Malaysia's medical inflation is ~15% a year for the last few years.

TS, when GE planned on the increase, it was last year before Covid19 was even visible.

Optics doesn't look good but the staff just following what was planned earlier - GE has postponed the implementation of the increase for 2 months but that's hardly enough.

Ok enough background.

Depending on your age and also how long ago you bought this plan:-

If you reject the increment - it shouldn't affect your coverage for the near-term since the premium should be enough to cover your current insurance cost - the increase is to plan for future.

Mid- to longer- term, if the cost of insurance (the cost of individual riders in your ILP plan) could exceed the premium you are paying, then GE will cover the difference by utilizing the unit trust units/cash value. As some has said it will affect the sustainability of your policy or the projected cash value of the policy. This is the purpose of unit trust/cash value to cushion the effects of inflation/increase in rider cost, or allow you to get premium payment holiday during times of hardship (loss of job) and give you the buffer to either catch up later in premium payment while not terminating the policy.


Summary:-
TS, if you can afford it, sign up for the increase, there is also another option, you can choose the amount of increase that's more comfortable for you if the amount recommended if too burdensome.

If you don't agree to the increase, just ignore the letter. Premium remains the same, coverage remains the same. Only sustainability of the policy/cash value will be affected.

GE has released a new medical card that addresses the recent cost increases (meaning slightly cheaper and more sustainable) and have more modern features that matches some of the competitor's features but is only currenly available to new ILP plans, the existing ILP plans will need to wait until next year before the system is able to accept upgrade applications.

Cost of insurance for the medical rider will increase, but premium can remain the same, since premium is usually higher that the sum of all the cost of individual riders - the difference will be put into the unit trust account (that is why ILP seldom, if ever gives you +ve returns since the money that goes remains in UT portion after deducting the rider costs usually cannot cover or exceed the total premium paid.

This is beyond the projection of age increases - this is due to medical inflation above projection (macro-economic issues), higher claims due to better diagnosis and also higher incidence of dengue fever (my own theory) that uses medical card (you see hospital doubling bed by adding a new wing but number of doctors remains relatively the same, why? Dengue patients just stay there while waiting for their blood platelets to go up).

Also the fact that Malaysians being the most obese country in ASEAN, whatever average that the actuaries to base their projection on also throw out the window.

The above just some of the factors for the cost of insurance increase.

Rider cost will increase, premium increase is optional, but it will come to a point where premium increase is needed to sustain/continue the policy.