Insurance premiums on already purchased investment-linked products (ILPs) will remain unchanged following the implementation of new guidelines for ILPs by Bank Negara Malaysia on 1 July, says the Life Insurance Association of Malaysia (LIAM).
LIAM's chief executive Mr Mark O'Dell told Bernama News Agency that the premiums for ILPs bought before the guidelines come into effect should sustain the policy for the full contract term. He was quashing misleading information by insurance agents who claimed that the premiums would be going up following the implementation of the new guidelines.
Bank Negara issued the Policy Document on Investment-linked Business in January this year, with the primary objective of protecting the interests of consumers. The document introduced several key initiatives, including the minimum standard of sustainability tests and minimum allocation rate to protect the account values of ILP policy/certificate owners.
Mr O'Dell said that it is important to differentiate between policies bought before 1 July and new policies purchased after the date, as insurance companies would quote premiums for the entire contract term as required by the central bank.
ILPs were introduced in Malaysia in 1999, and lead in the life insurance market in terms of market share. They accounted for 45.1% and 52.9% of new business premiums and in-force premiums respectively in 2018.