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.

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.