UNIVERSITI TEKNOLOGI MARA CAWANGAN SELANGOR

KAMPUS PUNCAK ALAM

(BA247)
BACHELOR IN BUSINESS ADMINISTRATION (HONS.) TRANSPORT
MAR 2022 – AUG 2022

FIN533
GROUP ASSIGNMENT

TOPIC:
IMPORTANCE AND CURRENT ISSUES ON MANAGING PERSONAL
FINANCIAL STATEMENTS AND BUDGETING & INSURANCE PLANNING

PREPARED BY:

STUDENT ID NAME
2022962021 ATHIRAH NAZIFA HUSNA BINTI MUHAMMAD HAZMI
2022981165 IRDINA ATHIRAH BINTI YONI DWI VARIA
2022900769 ADAM BIN ADRIN
2022745729 MUHAMMAD IZZAD SHAH BIN MOKHTAR
2022780293 MUHAMMAD FAKHRI HAZIQ BIN SHAMSUL

PREPARED FOR:
DR. RAFIATUL ADLIN MOHD RUSLAN

SUBMISSION DUE:
23RD JUNE 2022
 ACKNOWLEDGEMENT

First of all, we would like to thank Allah S.W.T as finally we were able to finish our
assignment that have been given by our lecturer to us. This task had been done with all of the
efforts by the group members, Athirah Nazifa, Irdina Athirah, Muhammad Fakhri,
Muhammad Izzad and Adam Adrin.

In performing our assignment, we had to seek for help and guidelines from respected
person, who deserve our greatest gratitude. We would like to express our very great
appreciation to Dr. Rafiatul Adlin for her patient guidance, encouragement, and willingness
to give her time to us during preparation of this assignment. We would also like to expand
our deepest gratitude to all people for their help directly and indirectly guided us to complete
this assignment.

Not only that, we would like to thank all of our friends that always stick together
through thick and thin and also work hard to produce a good assignment. Hope that the
efforts will give us benefits and also our group projects.

Last but not least, we would like to thank our family who always support and give
their cooperation to us in writing our assignment.

2
 SUMMARY

For the purposes of this report, we are required to discuss about the importance and
current issues on managing personal financial statements and budgeting and insurance
planning. There are a lot of importance as well as chosen current issues that we have talked
about, such as inflation and the rise of life insurance. Our current issues have been
strengthened as a result of the incorporation of statistical data and more recent occurrences
that have been publicized by the media as additional proof to support our stance.

It was expected that inflation would go up at various points throughout time. Because
of this, individuals are strongly advised to make effective decision on the management of
their personal financial statement in order to readily prepare themselves to deal with any
challenges that may arise in the future. If a person is unsuccessful in doing so throughout the
course of their lifetime, it is possible that they may experience a shorter-term financial loss
that is more than they should. The proper management of our financial statement may assist
us in growing our wealth and moving closer to leading a healthier life.

Not only that, but preparing ahead with insurance is also the methods to assist
contribute to a good financial situation. One of the things that has helped many individuals to
see the significance of having insurance in their own life is the Covid-19 virus. When people
get infected with the virus and have to spend unexpectedly high sums of money for their
medical care, a lot of people are impacted. This is why individuals need to have insurance
plans early on in their lives to ensure that their lives will be protected in the future.

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 TABLE OF CONTENTS

NO. TOPIC NO. OF PAGES

1. Managing Personal Financial statement and budgeting

- Introduction
5
- Importance
6-7
- Current Issues
8
- Statistical Information
9-10
- Other related Information
11
- Conclusion
12
- Recommendation
13

2. Insurance Planning

- Introduction
14
- Importance
15-16
- Current Issues
17
- Statistical Information
18-19
- Other related Information
20
- Conclusion
21
- Recommendation
21
3. References 22-24

4. Appendices 25-27

4
 INTRODUCTION (Managing Personal Financial Statement and Budgeting)

Managing personal financial statement and budgeting is a very important thing in

one's life in this world. This management is very much emphasized to everyone to manage
their finances, especially those with families because it can make an impact in their lives.
However, what does this management mean? We will start with a personal financial
statement.

