9 Things You MUST Know Before You Buy Insurance in Malaysia

Everyone wants insurance. But barely anyone wants to be ‘sold’ one. This fact has exasperated insurance agents like crazy since the beginning of time.

I’ve been researching how to buy insurance in Malaysia for a while now. It started when I was in my early 20s, a good decade ago. And it’s time to compile everything I know *so far* in an article, for my own reference and yours.

Some notes before we start:

  • Insurance =/= takaful, but they serve more or less the same purpose – protection. I’ll just use the term insurance for the rest of this article, lazy la to type insurance/takaful
  • Yes non-Muslims can absolutely get takaful, and Muslims can get conventional insurance. No one will stop you (except the Gates of Heaven oop-)
  • There are many types of insurance, but in this article we’re specifically talking about the ones for humans, not property, car, travel or pets
  • I’m not an agent and my knowledge on insurance is limited, beyond what was shared to me from people in the financial industry. If anything below is wrong/inaccurate, please comment and I’ll edit

Let’s go-

#1 – Where to buy insurance in Malaysia

You can buy insurance from:

  • Insurance agents – there’s like 60,000 of them in Malaysia; probably your first point of contact; they represent and sell products from ONE insurance company (representing two is uncommon, but I’ve come across them)
  • Financial planners – around 1000 of them in Malaysia; they’re able to suggest and sell insurance products from ANY company (although they might have a preference, motivated by lived experience or other factors)
  • Direct distribution channels aka Online – They are offered on insurance companies’ websites, financial comparison websites, and for some reason, on selected e-wallets and telco platforms. This option is the most convenient but coverage tends to be low. EDIT – You can get Perlindungan Tenang from Life Insurance Association of Malaysia and Malaysia Takaful Association websites (thanks Nurul for your comment!)
  • Government (-linked) bodiesMySalam (free; for B40), SOCSO Self-Employment Social Security Scheme (for self-employed), MDEC’s eBerkat micro-insurance options (for B40 and micro SMEs), SSPN-i (for your kids – this is an education fund with optional insurance add-on)

Do you *need* to buy insurance, when you can get cheap healthcare from government hospitals?

Well, if you are M40 and above, I’ll say its downright a moral obligation for you to take private insurance; there are solutions to fit your budget. Depending on government-subsidised healthcare means less allocation is available to those who are *actually* poor.

Please don’t burden the poor.

#2 – Which insurance provider to pick

The branding of most insurance companies is more or less the same: ‘we care for you’. I have no particular preference for any of them, but if you do, then go for it. You’ll be paying the insurance company (and/or the agent) for a long time so you might as well do it without resentment.

The most important thing is to ensure that the company you pick is a PIDM insurer member. Imagine diligently paying the premium every month for years then one day the insurance company go bankrupt and poof no payout for you. Yeah avoid that situation altogether.

#3 – How Investment-Linked Insurance is structured

By default, when you look for insurance, most agents will assume you want ILP, or investment-linked insurance. More on this in #8.

If you don’t know how ILPs work, I highly suggest you read this article before continuing: Investment-Linked Products, As Explained By the CEO of Life Insurance Association of Malaysia

#4 – Picking what insurance you need

Simplistically speaking,

  • Get Life insurance if you have people who financially depend on you, especially sole breadwinners (and, according to Mr Money TV, get this if you’re Chinese cos your funeral expenses very high compared to other races; don’t let your family get into debt just to pay this)
  • Get Personal Accident and Critical Illness insurance because anything can happen and the lump-sum payment helps (living with a disability is expensive and you think you can easily work while in pain meh)
  • Get Medical insurance (ie medical card) if the thought of paying high hospital bills scare the crap out of you
  • The rest – hospitalisation benefit, income replacement, waiver benefit etc etc – are all nice to have, but prioritise the above first

You can get Life + PA + CI pretty affordably, but Medical insurance tends to be the budget killer. It’s okay to not get them all at one – buy what is the most important for you first then add on as you go along in life. For good measure, pray a lot for good health, exercise and eat healthy.

(Medical insurance alternative – This isn’t insurance, technically speaking, but Life Engineering is a ‘crowd-share your medical fees’ platform. Not endorsing in any way but it’s an option.)

#5 – Checking what each insurance plan exclude sucks

Check if they cover this. Check if they give you that. If not you have to pay extra later!

This is seriously one of the most annoying things when you buy insurance in Malaysia. Something that is supposed to help me shouldn’t have been this… aggravating.

Therefore, you need consultation, ie talk to insurance agents or financial planners just to make sense of it all. They are supposed to help you find the best insurance plan possible within your budget.

