FinanShield

What Is Deposit Insurance System (DIS)?

2015-07-03T10:36:00.002+08:00

The Deposit Insurance System (DIS) is a system established by the Government to protect depositors against the loss of their insured deposits placed with member institutions in the event of a member institution failure. Commercial and Islamic banks that are member institutions of PIDM are also referred to as ‘member banks’.

As an integral component of an effective financial safety net, a deposit insurance system enhances consumer protection by providing explicit protection to depositors. Depositors will know when, how much and how their deposits are insured in the event that a member bank is bankrupt or is unable to make payment to depositors.

In Malaysia, the Deposit Insurance System was brought into effect in September 2005 and is administered by PIDM.

BENEFITS TO DEPOSITORS

PIDM protects your bank deposits and will promptly reimburse you on your insured deposits should a member bank fail

The protection is provided by PIDM automatically - no application is required

BENEFITS TO THE FINANCIAL SYSTEM

promotes public confidence in Malaysia’s financial system by protecting depositors against the loss of their deposits

reinforces and complements the existing regulatory and supervisory framework by providing incentives for sound risk management in the financial system

minimises costs to the financial system by finding least cost solutions to resolve failing member institutions

contributes to the stability of the financial system by dealing with member institution failures expeditiously and reimbursing depositors as soon as possible

Are My Savings Safe in a Bank?

2015-07-02T10:26:00.000+08:00

During the 2008 financial crisis, global banks around the world starting collapsing and since then, people started to question the security of their savings. The possibility of local and foreign banks in Malaysia remaining in business forever is not guaranteed and thus your savings could be at risk should a bank fail. So is your money safe?

The golden rule to saving is to ensure you put your cash into a Malaysia regulated bank that is protected under the Perbadanan Insurans Deposit Malaysia (PIDM) membership scheme. PIDM protects your bank deposits and will promptly reimburse you on your insured deposits should a member bank fail and there is no charge for this insurance protection. Keep an eye out for the logo at your banking institution (image below).

Savings of up to RM 250,000 is guaranteed by the PIDM per institution so if you have less than than, you don’t have too much to worry about. If you have more to save, you can get protection on your entire savings by dividing your savings into several accounts/bank institutions.

Example: you had RM1,000,000 and didn’t want to take any risk, you could open 4 separate accounts in 4 separate banks.

What you are effectively doing is spreading the risk over many banks and thus not putting all your eggs into one basket. Click here for a list of all PIDM member institutions.

Another way to protect your savings is to open joint accounts because they also enjoy separate deposit insurance under the PIDM scheme. You could place RM250,000 into your own account but also open a joint accounts with your father, mother spouse etc. Each account that you open with someone else is protected up to RM250,000.

What about Cooperative Banks like Bank Rakyat and Bank Persatuan?

Bank Rakyat and Bank Persatuan are not members of PIDM so deposits at this institution are not protected under this scheme. However, under the Development of Financial Institutions Act 2002, cooperative banks are under the purview of the Ministry of Finance and the Central Bank which gives an implicit guarantee on the deposits at this institution.

As the mechanism for depositor protection is different than what is offered by PIDM, we have no idea what the process is or whether the Ministry will guarantee more than RM250,000 per depositor or indeed if its an automatic matching and reimbursement of depositors as per the PIDM scheme. It's a strange scenario - no one really wants this procedure to be tested (ie. the bank fails), but until it is, we won't know how well the new system works.

Article by savemoney.my

Takaful: Islamic Insurance

2015-07-01T22:56:00.000+08:00

What is takaful? Have you ever heard of it? How does it works?

Let's learn more about the Islamic insurance called takaful via this playlist of videos on the topic. The videos were produced by Marifa Academy.

Note: To see the list of videos in this playlist, you may click on the top left of the video player.

To see more video on financial protection, visit our Youtube channel at https://www.youtube.com/c/FinanshieldBlogspot2015

Investment Guide to Diversification

2015-06-30T10:54:00.000+08:00

If you're tempted to start investing your money, or even if you're already a seasoned investor, it's crucial to make sure you manage the risks you are exposed to in order to avoid suffering agonising losses to your capital.

The key is to build a diverse portfolio with a mix of different investments that makes sense for your attitude to risk.

A balanced investment portfolio will contain a mix of equities (shares in companies), government and corporate bonds (loans to governments or companies), property and cash.

Here, we give you five things to consider when putting together a diverse portfolio.

Step 1: Assets

Having a mix of different asset types will help you spread risk. It’s the old adage of not putting all your eggs in one basket.

The theory behind this approach is that the values of different assets can move independently and often for different reasons. Shares move in line with the fortunes and prospects of companies; bonds are most prominently influenced by interest rates; and property values, while also influenced by interest rates, are also more closely connected to the performance of the domestic economy.

Get the right asset allocation and you could make a healthy return, while also protecting yourself against the worst downturns in individual markets.

Step 2: Sector

Say you held shares in a bank in 2006. Your investment may have been very rewarding, so you decided to buy more shares in other banks. When the credit crunch hit the following year, sparking the banking crisis, the value of your shares in this sector (financials) would have tumbled.

So, once you've decided on the assets you want in your portfolio, you can diversify further by investing in different sectors, preferably those that aren’t highly correlated to each other.

For example, if the healthcare sector suffers a downturn, this will not necessarily have an impact on the precious metals sector. This helps to make sure your portfolio is protected from dips in certain industries.

Some investors will populate their portfolios with individual company shares directly but others will gain access to different sectors through managed funds like unit trusts and Oeics (Open ended investment companies).

Step 3: Geography

Investing in different regions and countries can reduce the impact of stock market movements. This means you're not just affected by the economic conditions of one country and one government’s economic policies.

