JUST before the Asian financial crisis in the 1990s, Nazirul (not his real name) was working in the forex (foreign exchange) department of a major local bank.

Life was good. He had a wife and two young daughters and they did not face any financial constraints.

All that changed in one night in 1997 when Nazirul suffered a stroke. He was hospitalised for two months and became paralysed on the left side of the body, which resulted in movement and balance difficulties.

He returned to work but the salary was only enough to meet their daily expenses, as Nazirul could no longer work overtime and get shift allowances.

But his biggest problem: He did not have insurance. He had to sell their new house, which was half-paid, and his Honda Civic as he could no longer afford the monthly payments.

Nazirul’s plight is something that a top executive at an international insurance company is too familiar with.

Prudential Assurance Malaysia Bhd (PAMB) chief executive officer Gan Leong Hin said only 56% of Malaysians have some form of life insurance and even of this figure, many are under-insured.

The problem is compounded, Gan said, by the fact that insurance agents are selling intangible benefits. Many customers also do not understand that life insurance is designed to protect their future.

A report by Life Insurance Association of Malaysia (Liam) last year revealed up to 90% of Malaysians who have life insurance were under-insured, which could result in inadequate protection for family members.

In 2015, about 50% (around 12.5 million) of the population had life insurance coverage but 90% were under-insured, which meant that their coverage might only be one or two times of their annual income.

(As a comparison, the per capital spending on life insurance in Malaysia was RM850 or US$330 in 2012. This figure was lower than the world average of US$373 and much lower than other Asian countries, such as Singapore [US$2,472], Hong Kong [US$4,025], South Korea [US$1,578] and Japan [US$4,143]).

Liam said an individual, especially the breadwinner, should have life insurance coverage equalling 10 times his or her annual income.

Zurich Takaful Malaysia Berhad agent Mohamed Hafizullah Zainal concurred, adding that clients must understand that life insurance was not focused on illnesses only but what happened when an accident occurred and the person could no longer work.

“When someone suffers some form of permanent disability or loss the ability to work, most companies will not employ him. However, if he has life insurance coverage, he will get 10 times his annual income as compensation.

“This means he can survive for at least 10 years to pay loans and other commitments because he is getting the same amount he was earning monthly before.”

Hafiz said, the problem was Malaysians who bought insurance protection which did not tally with their annual income.

“The protection coverage must be higher than their annual income for them to survive and to maintain their previous lifestyle.

“Life is full of uncertainty. Having life insurance will prevent your family members from seeking donations on social media should calamity befall the main breadwinner.” – April 15, 2017.