Malaysia Insurance Law - Life Insurance

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INSURANCE LAW - Life Insurance

Related Topics : Auto Insurance . Business Insurance . Disability Insurance . Health Insurance . Insurer's Bad Faith . Life Insurance Law . Property Insurance

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WHICH POLICY SHOULD I BUY IN CHOOSING LIFE INSURANCE ?

Buying life insurance, like any other financial purchases, is an individual decision based on your particular needs. For example, term insurance may be suitable if you are young and want to make sure a spouse and young children would be taken care of if you were to die unexpectedly. For the older, more established family, the fixed premium and the build-up of cash value in whole life policies might be more attractive. If you purchase whole life insurance, ensure that the policy is maintained over a long period. It can be quite expensive if you allow it to lapse in the early years.

WHAT ARE THE BASIC TYPES OF LIFE INSURANCE AVAILABLE ?

The description that follows highlights the characteristics of the three basic types of life insurance, namely; term, whole life and endowment. It should help to clarify certain aspects of the policies.

POLICY TYPE

Term Insurance:
The term insurance policy provides for payment of the sum assured only if the life assured should die during the term of the policy. If the life assured survives the term, the policy will expire.

Features:

Low initial premium
Protection for a specific period of time
May be renewable and/or convertible
Premium increases with each new term
A minimum cash value is available for term policies beyond duration of 20 years

Whole Life Insurance:
The whole life insurance policy provides for the payment of the sum assured on the death of the life assured. Premiums are normally paid throughout life. However, there are policies which have a limited premium payment period.

Features:

Protection for life
Fixed premium
Growing cash value
Higher initial premium than term
Should be purchased with the intention of keeping for life or for a long period of time.

Endowment Insurance:
The sum assured is payable if death occurs during the term (duration) of the policy or upon the survival of the policyholder at the end of the term.

Features:

Insurance plus rapid cash accumulation.
Higher premium than term or whole life insurance.
You can arrange the policy to coincide with future events.

Most products sold by the Malaysian life insurance companies consist of either one of the above policies or a combination of the policies. The insurance company will be able to describe its policies on request.

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