The policy covers forever. The 5% projection cash value at age 66 is RM80k.
Option 2) Buy Plan B and have RM200k+cash value CI/death benefit till age 75 (CI), till age 99 (death), till age 65 (TPD). I have to pay RM2600 till age 99. If I die after CI, I can claim RM200k+RM200k both CI and death benefit. The approximate 9% (policy year 1-20) 6% (after 20 yr) projection cash value at age 66 is RM25k.
Benefit of Option 1 is I no need to pay the premium when I am old. I can surrender my AIA (get cash value) when I am old/retired and when no need high protection but still have min protection of RM85k. It covers you as long as you are still alive. But it is just either CI, TPD or death.
Benefit of Option 2 is I have the high protection with the approx same annual premium. However, high insurance cost when get older hence less cash value left. I suspect it will lapse soon after age 66. Hence, I have to hold on my AIA and keep paying till age 99. CI benefit will terminate at age 75. TPD benefits terminate at age 65.
Well, sorry for long writing, but this is typical dilemma or case study with traditional and investment link.
Lastly, can I find your book at Popular?
Thanks again. I’m really appreciate your advice.
It depends on how much sum assured you need NOW. And how much premium can you afford.
It is more expensive to get insured with traditional policy vs. ILP. So if you can only afford RM2600, but you need higher protection, go for ILP
Sound reasonable. It backs to basic of insurance.
I think a reasonable estimation of coverage needed is 5x of your annual salary for death benefit and 3x for CI benefit. May be about 10% of the salary spends for insurance plan. What is your recommendation though?
Getting IL allows me to pay with lower premium (RM2600) and get high coverage now. And surrender it or it lapses at older age. Then I have to hold on the AIA. It sounds good for now, but if I also consider for retirement, AIA can be a burden later.
In another word, if “affordable”, I can increase the premium of Option A to about RM3300 in order to have RM200k +cash value CI/TPD/death benefit before age 66 and RM120k + cash value CI/TPD/death benefit after age 65. I keep this policy and surrender my AIA at age 56 with cash value of RM100k. Of course, I have to make sure I can “survive” paying the Option A and AIA for the next 25 years.
I also try to stick on basic of insurance, but when I plan for my retirement. I feel the dilemma. As a professional financial planner like you, I am sure you can provide a good second view. It is very interesting. 😉
I like your “Investment-linked vs. Traditional Insurance”. However, I have a question. How about medical card? Should I tie the medical to investment-link or traditional? There are a lot of arguements, what is your view on this?
I recommend you choose the medical card that is attached to investment-linked.
The reason is simple – when you get a separate standalone card, it may lapse when you fail to pay premium after the 30 days grace period.
But when it is attached as a rider in ILP, insurance company will use your policy cash value to pay the insurance charges, which keeps the H&S coverage in force even though you forget and can’t pay premium for several months.
Thanks for your quick response.
The medical card is not standalone policy. What I meant is medical card with traditional plan versus medical card with investment link plan.
Since IL plan insurance charges will increse expontially with age, will that possible the IL policy will lapse and hence the medical card will terminate as well? In IL plan, we cannot see what beyond 30 years and since the charges jump significantly when we go older, the cash value reduces very dramatically.
Traditional is much steady in charges though.
Well, insurance always promote investment link plan though.
As I know from GE policy, MC attached in a traditional policy is still a standalone card. It won’t have the benefit of using your traditional insurance cash value to pay outstanding premium.
I’m not sure if AIA is different.
Can you be certain of the graph of [Cash Value or Return] of Investment-Linked to be right to everyone for example at the 20th year?
Hi KC,
I have 2 queries here and need your explaination.
1) Why is Traditional Plan is always more expensive than Investment Link?
2) If we are stop paying premium when we are old age, the traditional plan will become APL ( 7 to 8% interest yearly), while IPL will cancell the unit at the basic account to cover back the premium. If comparing between this 2, which is more costly to the policy holder?
Pls advice and thanks in advance
KC,
How do you comment on the insurance whole life saving plan which nowaday is an argument on this plan. Which the feature is high premium low protection because it emphasis on saving. Does it really can achieve the target of saving? Perhap it only yield 4% to 5% return a year only after lock-in 20 years (including the GUARANTEE income yearly or every 2 or 3 years depending on the policy). Is it worth for lock in 20 year just to get 4% to 5% a year while the inflation is about this rate.
Hi,
For some people who don’t save regularly, this is a saving system that is proven to work.
If you are already good and disciplin in money handling, the rate of return of whole life saving plan is not something to brag about.
