Takaful options in Malaysia’s growing insurance market

Takaful is seeing a rise in popularity as awareness of its benefits and competitive rates grows


AS MALAYSIA moves towards becoming a high-income nation, so grows awareness of the need for insurance — be it for life or general purposes.

In Malaysia, consumers can choose between conventional and shariah-compliant takaful insurance.

Insurers have also become increasingly creative in line with advancements in technology, going so far as to offer stand-alone online insurance.

Gone are the days when one had to rely solely on insurance agents for coverage. Takaful is also seeing a rise in popularity as awareness of its benefits and competitive rates grows.

If you are seeking to travel or buy some health insurance, know that there are takaful policies as options. Here is a sample of takaful plans to consider.

Attractive Takaful Options

Meanwhile, takaful travel plans are popular with those travelling to Mecca to perform religious duties

For health insurance, Syarikat Takaful Malaysia Keluarga Bhd offers myClick MediCare, a fully underwritten online medical plan that covers medicalrelated bills and allows online enrolment 24 hours a day, seven days a week.

The plan has three options, all of which include full coverage for inpatient and outpatient benefits, no co-payment when staying at the chosen room and board level and no lifetime limit up to the age of 85 years.

The plan offers worldwide coverage and income tax relief of up to RM3,000 per year, plus full coverage with no deductible if one stays at a government hospital within the country.

It also includes cashless hospital admissions with the “myClick MediCare” card, and the chance to earn Excite Points via the 8excite app every time a payment is made.

Advancements in air travel have made flying more accessible, making travelling abroad a reality for many. Yet, as flying becomes more commonplace, so do problems such as missed or delayed flights and lost baggage.

To that end, there are various takaful travel plans in the market that could come in useful.

Takaful travel plans are popular with those travelling to Mecca to perform religious duties. Some takaful travel policies also include financial protection against terrorism cases.

One can also opt for benefits such as badal haj, which allows a proxy to perform the haj on behalf of the takaful participant in the event of death or disability, and waqaf whereby a sum is deducted from the payout to fulfil a participant’s charitable obligations even after death or permanent disability.

Among the takaful travel plans available are the Hong Leong MSIG Takaful Bhd’s Takaful Plan 2, which offers coverage of RM300,000 for medical expenses and personal accidents, as well as RM750,000 for emergency repatriation and evacuation.

The plan also provides emergency assistance 24 hours a day and coverage for loss of baggage, belongings, passports and personal documents, as well as delayed, interrupted and cancelled flights.

There is also the Hong Leong MSIG’s Takaful Plan 1, which has similar benefits as Plan 2, but requires less contribution, and in turn, has lower coverage of RM200,000 for medical expenses and personal accident benefit.

For international travels, one can opt for the Takaful Ikhlas Kembara Plus, which covers medical expenses, personal accident payouts, hospital allowances and follow-up treatment back at home, plus a benefit of RM1,000 for treatments which involve alternative medicines.

In the case of death, the plan also offers a RM5,000 funeral expense benefit to cover related funeral costs.

Malaysians looking for takaful coverage through the online platform can also check out FWD Takaful Bhd, a new operator backed by Hong Kong tycoon Richard Li.

Among the more interesting plans offered on its website are the e-Term Takaful Cover, which has a sum covered of RM100,000, does not require medical check-ups and offers special rates for non-smokers.

FWD Takaful is set to launch its new online channel with “FWD Protect Direct”, Malaysia’s first online takaful protection plan later this week.

The online channel allows customers to instantly get quotes via an innovative underwriting system, purchase takaful protection and receive immediate coverage. “FWD Protect Direct“ covers up to four family members under one certificate.

Industry Continues to Grow

In March this year, Li’s Pacific Century Group, via its insurance unit FWD Group, bought a 49% stake in HSBC Amanah Takaful (M) Bhd from HSBC Insurance (Asia Pacific) Holdings Ltd and rebranded the company as FWD Takaful.

At its brand launch in July, the takaful operator said it had 120 agents and is expecting to have 600 registered agents by end-2019.

FWD Takaful has also said it will focus on digital innovation and omnichannel distribution to change public perception and boost awareness on takaful products.

In Malaysia, the takaful industry is regulated under the Islamic Financial Services Act 2013.

According to Bank Negara Malaysia, there are currently 15 licenced insurance companies and takaful operators in the country.

The two largest players are Etiqa, the insurance and takaful arm of Malayan Banking Bhd, and Takaful Malaysia, a subsidiary of BIMB Holdings Bhd.

Also present in the domestic takaful business are foreign players such as Great Eastern Takaful Bhd and Zurich General Takaful Malaysia Bhd.

Takaful insurance differs from conventional insurance in that it works as a cooperative policy under which participants contribute donations to a pooled fund that can be used to protect other participants from risks.

Buyers of conventional insurance policies pay a premium for coverage and the insurance companies bear the risk.

Takaful operators invest the pooled funds in shariah-compliant instruments that do not contain elements of gambling, uncertainty or lending money at unreasonably high interest rates, while conventional insurance firms are able to invest in legal instruments of their choice such as equities and bonds.

Although takaful is an Islamic insurance based on mutual cooperation, it is available to all including non-Muslims, just like conventional insurance.

If there is any surplus due to low claim rates by takaful users, the money will be distributed among the participants and operators of a takaful fund, while the profits from investment will be shared among participants and shareholders. Notably, the total payment received by takaful operators from the surplus must not exceed the amount paid to takaful participants.

For conventional insurance, the dividends and profits are distributed to the companies’ shareholders.