If you are planning to purchase an Investment-Linked Plan (ILP) insurance policy, then you should take note of the new regulations by Bank Negara that came into effect on 1 July 2019.
In January 2019, Bank Negara released a policy document that set several new requirements that investment-linked insurance providers must adhere to from 1 July 2019 onwards. Why? These requirements were designed with the primary objective of protecting the interests of policy holders.
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Continue to read here...
The salient requirements are as follows:
- Implementation of standards on *Minimum Allocation Rates (MAR) to protect the account values of IL policy/certificate owners;
- Minimum standards on sustainability tests and communication to policy/certificate owners to improve long term persistency of IL policies/certificates and consumer awareness; and
- Strengthened disclosure standards on product illustration to facilitate more informed decision-making by consumers.
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| Allocation changes for one of the ILP plans from an insurer. |
What does “Minimum Allocation Rate (MAR)” means?
It refers to the minimum proportion of premiums payable by policy owner/takaful contributions made by takaful participant that is allocated in the unit fund(s) of choice before the deduction of any charges.
What should investment-linked policy owners/takaful participants do?
For existing owners of investment-linked policies/certificates and consumers who have purchased an investment policy/certificate before 1 July 2019, you should:
- Understand the term of your contract and how long your coverage is expected to last, based on the current level of premium/contribution.
- Contact your insurer/takaful operator or agents (insurance/takaful/bancassurance) for further clarification, if necessary.
- Receive a letter from your insurer/takaful operator providing information on sustainability of coverage from 1 July 2019. Please discuss with your insurer, takaful operator or agent (insurance/takaful/bancassurance) on how the information on sustainability of coverage affects the terms and conditions of your contract, and meets your insurance/takaful protection needs.
- Continuously review your protection needs and financial situation, and be aware of any changes to the tenure your coverage is expected to last.
- Understand the options available to manage the investment-linked policies/certificate to meet your needs and discuss them with your insurers, takaful operators or agents (insurance/takaful/bancassurance) where necessary.
- Take appropriate action, if necessary.
Beginning 1 July 2019, for consumers who intend to buy a new investment-linked policy/certificate, you should:
- Understand that the premiums/contributions quoted at point of sale are expected to be sufficient to fund coverage until the end of the contractual term.
- Review carefully the terms and conditions to ensure that they meet your insurance/takaful protection needs.
- Continuously review your protection needs and financial situation and be aware of any changes to the tenure your coverage is expected to last.
- Understand the options available to manage the investment-linked policies/certificate to meet your needs and discuss them with your insurers, takaful operators or agents (insurance/takaful/bancassurance) where necessary.
- Take appropriate action, if necessary.
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