Personal financial statement is a spreadsheet that explains a person's financial

position at a given time point in time. It consists of two things, the first is the personal
balance sheet and the second is the cash flow statement. For the personal balance sheet, it will
be divided into two sections. In the asset section, it will explain all the estimated fair value of
each asset owned by a person according to his level of liquidity. While in the liability section,
it explains the estimated fair value of each liability owned by a person.

Through this spreadsheet as well, a person’s net worth can be known. Through the
results of this net worth calculation, it will explain whether a person's financial level is at a
good or bad level. To further increase this net value, a person can increase the value of his
assets or reduce the value of his liabilities which is reduce debt. However, for the cash flow
statement, it shows the amount of cash flowing into and out for a given time period. Besides
that, it is also called personal income and expenditure statement.

In addition, another purpose of this personal financial statement is when a person

wants to borrow money, the bank or an investor will request this record. So, evaluating this
personal financial statement regularly can help a person in getting high interest rates.

Next is budgeting. Budgeting is a spending plan. This planning will be made based on
income and expenses. In more detail, it is an estimate of the amount of income generated by a
person and his expenses in each period of time. Nowadays, there are so many ways to
generate this budget that one can generate it through handwriting as well as applications on
the phone related to finance.

The main purpose for a person to do this budgeting is to enable him to control his
finances more efficiently. This is because nowadays so many people are not good at
managing their finances by spending more than they should. In addition, in this budgeting
process as well, it is not fixed all the time. This is because it must be done according to the

5
situation. For example, if in the month has more money, then a person can change his budget
than before.

IMPORTANCE (Managing Personal Financial Statements and Budgeting)

Personal financial planning is a systematic strategy to maximize one's existing

financial resources through effective financial management in order to successfully
accomplish their financial goals and objectives. There is several importance of managing
personal financial statements and budgeting. Firstly, when individual is having a good
personal finance, it will help them to understand his or her money and financial better. We
must be financially literate and have a strong personal finance management strategy in place
in order to properly comprehend our money. As a consequence, we will get to understand on
how to control or rule our money rather than the other way around, because most individuals
face personal struggles and even chaos as a result of allowing their money to dictate their
decisions. Financial planning may provide a whole new perspective on budgeting and
techniques to improve control over one's financial lifestyle.

Next, it will also encourage people to properly organize their spendings and savings.
We may only know how to spend our money on bills as well as other monthly expenses such
as our groceries, debts and mortgage. However, with appropriate personal financial
management, we will definitely learn to keep track of our spending efficiently. By doing this,
we will know where will our money goes. If these are not necessary, we may also eliminate
them from our budget and put the excess money into our savings account. Savings are
prioritized above spending in proper personal financial management which mean before we
spend our money, we need to set aside some of our savings’ account. The remaining ones
might then be used for our expenses. There are few ways to organize our finance which are
creating two bank accounts, use financial apps as well as make a checklist.

Not only that, managing financial will help to keep us off unmanageable debts. It is
not an issue to have a few debts. Being too much in debt, on the other hand, is risky for our
future financial. Avoiding overspending or spending more than we earn is one strategy to stay
out of debt. For example, most individuals tend to modify their lifestyle as their income rises,
but in a greater percentage than their income rises. This just leads to more debt accumulation.

6
Besides that, when we use our credit card excessively, we are adding to our indebtedness.
This is why personal finance is crucial to help us avoid or get out of debt.

