|
Last week we looked at the benefits of buying life insurance to find good life insurance policies. Basically, there are two. The first is to insure the most precious asset we have - our lives - which would assure our families of a contingent sum for our wives, children and for the latter's education against the eventually of fatal incidents or our demise.
The second benefit is that our premiums are actually savings which add to the national savings. We currently have a rate of 34.8 per cent of the Gross National Product. High national savings is vital for the continued growth of the economy as investors would not need to not seek funds abroad nor would the country have to depend on foreign funds.
We also examined the criteria that determine the premiums we have to pay on various types of life insurance policies. Unlike motor and general insurance, life cover is not based on a code of tariff. Agents, however, have a set of underwriting guidelines which are worked out on actuarial principles. These actuarial principles are basically four: one, your age at the time you buy a policy; two, the state of your health; three, the medical history of your family; and, four, your occupation.
Besides these underwriting guidelines, insurance companies also provide their agents with a table of premiums. This table lists the premiums payable for every RM1,000 insured. It is calculated by two factors. The first is the mortality rate, which is how many people die at what age, in the country. The second is the expense incurred by the insurer.
This includes management costs, commissions paid to agents and interest costs. Interest costs are the returns netted by the insurance company through investing your premiums. They actually are the bonus or dividends the insurer declares on your life insurance policy.
The table of premiums varies according to the type of policy you buy. Which brings us to the question the various policies insurers currently offer and might offer in the future?
But first let us look at the entire picture of life insurance policies in the country. Eighteen companies are in the business; seven offering life covers only and 11 are composite insurers that are providing both general and life insurance.
According to official sources, 4.4 million policies are estimated to have been issued in 2004. Readers must note that this does not necessarily mean 4.4 million people have life insurance policies. Why not? As insurers explain many people, you and I might not be included among them, have multiple policies. One, perhaps which names the wife as the beneficiary; another for the children; or several specific policies for each individual child.
Which should explain why only 22 per cent of the populations have life insurance policies? Given our population of almost 20 million, this does not immediately translate to 4.4 million people with life insurance cover.
|