Different markets are not always highly correlated with each other - if the Japanese stock market performs poorly, it doesn’t necessarily mean that the UK’s market will be negatively affected.

However, you need to be aware that diversifying in different geographical regions can add extra risk to your investment.

Developed markets like the UK and US are not as volatile as those in emerging markets like Brazil, Russia, India and China. Investing abroad can help you diversify, but you need to be comfortable with the levels of risk involved.

Step 4: Company

Don’t just invest in one company. It might hit bad times or even go bust. Spread your investments across a range of different companies.

The same can be said for bonds and property. One of the best ways to do this is via a unit trust or Oeic fund. They will invest in a basket of different shares, bonds, properties or currencies to spread risk around. In the case of equities, this might 40 to 60 shares in one country, stock market or sector.

With a bond fund, you might be invested in 200 different bonds. This will be much more cost effective than recreating it on your own and help diversify your portfolio.

Step 5: Beware of over diversification

Holding too many assets might be more detrimental to your portfolio than good. If you over diversify, you might not end up losing much money, but you may be holding back your capacity for growth as you’ll have such small proportions of your money in different investments to see much in the way of positive results.

It’s usually recommended that you hold no more than 30 investments (be it shares or bonds). If you're investing in funds, 15 to 20 should be a maximum.

Finally, for many investors - especially those without the time, confidence or knowledge to make their own investment decisions - professional financial advice is a must.

Source

Insurance: Protecting You Financially

2015-06-29T15:10:00.000+08:00

Choosing the right type of insurance for your needs can be tricky. This guide looks at the different types of insurance available, how to choose the right cover and when and how to buy it.

What is insurance?

Insurance is designed to protect you against the financial impact of certain events happening. It involves paying a regular or one-off premium to an insurance company which then promises to pay out either a set amount or a pre-defined amount if a certain event occurs.

When you might want insurance

You can buy insurance which pays out a lump sum or income if you lose your job, fall ill or die. You can also take out insurance to protect yourself against the financial impact of your belongings being lost, stolen or damaged. You can have insurance to help with the costs of unexpected medical treatment either for yourself, someone close to you or a pet. Or you may want insurance which pays out if you have to take legal action against someone or a lawsuit is filed against you.

How to choose insurance

Insurance is often sold on the basis that it offers peace of mind – if you take out insurance you can be financially prepared for the worst or the unexpected. But before you do it's worth thinking about what other protection you might already have (such as savings) or what would be available if something bad or unexpected happened (such as state benefits).

You can then look to plug the gaps by taking out appropriate insurance.

Some insurance products are compulsory such as car insurance if you own a car on the road.

If you work for an employer, you may have some insurance cover as part of an employee benefit package. This might include life insurance, critical illness insurance and income protection insurance if you have to give up work due to ill health.

How to buy insurance

If you don't think you have adequate insurance you might want to take this out yourself. There are several ways to buy insurance and the way you choose will depend on the type of insurance you want and the sort of advice, if any, that you require.

General insurance such as car, home, pet and travel insurance can be bought direct from a provider, through a comparison site or from an insurance broker.

Life insurance, income protection insurance and private medical insurance can be bought direct from a provider but also through advisers as people often need advice when choosing this type of insurance.

Help choosing insurance

Choosing the right type of insurance and the best levels of cover to protect yourself against a particular event can be tricky. Not only might there be several types of insurance which might be appropriate but levels of cover might vary between providers.

If you know what you want and are confident you can choose the best insurance cover for your needs you could buy direct, through a comparison site or discount broker which might save you money.

If you would like some help choosing then you will need the services of an insurance broker or a financial adviser.

Source

Difference Between Saving and Investing

2015-06-28T19:16:00.000+08:00

Saving money and investing money; are they two same thing?
If you save money, does it means that you are investing your money too?

Find out the answers in this video, which produced by Franklin Templeton Investments:

'Just Married' Financial Mistakes

2015-06-27T21:31:00.000+08:00

When you coupled with your spouse, everything is wonderful. Everything looks rosy and nice in the beginning. After the honeymoon period, reality strikes – finances!

How do you avoid this blow as a newlywed?
Counseling and Debt Management Agency (AKPK) shares some info special for you:

1) Know your spouse’s financial history

How each partner feels about finances is often shaped by their experiences with money growing up. One partner may have grown up in a wealthy family where acquiring material possessions was as simple as asking their parents for it. When they get married, they would expect the same ease in getting things their heart desires. Find out what their spending is like, what was the monetary situation at your spouse’s home. This will help you tackle financial issues later, and avoid unnecessary arguments about money once you are married.

2) Don’t keep financial secrets

Mystery in a relationship keeps the marriage exciting, but not mystery involving money. In fact, many people choose to keep their finances a secret – more so, when they are trying to impress their partner before marriage. It’s never easy nor is there ever a perfect time to say, “I have this amount of debts”. But, it has to be discussed. If you keep details of your debts a secret, be mindful that your spouse is bound to find out about it sooner or later. It’s best to be open with your spouse when it comes to money and debts.

3) Help each other to stick to a budget

As a couple, it’s never easy to stick to a budget if the other chooses to spend lavishly without thinking of the financial consequences of their overspending. The rule of thumb to doing this is keep yourselves accountable to each other when it comes to money. This way, nobody can splurge recklessly or impulsively.

4) It is never too early to save for retirement

We would like to think that we are immortal. But the harsh reality is that we shall all retire from the workforce some day. When we do grow old and are no longer earning money, we need to have a financial buffer to fall back on. Eventhough you have just gotten married and are probably still young, prepare for your old age with your spouse.