In addition, managing personal financial statements and budgeting will help us

prepare for emergencies. Emergencies are not specifically for accidents, hospital bills but also
can be for home repairs and more. If we do not plan our money ahead of time, we won’t be
prepared when those bills arrive. Many people believe that savings are a shield for a gloomy
day. However, if our savings are insufficient, unexpected financial upheavals might still put
us off track. It is usually a good idea to have some liquid investments on hand that may be
used in an emergency. It is highly recommended to save at least three to six months of living
costs. Creating a financial plan takes time and may force us to confront certain financial
issues that we have been avoiding, but it is well worth it in the end.

Lastly, it will also help to establish clear financial goals. We will be able to assess
whether our goals are attainable once we have learned about personal finance management.
Depending on our financial objectives, effective personal finance management can assist us
in devising the best approach to meet those objectives. For example, keeping track of our
everyday spending is one approach to restrict our expenses as well as save more money.
There are few steps that we can do to set our financial goals. One of them is access our
priorities. When we list everything and evaluate what is more significant, from there, we will
determine what is most important to do first. Next, is by using SMART. Set specific,
measurable, attainable, relevant, and timely goals. By doing so, we will avoid creating an
unattainable goal that would cause us anguish if it is not achieved. Lastly is checking our
budget. We will have a better notion of how much we can set as our goals after we know how
much we receive and spend. Furthermore, our budget will assist us determine whether our
wages are sufficient to accomplish the objectives.

7
 CURRENT ISSUES (Managing Personal Financial Statements and Budgeting)

Though the year 2021 may have begun with a terrible flood that has impacted
thousands of Malaysians and their families in numerous areas throughout the country, it is far
from over. According to specialists at Kenanga Research, the country should expect to at
least avoid deflation in 2021 and face growing pricing pressures in the months ahead.

Inflation is likely to come around but stay relatively mild at 1.7 percent this year,
according to the research house's forecast, with the anticipation of a resurgence in economic
development. "In the next months, the sustained pandemic-related limitations will almost
certainly maintain deflationary pressure." The upward trend is expected to be aided by a
recovery in global crude oil prices. "Given the possibility of economic growth recovery, we
predict inflation will come around but remain relatively moderate at 1.7 percent in 2021,"
they said in a statement.

Furthermore, Kenanga Research believes the Bank Negara Malaysia (BNM) would
retain the benchmark overnight policy rate (OPR) at 1.75 percent at its next Monetary Policy
Committee meeting on January 20, 2021, as a result of the emergence of positive vaccine
sentiment and improved economic conditions.

The International Monetary Fund (IMF) defines inflation as the rate at which prices
rise over time. It is usually used to estimate a broad measure of pricing, such as the growth in
the cost of living in a nation, but it may also be used to calculate more particular items, such
as food or services. For example, if a bowl of Curry Mee cost RM5 in 2005, the identical
piece of Curry Mee with the exact same serving and qualities will cost RM10 in 2020 or
double the original price.

While inflation is a topic that most people are unfamiliar with, it may have a
significant impact on how you manage your daily costs. A person may not be able to
effectively strategize or manage their finances for the long-term if they are unaware of the
consequences of inflation and may lose more money than they should in the short-term.
8
9
 STATISTICAL INFORMATION (Managing Personal Financial Statements and
Budgeting)

Malaysia's annual inflation rate increased to 2.3 percent in April 2022, meeting
market forecasts after falling to a five-month low of 2.2 percent in March. Food prices
increased the highest since December 2017 which is 4.1 percent vs. 4 percent, as demand
increased throughout Ramadan and ahead of the Eid-ul-Fitr holiday. In addition, costs for
transportation 3.0 percent compared to previous which is 2.6 percent, entertainment & culture
is 1.3 percent compared to previous which is 1.1 percent, education is 1 percent compared to
previous which is 0.9 percent, and restaurants & hotels is 1 percent increased is 3.2 percent vs
2.9 percent previously.

