Affordable and suitable schemes hard to come by for B40 group

KUALA LUMPUR: It is not easy for the masses to obtain affordable and suitable insurance and takaful schemes in the market.

The current products are more suited to the affluent market segments, said Bank Negara Malaysia in its annual report.

Adding to the setback are product and process complexities. This, in turn, discouraged demand for insurance and takaful, particularly among the bottom 40 per cent household income group (B40).

Based on a survey among those who had never bought any insurance or takaful products, three in five indicated that it was due to a lack of understanding of insurance and takaful products.

“The Skim Perlindungan Nasional B40 (mySalam) is aimed at reducing the vulnerability of B40 households to income shocks from unexpected hospitalisation or critical illnesses,” Bank Negara said.

Based on data published by the Employees Provident Fund, the existing social protection system provides benefits for only 38 per cent of working-age Malaysians, with the rest (about 13.7 million people) excluded from such protection.

This remaining group includes the self-employed, informally employed (such as day earners) and housewives.

Bank Negara said notwithstanding recent public policies to expand coverage to these subgroups, many of these individuals are low-income workers and interruptions to their income stream owing to an inability to work can have a significant impact on their well-being as well as that of their dependants.

“This need remains underserved by both private insurance and takaful and public social protection,” it added.