Hi KCLau,
I have been effect the Great Eastern Life insurance in August 1994.
This month my bill is like this:
Premium Due on 04/08/2010:RM1170.30
Less:
Cash bonus balance RM3885.86
Total 0.00
Will i have to pay after the 3885.86 is fully deduced or I will not need to pay anymore since already 15 years?
Hi Yap,
It is hard to say because the bonus declared every year may differ. You can choose to pay only the difference when your current year bonus is not enough to cover for the year’s premium.
You can ask the customer service personnel at GE to give you an explanation and how long the cash bonus may last.
Since ’90 most insurance company can’t get high return mainly due to:
1. Global Trend (not only Malaysia’s insurance company)
2. Check BNM website for Malaysian Government Securities historical rate and you will know why
3. Interest rate dropping (check my blog for “Interest Rate”) to see the trend.
Therefore, you need to monitor the Statement from GE closely to avoid out of coverage. If required, pay premium or settle the Automatic Premium Loan which charge you 7%-8% (if you are under APL now).
Hi KCLau
From your website, you have been so helpful in giving your thoughts and advice. I have sent you an email and would really appreciate your thoughts please.
Thank you so much!
Rgds.
Lim, I’ve got your email and replied you.
Hi Christopher & unknown, thanks for the advice! I think I will combine both policies then.
Taking both policies would be good.
hi kclau
i’m in the midths to get my company biz insurance soon and i’m also looking into doing trust. can u recommed me any reliable trust company? thank u .
Hi Raymond,
You can go with Rockwills. Some lawyers are also very familiar with this.
If you want me to refer someone, please contact me via email.
Thanks
Dear baxxor8.
I like your question and would also be keen to hear from KCLau’s point of view.
I think he would probably recommend you to take both based on his previous article in this blog. From my personal research, both combination of traditional and investment-link is the ultimate best plan. He enjoy the benefits of both.
For your info, I am also thinking of buying another traditional policy like what you mentioned RM50K for whole life with critical illness in addition to my current ILP of RM200K plus medical card of SmartMedic of RM200.00.
I have a few friends who had cancer during the last 10 years and honestly, RM200K is confirmed definitely not enough. But I cannot afford to insure further more due to budget constraint.
Hope this helps.
KCLau, sorry if I had taken over your role here…..
All as long as depend on your budget that you can afford.
Christopher, thanks for your effort to answer the question here. I like your comments and this is my recommendation as well.
HLA has a medical plan call MajorMedi at very affordable rate to compliment your existing medical plan. This product helps those who have low life time limit or need to increase life time limit.
It works like back up plan. When the medical bill is RM50,000 – you claim first RM15k from existing medical card and balance from HLA. Therefore, a relief to existing medical card’s life time limit.
I have a plan by GE agent. It’s a combination of whole-life and investment-linked.
I am a male 26yrs non smoker.
Whole life Great Enhanced Living Care: Death, TPD, 36 CI : 50k coverage
Yearly premium: ~RM1,600
Investment-linked Smart Protect Essential Insurance 2: Death, TPD, 36CI, Medical Card SM150 : 50k coverage
Yearly premium: RM1,800
Should I take both plans or I just take one of it? I can pay additional premiums if I just take one of it. But I need the medical card after retirement. Should I go for term insurance for medical card?
Thanks in advance.
Depends on your budgeting, it is encouraged to continue if you could afford.
Pls make sure you have the minimum go to Basic Premium and balance goes to Top Up Premium to maximise your policy cash value without affects your benefits.
Since ILP can give high protection at low charge, ask for higher protection like RM300,000 for few reasons:
1) You might need it in future;
2) When you need it, you may not qualify for it any more.
3) It is marginal cost to you.
Greetings & G’Day,
There are many term insurance( annual renewable/term level life) available in the market today.. Term insurance is not the traditional whole life(with or not with participating plan).. You may search google or yahoo for term insurance, or compare whole life endownment plan with term insurance.
Nowadays, our society really does not know what are the differences of insurance available today. And the main problem is, our financial adviser/insurance agents always recommended ALL-IN-ONE package(high commission) to clients/customers with all coverage.. But does those coverage really need or not? And coverage is small with high premium. Example:- Life/Death coverage of RM150K , it will took less than 3 years for the beneficiary + their young childrens to spend and finish off (expenses + cost of living,car/home loan. RM50K per annum).. Why pay high premium for low death coverage?
Example:- A person age 35 year olds, non-smoke, term insurance(level term life for 25 years) coverage of RM300K(Death) with 36 critical illness and disability benefits cost RM2k annually.