Housing prices went up 0.8 percent vs 0.9 percent, miscellaneous goods & services
1.8 percent vs 1.9 percent, furnishings, household equipment, and maintenance 2.7 percent
compared to previous which is 3 percent, health 0.2 percent compared to previous which is
0.2 percent, and alcoholic beverages & tobacco 0.5 percent vs 0.5 percent, while
communication costs remained unchanged for the third month. Furthermore, the cost of
apparel and footwear fell significantly less sharply, -0.2 percent compared to previous which
is -0.3 percent. Consumer prices rose 0.2 percent month over month in April, after gaining
0.3 percent in March.

10
11
 After a flat result in March, consumer prices in China jumped 0.37 percent in April
compared to the previous month. The reading was mostly influenced by rising food and
transportation costs. Food costs were impacted in particular by logistics issues and
stockpiling as a result of the Covid-19 limits. Housing costs, on the other hand, have fallen as
a result of sluggish demand in the real estate market.

Consumer inflation increased to 2.1 percent in April, up from 1.5 percent in March.
The rate of inflation in April was the highest since November 2021, and it exceeded market
predictions of 1.8 percent. In April, the annual average rate of inflation increased to 1.3
percent. Finally, producer price inflation decreased to 8.0 percent in April, down from 8.3
percent the previous month, the lowest rate in a year. Consumer price inflation is predicted to
go up in the next months, although it will likely remain low due to weak domestic demand.
Meanwhile, notwithstanding Covid-19-induced supply challenges and a negative foreign
pricing environment, producer price inflation should eventually trend down on a base effect,
given increasingly high producer price inflation readings as last year proceeded.

Consumer price inflation is expected to average 2.2 percent in 2022, unchanged from
last month's prediction, and 2.3 percent in 2023, according to FocusEconomics. Inflationary
pressures on producer prices are expected to average 5.5 percent in 2022, up 0.4 percentage
points from last month's prediction, and 1.3 percent in 2023.

12
 OTHER RELATED INFORMATION (Managing Personal Financial Statements and
Budgeting)

Knowing how to spend, save, and invest money wisely may not have seemed
important in earlier fortunate times, but Covid-19 is now causing chaos on Malaysians'
financial fortunes. The pandemic is pushing individuals to recognise that financial literacy is
a necessary survival skill without which they would face problems, particularly when a global
or personal crises comes.

Just under percent of people indicated they still spend exactly what they make or
more, and just over half said they wouldn't be able to live on their savings for more than three
months if they lost their job. Despite the outbreak prompting interim measures like as loan
moratoriums and debt repayment help, more over 60% of individuals under 35 are ignorant of
potential debt restructuring and rescheduling options. According to the 2020 RinggitPlus
Malaysia statement, there is 70% of Malaysians believe their EPF would not be enough to
fund their retirement, 45% have yet to begin retirement financial planning. Indeed, many
people manage to scrape by for the rest of their lives with little or no regard for their personal
financial management.

"Despite the fact that every adult, regardless of occupation, is influenced by money
concerns, we aren't properly taught it at school in a meaningful or required way," according
to the research. Financial literacy receives less attention than other subjects such as
languages, math, and science, but it deserves to be treated equally to history, geography, and
art." "Responsible financial behaviour is vital for us all," Izlin Ismail tells MalaysiaNow.
"You don't want to be left penniless if the worst-case scenario comes."

Izlin has trained teachers to administer financial literacy programmes for children in
schools, with each session tailored to a specific age group. Many children of low-income
parents who enrolled in such classes became so knowledgeable that they began counselling
their parents on how to improve their financial habits.