5) Discuss about children

Parenthood is a blessing from God. But, raising a family is costly these days. Discuss with your partner on starting a family and ensure that you have saved money to make you journey into parenthood a smooth sailing ride.

Footnote:

AKPK is an agency set up by Bank Negara Malaysia to help individuals take control of their financial situation and gain peace of mind that comes from the wise use of credit.

Find out more at http://www.akpk.org.my

What Is Investment Risk?

2015-06-26T17:47:00.000+08:00

You can't plan financially without understanding investment risk. Many people, when they hear about 'risk', think automatically about the chance of being defrauded or not getting all their money back. This 'capital' risk is important, but it isn't the only type.

Other types of risk involve uncertainty and unpredictability. When you make an investment, it can be difficult to say with any certainty what you'll get back when you finally cash it in. Share prices fluctuate, interest rates vary and inflation is a risk too. Just concentrating on capital risk and ignoring these other risks can mean you take too cautious an approach.

Understanding risk means identifying your own attitude towards it and identifying the different types of risk. Then you can pick up tips for minimising the chances of things going wrong.

Investment risk of different types of assets

There are a number of different asset classes that you can invest in, each of which come with their own risks. The four main asset classes are cash, bonds, property and stocks and shares (equities).

Cash

Cash is the least risky of the four but it tends to deliver low returns, which means the value of your money can be eroded in times of high inflation.

Bonds

One step up the risk ladder is government bonds, or gilts, followed by investment grade corporate bonds, where you effectively lend money to large companies in exchange for a fixed-rate of interest.

Property

Investing in commercial property, such as offices, supermarkets and warehouses, can grow your money through rental income and growth in the value of the property you own.

Equities

Stocks and shares, commonly known as equities, are seen as the most risky asset class, as stock markets can be highly unpredictable. Investing in UK equities is considered as lower risk than US equities, while emerging markets (such as India, China or Brazil) equities are viewed as the highest risk as the companies you are investing in are less well known.

Source

Protecting Yourself Financially Against Sickness

2015-06-25T13:44:00.000+08:00

If you fell ill and were unable to work, how would you manage financially? Insurance might help.

In this guide we look at what types of income protection insurance and medical insurance are available.

Why You Might Want Protection

Coping with the unexpected is part of life and insurance can help you do this. You might want to think about how you would manage day to day if you fell ill and couldn't work for any length of time.

You might be able to manage in the short term if you are a member of an employee sick pay scheme or on a combination of state benefits and savings (if you have any). But if you suffer a protracted illness or are diagnosed with a life-threatening disease it could be a different matter.

Even the most generous employer sick schemes don't last forever and if you're self-employed you won't have an employer sick pay scheme to fall back on.

You may be entitled to state benefits when you are sick but these are modest and few of us have enough savings to last indefinitely.

What cover you might need

There are various types of insurance which can help replace your income or meet a specific cost if you're unable to work due to illness. If you want to protect your income so that you can meet everyday expenses as well as your usual bills and financial commitments, income protection insurance offers the most comprehensive cover.

To help work out how much replacement income you might need you could draw up a budget of how your household's income and spending might change if you fell ill.

A cheaper but more limited option to income protection is payment protection insurance, also known as accident, sickness and unemployment insurance (ASU). The pay-out from this insurance can be used how you choose but people usually take it out to cover a specific expense such as a loan or mortgage repayments.

If you are concerned about how you would manage financially if you contracted a life-threatening or serious illness, critical illness insurance might be appropriate. And if you would like the option to receive private medical care or want help with health costs, then private medical insurance or a healthcare plan might be worth considering.

Income protection insurance

Income protection insurance pays out a regular income if you're unable to work due to illness. Cover can be for a specified amount of time or until you are able to return to work, retire or die, whichever comes first.

Other insurance

Other types of insurance which can be useful if you fall ill and are unable to work are listed below.

Mortgage Payment protection insurance (MPPI)this pays out a set amount for a specified period of time, typically between one and two years. The pay-out covers your mortgage if you are unable to work due to illness, an accident or redundancy.

Critical illness insurancethis insurance pays out a lump sum if you are diagnosed with a specified life-threatening disease.

Private medical insurance (PMI)covers the cost of private medical treatment.

Health cash plansin exchange for a monthly premium these schemes pay out a cash sum if you have to go into hospital or have specific treatment such as dental or chiropody work. The pay-outs are relatively small and not enough to pay for private medical treatment. However, these schemes can be useful to cover things like dental treatment or opticians' costs.

Source

Tips: Banking Issues

2015-06-24T18:57:00.000+08:00

Some people often get into problems when dealing with banking-related issues. To make sure you are not part of them, we suggest you to follow these tips from Bank Negara Malaysia (BNM).

Read the terms and conditions of a contract carefully

You have to read and understand the terms and conditions of an agreement/contract for any loan or investment related product prior to signing any related documents.

Responsibilities of a guarantor

You have to understand the responsibilities and obligations of a guarantor. Guarantors are legally bound to make repayment if the borrower fails to settle the loan.

Disclosure of financial information

Do not disclose your financial information such as account number, credit card number, password and other personal particulars to third parties either via telephone, e-mails or any links in websites.

Transactions at ATM machines

Do not allow third parties to make transactions at ATM machines on your behalf, even to those whom you know such as your spouse.

Credit card transactions

Credit cards should be used as a payment instrument and utilisation should be within your means. Please verify the amount swiped after each credit card transaction and make sure the card returned belongs to you.

Submission of documents

Be cautious before submitting photocopies of your identification card or passport to third parties, other than to financial institutions or lawyers acting on your behalf.

