TheWall: Protecting three generations under a single plan

This article first appeared in Personal Wealth, The Edge Malaysia Weekly, on August 24, 2020 - August 30, 2020.
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In Asian countries, it is not uncommon to see three generations of a family living under the same roof. The deep-rooted culture of children taking care of their ageing parents is still prevalent today. However, many working parents are finding it difficult to financially support everyone in the household, especially when it comes to big-ticket expenses such as medical bills.

These challenges have prompted some insurers to introduce policies that provide coverage not only for the policyholder, but also his parents and children, under a single plan. Some policies provide payouts upon death or total and permanent disability while others offer coverage for personal accidents and critical illnesses.

Great Eastern Life Assurance (M) Bhd chief marketing officer Nicholas Kua points out that many working parents, also known as the “sandwich generation”, need to provide for their spouses and children while taking care of their ageing parents. This has created a tremendous financial strain on them.

“While the virtue of filial piety has been taught down the generations, financial planning has become important in helping the sandwich generation mitigate the financial risks associated with a three-generation household,” says Kua.

“The challenges adult children face in caring for ageing parents are made harder in modern society. This is especially true in a household where both husband and wife work, compounded by having to care for their children.”

He says this motivated the insurer to develop Great Generation Care, a first-in-the-market insurance policy that provides critical illness coverage for all three generations. The plan protects the insured (sandwich generation) against 45 critical illnesses, including cancer, heart attack and stroke. It is cheaper than buying separate plans for the policyholder’s parents and children.

Families with more than one child would typically need to buy a separate plan for each of the children. The same goes for their ageing parents, where each would need a separate plan, says Kua.

“Currently, there isn’t any plan that caters for this combination in a single policy, let alone the affordable premium offered. For those who purchase Great Generation Care, there are essentially five policies — the insured person, his/her two children and his/her parents,” he adds.

“In addition, Great Generation Care and Parent Protect Rider cover their children and parents without medical underwriting. Buying a separate plan in the market would require going through underwriting.”

Additional complimentary coverage is provided for all their current and future children until the age of 18 without the need to pay additional premium, says Kua. The plan protects them against the same 45 critical illnesses as well as 11 child illnesses, with no medical underwriting required. This means the premium for this plan is the same as buying individual plans out there, but it includes complimentary coverage for current and future children.

“Completing the three-generation coverage, there is an option to include a parents’ coverage (Parent Protect Rider) for three of the most prevalent illnesses among senior citizens: Alzheimer’s disease, cancer and Parkinson’s disease, with no medical underwriting required,” he says.

“Having the right financial protection will go a long way to alleviate the financial strain and emotional stress caused by any unexpected turn of events encountered by any member of the three generations. This is especially true when it comes to ageing parents. Illnesses such as Alzheimer’s, cancer and Parkinson’s require dedicated care that will put a tremendous strain on the household’s finances and resources.”

Great Generation Care was made available in Malaysia in January. Since then, almost 10,000 customers have taken up this plan. Kua says it was made more accessible by offering complimentary protection to the policyholders’ current and future children.

“Conventional wisdom is that it would be difficult to secure financial protection for critical illnesses coverage at old age, especially for Alzheimer’s, cancer and Parkinson’s, which are part of the identified risks for senior citizens. Thus, we have made this plan accessible by offering an option to the insured to include their parents without any medical underwriting, meaning no health questions asked,” he adds.

“Similar to other critical illness plans offered in the market, this plan comes with some standard exclusions. Among them are any pre-existing conditions not covered by the plan.”

Meanwhile, MSIG Insurance (M) Bhd provides a single insurance plan to cover all three generations. Its Generations PA is a personal accident policy that provides the flexibility of allowing policyholders to “mix and match” any of the three plans (Silver, Gold and Platinum) to suit their family members’ needs, excluding children as it is free for children aged one month to 17 years old.

MSIG Insurance CEO Chua Seck Guan tells Personal Wealth that being a pioneer in offering Generations PA insurance since 2010, the company has noticed that it is easier for the policyholder (usually the breadwinner of the family) to manage the family’s insurance plans in a single policy at a time than it is to manage individual policies that may have different expiry dates. This reduces the likelihood of forgetting any policies when it is time for renewal, ensuring adequate protection for the entire family, he points out.

“As the younger generation enters the workforce, they become aware of the importance of insurance. In addition to taking up insurance for themselves, they are looking for plans to take care of their parents in their golden years, when the application process could be challenging,” says Chua.

