Good Things Come In Threes

Good Things Come In Threes

great eastern takaful

The future of Takaful is upon us.

Industry experts predict the way forward will be led by Internet of Things (IoT), social media and connected devices that will lead improvements in operational efficiency and boost productivity to be able to customise products to meet complex and unique customer needs.

According to McKinsey & Company’s 2019 report on global insurance trends and forecasts, the global industry grew by more than 4% in 2017, the same level as its compound annual growth rate from 2010 to 2016.

Regionally, Asia Pacific expanded by 8% from 2016 to 2017, the highest growth rate, followed by the Americas and EMEA (Europe, Middle East and Africa) with 4% and 1%, respectively.

The report further said that health insurance continues to be the fastest growing segment, achieving 5% year-over-year growth in 2017 and making up about 23% of global insurance premiums.

With all these changes coming, one reality remains.

The need for protection remains relevant, especially as future generations focus on pursuing lifestyle choices beyond commonly known barriers.

Similar to the encouraging growth rate in the APAC region, the local Takaful industry (new business contributions) registered double-digit growth at 13.1%, from RM4.35 billion in 2017 to RM4.91 billion in 2018.

In its March 2019 report, the Malaysian Takaful Association anticipated that private consumption will be resilient notwithstanding the relatively low percentage of the Malaysian population having Takaful at 15.2% (against the Muslim population of 60%) – the outlook for the Takaful sector is expected to be moderate but positive.

Azlina Ideris

According to Azlina Ideris, Great Eastern Takaful Berhad Assistant Vice President of Product Development, Takaful providers are equally impacted by and cognizant of global trends shaping the delivery and consumption of protection products by ever changing and complex consumer preferences.

She adds that in Malaysia, efforts are being made to overcome issues of low penetration rate, and concerns over the lack of health and old age cover in underserved and lower paid segments of the Malaysian populace.

Read on for her guide to getting the most affordable protection for you and your family.

A family plan

Life’s good today, a secure job, food on the table, quality time spent with loved ones.

What happens when you’re not there as a cover for your family and their needs? Bills need to be paid, so does the mortgage, and car(s), the education fund has to be topped up as it is being used to pay college fees for the older children.

This is where a Family Takaful plan comes in. To offer protection for the family needs when you’re no longer around. In terms of apportionment with a medical card and Critical Illness cover, the highest apportionment must be for family protection, which is recommended at 10 times your annual income.

So the family does not need to remortgage the house, pawn the jewelry, borrow from friends/family, sell the pets to be able to afford their existing lifestyle.

There are different type of Family Takaful plans, from pure protection (with no savings element) to other types of protection plans with savings and investment elements. The most affordable plan would be the pure protection plan, with no savings along the way but rest assured, when the unfortunate happens, the coverage would be there to support your loved ones.

Medical plan

Let’s get the truths out first. We all know that our government hospitals have excellent medical experts and nursing care. However, because the public hospital system is over-crowded with so many people needing urgent medical attention, it may not be able to give us the comfort and urgency we seek, from both physical and emotional perspectives.

Firstly, there may be others in the system who need more urgent attention than us, and so there might be a long wait should there be a need for surgery.

Then there is the physical aspect we need that a government hospital may not be able to offer in terms of privacy and the desired level of comfort.

This is the height of having peace of mind, more so when you are sick and the body and mind are weak. And we all know how private medical bills are on the rise globally and Malaysia is no exception.

Medical trend rates 2018 survey data

 
2018 MEDICAL
TREND RATE EXPERIENCED1(%)
2018 ESTIMATED INFLATION RATE2 (%)
2019 PROJECTED MEDICAL TREND RATE1(%)
2019 FORECAST INFLATION RATE2 (%)
Global3
9.7
3.2
9.6
3.3
North America
Canada
8.5
2.6
8.5
2.2
Asia
10.4
2.5
10.3
2.6
China
9.7
2.2
10.2
2.4
Hong Kong
9.3
2.3
9.1
2.1
India
8.5
4.7
9.3
4.9
Indonesia
11.0
3.4
10.5
3.8
Malaysia
13.4
1.0
13.6
2.3
Philippines
13.0
4.9
13.7
4.0
Singapore
10.0
1.0
10.1
1.4
South Korea
6.0
1.5
5.0
1.8
Taiwan
11.5
1.5
9.1
1.3
Thailand
7.9
0.9
8.5
0.9
Vietnam
14.5
3.8
14.2
4.0
Pacific
6.0
1.8
5.1
2.0
Australia
4.0
2.2
3.3
2.3
New Zealand
8.0
1.4
7.0
1.7

1The medical trend rates reflect insurer survey results and may not be MMB’s view.
2Sources for inflation rates include:
-International Monetary Fund. World Economic Outlook Database, January 2019.
-Inflation rate information is strictly for general reference purpose
3Average of 51 participating countries with an acceptable number of responses.
Source: Mercer Marsh Benefits: 2019 Medical Trends Around the World.

Medical inflation is no laughing matter, years ago, a simple appendicitis surgery cost RM 6,000, now, that figure has more than doubled to RM13,000. This is the reason a medical card protection without a lifetime limits is crucial to really and truly support you when you need it the most.

Critical illness (CI)

Out with it! You’re wondering why is there a need for a CI plan when you already have a medical card right?

Let’s clear the forest from the trees. The medical card covers hospital room, board and medical costs, surgical, including pre-hospitalisation and post-hospitalisation follow up treatment.

A CI cover on the other hand gives you a lump sum payment to tide you over the longer term where you need time to recover and may need extended time away from work. You can use the funds to pay household bills during unpaid leave of absence from work. In that sense, this works as an income replacement plan. The general rule of thumb on sum covered for CI is 3 times annual salary because it will usually take 3 years to recuperate from a critical illness.

The other increasingly pertinent need for CI plan is to cover the cost of alternative medicine and therapy. When you need a break from getting back into the rat race after suffering from the scare and weakness of having a life-threatening illness, you would be most grateful you opted for this cover.

No need to ask family and friends for financial help.

Estimated treatment cost at private hospitals in Malaysia

Type of treatment
Estimated cost
2018
2028
Cancer
RM18,000-RM300,000
RM62,000-RM1.05mil
Stroke
RM35,000-RM75,000
RM122,000-RM261,000
Kidney
RM150,000
RM523,000
Heart bypass
RM80,000
RM279,000
Angioplasty
RM40,000
RM139,000

Source: http://howtofinancemoney.com/cost-medical-procedures-2018
Last Updated: 16 Aug 2019
Accumulated at 13.3% Medical inflation rate

If affordability is your main consideration, then look for a plan that offers coverage for the top 10 CI with the highest incidence rates namely cancer, coronary heart disease and stroke.

This write up is brought to you by Great Eastern Takaful. For more information on 3 affordable plans to cover your family and health needs, please visit https://www.greateasterntakaful.com/en/takaful-solutions/promotion-and-events/2019/harapan-trio.html

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