Internet banking facilities

Do not be deceived into opening an internet banking account in order to win prizes or inheritance from an unknown party. This could be a scam! If you have already done so, contact and report to your bank and to the police immediately for their further action, also keep Bank Negara Malaysia informed.

Memory cache function

Do make sure that you have log-out properly after using the internet banking and clear the memory cache after completing the transactions.

Malaysia Islamic Insurers Go Digital to Attract Younger Audience

2015-06-24T16:34:00.002+08:00

Malaysia’s Islamic insurers are seeking to double policy holders in five years by investing more in digital technologies to attract a younger audience, according to the industry association’s head.

Takaful operators should also step up educational campaigns to boost customers to 8.4 million by 2020 from about 4 million now, Ahmad Rizlan Azman, chairman of the Malaysian Takaful Association, said in an interview from Kuala Lumpur Tuesday. The Shariah-compliant industry is aiming for a 25 percent market share compared with 14 percent at the end of 2014, he said.

Islamic insurance in Southeast Asia has the potential to catch up with the leader Saudi Arabia, driven by increasingly young populations and strong economic growth, according to a report from Ernst & Young LLP, which forecasts global assets will climb to $20 billion by 2017 from an estimated $14 billion last year. Attracting more professionals is another prerequisite to achieving Malaysia’s targets, Ahmad Rizlan said.

“There’s still much to be done in increasing awareness of takaful insurance amongst Malaysians,” said Mohamed Hassan Kamil, group managing director of Kuala Lumpur-based Syarikat Takaful Malaysia Bhd. “With less than 60 percent of the population having a life insurance or a family takaful policy, there is still very high upside potential.”

Takaful is based on mutual assistance, where policy holders contribute a sum of money to a common pool managed by a company. The funds are used to pay for claims and any excess is returned to customers. Shariah law prohibits the payment of interest and embraces both profit and risk-sharing.

Tertiary Campaigns

Malaysia is seeking to bolster its position as a global Shariah-compliant hub after pioneering Islamic finance 30 years ago. About 61 percent of the country’s 30 million people are Muslim. U.S. government data estimates 46 percent of the population are 24 years old or younger, compared with 43 percent of Indonesia’s 253.6 million.

Islamic insurance assets within the Association of Southeast Asian Nation’s may grow to $6.4 billion in 2016 from $4.2 billion in 2014, according to Ernst & Young’s report. Asean countries account for 30 percent of the global takaful market led by Indonesia and Malaysia, compared with 48 percent in Saudi Arabia, it said.

“We are targeting the underserved and the younger people who are entering the workforce,” said Ahmad Rizlan, who is also chief executive officer of Etiqa Takaful Bhd., Malaysia’s biggest Islamic insurer. “We are doing this by embarking on awareness campaigns at the tertiary level.”

Digital Age

In countries such as Malaysia, Singapore, Indonesia and Thailand there’s an impetus for companies to embrace digital in financial services, the public sector and media and telecommunications, according to a Deloitte Touche report in May as it started Deloitte Digital in Southeast Asia. Smartphone penetration in the region is expected to expand at a compound annual growth rate of more than 20 percent, it said.

“Digital is the CEO’s next battleground,” said Jonathan Rees, executive director of Deloitte Digital in Southeast Asia. “As the engine room for growth in emerging markets, responsibility for digital cannot be delegated. It must start at the top.”

Malaysia’s central bank introduced new rules in 2013 requiring insurers to have clearly defined licenses for takaful and those covering conventional policies to ensure transparency and Shariah compliance. That should help boost efficiency and market growth, according to Ahmad Rizlan.

Syarikat Takaful’s Mohammad Hassan said the nation’s Islamic insurers have to push for innovative new ideas to keep their growth momentum going. The company is considering an acquisition in the next two years to increase its customer base, he said.

“Takaful operators need to be innovative and to offer products that are competitive with conventional insurers to entice policy holders,” said Mohd. Effendi Abdullah, Kuala Lumpur-based head of Islamic markets at AmInvestment Bank Bhd. “If that can be done, then it’s possible for takaful operators in Malaysia to double policies in five years.”

Written by Elffie Chew on Bloomberg

Takaful and Insurance Benefits Protection System (TIPS)

2015-06-23T22:25:00.000+08:00

The Takaful and Insurance Benefits Protection System (TIPS) is a system established by the Malaysian Government to protect owners of takaful certificates and insurance policies from the loss of their eligible takaful or insurance benefits in the event that an insurer member fails and is unable to honour the takaful or insurance benefits. Takaful operators and insurance companies that are member institutions of PIDM are also referred to as ‘insurer members’.

TIPS came into effect on 31 December 2010 and is administered by PIDM.

BENEFITS TO TAKAFUL CERTIFICATE AND INSURANCE POLICY OWNERS

PIDM protects you against the loss of your eligible takaful or insurance benefits should an insurer member fail.

The protection is provided by PIDM automatically - no application is required.

BENEFITS TO THE FINANCIAL SYSTEM

PIDM promotes public confidence in Malaysia’s financial system by protecting takaful certificate and insurance policy owners against the loss of their benefits

PIDM reinforces and complements the existing regulatory and supervisory framework by providing incentives for sound risk management in the financial system

PIDM minimises costs to the financial system by finding least cost solutions to resolve non-viable insurer members

PIDM contributes to the stability of the financial system by dealing with non-viable insurer member expeditiously

Source

Bankrupt Before 35

2015-06-22T21:59:00.000+08:00

PETALING JAYA: Close to 25,000 Malaysians from Gen Y, defined as those below age 35, have become bankrupts over the past five years.