Monthly Cost = RM 166.67 ( Cheap bargain premium payment).
Basic CONCEPT:- Buying insurance is to protect the beneficiary + young childrens to survive should any disaster strikes the breadwinner. Get high payout with low premium payment.
Have a great day. Just a thought of mine,.
netmask8…I strongly agree with what you said….
Greetings & G’Day,
Getting a term life insurance(renewable/term life) and investing the extra in other form of investments like stock markets(if u got the knowledge/patience) or unit trusts..
Why TERM Insurance ?
Term Life Insurance is “”very cheap”” premium and the death coverage sum is VERY HIGH should there’s any death incurred to the insured breadwinner.Nowadays, many “packages” or we called in All-in-ONE package of life insurance / endownment plan which force clients/customers to perform a saving/investment.
By Getting 1) a term insurance with 36 critical illness 2) medical card and 3) PA will be sufficient enough for a breadwinner. If possible, work in a company that provides medical card for employees(some saving on normal medical card coverage). If no longer works for the company, get own medical card.
Usually term insurance is depends on own needs. If the breadwinner got young infants/children to provide them education, living ..etc,, the insured might need term insurance up to only 15 – 25 years(renewable/term life) only. Any life death during the 15- 25 years, his young children able to survive with the HUGE SUM PAYOUT. If nothing happen during the 25 years tenure, by then, his children already independent, graduated from college/university. The extra, the breadwinner might invest it on stock markets/units trusts..
You can compare the premium payment for the term insurance and ILP/Endownment/Whole Life (with or not with particating plan ), and you ‘ll surprise the premium cost and the death sum coverage where huge differents between them.
In olden days, people BUYs term insurance is to HAVE BIG Coverage Plan for Beneficiary to survive for long years(depends on their young infants/childrens to become independents) if anything happens to the breadwinner.
Why pay BIG Premium with ++small/ordinary++ SUM Coverage Payout with “force” saving/investment plan?
http: //en.wikipedia.org/wiki/Term_life_insurance
Just a thought. Have a great day & Enjoy Learning !!
Thanks for your information. I really hope to see very much cheaper term assurances being offered by local insurers.
Check my blog for “Is Term Life Really Cheaper” for a real case study.
This concept is not always true, especially:
1) Term life in Malaysia not very cheap (as KC mentioned)
2) ILP is cheap for younger people looking for high coverage.
Only upon an informed analysis, the only you conclude if TL better or ILP better.
I am an agent from Great Eastern. My husband has an insurance which he bought from Prudential before we are married. It is a 4 yrs old plan which he paid RM120 for RM120k protection. I am still keeping the policy with Prudential. We bought a Smart Protect Medical card recently with RM220/mthly for RM170k (3d). Also a Great Enhanced Living Care of RM240/mthly. I am contemplating whether should i mininise the RM220 which I paid for Investment Link ( i will still keep the medical card & maintain the minimal coverage for life) & transfer the cash to Great Enhanced Living Care, in view that he is still keeping the RM120k plan with Prudential. This is because the return (if ntg happen) wld be better for Great Enhance Living care, rather than INvestment link plan.
Hi June,
I think your plan is fine. The combination is quite balance.
Hi Mr.Lau,
i’m planning to get a keyman insurance for my client. which plan will be more adviseable to be taken? is it Tranditional or investment link product.? i’m looking at 10 to max 20 yrs of period.
normally, ILP may be cheaper compared to term insurance, especially when you are looking for 10-20 years protection only.
if i take ILP can it be consider company expenditure? coz my agent told me only term insurance can be consider company expenditure for tax purposes.
Hi Raymond,
Your agent is right. There is no tax advantage.
Good to consider tax but I suggest you look into total cost in present value. After tax concern, it might be still worthwhile to take ILP, right?
By the way, Keyman insurance has a limitation from tax point. Check my blog for further info.
I’m 47 yrs & my wife 39 yrs with 2 kids, 10 & 14 respectively. Which insurance plan & medical card is best for me & my family. I can affort to pay total monthly premium of $500/= till 80 yrs old.
*Never concern about getting back money at old age but more on coverage [sickness & operation/injury]. So not much on Investment-linked insurance.
Regards.
Investment-linked with medical card rider will be suitable for you.
You can contact me at insurance@kclau.com
Please provide the details below in the email:
– Date of birth:
– Contact number:
– Occupation:
– Where do you stay?
I will get back to you then.
Hi Mr Lau,
My mum bought for me a life policy from GE many many years ago. She had stopped paying for it a long time ago and ever since then GE has been using the cash bonus to offset the premiums. It subsequently ran out of cash bonus and I am now paying for it on a monthly basis.