"The issue is not how much debt you have," Izlin argues, "but whether you will be
able to pay it back if it grows." When the economy is disrupted, as it is today, the long-term
consequences of high debt can lead to societal instability.
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14
 CONCLUSION (Managing Personal Financial Statements and Budgeting)

In conclusion, we need to complete our financial statements and create a budget so

that we do not fail to plan our savings and expenses. It is a crucial aspect of wealth
management. A comprehensive financial plan, regardless of your income or aspirations, may
prepare us for a lifetime and minimise any financial worry, both before and after retirement.
Having a huge amount of earnings does not mean that we do not need to manage our personal
financial assessment and do our budgeting. This leads to failure to plan and worst-case
scenario we may be to have a lot of outstanding debt and a lack of money to finance the debt.
We know that there need to be 3-6 monthly subsistence savings as collateral to have a full
backup instead of living from salary to salary. Emphasizing personal finances and budgeting
is especially important to know at a youthful age so that we are literate about our wealth with
the current situation. We can find alternatives in our spending so as to have a sufficient
amount of money to achieve our target. We need to care about our finances otherwise we
may not be prepared to face any risks in the future. We can see that during a pandemic when
the economy collapses, many people experience a financial recession because they lose their
source of income and have to reduce spending. Preparing this plan seems to organize our
lives and make a checklist for what we want to accomplish in the future. This can help us to
strengthen our wealth and towards a healthier life. No good decision can be made without
sufficient information.

15
 RECOMMENDATIONS (Managing personal financial statements and budgeting)

Among the recommendations that can be done is that we need to set our financial
goals. This is to guarantee that we have a financial strategy. If we want to buy a car, we need
to know the cost, the amount of down payment, and the financing method that suits our
income, savings, cost of living, and other debts. We can also categorize our targets into short-
term, medium-term, and long-term finances. Organizing big goals into smaller ones helps us
to manage them more easily. With that, we will be more motivated to budget and keep
savings. Meanwhile, we must determine whether the items we wish to purchase are
appropriate for the current scenario. Instead of accumulating liabilities such as new
automobiles and motorbikes, one should focus on accumulating assets such as real estate and
precious metals, as well as diversifying various investment products.

Next, set SMART financial goals, which are specific, measurable, attainable, realistic,
and timely. The advantage is that we can identify our strengths and weaknesses so that we
can make good planning. In this regard, we are always prepared in case there is an issue that
hinders. Always follow your budget, so that we are not overlooked or complacent with our
expenses. For example, if our eating out expenditure is high, we can initiate to bring our own
food from home. There are now many mediums like user-friendly spending apps to help our
daily spending, otherwise, we can also do it manually by updating itself in excel.

Another suggestion is that through resources on the internet, this can help a person
create their own financial statements and budgets. There are good templates, and they contain
formulas to make it easier for us to manage them. We can also learn a lot of knowledge more
interactively about financial management on social sites like YouTube and Facebook. Now
there are many recognized and accredited individuals out there who share the knowledge
about wealth consolidation that we can learn.

One needs to be sensitive to are with respect to current issues. We need to be efficient
with what is going on and always plan our finances in advance. With the better economic
condition, the government is providing aid to help individuals lessen their living burdens. For
example, PEMULIH and Penjana stimulus packages. We can observe which services are
available for use. There is a program under Bank Negara Malaysia, namely the Financial
Management and Resilience Program (URUS), which aids B50 home debtors or consumers

16
in overcoming financial difficulties caused by the Covid-19 epidemic, the existing facilities
we can take note of in order to help our affairs.
INTRODUCTION (Insurance Planning)

Most people nowadays have understood how important it is to take out insurance
for themselves. Yet there are still some who still do not understand it and do not want to take
it. However, what is meant by this insurance?

Insurance can be said to be a contract called a policy. It is where an individual will

receive financial protection as well as compensation subject to the certain term and condition
from the insurance company he deals with. In this contract, in the event of any contingency
insured then the insurance company will pay the compensation. This is like the death of a
policyholder as well as property damage.

One needs to understand and know the type of insurance he needs before taking it
out. This is because insurance has many forms and options for a person to choose. Among the
types of insurance that are often chosen by the public are life insurance and medical
insurance.

Life insurance is a payment that will be given to an individual who took out this
policy and has died. The benefits of this payment will be obtained by family members such as
the wife and children of the deceased. They can use this money to continue living and also to
finance the cost of education.