Their inability to settle loans for cars, houses and personal loans or for being guarantors for other loan defaulters are the main reasons for the worrying trend.

A total of 24,953 people below the age of 35 had been made bankrupts since 2010, according to the Insolvency Department’s records.

Between January and April this year, there were 107,306 cases of bankruptcies, 948 of which involved people under the age of 35.

The Bankruptcy Act states that a person could be subjected to bankruptcy proceedings if he or she fails to settle a minimum debt of RM30,000.

The Federation of Malaysian Consumers Associations (Fomca) has sounded the warning bell for a financial education policy to tackle the growing problem of young bankrupts.

“It is a serious problem as those affected are young workers who are the nation’s future,” said its secretary-general Datuk Paul Selvaraj.

“Fomca is drafting a financial education policy with the hope that the Government will implement it at all levels.”

Selvaraj said based on its survey of 1,000 respondents in 2013, 37% of young Malaysians were found to be living beyond their means while 47% used more than one-third of their monthly incomes to settle debts.

He said the rising cost of living, moderate salary increments and low retirement savings would only worsen the situation if the issue was not addressed soon.

“We have initiated several awareness programmes and even published a monthly magazine called Ringgit funded by Bank Negara for the purpose,” he said.

Selvaraj said Fomca was gathering feedback from stakeholders and had started another survey to gauge the extent of the problem, adding that the findings and recommendations would be submitted to the Government by the end of the year.

Among those involved in the survey are the Credit Counselling and Debt Management Agency, known by its Bahasa Malaysia acronym of AKPK (Agensi Kaunseling dan Pengurusan Kredit), non-governmental bodies, financial institutions and insurance companies.

AKPK was set up by Bank Negara in 2006 to provide counselling, debt management and financial education to help individuals take control of their financial situation.

An agency official said that if a person seeking help was found to be unable to manage debts, he or she would be advised to undergo a debt management programme.

“After a confidential counselling session, personalised debt repayment plans will be worked out for individuals through negotiations with the financial service provider.

“The programme is also extended to those who are not bankrupt or under advanced litigation process, have a positive net income and whose loans are worth less than RM2mil and taken from institutions regulated by Bank Negara,” he said.

All services by AKPK are free and available at its 11 branches and 23 credit counselling offices in major banks nationwide. For more information, log on to www.akpk.org.my.

Source: The Star

Footnote: We suggest you to browse this informative Finanshield blog to get more info on financial protection and education.

Tips: Insurance Issues

2015-06-21T07:40:00.001+08:00

Insurance is one of the important elements to protect your financial. However, you need to make sure you are not involved with mistrusted insurance or even scam.

These tips from Bank Negara Malaysia (BNM) may help you to avoid the problem.

Read the policy contract carefully

You have to read and understand the terms and conditions of the policy upon receiving the policy contract from insurance companies. You are given 15 days from the date of receipt to scrutinise contents of the policy. Use this opportunity to validate the information and evaluate whether the policy suits your requirement. Understand the limitations or the exemption clauses. Please contact the insurance company or its agents for further explanation, if necessary.

Importance of disclosure

You must disclose all material facts in your application form completely. If your agent fills up the application form on your behalf, please read and understand the requirements in the form prior to signing the form. Failure to do so could cause your insurance policy to be terminated or the insurance company might repudiate your claims.

Purchase of insurance policy

You can purchase insurance policy either directly from the insurance company, through authorised agent, or banks/financial institutions which has bancassurance arrangement with insurance companies. If you are buying the insurance policy from an agent, please ensure that he/she is an authorised agent of the insurance company. If you have doubt, request for proof such as registration/authorisation card of the agent or contact the insurance company directly. All authorised agents are registered under Persatuan Insurans Am Malaysia (PIAM) or Persatuan Insurans Hayat Malaysia (LIAM).

Premium payment

You have the choice to either pay the premium directly to the insurance company or through agents. You have to ensure payment is made under the insurance company?s name and also ensure that you receive the original receipt from the insurance company. Avoid making cash payment to the agents, if possible.

Financially Protecting against a Death

2015-06-20T13:05:00.000+08:00

Financially protecting yourself and your loved ones financially against a death in the family means there is one less thing to worry about if the worst should happen.

Why you might want protection

Nobody likes to think about what would happen if they or a loved one died but being financially prepared can help to ease the burden for you and your family if the worst should happen.

There are various types of life insurance which pay out a lump sum or income on death. Different products offer different types of cover so you need to check which ones might be best for your needs.

What cover you might need

If you're in paid work, you might want insurance to replace your income if you die. If you are not in paid work but look after your children or an elderly relative, you might want insurance so there is money to pay for someone else to look after them if you die.

Life insurance

You can buy life insurance which pays out a lump sum on death to cover specific expenses or an Inheritance Tax bill. Other policies can be used to provide an income (known as family income benefit). There are also life insurance policies specifically designed to pay off a repayment mortgage (the type where the amount you owe decreases each year as you gradually repay the capital). These are called mortgage decreasing term assurance policies and pay off your outstanding mortgage if you die.

Family income benefit

You can take out life insurance to provide an income for your family if you die. This is known as family income benefit.

You might want just one lot of life cover or you might want two or more policies to cover different needs such as a lump sum for immediate use to pay off debts and funeral expenses and an income for future needs.

How much cover?

Working out how much you might need to pay off debts (such as your mortgage, loans or credit cards) is straightforward. But working out how much you might need to live on can be more difficult. One way to do this is to draw up a budget of how your household's income and spending might change if this happened.

