Family vector illustration

Understanding Life Insurance: Guide to The Basics of Life Insurance

How life insurance works?

Policyowner pays premium
The policyowner (customer) will make periodic premium payments to the insurance company for their insurance policy based on their plan coverage
Premiums pooled within the Insurance Fund
The insurance company pools premiums from customers into the Insurance Fund, and uses the Fund to pay for claims.
Insurance company pays benefits to policyowners
In the event of a mishap, the insurance company pays out benefit to the customer according to policy contract.

Type of life insurance plans

 

 

 

Conventional plan

Investment-linked plan

Term

Endowment/Whole Life

Endowment/Whole Life

 

Needs

Insurance protection for a limited period only and benefit is paid out upon death or Total and Permanent Disability (TPD), whichever is earlier

Combination of protection and savings whereby benefit is paid at the end of a specific period, or upon death or TPD, whichever is earlier

Combination of protection and investment whereby premium is used to buy insurance protection and units in Investment Linked Funds managed by insurance company. The value of your policy will depend on the performance of the Investment Linked Funds

 

 

 

Fund type

 

Non Participating Life Insurance Fund - Investment risk is borne by insurance company

 

Participating Life Fund - Investment risk is borne by insurance company & Policyowner, through the sharing in profit in the form of non-guaranteed bonuses to the policy; or

Non Participating Life Insurance Fund - Investment risk is borne by insurance company

 

 

Pre-fixed or customer-chosen Investment Linked Funds - Investment risk is borne by Policyowner

 

 

Supplementary cover
  • Commonly known as riders, these are optional benefits to consider for additional protection

    • Accidental

    • Critical Illness

    • Medical & Health

    • Payor/Waiver Benefits

  • Subject to availability and eligibility of the offered plan

  • Additional premiums will be required

 

 

Premium & Coverage

*Buying a life insurance policy is a long term commitment. You should satisfy yourself that this policy will best serve your needs and that the premium payable under the policy is an amount that you can afford.  

                                          

  • Premium can be guaranteed and non-guaranteed.

  • Coverage continues as long as premiums are made

  • If there is any outstanding premium and provided the policy has sufficient cash value, the insurance company will use the cash value to pay for the premiums and interest in default to ensure coverage continues. However, once the cash value is exhausted, the policy will lapse 

 

 

  • Non-guaranteed premium

  • Premium is allocated to buy units for coverage, while charges are paid by redemption of units

  • Unallocated premium is used to fund commission and insurance company expenses

  • Coverage is subject to sufficiency of units for payment of insurance and other charges

  • Potential upside from underlying Investment Linked Funds

  • Flexibility for Policyowner in fund selection/switching/top-up (i.e. for voluntary savings/investment)/withdrawal

 

 

 

 

The benefit will be paid in the event of the insured person's death or TPD (where applicable) during the term of the policy

 

  • The benefit will be paid to the insured person when policy matures at the end of the term, or upon death or TPD (where applicable), whichever is earlier

  • Potential upside for Participating type of policy

 

 


For more information on choosing the right insurance plan, please visit www.prudential.com.my or contact our Prudential Wealth Planner/Bank Representative.

Learn more about life insurance in your preferred language:

EN 

BM