My knowledge on takaful is rather limited. Yes I read materials on the products and etc, but I couldn't find a takaful agent who thinks about my pocket rather than his/her own pocket. That is until a few days ago.
Asa and I see that takaful should be treated as an expense, hence we did not want to sign up a investment-linked or a savings-linked( the term is standard takaful in the industry). However, due to our lack of knowledge before, the first takaful we signed was an investmet-linked takaful.
After further readings we realised what we actually wanted was a term insurance. It provides protection and none of the savings(maybe only a little) or the investment element. We tried asking for this product from a few takaful agent but they rejected our request saying they do not sell it, or they don't have it. Apparently, a friend, who is also a part time takaful agent told us that the product actually gave agent very little commission hence their hesitance of promoting the product. Well boo hoo... thinking about their pocket and not ours... well to each their own I suppose. Fair enough.
Anyway, I attended a personal finance course the other day and the lecturer was a takaful agent. So I took the opportunity to ask him about his company's term product under the pretense of asking for the sake of the course and not for my own. I knew I would get a straight answer because this was a course and he was not trying to sell me his products and indeed I got a straight answer from him.
Apparently, term conventional insurance for individual are available BUT for takaful it is sold as a rider. Finally!!! the answer I was looking for
So after class I told him my situation and asked him about the product further and he told me what he could do is he could sell me a standard insurance (savings-linked) but with min coverage but insert a term takaful as a rider with the most coverage he could give me.
Why do we want term insurance so much..??
Ok here's the difference.
With a standard takaful, we would have to pay RM4k for a RM1 mil coverage (not that I want a RM1 mil coverage.. this is just an example)
But with a min standard takaful + a term takaful added as a rider we would only have to pay RM1k for a RM1 mil coverage. How this works is the standard takaful would cover RM250k and the term insurance would cover RM750k. U see.. the contribution that you have to pay for standard takaful is more that term takaful.
Now comes the difference between a standard and a term insurance
The contribution in a standard takaful would be portioned to your protection account and a savings account. This portion will change according as you grow older. It's the savings part that's expensive. It's like you're hiring your takaful company to invest your savings. (same goes for investment linked)
With term insurance/takaful, the contribution would mostly go to the protection account and only a little would go to the savings account. Yes after 40 years the amount in the savings account of a term takaful will be less than the amount if I'm taking standard takaful but since we have the capability of investing our own savings and getting better returns thus the main reason why we want a term insurance.
So.. yeah.. I finally found a takaful agent I can trust. Now it's only the matter of introducing him to Asa and discuss what is most suitable for us. YIPPEE!!!