Insurance company's ILP's only invest in a unit-trust type of fund, nothing special about it.

ILP plan has increments of the cost of insurance, but because of the way the plan was designed, you already have paid upfront for the increment

If you are asking for policy/certificate efficiency, the only way to find out is to make comparisons, just like how you would do the same when buying your gadgets or singing your mortgages. The RM188 is your resource, however it is subdivided and assigned to the policy and its riders is up to you and the agent.

The problem is that the premium/contribution for ILP is cut by the company upfront, when the cost of insurance is the cheapest. whatever the difference between the COI and Premium could have been invested directly

Pretty much all insurance companies have this. The more famous plan would be an investment-linked-plan.

Can you elaborate on its coverage, etc.?

How long is the loan tenure left?

The MRTA is expiring in 2 years? That means you took a shorter MRTA than the loan tenure correct?

There are still medical riders and policies that end at the age of 70. Although not recommended to subscribe to one, it can be cheaper and thus allow the less-wealthy access to private medical cards.

When recommending coverage, it is important to know how long the liability will last. The nature of an MLTA is that it has a level coverage. Should this coverage be applied to a reducing balance loan? Professionally, i do not think so. Inefficiencies in coverage (over insured) will be an issue.

It is best practice to find out more about the liability and the applicant, especially the tenure of the loan.

Graph out the outstanding, and figure out an insurance policy that will cover the libility. MLTA is an easy choice, but it is a level coverage which means that you can be overinsured (and pay more than you need)

You may look into "personal MRTA". Most insurance companies, even Prudential have them. it is cost effective especially if you only want to cover the loan balance throughout the next 20 years.


This post has been edited by wild_card_my: Apr 19 2019, 11:27 PM

err, which company is this? Is this ILP?

If it is... well... look at the graph below. If you extend your coverage till age of 80 and 100, the premium has to be increased to cover the area under the premium-line and above the cost-of-insurance. if the premium is not increased, that area would be too small.



yw

Well there you have it. If you dont increase the premium, there wont be enough "investment" to cover the bigger needs to cover your cost of insurance. So the system will automatically increase the premium that you would have to start paying today.

If flat, you may pay into the policy ahead of time. Please refer to the illustration above. The cons that I can think of with flat is that:

1. you are paying your coverage ahead of time
2. is the insurance investment better than your own through unit trust?
3. sensitive topic: commission are calculated based on the premium, in the first 6 years, so if you combine (1) and (2), generally speaking you are paying a higher amount of commission, compared to taking a policy with a progressive/planned increment.

Case-to-case basis though, you have to compare these offers and read the fineprints.

I am not looking at the quotes and products per se but here is what you can also consider:

1. the progressive premium, does it start at a lower rate compared to the flat premium?
2. what is the expected total premium payable for both quotes?
3. what are the rate increment expectation/guarantees, are they even available?

In general, given the same company, Medical card with co-insurance has a lower Cost-of-Insurance (COI) than ones without co-insurance. The RM300 co-insurance is definitely a limitation to the card, but if you had chosen a full-coverage (no co-insurance) the same card would have been doubly as expensive (more or less, you got to see the quotes)

There are all sorts of limits, and some agents can highlight one and hiding the others.

If everything else is set the same, sure. For example:

1. same annual limit
2. same lifetime limit
3. same room and board

etc. If all else are the same, and P has co-insurance while GE does not, then sure, GE would seem to have a better proposition

But when I made my comment, I was just comparing co-insurance vs full-coverage of a single medical plan from the same company and with all the same coverage.

Put it this way, for a company, having a full-coverage can end up being expensive, and will pass the cost to the customers. The trick is managing the product property (changing the terms and conditions), managing the hospitalization, etc.

Because when there are no co-insurances, clients will more likely drop by the hospitals and enjoy their services for the slightest of illness. That is fine, nothing illegal with that.

But insurance works based on law of large numbers. When the numbers of contributors are not large enough to cover the claims, the rates have to be increased across the board

With co-insurance the insurance company gets to reduce the in-patient claims by limiting or reducing the claimants to only those who are seriously ill

Also note that there are people who abuse their insurances. If caught there will be repercussions, but if the abuse is prevalent and not controlled, the cost of claims will increase for the company and you can expect that the company will increase their rates for all their customers

It is important to buy insurance from companies that are known for their good management. Because if the management is not strong, they may not have a good claim controls, and when that happens the funds will deplete quickly.

One sign (and i am not pointing fingers) to bad management is that the company is run badly that it couldn't survive on its own - thus they get bought over.

This post has been edited by wild_card_my: Apr 20 2019, 11:33 AM

Hi,

You can't put it that way. Co-insurances have their merits, it allows people with limited funds to insure the most expensive portion of their illnesses. Insurance is not about cheap or expensive, it is about planning against the risk that you are facing; and there are many ways to plan against this risk, there are no right-and-wrong answer, but as someone who plans other people's finances, you have to be careful about the advice that you are giving.

Just because the company that you are representing (and I am not just referring to you) has full-coverage medical policies, doesn't mean you have to discount any other alternatives. For example, Prudential has both full and co-insurance coverage, but you won't catch me recommending one over the other. I will just show the quotes for both and let the customers decide.

Likely, but nothing is guaranteed. Co-insurance was introduced to control the costs. Is RM300 too much to pay if your medical bill is RM10k?

The P medical card is 5 years old? Is the GE one that you compared to newer?

When the premium was set during the quotation, the system has already taken into account of the "investment portion" required to maintain the policy, including the normal inflation costs going forward. This is presented in the schedule in the quotation, look for Cost-of-insurance (COI). However, this COI is NOT fixed, it can change and will likely change.

Following what I said above, some ILPs allow you to "add buffer", that is to pay more than what the system require you to. Doing this will increase the "slack". All the extras that goes to slack will go into the investment portion.

So this is what you are doing, you are trying to add "slack". In my professional opinion, slack is not important. You are better off putting this money in your own investment that you can monitor more easily.

Unless you are upgrading your policy with new or additional riders, there is no need to increase the investment amount in ILPs.

PRUBsn has medical card that last all the way to 100 years. With and without co-insurance

"best to go for GE/AIA" - AIA agent

Best thing to do is to ask for quotes from each respective agents here

Agreed. It is important to maximize the protection for the lowest cost possible. this is what we call insurance efficiency.

With a lot of bells and whistles as riders, it may deter a client from getting the most important coverage though - like life and medical.

Perhaps it is, but it is best to compare them all anyway.