Besides that, medical insurance is a protection given to the policyholder when he

suffers from any illness or needs treatment, surgery, and others in a private hospital. Through
this insurance policy, all treatment costs when the policyholder is admitted to the hospital
will be fully borne. In addition, policyholders for both of these coverages will also get tax
exemption.

Lastly, insurance planning is one of the important things in one's financial

management. The main goal of this planning is to identify and analyse any risks that a person
may face and through this planning will determine the insurance coverage needed to provide
peace of mind if the problem occurs.

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 IMPORTANCE (Insurance Planning)

There are four main types of insurance which are life insurance, health insurance, auto
insurance and long-term disability coverage. All of these have their own importance to
someone’s life but we shall discuss them generally. Firstly, insurance will provide safety and
security to individuals and businesses. This is due to the fact that insurance offers financial
assistance and minimizes the uncertainties that individuals and organizations confront at
various stages of their lives. It is an excellent risk-mitigation technique for occurrences that
might cause financial hardship for people and organizations. For example, with medical
inflation averaging increase at about 15% per year, Health Insurance provides financial
security for the family if the routine medical operations disrupted the family’s calculated
budget. Financial losses that caused by fire, theft, maritime mishaps and more will be provide
a financial compensation as for the business insurance.

Next, insurance planning helps us to manage and fulfil our long-term goals. It is vital
to appreciate the significance of insurance in achieving long-term life goals. This is because,
we do not want our loved ones to give up on their aspirations while we are gone. Long-term
goals must be well researched and financial planning should begin as soon as possible. A life
insurance package and adequate life insurance coverage can assist you in meeting a variety of
long-term financial goals such as purchasing a car, house, marrying our children, savings for
retirement and more. Not only that, it is also a long-term contract that provide a variety of
insurance plans to help us reach our individual or multiple financial goals by combining the
right insurance plans. Our investment will be unaltered for a long and continuous period of
time in the direction of a planned and secure financial future.

Besides that, insurance planning will also generate financial resources. The insurance
industry earns money by collecting premiums from millions of policyholders. The funds will
be invested in government bonds, stocks and it will also be invested in a long-term
infrastructure asset due to their long-term nature. For example, are ports, dams and roads that
are titled to be very important to nation-building. This is because more revenues will be

18
generated and used for the country's economic development. By that, massive investments
enhance job prospects by causing capital formation in the economy.

Not only that, it will also provide a support to families during medical emergencies.
Everyone values family well-being, and most individuals are more worried about the health
of their family members. Medical insurance is a policy that protects people financially against
a variety of health risks. A Health Insurance plan offers financial help in the case of a medical
emergency. Medication and hospitalization play a vital part in safeguarding the health of
families, from elderly parents to newborn children. Rising medical care expenses and
skyrocketing drug prices might quickly deplete our finances if we are not adequately
prepared. Anyone can become a victim of a severe disease at any time such as a heart attack,
stroke, or cancer and growing medical costs are a major source of concern.

In addition, it will help in savings and investments. A life insurance policy can be
used to fund our retirement and investments. The amount insured rises with varied
cumulative advantages such as simple or compound incentives, fixed bonuses, reward
benefits, and more over the life insurance period with yearly, frequent, and regular premium
payments. It means that it inculcates the habit of conserving money through premium
payments. When the contract matures, the insured receives the lump sum amount. As a result,
life insurance promotes saving. Furthermore, retirement planning is an important component
of a healthy financial strategy. We may be unaware of the significance of insurance in
developing a thorough retirement plan, but it may be quite beneficial. Certain insurance plans
might provide a steady source of income after retirement. Insurance's function in life after
retirement is determined by how we invest in the present.

