Life Insurance Products Of Malaysia

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Life insurance products in Malaysia The life insurance industry in Malaysia can be divided to family takaful and conventional life insurance. Both family takaful and conventional life insurance are similar in providing protection against the loss of income that would result in the death of the insured. However, unlike the conventional life insurance in which the insured transfer the risk to the insurer, takaful mutual risk is shared among the participants. Another major difference between them is the ownership of the companies. A conventional life insurance company is owned by shareholders whose objective is to maximize profits while a takaful company is owned by the participants whose objective is to minimize the cost incurred. The total…show more content…
The minimum paid-up share capital of an insurer is RM 100 million while the supervisory Capital Adequacy Ratio (CAR) for an insurer must be higher than 130%. CAR can be obtained by dividing the total capital available by the total capital required and insurers must set their own CAR to reflect their own profile risks and have a CAR higher than the 130% required. Taxation Taxation is always one of the crucial factors in business. After being fixed at 25% for seven years, the standard corporate income tax in Malaysia is reduced to 24% from the year of assessment 2016. In comparison, the company tax rate in Australia is higher although it is scheduled to decrease to 25% for all companies in 2026-2027. Apart from that, although Goods and Service Tax (GST) at 6% is implemented from 1st April 2015 in Malaysia, all life insurance products exempt from GST. Market penetration rate According to the BNM, the market penetration rate which is measured in terms of the sum of the life insurance policies and family takaful in force to the total population has risen from 38.7% in 2005 to 54.9% in 2015. However, it remains distant from the government’s targeted level of 75% in the year 2020. Although the market penetration rate for family takaful products was only a quarter of the market penetration rate in 2015, its market penetration rate has increased steadily from 9.2% in 2009 to 14.7% in 2015. In
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