A week ago i received a statement from GE claiming that the last payment made was in December and when i called them up they said that they have used the cash bonus to pay up for the month of Jan and Feb. my question is:
1) Can i opt to stop the option where they use the cash bonus to pay for the premiums
2) Can i pay back the premiums owing in Jan and Feb so that my cash bonus won’t be affected
3) Can i pay back all the cash bonus that have been used in the last 10 years or so.
thanks,
Leon
Hi Leon,
You can visit any GE branch and get advise about the policy premium.
1. yes. You can do that by choosing different cash bonus option – need to fill up a form.
2. I am sure you can pay back the premium owed. For the cash bonus that had been used to pay outstanding premium, it is irreversible. But if it is a policy loan, yes you can pay back the money plus some interest charge. Better to ask about that directly at GE branch.
3. I don’t cash bonus used up is irreversible. Only the policy loan can be paid back to GE.
Hi KCLau,
I am trying to get an insurance plan for my mum, she is 55, housewife, non-smoker.
There is an insurance agent quoted me such a plan with all these included:
i. Medical card – 750k life time limit, 75k annual limit. Cover until age 80.
ii. Life coverage – 38k. Life time coverage.
iii. PA – 50k (said to be given free)
Premium is 2.8k per year for at least 15 years, after that might need to top up.
My question is, is 750k life time limit too much for my mum? No doubt the main reason i wanna buy her a plan is to give her medical protection, but i was thinking like 300k-350k kind of plan. Is this enough?
Is the quoted plan a good plan overall?
Hi Aileen,
There should be a lower plan. Just ask your agent to quote a plan with lower medical limit.
Overall, the plan is competitive.
Hi, KCLau,
My fren advise me to terminate my current life traditional policy and go to the Investment link policy which is low premium and high coverage. I mean the yearly premium rm3500 I paid can get better package with more ceoverage. What your opinion?
Hi Cheang,
Of course this is applicable. But you must understand that ILP is good as a start. But it might not be the policy you will keep until old age.
Have you terminate it?
Send me your current policy info and I will analyse for you for RM50 only.
Spend RM50 may save you RM5,000
Why did BNM allow ILPs which allocate more than 50% of the premium to pay commission and general expenses of the insurance company? Isn’t this too expensive for the policy holder while the returns may not commensurate with such a high maintenance & management fee? In addition, ss the above amount refunded when the insurer decided to void a policy and give no protection to the policy holder? if not, why? Thanks.
Hi Amanda,
The allocation is mainly to compensate agents as an incentive to sell the policies and serve their customers. BNM has a guideline for the commission allocation. As long as insurance companies design plan within that guidelines, the plan will be approved.
Supreme Living care – Why i dont see the Sum Assured drop after age 80 ? I refered to the quotation given by the agent.
by taking into account all the cash value accumulated, the death benefit won’t drop.
Dear KC Lau,
I have been effect the Great Eastern Supreme Livingcare Series 2
policy in year 12/01/2004. After few years due to financial problem, i’m not make the premium start from mid year of 2007 till Sept 2009. In around Oct 2009, i try to pay back the premium.
My issue now is, up to todate, the APL Balance is RM3,176.24.
And, there was Cash Bonus Balance of RM561.51
My question is, isn’t good to apply the cash bonus to pay the APL? or just leave the Cash Bonus, but continue pay the monthly premium until the APL settled?
I think you should ask GE directly about your policy status.
If there is the cash bonus there, you should ask GE to pay the premium with it.
To settle the APL, you will have to pay more than the usual premium regularly.
Hi Mr Lau ,
i think i need some assistance from your advise , im thinking to buy only medical card .
my friend ING ask me to buy IMplus2 .
which medical card plan is the best among 16 other ins ( i read your earlier post somewhere )
please email to me ahping85@gmail.com
Hi Han Pin,
I think there is no such thing as best plan in the market. The is always pros and cons.
If not, one plan would be dominating the whole market.
Just compare a few plans from reliable companies.
Dear Mr Lau,
i can suggest you for Pruhealth medical plan. They is non-claim bonus, minimum RM50k annual limit with minimum lifetime limit RM500k. Can claim the dialysis treatment and cancer treatment using the medical card annual limit.
If you would like to know for more details, you can contact me at 012-2800626/012-4860626
Hi Lau,
Im 27 years 9 months currently, in dilemma to choose the best insurance plan for myself. Is ILP best for my age? Can u suggest me the best insurance plan with few requirements here; high reimbursement for death, accidents(100k-200k), total permanent disable(100k-200k w annual benefit), got cover high medical benefit/ expenses(20k per annum or any), got investment saving plan, and worth for life.FYI, previously 3 times(in 3 yrs) i did change my insurance plan due to benefit was not so good. all already suspended.now im looking for new life insurance.