Of course, they don’t do this for free. They earn commissions on sales, around 25% on the premium you paid (there are tiers; won’t get into details).

I used to be dengki of this, but watching the reality TV show Selling Sunset on Netflix forever changed my impression of real estate agents and salespeople in general. Can see la the hustle, not so easy. As long as they don’t guilt-trip or mislead you, its honest money. 

(Even agents hate fellow agents who give the industry a bad name. The ones who are too pushy with sales, the ones who say things like, TAK AMIK INSURANCE NI, TAK SAYANG KELUARGA KE?, the ones who use grisly accident pictures to sell their services, the ones who focus way too much on the investment part rather than the protection part)

#6 – Good insurance coverage with minimal exclusions costs higher than you think

Ah, the number of times I clicked on insurance ads using the text ‘From RMxx only per month’ and end up being disappointed.. 🙂 It’s like going to that sales rack in Cotton On that says ‘From RM20’ but everything worth getting is RM75 and above.

In my early 20s, I met up with an agent and asked for a quotation for the best possible insurance I can get. The most comprehensive, without excluding anything I didn’t want to exclude.

I remember the brochure said ‘From RM99’ or something like that. My quotation? RM500 per month.

Overinsured? Maybe, but I really really really wanted to avoid the ‘oh sorry miss actually your insurance don’t cover xyz’ situation at the friggin’ hospital. If I had money, I would have gotten it and ‘locked in’ that rate – they say that insurance is cheapest when you’re young.

But let’s face it, there’s no way I could afford to pay that on my salary then. I also didn’t want to ‘just get it’ and then let my insurance lapse due to non-payment.

I *could* get mediocre insurance within my budget (and this is completely fine – can always upgrade later when have more money), but in the end I picked the other alternative: I looked for term insurance.

#7 – ‘Buy term, invest the rest’

I didn’t know this when I started learning about insurance, but ‘buy term, invest the rest’ is a strategy in itself. Term insurance costs a fraction of investment-linked insurance, BUT the money is ‘burned’; unlike investment-linked insurance, you won’t get it back.

Why would one want to do that, you ask? Because you can grow the money meant for ILP yourself through business and/or investments.

However, no one said you can’t get both ILP and term insurance. This strategy suggested by MyPF makes a lot of sense.

#8 – The insurance industry don’t expect you to be financially savvy

Why is investment-linked insurance the default? Because they don’t think you’re good at financial management.

I don’t blame them for assuming this. Data backs it up – Malaysians do have low levels of financial literacy. People fall for investment scams all the time. The Chairman of Securities Commission Malaysia said;

 In our survey earlier this year, it shows that a majority of investors in Malaysia have an unrealistic expectation of 24% to 30% returns per annum on their investments. Please remember, if the investment proposal is too good to be true, then it probably is.

This is why you’ll face some questions or resistance from insurance agents if you specifically request for term insurance options – they’ll want to know why you want to keep investment separate from insurance. Depending on your answer, you are either really brilliant with your finances, OR an overconfident idiot.  No in-between.

This is why self-awareness is important 🙂 I *hope* I’m the former, but it is absolutely possible that I’m the latter too.

#9 – Who to buy insurance from

If you have a good friend or trusted family member who happens to be an insurance agent, it’s not a bad idea to get from them – you get to support them and they (hopefully) have your best interest at heart.

You can also ask your friends and family for insurance agent referrals. If they had a good experience, you’re likely going to have a good experience too. Make sure to compare plans from a few agents. This process will likely take a while, it’s not the most efficient.

It is also possible to find insurance agents who are also content creators on social media and/or blogs. Reach out to them and ask for quotations (or simply ask out loud in social media, in my experience someone will DM you), then compare the plans and service you got. This process will also take a while, it’s not the most efficient.

The most efficient way IMO is to hire a financial planner to suggest suitable insurance plans, and review your overall finances at the same time. See Get REAL Financial Advice: 3 Ways to Find Financial Planners in Malaysia article.

(If you have multiple insurance plans, it is also not a bad idea to hire a financial planner to review everything, see if you’re over or under-insured.)

If you don’t have much money, then look for the government-assisted options. Scroll all the way up to #1.

What other practical tips on buying insurance in Malaysia that you know?

Do you have insurance? How did you get yours, and how would you do it differently if you were to do it all over again?

I especially want to hear from insurance agents and financial planners – what would you suggest we do before we reach out to you? What tips do you have for us, so that our interaction is pleasant and mutually beneficial?

Let me know in the comments section!

