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1CHAPTER 1

INTRODUCTION TO INVESMENT-LINKED LIFE INSURANCE

TMTDA/ADA/Yellow-Belt/TMyellow9-ceilli-tutorial/LCH/June111CHAPTER 1: Introduction to Investment-Linked Life Insurance

Bank Negaras report (2009)Total number of new life insurance policies has increased.

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TMTDA/ADA/Yellow-Belt/TMyellow9-ceilli-tutorial/LCH/June112CHAPTER 1: Introduction to Investment-Linked Life Insurance

Bank Negaras report (2009) Distribution of annual premiums that has gone into Investment-linked Insurance policies has increased 3

TMTDA/ADA/Yellow-Belt/TMyellow9-ceilli-tutorial/LCH/June11

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CHAPTER 1: Introduction to Investment-Linked Life Insurance

PremiumUnitProtectionInvestmentTMTDA/ADA/Yellow-Belt/TMyellow9-ceilli-tutorial/LCH/June1145Investment-linked life insurance directly connectedto the investment performance.

CHAPTER 1: Introduction to Investment-Linked Life Insurance

Special unitized fundPerformancefluctuatesValue of policyInvestment

TMTDA/ADA/Yellow-Belt/TMyellow9-ceilli-tutorial/LCH/June11For example:6RM 5,000 for 5,000 units (RM1/unit)

After 2 years

5,000 units x RM3/unit =RM 15,000

Lose all premiums paid and coverage provided

CHAPTER 1: Introduction to Investment-Linked Life Insurance

RM3/unitRM0/unit

TMTDA/ADA/Yellow-Belt/TMyellow9-ceilli-tutorial/LCH/June117Basic characteristics of Investment-Linked:No guaranteed cash valueFlexibility for policyholder to choose:Amount of coverage neededTypes of investmentsExternal unit trustsInternal unitised investment -linked fundFunds value fluctuate according to market forces

CHAPTER 1: Introduction to Investment-Linked Life Insurance

TMTDA/ADA/Yellow-Belt/TMyellow9-ceilli-tutorial/LCH/June11No guarantee of either interest rates or minimum cash values. wide range of investments like equities or stocks, bonds , fixed interest , foreign funds , real estate, currency and so on. These funds can either be external unit trusts or an internal unitised investment -linked fund (part of the life insurance fund of a life insurance Company). Policyholder can lose all the premiums paid and also the coverage provided.7The term Investment-linked shall be similar to : Investment-linked (Singapore)Unit-linked (UK)Variable Life (US)8CHAPTER 1: Introduction to Investment-Linked Life Insurance

TMTDA/ADA/Yellow-Belt/TMyellow9-ceilli-tutorial/LCH/June11What was the main reason for the steady growth of the Insurance Industry in Malaysia?

The liberalisation of regulations by the Ministry of Finance and Bank Negara Malaysia.The introduction of Investment-Linked policies.The efforts by insurance companies to design and offer customer-centric and good plans.The robust growth of the countrys economy.9Sample Questions

TMTDA/ADA/Yellow-Belt/TMyellow9-ceilli-tutorial/LCH/June11C10Sample Questions

TMTDA/ADA/Yellow-Belt/TMyellow9-ceilli-tutorial/LCH/June11What is an Investment-Linked policy?

A participating Whole Life Policy.A Capital and returns guaranteed policy.An endowment policy only.A plan that offers clients coverage and investment returns.11Sample Questions

TMTDA/ADA/Yellow-Belt/TMyellow9-ceilli-tutorial/LCH/June11D12Sample Questions

TMTDA/ADA/Yellow-Belt/TMyellow9-ceilli-tutorial/LCH/June11All the following statements are False, except;

The Investment-Linked policy is directly linked to investment performance.Once the policy is in force, the clients investments will grow steadily.Fund Managers will make sure that the Investment Linked policy is shielded from market fluctuations.The Investment Linked policy only provides coverage and nothing else.13Sample Questions

TMTDA/ADA/Yellow-Belt/TMyellow9-ceilli-tutorial/LCH/June11A14Sample Questions

TMTDA/ADA/Yellow-Belt/TMyellow9-ceilli-tutorial/LCH/June11Investment-Linked Insurance policy is named as the following around the world except

Mutual Fund-Linked Policy.Unit-Linked Policy.Variable Life Policy.Takaful Investment-Linked life.15Sample Questions

TMTDA/ADA/Yellow-Belt/TMyellow9-ceilli-tutorial/LCH/June11A16Sample Questions

TMTDA/ADA/Yellow-Belt/TMyellow9-ceilli-tutorial/LCH/June11... is designed to shift the uncertainties of investment gains or losses to the policy holders... The excerpt describes what of the following accurately?

Policyholders who choose to take Investment-Linked policies must realise that they are also responsible to monitor the performance of their policy to ensure a reasonable return.The chances that the policy values going to zero is impossible because the Fund Managers, companies and agents will ensure that the policy is profitable at all times.Insurance companies, Fund Managers will wash their hands off the policy once the policy is taken and leave it solely to the agents and policy holders to monitor it.Agents are responsible to the clients only and must ensure that they monitor the policy at all times.17Sample Questions

TMTDA/ADA/Yellow-Belt/TMyellow9-ceilli-tutorial/LCH/June11A18Sample Questions

TMTDA/ADA/Yellow-Belt/TMyellow9-ceilli-tutorial/LCH/June11An Investment-Linked plan has the following features :-

Provide cover for death and Total Permanent Disability.Participate in investments managed by the Insurer.Can provide a good return if monitored well.Largely depends on the clients ability to be good at investing in equities market.

I,II,IV only.I,III,IV only.II,III,IV onlyI,II,III only.19Sample Questions

TMTDA/ADA/Yellow-Belt/TMyellow9-ceilli-tutorial/LCH/June11D20Sample Questions

TMTDA/ADA/Yellow-Belt/TMyellow9-ceilli-tutorial/LCH/June11