RECENTLY, the Employee Provident Fund (EPF) has launched the i-Lindung protection platform to facilitate its members to purchase life insurance and takaful products.
Essentially, this initiative enables members of the retirement fund to mobilise their savings from Account 2 to purchase insurance and takaful products from providers and operators that have been approved by EPF.
As some background information, products in the i-Lindung platform are generally low premium or contributions products that allow EPF members to apply for life benefit and critical illness benefit.
i-Lindung is a self-service platform where members will be able to receive quotation on the premiums required in order to receive the protection level that they desire or need to have.
As a curious individual, I did a check on the platform and from my little observation, I was able to input the kind of protection need that I am looking for and my preferred sum cover which is up to RM200,000 at time of writing. Here is what I found:
‘Vanilla plan’
Firstly, the products that are made available in the i-Lindung platform are considered as ‘vanilla plan’ protection products. This means the sole purpose for having them is to give us a protection blanket in the event of our untimely death, total permanent disability or when diagnosis of covered critical illnesses is confirmed.
These are products that do not have an element of investment or savings as well as no complicated riders such as hospitalisation and surgical benefits, etc.
For people who currently do not have any protection plans shielding their dependent from dreaded events such as death and have found the protection products currently distributed by traditional product distribution channel unaffordable, this could be a good place to start.
After all, it is better to have a basic layer of safety net than none at all when death happens.
Risks in simplicity
Application for protections through i-Lindung products are also made to be easier. Essentially, members are only required to answer very few health-related questions during application stage. Depending on the product and plans that they are applying for, some have a set of five or three questions while others are guaranteed acceptance products.
As protection products are risk-based priced, it is important for members to understand the Principle of Utmost Good Faith which is one of the basics of a protection contract or certificate.
This principle means that both the applicant and the protection company need to disclose all material and relevant information to each other before commencement of the contract. This include but not limited to health and lifestyle information.
Should certain information be disclosed inaccurately or withheld from the knowledge of the companies providing the protection, it may cause the contract or certificate to be voided and your claims can rejected. Therefore, disclosure is critically important.
You should also note that most products listed have stated that the coverage term is for a 12-month period and that most product disclosure sheets mentioned that the product can be re-purchased within 30 days before expiry date provided no claims have been made prior (or any other terms and conditions that are applicable).
Bear in mind that providing a plan-B for our dependent may require more than a 12-month period.
In addition to protection period, one should also take note of the waiting period. Waiting period means the number of days one must wait until the plan covers certain conditions or in this case, critical illnesses.
Usually, if the plans have benefit related to critical illness, the waiting period will be applicable. This may range from 30 days to 60 days while that of some specified illnesses may have waiting period up to 120 days. During the waiting period, if certain covered events were to happen, the claim will not be paid.
Third party opinion
As i-Lindung is a self-service platform, this means that there is no agent servicing us. Hence, it is important for members to ensure that they always remember to make nomination.
Life insurance allows policyholders to make nomination. Depending on whether it is a trust-nomination, this will allow the claim payment to be paid to the beneficiary without unnecessary delay due to estate administration process.
For takaful certificate, hibah is allowed. Hibah is also known as voluntary gift without a consideration or expectation in return. Loved ones who are named as beneficiaries under conditional hibah will enable takaful operators to make the claim payment to them instead of to the estate of the deceased person.
If you are still sitting on the fence on whether you should purchase the plans available under this platform, then do so by considering buying protection products based on your needs which are unique for everyone.
It is good if you can receive independent advice from a qualified and licensed financial planner or an approved financial adviser representative.
A decision made without clarity or lack of information could actually cost a lot more in terms of peace of mind and monetary loss. It is imperative for me to point out that a good advice actually pays for itself. – July 24, 2022
A CFP professional and a certified member from the Financial Planning Association Malaysia (FPAM), Kevin Neoh is also the founder of Money Warriors Community.
The views expressed are solely of the author and do not necessarily reflect those of Focus Malaysia.
