Buying life insurance for you and your loved ones helps provide some financial security in times of hardship. The money from your policy will be paid to your loved ones when you pass away or to you should you suffer a total and permanent disability throughout any course of your life.
Important Provisions To Remember
Understanding important provisions in your life insurance policy
Premium This is the money you pay to the life insurance company for coverage. Bonus This is the extra money paid with the final benefit for participating policies. However bonuses are not guaranteed and depend on the performance of the insurance fund. Policy Loan You may take up a policy loan on condition that your policy has a cash value. Interest will be charged on your policy loan. Reduced paid-up If your policy has acquired a cash value, you can choose to stop paying future premiums. The policy will continue to remain in force but the sum assured will be reduced. Suicide Nothing will be payable to a nominee if death was due to suicide within a period, usually one year, as stated in the policy. Free Look You may cancel your life insurance policy by returning it to your insurance company within 15 days after receiving the policy documents. The premium that you have paid will be refunded to you. Assignment You may transfer your life insurance policy to another person or organisation on condition a written notice is given to your life insurance company. Confidentiality of Information All your personal information including medical information is confidential and your life insurance company is strictly not allowed to divulge such information to third parties. Reinstatement A lapsed life insurance policy can be fully reinstated within a period of time and under certain conditions. Exclusions These are risks that are not covered under the policy Cash/Surrender value Your policy will acquire a cash value (or surrender value) when it has been in force for a minimum of three years. This value will be paid to you when you cancel your policy. However, you will lose this cash value if you surrender your policy before the maturity period. Grace Period If payment for your monthly premium is pass due, a grace period of 15 days will be given for you to settle your payment. For other frequency of payments such as semi-annually or annually, the grace period is 30 days. If payment is still not made within the grace period, your policy may lapse or be subject to reduced paid-up or automatic premium loans. Automatic premium loan Some life insurance companies will automatically advance to you the premium amount when you do not pay your premium within the grace period on condition that your policy has sufficient cash value. However, you will be charged interest on the outstanding amount of your premium loan. Incontestability The life insurance company cannot dispute the validity of a life policy after the policy has been in force for two years. If the insurance company refuses to pay, it must prove that the policy was obtained through fraud. Terms and conditions These specify your rights and responsibilities as well as that of the insurance company.
Buying Tips
Tips on buying life insurance
Be sure to buy from a company through an authorised agent
Buying life insurance is essentially buying future financial security for your family. Licensed insurance companies are listed in Bank Negara Malaysia’s website or should you need to find out more, contact the Life Insurance Association of Malaysia (LIAM).
Shop around for rates
Seek premium quotes and proposal from more than one insurance company and compare them. Be sure to compare among similar policies as not all insurance policies have similar benefits.
Understand the scope of cover, terms and conditions of the policy
Make sure you understand all provisions in the policy and if necessary. ask for explanations from the insurance company. Be careful if you are told that bonuses or dividend scales are guaranteed.
Avoid unwanted additional coverage
Do not be pressured into buying "packaged" products that may contain fixed coverages that you don’t need. However, you may opt to add additional coverage or rider of your choice at additional premium which is better value for money.
Make sure the life policy recommended is right for you
Carefully study your agent's recommendation and ask for a point-by-point explanation to make sure the policy suits you.
Always check the date the insurance becomes effective
The date the insurance goes into effect may be different from the date the company issues the policy. Be sure to ask your agent for the effective date of your insurance.
Fill in your application carefully
Never sign blank proposal or application forms. Ensure all information filled in your application is
complete and correct to avoid delays or even denial of claims.
Make sure premiums are paid to company
Make sure your cheque or money order is made payable to the insurance company and not to your agent and insist for a receipt immediately as proof of payment.
Read your policy when you receive it
Life policies have a "free-look" period of 15 days from the date you receive it. Therefore, use this opportunity to assess the policy to make sure this is the right policy for you.
Advising Your Nominee
Importance Of Making Nomination
The purpose of buying life insurance is to ensure that your loved ones are protected financially should anything happen to you. Therefore, making a nomination in your insurance policy will speed up the process of disbursing your funds to your loved ones.
When can I make a nomination?
If you are 18 years old or older, you can nominate an individual or individuals to receive the policy funds upon your demise. Your nomination can be made at the time you apply for your policy.
Who can I nominate?
You are free to nominate whoever you wish. However not all nominees will receive the funds beneficially or for their own use. For more information on who you can nominate, download our booklet.
How do I make a nomination?
1. Fill up a nomination form provided by your insurance company. Be sure to fill in the correct details of your nominee such as name, date of birth, identity card or birth certificate number and address.
2. Ensure that your form is signed by a witness who is 18 years and above who is not your nominee.
3. Have your insurance company endorse your nomination or the policy document for validation.
What happens if I don’t make a nomination?
If you do not make a nomination, your loved ones will have to obtain a Grant of Probate letter or Letter of Administration of Distribution Order to receive your policy fund. However there are certain circumstances under which an insurance company can make payment to a claimant without any of the above mentioned documents. To know more, download the booklet.
Source: http://www.insuranceinfo.com.my/choose_your_cover/things_to_note/life_insurance.php?intPrefLangID=1#content3
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