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KENANGA INVESTMENT BANK BERHAD
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Term Insurance provides coverage on premature death or Total and Permanent Disability (TPD) of the insured person.
A Term Insurance plan is a relatively inexpensive form of insurance cover and is useful for the following purposes:
It provides the most amount of coverage yet carries the least amount of payable premiums, compared to whole life and endowment insurances. Since there are no savings elements involved, the policy owner will only be compensated in the event of an unforeseen event and will not have an element of principal premium of funds returnable at the end of the term of the policy.
Whole Life Insurance
Whole life insurance covers the insured person for life and carries a level premium that is payable throughout the term of the plan.
If the insured person passes on, the sum assured is payable to the beneficiary. In some plans, the sum assured will be payable when the insured person reaches a pre-determined age such as 85, or 100 years.
The advantages are as follows:
The disadvantages are listed below:
There are two types of whole life insurance:
Medical Expenses Insurance
Medical expenses insurance plans are designed to pay for the treatment cost when the insured person is hospitalized or for surgical procedures. Benefits provided by medical expenses insurance plans include hospital room and board, Intensive Care Unit treatment, anaesthetist's fees, surgeon's fees, pre-hospitalization diagnostic tests, post-hospitalization treatments and more.
Some policies may be extended to cover the daily cash allowance for government hospitals, outpatient cancer treatment and organ transplants. Medical Expenses Insurance plans are sold as a standalone or a supplementary rider attached to a life insurance policy and is subject to an annual limit and life time limit stipulated in the policy contract.
Some plans are subjected to minimum deductible set as a fixed amount for each claim, a percentage of all eligible expenses or a combination of percentage and fixed amount. Some plans are subject to co-payments, for example sharing of expenses between the policy owner and insurer.
Critical Illness Insurance
Critical illnesses Insurance is also known as dread diseases insurance. It may be designed as a standalone policy or as a rider to a life insurance policy.
The policy pays a lump sum upon the insured person being diagnosed as having any of the 36 specified critical illnesses. Typical diseases include cancer, heart attack, stroke, kidney failure, multiple sclerosis, Alzheimer's disease, Parkinson's disease and motor neuron disease. Some plans in the market provide coverage from early to advanced stages of the critical illness. Some offer protection up to 3 critical illnesses that fall under different groupings of the critical illness group.
Hospitalisation Cash Benefit Insurance
Hospitalisation cash benefit insurance could be utilised as stand-alone policy or as a complement to life insurance or medical and health insurance policies.
The policy pays a pre-agreed amount for hospitalisation of an insured person due to any covered illness, sickness or injury; on a daily, weekly or monthly basis.
Endowment insurance provides for the payment of the sum assured and any accrued bonuses at the maturity of the policy, or for the pre-mature death of the insured person, whichever comes first.
Premiums are payable throughout the term of the policy unless the policy owner has insured themselves with a Limited Payment Endowment Plan.
Like whole life policies, endowment policies steadily build up cash value. However, the endowment policy is designed to mature earlier than a whole life policy as it accelerates in cash value thus creating rapid build-up. As a result, the premium payable is higher than that of a whole life policy.
Endowment policies are systematic savings complemented with life insurance protection during a chosen period. It can be used to satisfy certain financial goals such as:
The advantages of endowment life insurance are its ability to:
The disadvantages include the following:
Investment-linked life insurance is a plan that offers life insurance protection as well as investment opportunity to the policy owner. It is best suited for individuals who are looking for an investment opportunity that combines protection with the potential of equitable returns.
The benefits of the plan are directly linked to the performance of the investment-linked funds that are chosen by clients in accordance to their risk preferences. Depending on individual needs, the policy owner can choose to undertake a single premium investment-linked plan or a regular premium investment-linked plan.
The premium is used to purchase units in the investment-linked funds that policy owners have selected. The value of the policy is linked to the units in those funds and directly reflects the value of the underlying fund, which means that it fluctuates according the performance of the funds.
An investment-linked insurance plan offers the flexibility to switch between various investment funds, top-up option to increase the investment amount and full or partial withdrawals at any time. Regular premium investment-linked plans offer additional flexibility to increase or decrease the insurance coverage and to increase or decrease the regular premium savings.
Fees such as Insurance Charge and Administration Charge will be imposed on an investment-linked policy.