TQ.
All insurance products work in such a way the “charges” are loaded in first few years. If you keep lapse the policies, it becomes very costly “mistake” (so to speak)
Yes, ILP is best for anyone below 40 and need high protection. If you load too many benefits into an ILP policy, beware of the increasing charges when you grow old.
Manage it actively. Review with spouse (if any) and/or financial advisor (a good one).
Hi KC, Thanks for the article.
With regards to ILP, shouldn’t one be concerned about the price of the units?
The price fluctuates according to the underlying equities as can be seen over the last 12 months whereas insurance charges increase as one gets older as illustrated in the charts above – what happens when there’s mismatch? i.e. when price is low when charges are high. Your thoughts?
Thanks.
Your concern is valid. That’s why ILP is not so suitable for elder people.
You still need to monitor the charges vs investment value.
For older age people, better to switch fund to bond or money market fund to avoid the fluctuation of investment affects the insurance coverage.
If the protection element is no longer that important, reduce the coverage.
I have a RM500,000 life insurance using ILP as the charges is much lower. Check my blog for details. I have even use present value to compute it.
When I am older, my asset grows and need for protection lowered, then I will revise the sum assured gradually to as min as possible.
Lastly, I can harvest the account at right time and transfer the fund elsewhere to avoid high insurance charges. (provided I am totally no need insurance / still have another traditional life)
Financial planning is something we need to actively engaged with.
KC:
It’s good you differentiate between Trad vs ILP.
Hence, i am in a same dilemma now, to choose between Trad or ILP for my 36CI+MC
Age : 31 yrs 11 months
Sex : Male non smoker (C2)
Below is quotes:
A : ILP
Sum Assured : 200K for 36CI, R&B 150 annual limit 65k lifetime 625k
Premium : RM270
Projected Return only after 20 yrs : 52K
B: Whole-Life non par
Sum Assured : 200K for 36CI, R&B 200 annual limit 115k lifetime no limit
Premium : RM453
Guarantee Return after 20 yrs : RM63K
According to your statement, you take both, can you illustrate how are you spread across the t plan.
Thx
Hi KL,
It depends on your budget.
If you have RM400/month for paying premium – you can spread 50-50
KC:
It’s good you differentiate between Trad vs ILP.
Hence, i am in a same dilemma now, to choose between Trad or ILP for my 36CI+MC
Below is
Age : 31 yrs 11 months
Sex : Male non smoker (C2)
Sum Assured : 200K for 36CI, R&B 150 annual limit 65k lifetime 625k
@KL
For health card, it is better to attach it on ILP to avoid the trouble of policy lapse.
This may happen to standalone credit card when you forgot to pay premium
Can you give illustration for a buyer at age 35yr, life & 36CI protection rm70k, to cover difference between traditional vs investment link plan ?
1) initial premium
2) premium at age 40, 45, 50, 55, 60, 65.
3) protection at age 40, 45, 50, 55, 60, 65 for traditional plan (guess investment plan is fix)
thx.
I bought sum assured RM50k of Supreme Livin‘ Care series 2 in 2004 (I was 30yr old). It stated in policy – last premium due in 2060. Few questions to make me clearly:-
1. Do I need to pay the premium for my whole life ?
2. No lump sum paid for Supreme Livin’ Care series 2 for 36CI ?
3. My supplementary benefits:-
a. ACB (expiry yr 2034) rm20K
b. LAR-TPD (expiry 2029) rm30K
Am I not getting any protection of above two after expiry date ?
4. How much money (roughly) I can get back at the age of 45, 50, 55 ?
5. What is protection sum assured in the year of 40, 45, 50, 55, 60 yrs ?
thx.
@ Dennis,
1. Yes .. you need to pay premium for whole life as stated in the policy. However, you have the option to use the accumulated bonus to pay the premium.
2. When 36CI strike, you will be paid a lump sum of the sum assured plus bonus accumulated.
3. After expiry of the riders, the coverage provided by the riders is no longer valid.
4. Refer your quotation
5. Refer your quotation.
Thanks!
Hi KCLAu,
So if i get redeemed my investment-link insurance policy , how much money can i get back?
@Noob
You will get back the total investment value of your policy.
Hi, since ILP need to pay policy charges for first 6 years, if you have no such need, don’t simply redeem (surrender) the policy. Always a alternative to be explored.
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