Investment-linked statement

Do not chuck away your investment-linked annual statement when you received it normally in Feb. Most of us would have our medical card and critical illness cover attached in investment-linked policies. Therefore it is important to ensure that our premium and the units value are sufficient to cover next year's insurance charges and service charge. DO NOT ASSUME that the premium is level throughout the duration of the policies.

Using the projected insurance and service charges table, work out how much you need for next year.

Giving you a live example of what Mr.A's age 51 Prulink Assurance Account paying RM1800 premium annually.

Death Benefit                                 RM30K
Crisis Cover Benefit                      RM30K
PRUdisability provider Benefit       RM3K
PRUmajor med Benefit                  100 (medical card, Daily R&B 100/day, Annual Limit RM50K)
PRUpayor Basic                            RM1,800

Summary of projected insurance and service charge:

Projected Insurance charges for age 51 is
(4.69 X 30) + (5.34 X 30) + (0.9 X 3) + (360.19) + (8.64 X 18) + (96) = 915.31

Projected Insurance charges for age 52 is
(5.26 X 30) + (5.89 X 30) + (0.9 X 3) + (391.03) + (9.39 X 18) + (96) = 993.25

Projected Insurance charges for age 56 is
(8.27 X 30) + (7.51 X 30) + (0.9 X 3) + (490.97) + (11.19 X 18) + (96) = 1264.79

Take note that there is a 38% rise in the charges from age 51 to age 56, 5 years difference only.

Based on the annual statement received this year, we can only project maximum 6 years later.

Mr. A plans to hold his policy until 70 years old. The insurance charges increase more as a person gets older. When Mr.A is 60 years old, the charges will definitely be more than RM1800 which is his annual premium. The shortfall will be deducted from the units value in the account. If Mr.A has withdrawn his units from the policy account, (which you are allowed to), it is very likely that he will lapse his policy unless he pays more for his premium.

Work out the projected charges carefully each time you received your annual statements. You don't want to be caught by surprise that your policy has lapsed when you need it for medical bills!