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June 14, 2024

What is Insurance and Takaful, and 6 Reasons Why You Need It

Discover the importance of insurance and takaful and why you need financial coverage, and learn about the role of insurance in private healthcare expenses.

Insurance and  takaful serves one important purpose: to provide you with financial coverage if certain circumstances were to occur, including illness, hospitalisation, death, theft, accidents, and more.

Here’s an example,

Based on the scenario above, it is clear that getting insurance and takaful makes good financial sense, because we cannot predict what will happen to us in the near or far future. Unfortunately, many Malaysians still don’t think of it as a necessity. According to the 2023 RinggitPlus Malaysian Financial Literacy Survey:

These findings are quite troubling as most Malaysians are clearly not financially prepared if something unwanted were to happen.

Why Do I Need Insurance and Takaful When I Have Access to Affordable Government Healthcare?

Malaysians are indeed lucky when it comes to having access to incredibly affordable healthcare. With 146 government hospitals and more than 2500 Klinik Kesihatan Malaysia spread across the country, many feel there is no urgent need to spend extra on insurance or Takaful coverage. After all, a chemotherapy session at a government facility costs about RM200 per session for citizens (with a discount for senior citizens!), just a fraction of what private hospitals charge1.

However, while government facilities provide essential medical and healthcare services to many, there is also much they cannot offer that private healthcare can, due to time, budget, equipment, and staff constraints. While expensive, the advantages of seeking treatment at private hospitals include:

  • Minimal wait times for treatments, follow-up appointments, test results, and so on.
  • Access to advanced surgical procedures and the latest equipment.
  • Comfortable healing environment with better quality wards, entertainment options, and facilities.
  • Doctors and specialists catering to a variety of illnesses, procedures, treatments, etc. In many cases, there is no need to visit different private hospitals for different treatments.
  • More medication options.

Due to the increasingly high cost of private hospitals, most Malaysians can’t afford paying for private healthcare and treatments out of pocket. This is where insurance and takaful comes in – by helping you alleviate the burden of paying for your private medical bills. Additionally, when you go private, you’re ensuring that the heavily subsidised treatments provided by government hospitals can go towards someone who needs it more.

Six Important Reasons Why You Need Insurance or Takaful

There are many reasons for getting insurance or takaful, and these reasons may change as you get older.

Six reasons for Insurance and Takaful

Peace of mind

Knowing your expenses will be covered if the unexpected were to happen will provide significant peace of mind and allow you to live your life with one thing less to worry about.

Protects your salary

Knowing your expenses will be covered if the unexpected were to happen will provide significant peace of mind and allow you to live your life with one thing less to worry about.

Secure your finances

Knowing your expenses will be covered if the unexpected were to happen will provide significant peace of mind and allow you to live your life with one thing less to worry about.

Provide for your loved ones

Death & Total Permanent Disability benefits and Life insurance/Family Takaful can go a long way to ensuring your loved ones will be financially secure when you’re no longer around.

Access better medical care

Medical coverage means you can now afford private hospitals, treatments and surgeries, and other specialist treatments not easily available at government hospitals.

Help you build your savings goals

Specialist insurance and takaful plans help you save for retirement, your children’s education, and other savings goals you might have.

When Should I Get Protected?

The simple answer is: NOW.

Besides life’s unpredictability, getting insurance or takaful when you are younger is always the better choice – your savings may not be sufficient to cover unexpected expenses, but, more importantly, you’re likely to be healthier, which means lower and more affordable insurance and takaful fees. You will also benefit from a longer savings and investment period that can help build your retirement nest egg.

No matter how well we look after ourselves, our health will deteriorate as we age. This also means the older you are when you sign up for insurance or takaful, the higher the prices will be.

And if you have dependents, especially children, protecting them from when they are born can also protect you in the long run, as there are any number of pregnancy complications, children’s illnesses and accidents that can occur as they grow up – potentially costing you a lot of money if they are not already covered. Many insurance and takaful plans for children can be converted to adult ones upon reaching a certain age, and once they start earning an income, your children can continue paying for the policies themselves, knowing they’ll have financial support even though they’re just starting out.

We have mostly talked about insurance and takaful from a medical perspective so far, but there are many other personal protection plans that can come to your rescue when you find yourself in a tight spot. But the most important thing is to have an insurance or takaful plan in place, because the unexpected can truly occur at any time.

Etiqa has a variety of takaful and insurance products to support your needs. Check out our life stages quick guide to help you figure things out

References:

1 RinggitPlus