“We introduced this three-generation insurance plan to provide a hassle-free experience for them to obtain coverage for their parents and dependants through a single application instead of going through multiple ones. The risk of an insurance policy lapsing can be minimised by having all of their loved ones insured under a single policy.”

In fact, Generations PA is the top-selling product in MSIG’s family PA plans. It contributes about 80% to all family coverage PA policies, he adds.

MSIG’s product benefits families with more than four persons, such as providing free coverage for children aged one month to 17 years when both parents are insured as the Principal Insured (primary insured), plus an extension for any number of children a couple may have. The policy also has a cash benefit of up to RM200 per day for a maximum of 365 days for the adults under the plan, in the event that the insured is hospitalised due to an accident.

Medical evacuation or repatriation services of up to RM1 million are available at various locations under MSIG’s policy if the insured meets with an accident while overseas or travelling more than 100km from his residence in Malaysia. Extended coverage includes drowning, food and drink poisoning, harmful insect and snake bites and motorcycling accidents.

“[When it comes to the premium,] it is not an apple-for-apple comparison between the three-generation plan and an individual plan as each has its own offerings to cater for different needs. So, we have to take into consideration the different age groups in a family plan to ensure adequate benefits are offered with affordable premiums to ensure that the entire family can enjoy similar protection,” says Chua.

Hong Leong Assurance Bhd offers insurance coverage for three generations under its HLA Complete Link. This investment-linked policy provides coverage for three generations, depending on their needs, with the use of riders. According to the insurer’s website, HLA Complete Link is a regular premium investment-linked plan that protects against death and total and permanent disability as well as old age disability.

The policyholder has to be at least 16 years old. The policy provides coverage for an unborn child from 13 weeks of gestation until before birth while other coverage is provided from 30 days to 70 years old.

Greater interest during pandemic

There has been more interest and demand for insurance products over the past three months, say Great Eastern Life Assurance (M) Bhd and MSIG Insurance (M) Bhd.

Great Eastern Life Assurance chief marketing officer Nicholas Kua says the unprecedented Covid-19 pandemic has seen heightened interest in health and financial protection among Malaysians. While there have been more enquiries on and interest in life insurance, the economic uncertainty has also put a strain on financial commitments. “The take-up remains strong, but the premium size has been moderated by the economic uncertainty,” he adds.

MSIG Insurance CEO Chua Seck Guan says the company has seen growth as well, particularly for its basic PA products such as Mini PA and ABC PA in the first three months of the year. “We observed that business started to pick up from May. The Covid/Dengue Hospitalisation Cash Benefit add-on was definitely well received by our policyholders.”

In the early days of Covid-19, the insurer recognised the need to respond to it quickly and introduced the Covid-19/Dengue Hospitalisation Cash Benefit add-on to selected PA products to assist policyholders, says Chua. It is a daily hospitalisation cash benefit for each day the insured is hospitalised after testing positive for Covid-19 and/or dengue, up to a maximum of 30 consecutive days. The lowest plan is RM10 per year for a hospitalisation cash benefit of RM100 per day for up to 30 days.

He points out that compared with previous years, the key factor that stimulated the demand for insurance is different this time around as the pandemic may have reshaped how people view their insurance needs. It has made people more accepting of insurance as a necessity to complete their protection with Covid-19 coverage.

Chua foresees that the demand for insurance will continue to increase. “The Covid-19 situation has created economic uncertainties, with individuals and businesses greatly impacted. People are now being very prudent in their spending and our focus is to retain our existing business and provide benefits that offer value to our policyholders and to ensure that their financial interests are protected in times of uncertainty,” he says.

With Covid-19, the major concern globally is good health and a robust economy, says Chua. During these uncertain times when people think of reducing their expenses, insurance has become even more important as a safety net to provide financial relief and assistance during emergencies, especially in managing unforeseen larger expenses. “Therefore, it is crucial for policyholders to review their insurance plans carefully to ensure that they are adequately protected in times of need,” he adds.

Meanwhile, Kua says it is important to ensure that one has sufficient financial protection in times of uncertain economic conditions. “When your financial resources are already strained during the poor economic situation, it will be even more challenging for you to outlay from your savings and investments for any unexpected turn of events. This is the time when having sufficient financial protection will alleviate the need to cash out of investments at distressed prices.”