You also need to consider how long this money might be needed. For example, if you have young children it could be until they are old enough to support themselves. And don't forget that prices rise over time so you'll need to factor this in when choosing the level of cover you want. Alternatively, choose a policy with an 'increasing cover option' so the lump sum your policy pays out increases each year in line with inflation or by a fixed amount, such as 3%.

You could either take out life insurance which pays the required level of income for this period or work out how large a lump sum would be needed to provide this income.

You may already have some life cover through your employer which can be taken into consideration. You may also have investments, savings or pensions which would pass on to your family if you died. And there are also state benefits you may be entitled to if your spouse or civil partner dies.

Cost

The cost of insurance depends on the type of policy, the amount of cover and a whole host of other factors such as your age, job, health and lifestyle (smokers pay more than non-smokers).

Cover varies, so the cheapest policy is not necessarily the best. Check for exclusions when a policy will not pay out. It's also often worth paying a little more for waiver of premium so that your premiums are paid for you if you are unable to work due to illness.

Source

Protecting Your Cash

2015-06-19T21:58:00.000+08:00

Yes, protect your cash!
Let's listen to these advises from experienced people about their financial regrets, hopes, and what they are saying about savings protection.

Video produced by Canada Deposit Insurance Corporation.

Protecting Yourself from Fraud

2015-06-18T22:34:00.000+08:00

These are four steps you can take to protect yourself from financial fraud.
We also share a video on the same topic, produced by US Consumer Financial Protection Bureau (US CFPB):

1. Check your accounts for unauthorized charges or debits and continue monitoring your accounts

If you have online or mobile access to your accounts, check your transactions as frequently as possible. If you receive paper statements, be sure to open them and review them closely. If your provider offers it, consider signing up for email or text alerts.

Report even small problems right away. Sometimes thieves will process a small debit or charge against your account and return to take more from your bank account or add more charges to your credit card if the first smaller debit or charge goes through. And keep paying attention—fraudulent charges to your card or fraudulent debits to your bank account might occur many months after the theft of your information during a data breach.

2. Report a suspicious charge or debit immediately

Contact your bank or card provider immediately if you suspect an unauthorized debit or charge. If a thief charges items to your account, you should cancel the card and have it replaced before more transactions come through. Even if you’re not sure that PIN information was taken, consider changing your PIN just to be on the safe side.

If your physical credit card has not been lost or stolen, you’re not responsible for unauthorized charges. You can protect yourself from being liable for unauthorized debit card charges by reporting those charges immediately after you find out about them or they show up on your bank statement.

If you spot a fraudulent transaction, call the card provider’s toll-free customer service number immediately. Follow up with a written letter. Your monthly statement or error resolution notice will tell you how and where to report fraudulent charges or billing disputes.

When you communicate in writing, be sure to keep a copy for your records. Write down the dates you make follow-up calls and keep this information together in a file.

If your card or PIN was lost or stolen, different rules may apply. Your timeline for reporting after your card, PIN, or other access device is lost or stolen is tied to when you discover the loss or theft or when unauthorized transactions show up on your bank statement. Therefore, you should make the report as soon as you know that there is a problem

3. Submit a complaint if you have an issue with your bank or card provider’s response

Debit card issuers should investigate the charges (generally within 10 business days) and take action quickly (generally within 3 business days). For your credit card, it can take longer, but you don’t have to pay the charge while it’s under investigation. You also have a right to see the results of their investigations.

If you have an issue with their response, you can submit a complaint online or by contacting Financial Mediation Bureau (details as at bottom of this post).

4. Know when to ignore anyone contacting you to “verify” your account information by phone or email

This could be a common scam, often referred to as “phishing,” to steal your account information. Banks and credit unions never ask for account information through phone or email that they initiate. If you receive this type of contact, you should immediately call your card provider (using a customer service number that you get from a different source than the initial call or email) and report it.

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If you have any inquiry or even want to lodge complaint about this issue, we suggest you to contact Financial Mediation Bureau:

The Financial Mediation Bureau 664393P
Level 14, Main Block
Menara Takaful Malaysia
No. 4, Jalan Sultan Sulaiman
50000 Kuala Lumpur.
Tel : 03-2272 2811
Fax : 03-2272 1577
Website: http://www.fmb.org.my

Malaysians Positive in Reaching Investment Goals

2015-06-17T12:56:00.000+08:00

KUALA LUMPUR, 16 June 2015: A strong majority of Malaysians are optimistic in reaching their investment goals, according to a survey by Franklin Templeton Investments.

The fund manager's Global Investor Sentiment Survey (GISS) for 2015, 81% of Malaysian respondents were confident of achieving their financial goals with retirement, purchasing a new home and investing in or starting a business to be their top investment goals.

The findings also show that 64% of Malaysians viewed having investment manager with risk management as "very important" to them.

However, the survey also found a growing sense of conservatism among local investors this year, with 71%said they would be adopting a more conservative investment strategy in 2015 compared with 55% of the investors globally.

Malaysians were found to be more cautious towards the local stock market, with 39% expecting the equity market would be down this year vis a vis 31% thinking the market will be up and 30% believing it will be flat.

The Franklin Templeton GISS is one of the largest investor sentiment surveys and pooled over 11,508 investors globally across Asia Pacific,the Americas, Europe and Africa, including 500 Malaysians.

The survey is a barometer of the respective country's perception towards investing and expectations for 2015 and beyond.

Source: The Star

Prudential Calls for Awareness, Protection after Sabah Quake

2015-06-16T10:31:00.000+08:00

KUCHING, June 15, 2015: The recent earthquake disaster underscored the call by insurance providers such as Prudential Assurance Malaysia Bhd (Prudential) to prepare for the unforeseeable.

Prudential Bhd chief executive officer Philip Seah affirmed that the bedrock of life and medical insurance has always been about preparing for the unexpected.