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13 comments

  1. As an agent myself, I understand when people say they want to survey first, but there are two things I think that are important for people to take account for.

    1. Do not only compare price, compare benefits also.

    2. When you buy insurance/takaful from an agent, they get commission. It is much better to find an agent that you trust can help you in finance or business. Preferably the ones that always sharing useful knowledge at media social.

    1. Thanks for your 2 cents, Azam. You’re right about the trust part. Really admire agents who take the time to build it, it must be hard but ultimately worthwhile

      1. Good sharing. As an insurance agent, i can assure you that what you wrote is almost the same thing i would share to my client. I just like to add a few things if you don t mind.

        1. You can only buy insurance with your health, not just your money. If you have medical history, most of the time, either that person will have to go for a medical check up and there will be a loading on the premium or worst, the proposal will be rejected.

        2. underinsured or overinsured, just make sure the premium you pay for insurance is not more than 10% of your income. Based on my experienced, most people who pay more than 10% of their income, can only afford to pay their premium for only 6 months, and just let their policy lapsed afterwards.

  2. Hi Suraya,

    Thank you for the informative article! Always loved you posts.

    Slight innacuracy in #1 – mySalam is free, and not something you *buy* from any governmental body. And you rightly pointed out that it is for the B40 segment *only*.

    An alternative for consumers (regardless B40/M40/T20) to buy would be Perlindungan Tenang products. Its a suite of products that are simple and easy to buy/claim, affordable (less than RM20) and of good value. These products are offered by multiple providers – list of products available on the industry association’s websites.

    Life products on LIAM’s website: http://www.liam.org.my/customer_zone/?c=18&ct=2 and the “Gates of Heaven”-approved products on MTA’s website: https://www.malaysiantakaful.com.my/family-takaful/perlindungan-tenang

  3. Thanks for sharing this Suraya. With 11 years doing life insurance, I still get this impressions by many Msians that a medical card is the be-all for an insurance plan. They only think that getting a medical card blankets everything about personal insurance. Can’t blame them coz they are not trained on the different types of insurance for different timelines of our lives. I just want them to understand that having substantial critical illness coverage is as important because it converts to cash to help us in our daily living. Medical cards is only to pay for hospital bills and not shop in Tesco.

  4. As an agent, please please get it early, I have gone through a few of people whom I meet procrastinate or delay their insurance purchase, and when they are ready it’s too late bcoz already diagnosed with something and often akan dimaki and get scolding, please everyone get it early (healthy) if can

  5. I agree with your statement in #8 that they don’t think you’re good at financial management when they sell you investment linked product (ILP).

    As someone who has worked in the insurance industry before (not as an agent), I don’t understand why they keep pushing for investment-link products when the real purpose of insurance is for protection.

    So if you have good financial literacy, please invest your money somewhere else because (1) the investment portion from the premium you pay for ILP is little (unless you do top up) and (2) the return rate is not that great considering the fees charged for the ILP itself. But if you like the all-in package, please go ahead 🙂

  6. I have insurance linked insurance which I think is a complete waste of money. I want to terminate it and just take regular insurance. But honestly, afraid of what to tell the insurance agent lol

    1. afraid because you know they’ll try to talk you out of it? lol

      idk what to say to this. but do look up cost/coverage – I do know that the earlier you get ILP, the cheaper it gets. maybe term would be more expensive for you by now? worth discussing

  7. Hi Suraya, good article here. Just my 2 cents on what you wrote.

    1. I’m all for supporting the poor and not misusing benefits allocated to them, but personally I much prefer our government healthcare. I’ve had bad experience with private healthcare all over Malaysia, not just in the Klang Valley. A lot seem to prioritise treatment which maximise profit and not patient wellbeing e.g. ICU admission for tonsillitis. And for serious cases or those which they bung up, patients will eventually end up in government healthcare too. Because of that, I’m not really in favor of medical insurance-I’d rather wait and get proper treatment in a government facility than rush to a private hospital. That’s just my opinion though.

    2. Regarding point #7, particularly in regards to critical illness coverage. I know term is cheaper, but most term CI out there only cover the basic 34-36 illnesses. The more comprehensive ones which cover early to late stages all seem to be ILI. So when getting CI, one will have to balance the premium paid versus the coverage they get. Personally, I’m the paranoid type so more CI coverage is better (although it might seem overinsured).

    Cheers, and keep up the good work!

    1. Hi CS, curious about your experience being warded into ICU for tonsillitis. Did you have any say at all at the time? Couldn’t you refuse?

      Asking from a doctor’s POV (government service, not private).

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