Starting 1 July 2019, Bank Negara Malaysia will introduce mandatory testing and disclosure of sustainability of coverage for investment-linked products (sustainability test) by insurers and takaful operators.

The objectives of the mandatory testing and disclosure of the sustainability of coverage at point of sale and after purchase are:  

• To improve transparency on the active management of the sustainability of cover by insurers/takaful operators.
• To ensure that consumers are provided with sufficient and timely information to actively monitor and manage investment-linked policies/certificates.

Bank Negara Malaysia sets out requirement on investment-linked products to ensure insurers and takaful operators accord fair treatment to consumers in preserving the value of the customers’ investment-linked policies/certificates.  

To achieve this, Bank Negara Malaysia requires insurers and takaful operators to:

• Maintain strong governance in the management of investment-linked business.
• Ensure professional conduct in the sales and marketing of investment-linked policies/takaful certificates.
• Enhance product transparency and disclosure to enable policy owners/takaful participants to make informed decisions when purchasing.

What should investment-linked policy owners/takaful participants do?

For existing owners of investment-linked policies/certificates and consumers who have purchased an investment policy/certificate before 1 July 2019, you should:

• Understand the term of your contract and how long your coverage is expected to last, based on the current level of premium/contribution.
• Contact your insurer/takaful operator or agents (insurance/takaful/bancassurance) for further clarification, if necessary.
• Receive a letter from your insurer/takaful operator providing information on sustainability of coverage from 1 July 2019. Please discuss with your insurer, takaful operator or agent (insurance/takaful/bancassurance) on how the information on sustainability of coverage affects the terms and conditions of your contract, and meets your insurance/takaful protection needs.
• Continuously review your protection needs and financial situation, and be aware of any changes to the tenure your coverage is expected to last.
• Understand the options available to manage the investment-linked policies/certificate to meet your needs and discuss them with your insurers, takaful operators or agents (insurance/takaful/bancassurance) where necessary.
• Take appropriate action, if necessary.

Beginning 1 July 2019, for consumers who intend to buy a new investment-linked policy/certificate, you should:

• Understand that the premiums/contributions quoted at point of sale are expected to be sufficient to fund coverage until the end of the contractual term.
• Review carefully the terms and conditions to ensure that they meet your insurance/takaful protection needs.
• Continuously review your protection needs and financial situation and be aware of any changes to the tenure your coverage is expected to last.
• Understand the options available to manage the investment-linked policies/certificate to meet your needs and discuss them with your insurers, takaful operators or agents (insurance/takaful/bancassurance) where necessary.
• Take appropriate action, if necessary.

Role of insurers, takaful operators and agents (insurance/takaful/bancassurance)

From 1 January 2020, insurers, takaful operators and the agents (insurance/takaful /bancassurance) should actively manage the sustainability of an investment-linked policy/certificate sold and provide the following to the policy owners/takaful participants every year:

• Information on how long the coverage is expected to last, in the annual statement of an investment-linked policy/certificate.
• Options for policy owners/takaful participants to manage the sustainability of their investment-linked policies/certificates, taking into account their protection needs and financial situation.

For more information, please refer to the FAQs.

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