“We would encourage every Malaysian to have adequate financial protection, be it in an event of a natural disaster, critical illness, accident or death,” he told The Borneo Post via email earlier this week.

“Currently, the combined life insurance penetration rate in Malaysia is at 56 per cent, combining both conventional and takaful, which means that only half of the population have some form of life insurance.”

Currently, concerns come in the form of coverage in terms of life insurance as well as insurance for assets and properties. It is noted that generally, houses in Malaysia are not covered for earthquake insurance. In regards to life insurance policies, Seah affirmed that there are no exclusions on death and medical claims that are a result of a natural disaster.

However, Prudential’s Personal Accident policies do cover natural perils including earthquakes.

“Having said this, the terms and clauses vary from policy to policy so we would encourage all policyholders to review their policy document for exclusion clauses,” Seah commented.

One of the challenges that the industry will need to continue to address, Seah said, is increasing consumers awareness as well as the understanding of insurance and general financial planning matters.

“Consumers need to be better informed to be able to make informed decisions about their insurance investments,” he underscored.

Speaking further on the group’s efforts to create awareness, Seah touched on Prudence Foundation which is done in relation to disaster awareness education.

Prudence Foundation is the community investment arm of Prudential in Asia and its mission is to make a lasting contribution to Asian societies through sustainable initiatives focused on the three key pillars: Education, Children and Disaster Preparedness and Relief.

Prudence Foundation has a public service initiative called Safe Steps which is aimed at providing people with key educational messages on how to prepare for natural disasters.

“It has been developed in partnership with National Geographic Channel and with international boxing champion and humanitarian Manny Pacquiao as the programme ambassador.

“We hope to be able to create more awareness surrounding disaster preparedness by leveraging on Safe Steps’ educational videos and information.”

Source: Borneo Post Online

Attitude Towards Investment Risks

2015-06-09T21:12:00.000+08:00

Your own attitude to risk is crucial. Some people are happy to live with capital risk if it means the chance of a higher return in the end. Others are 'risk averse' and don't want to risk their capital under any circumstances, while many will sit somewhere in the middle.

Only you can judge what level of risk you feel comfortable with and you should think seriously about whether you can afford to lose money or lock it away for a sustained period. All investment carries a degree of risk so you should never invest more than you can afford to lose.

Building a portfolio to suit your level of risk

To work out your own risk tolerance you should think about how much money you could face losing without it having a negative impact on your lifestyle or emotional state. Before investing you need to work out how you would cope if your investments fell by 10%, 30% or 50%, then you can set a limit for yourself.

How long to invest

You may have a different attitude for different types of investments. For example you might be happy to take some risk with money you won't need access to for many years – but if you are also saving up for something over just a few years, you'll need to be much more cautious.

Your risk tolerance is always linked to your investment timeframe. If you are investing on a short-term basis (less than five years) then you need to be prepared to accept more risk because if the value of your investment falls you will only have a limited time for it to recover so you can break even.

The longer you have to invest, then the more able you will be to withstand short-term losses and see the value of your investment recover. However, it can take a long time for that recovery to happen and stock markets will always have bad years as well as good ones.

Always seek financial advice

A good independent financial adviser will help you establish your attitude to risk, especially if you are not confident or experienced.

However it's important to find an adviser that specialises in investment and to make sure that they go through this process of finding your ‘attitude to risk’ thoroughly.

Source

Investment Risk: Simple Rules to Follow

2015-06-05T12:14:00.000+08:00

Follow these rules and you will deal the investment risk better.

The greater return you want, the more risk you'll usually have to accept
The more risk you take with your investments, the greater the chance of losing some or all of your initial investment (your capital)
If you're saving over the short-term it's wise not to take much capital risk. So what you are investing for and when you'll need access to your money will have a big impact on what types of investments are right for you
If you are investing for the long-term you can afford to take more risk as your money has more time to recover from falls in the markets
Investing in share-based assets has historically proved to be the best way for providing growth that outstrips inflation. There is a risk attached but, when you invest over the long-term, there is more time to recover your losses after a fall in the stock market.

Source

Investment Risk from Inflation

2015-06-03T21:05:00.000+08:00

Inflation risk is the threat of rising prices eroding the buying power of your money. In many cases, saving rates have been lower than inflation, meaning that the returns savers are making on their money are not enough to keep up with the rising cost of living.

Inflation risk to savings

Since you will pay tax on your savings, then you need to earn an even higher interest rate to keep pace with inflation after tax has been deducted.

If, for example, inflation is at 4% and you pay the basic rate, 20% tax on your interest, then your money would need to be in an account paying 5% for the real value of your money to remain the same, and higher than 5% for it to go up.

This means keeping all of your savings in cash is not actually a 'risk free' solution, as is often thought to be the case. If the returns you get on your money are unable to at least match inflation, then your money will effectively be losing value each year.

Inflation risk in retirement

This can be a big risk at any stage of your life but can be particularly damaging when you're retired, as you would typically not want to expose your money to risky assets such as equities (stocks and shares). So if you're not receiving interest equivalent to inflation, the value of the pension pot you have built will effectively be falling.

There are several index-linked savings accounts and investment products available, which are built to beat the risk of inflation, although they often require you to lock your money up for a number of years. These work well if inflation remains high but if it drops during the term of your agreement then you might miss out on higher returns elsewhere.

How to beat inflation through investing

Investing your money on the stock market is often seen as the best hedge against inflation. Taking on additional risk with your savings can potentially provide returns that outstrip the rising cost of goods. However, taking on this additional risk means you could also lose money. Of the different types of investments, stocks and shares, or equities, are generally used as a hedge against inflation.

