URGENT!

Is there a compulsory insurance for hire purchase loan (called Auto life insurance?)

After I successfully applied for a loan with Affin Bank, the officer told me I need to pay an equivalent of 0.132% of compulsory insurance for my loan in case I am not able to pay the installment due to death / serious permanent injury.

Also, the money will NOT be return to me even if I can pay all the installments.

I have bought 4 (perodua) cars before and never once were forced to buy a compulsory insurance for car loan

Please help!!!! Thank you

Just to share my own experience, I was put in the same situation by Bank Islam before signing HP loan with them. They requested for me to pay 2k++ for the auto life insurance and they made it compulsory. However, I refused to do so and they changed their stand by asking me to put in more dp instead of auto life insurance if I want to sign with them.

I said no, thanks.

In the end I signed HP loan with Ambank and I do have to sign for an insurance, but it wasn't auto life. And I only have to do that open my account with them due to the HP loan and it just cost me 200++. this one only last for a year and I can choose not to renew the following year.

So, it's up to you. and this compulsory auto life insurance is bull**** IMO.

Totally agree. I can understand if the loan period is long like mortgage loan with MRTA and anything can happen so insurance could be a good option but 5 years loan who the hell wanna pay an insurance that cannot be claimed back when we pay all the installment?

Even MRTA is optional.

Think depends on bank.
I got the loan from Hong Leong...they not even know what is Auto Life Insurance when i asked!

You walk in or go through the sales advisor to apply?

If like that I might go HL

Got the loan from HL sales, after signed off the agreement and checked how if i want to buy the insurance?
The sales said can just walk-in bank to quote anytime, very easy.....later on i walk in bank and ask, the bank staffs look at me in blurr ...finally the manager call to area HQ to check check and finally a quote send from no where and ask me come back another time to get it. Anyhow i end up no buying

WOW so much hassle? I might get angry and shout at the manager lol

double post

This post has been edited by ru40342: Sep 4 2020, 03:53 PM

maybe they deemed you to be a risky loaner. Thus they ask for this. I suggest you look for alternative and see what other banks offer.

The car is registered under my sister who is a 18 year govt servant (teacher) with no outstanding loan and never late payment before. I don't think she is a risky loaner.

Also should I walk in to banks and ask or should i go through the sales advisor?


This post has been edited by ru40342: Sep 4 2020, 04:15 PM

Can try insist that you don't want it.

Btw of course if you pay for insurance you wont get your money back. Its not collateral money.

You can outright reject the additional insurance imposed by the banks. They are trying to push unwary hirers into purchasing these kind of insurance after approving your loan. It is against the law to try to force consumers to purchase such insurance. You could tell them you will complain to Bank Negara regarding their such practices and you will see how fast they will say they would waive it for you.

Did tell them afterwards and they told me will file a waiver pending approval.

Told them I don't want it and they told me they will get a waiver pending approval from management, whatever that means.

I think this is a terrible practice by these banks to further profit on us on top of the already high effective interest rate even though opr is only at 1.75. thanks for the reply

Its a pretty common practise for cross selling these days by financial institutions. Some even force us dealers to take their insurance for our customers once loan is approved. But dont worry, the waiver will usually get approved, if not walk away and approach other banks.

Thanks for the info. That's terrible. Will definitely walk away if it is not approve. I can understand if it is optional but if it is compulsory and costs around 0.1% to 0.5% of the loan, that crosses the line imo