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Monday, 7 August 2017

(The Star) Demand for investment-linked business

KUALA LUMPUR: Zurich Insurance Malaysia Bhd (ZIMB) is positioning itself to command a stronger presence in the fast-growing investment-linked business amid strong demand for investment-linked plans (ILPs) domestically and in the region.

The move is also part of the insurer’s initiative to be among the Top 5 life insurance and takaful players in the country in the next three years.

ZIMB general manager of life insurance Mukesh Dhawan told StarBiz that the demand for ILPs has been on the uptrend and the industry has also grown significantly, overtaking the life traditional business.

He attributed this to the flexibility of the products in providing life insurance protection coverage, as well as the opportunity to rake in returns from investments in local and overseas funds.

Furthermore, he said traditional insurance products are losing their appeal over time, especially after the global financial crisis in 2008, noting that insurers are finding it difficult to provide guarantees for traditional products. “Investment-linked products are here to stay. This trend is not only happening in Malaysia but also in Asia as a whole,” Mukesh said.

He added that on the domestic front, sales of traditional insurance products have declined, while ILPs have enjoyed double-digit growth of late.

In terms of industry growth, ILPs overtook the life traditional business by charting a 28% growth in new business premiums compared with a decline of 12% by the latter year-on-year in the first quarter of 2017.

In terms of product mix, close to 70% of ZIMB’s products comprise of ILPs as opposed to between 60% and 65% for the industry.

Mukesh said one of the core strengths of ZIMB, which is part of the Zurich Insurance Group, is the ability to roll out products that meet market needs, of which Zurich FlexiLife Premier, its latest suite of ILPs, offers customers a diversified range of funds for investment.

“Zurich’s edge over other players is in the diversification of funds, which remains the golden rule for smart money management practice.

“For example, FlexiLife Premier provides the opportunity to customers to invest in 14 funds, local and offshore, with four foreign renowned fund mangers like BlackRock, the world’s largest asset manager, Schroders, Vanguard and Zurich. We are a key player in the ILP segment in the country.

“Another comparative advantage over the industry is the higher value for death benefits with a minimum coverage of RM500,000 up to RM2mil.

“Customers can purchase up to RM2mil without a medical check-up, depending on the age and health condition of the assured.

“Most people applying for life insurance or those that have existing life insurance policies shy away from buying death benefits, as they are reluctant to undergo medical tests,” he said.

FlexiLife Premier is suitable for this group. Ideally, in terms of death benefits cover, one should buy 12 to 15 times their annual income from the current trend of two or three times the annual income, Mukesh said.

ZIMB is expecting the new product to account for 10% of its new business premiums in the second half of the year.

It was launched on July 10 this year. The company’s earlier ILP – FlexiLife Plus – at the moment accounts for about 35% of ZIMB’s sales.

FlexiLife Premier provides high coverage starting from RM500,000 basic sum assured, up to the age of 100. The plan is available to anyone between 30 days old and 70 years old on the condition that the policy holder must be at least 16 years old.

The product also offers total and permanent disability (TPD) coverage of up to RM8mil per life. In the event that a customer suffers from TPD before the age of 70, he or she would receive the TPD payout, as well as a TPD income of 5% of the current sum assured annually for 10 policy years.