Source

Are You Ready to Invest?

2015-06-01T22:44:00.000+08:00

Taking the decision to begin investing your money is a big step. Many of you are doing so in order to increase the capital value of your money or to get an income and maintain the level of your savings.

Investment means introducing risk to your money. This is not necessarily a bad thing, as increased risk can help you grow your cash. But, conversely, there is the possibility that you could lose some, or all, of your money.

There are four key activities that you must undertake before considering investing your money:

1) Sort out your debt

It's imperative to ensure that your debts are under control before considering investment. Debt is generally much more expensive to service than the returns you'll get from investments and large debt repayments may stop you from reaching your financial goals.

Additionally, if you do lose money by investing, you risk defaulting on your debt repayments. Focus on reducing debt to levels that you're comfortable to manage or, ideally, pay off all debt before investing.

2) Get protected

Make sure your finances are protected if you cannot work due to illness for an extended period of time. Check your sick pay scheme at work to see how long you would be covered for and consider taking out income protection insurance if you are self employed.

Other insurance, like critical illness cover if you become seriously ill, could also be an option if you have a mortgage or dependents, although this can be expensive.

In addition to this, life insurance is an essential item you need to take out before thinking of investment, especially if you have a family. Your work may offer a death in service benefit, but consider an additional policy, in case you change jobs or are out of work.

3) Think about retirement

One of the biggest problems in the UK is that people are not saving enough for their retirement. Relying on the state to provide a pension for you in older age may not be enough to maintain the lifestyle you have now or leave you comfortable in retirement.

It's vital that you start saving for your later years as early as possible. Make sure you're contributing to your employee pension scheme or a private pension before investing any spare cash – pension savers benefit from employer contributions and generous tax breaks.

4) Make sure you’ve got savings

Have you got spare cash to fall back on? Before introducing risk to your money, you need some core savings as an emergency fund for those unseen events.

The generally accepted rule is to have three months' salary in savings before you invest. And make sure that these savings are in a high-rate savings account, by using our unique Which? Savings Booster tool.

Source

5 Strategies for College Savings Success

2015-05-31T19:48:00.000+08:00

Calling for all future college and university students; if you plan to get into college or university to start on your degree study or pursuing a higher level of studies, here are five strategies you may work on to pay for the institution later.

Any parents or relatives who also want to get your children into the college may apply these strategies also.

The five strategies for college savings success are:
1. Start Early
2. Invest Regularly
3. Ask Friends and Family to Help
4. Educate Yourself
5. Work with a Financial Advisor

To learn more about these strategies, we would like to suggest to you to read on the online flipbook produced by Franklin Templeton Investments, or you may watch the video produced by the same organisation.

Enjoy!

College Savings Strategies Flipbook
(click on the image below)

College Savings Strategies Video

Getting Started as an Investor

2015-05-30T12:16:00.000+08:00

Through investment, you have a much greater potential for growth than by leaving your money in a savings account.

In the current economic climate, with interest rates so low and inflation rising, you could be losing out by keeping your money in a savings account because inflation is beating the return on interest rates and, therefore, the real spending power of your money is less.

Investment can enable you to match or even beat inflation and help you reach your long term financial goals. But it’s important to understand that in order to do this, you are introducing the risk of loss to your money.

When you invest, you encounter what is known as a risk/return payoff. Traditionally, the greater the risk you take with your money, the greater the potential for growth.

But with this comes an increased chance of losing your money. Before even considering investing your money, you need to be fully comfortable with introducing the potential for loss.

No investment is risk free and if you simply can’t reconcile that there are no guarantees with investment and that you could, potentially, lose some of your money, you are not ready to become an investor.

When making financial decisions, it’s important to consider the five steps below before you do anything with your money.

1) What are your financial goals?

Set a clear goal of what you want to achieve by investing. Are you just looking to grow your money? Are you looking to provide an income? Is there a set amount that you want your money to grow by or a minimum income that you need to be provided by your investments?

Having an idea of these will help you to decide how much risk you need to take to reach your goals. You may not have a particular reason to invest or it might be open ended, but try to ascertain exactly what you want your money to do.

2) What’s your time frame?

Once you know what your goals are, work out how long you need to achieve them. This will give you a clear idea of the kind of rates of return that you’ll need from your investments and whether or not your goals are realistic.

Factors like your age and health are important to consider. If you have short-term goals (less than five years) you should stick to cash savings.

Medium (five to 10 years) and long-term goals (10 years or more) are appropriate for investment, but some investments become less appropriate the older you get. You have less time for your money to recover if it falls in value and, if you’re retired, your capacity to earn is diminished.

3) Understand your attitude to risk

Understanding the risks you'll encounter through investment and how much risk you think you're willing to take could have an impact on the length of time you want to invest and, indeed, your financial goals.

If you want your money to grow significantly over a shorter time period, you may have to invest in riskier assets to achieve that growth – but if the potential downsides are too much, you may have to realign your goals. Read our guide to understanding investment risk to learn more about your attitude to risk.

4) How much can you afford to invest?

Be realistic about how much you can afford to invest. Assess all of your liabilities, like debts, insurance premiums, pension contributions, savings and living costs, to see how much spare cash you have to invest.

Remember that investment is long term and you should avoid having to access the money you're investing, as it may not reach its full potential if you do.

5) Seek financial advice

Only those who have knowledge of the markets and strong financial sense should really be managing their investments on their own.

By seeking financial advice, you'll be able to talk through all the points raised above and ensure that your investments are tailored exactly to your needs. Read our guide to choosing a financial adviser for the best ways to get investment advice.

Source