Lastly, insurance planning will help us in spreading of risk. Insurance allows risk to
be transferred from the insured to the insurer. The basic principle of insurance is to spread
risk among a large number of individuals. Many people get insurance plans and pay
premiums to the insurer. When a loss happens, it is reimbursed from a pile of cash
accumulated by millions of policyholders. The insurance contract operates on the 'concept of
financial risk transfer from the insured to the insurer.' As an insured, you pay premiums in
order to get compensation from the insurer if an unanticipated disaster occurs. As a result,
getting insurance reduces your financial burden.
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 CURRENT ISSUES (Insurance Planning)

The effects of the Covid-19 pandemic are not all negative. The virus has made
Malaysians more conscious of the significance of life insurance after it was discovered that
the virus can infect anyone, regardless of their financial situation. It has become a reminder
of how unpredictable life can be and the importance of protecting family in the case of a
breadwinner's death. According to a spokesperson from the Life Insurance Association of
Malaysia, households would not only lose their source of income, but also their ability to pay
for unexpected bills. Despite the significant economic impact of the Covid-19 crisis, the
group expects the insurance business to remain resilient.

The spokesperson told The Malaysian Reserve (TMR) in an email reply that before
the Movement Control Order (MCO) was issued, insurers had put in place a very solid
business contingency plan. Policyholders were able to obtain their service online, through
customer service centres, or even face-to-face, with precautions against social distancing
since all major services were maintained, purchasing insurance and agents can continue to
sell and provide advice to customers. The insurance and takaful industry had offered a 90-day
deferment period or no-lapse guarantee for policyholders who were affected by the pandemic
to support Malaysians who had lost their employment or suffered a severe loss in income,
who are Covid-19 patients also small and medium enterprises who are affected. They will
continue to provide insurance cover to impacted policyholders. However, they must first
obtain clearance from their insurance companies before they get this relief.

This industry has also established an RM8 million Covid-19 Test Fund (CTF) to
support the Malaysian Health Ministry's (MoH) efforts to conduct additional Covid-19
testing. The percentage of life insurance premiums increased, due to high consumer
awareness of the necessity of life insurance protection. Because of the global and local
economies' uncertainty, the group expects the industry to expand in the high single digits in
2020. Meanwhile, according to the General Insurance Association of Malaysia (PIAM),
insurance companies have been providing guarantee letters, processing claims, and renewing
20
policies over the past few months. There are some general insurance companies offer motor
insurance coverage based on the mileage band driven during the MCO period others are
offering their consumers with various attractive incentives. There are all based on different
insurance business strategies and pricing patterns from one insurer to another.

21
 STATISTICAL INFORMATION (Insurance Planning)

Source: Statista

Bar chart above shows the annual premium of life insurance companies in-force in
Malaysia from 2014 to 2020. From here, it stated that the amount keeps increasing every
year. The annual premium of life insurance companies in-force accumulated to around 39.30
billion Malaysian Ringgit and Malaysia has around 82 thousand people that became the
agents of life insurance companies in 2020. This industry has a high potential to grow in this
country due to the low share of the population with a life insurance.

The life insurance digitalization in the country has increase because of the Covid-19
pandemic. Insurers were able to make the transition to a digital style of operation as a result
of the strict regulations that been established in Malaysia. During the pandemic, telehealth
services gained popularity as well. To protect their consumers and provide medical support,
many life insurers in the country have implemented telehealth services.

22
 Source: Statista

The bar chart above shows the premium income of China Life Insurance from 2010 to
2021. The China Life Insurance Company Limited is a Beijing-based Chinese insurance
company. China Life earned around 618 billion yuan in premium income in 2021 and its
premium income from life insurances was 3.3 trillion yuan. Based on the chart, the trend is
increasing every year. The insurance sector increases in tandem with the expansion of the
country's financial system. Life insurance premium income has become more than doubled
since 2015.

According to a recent analysis by Oliver Wyman, China's life insurance premium is

predicted to exceed the US market and become the world's largest market by 2030 despite
short-term obstacles. After the country's disposable income per capita reaches the 7,000 US
Dollar to 10,000 tipping point, the consultancy predicts that China's life insurance market
would develop at a level of up to 13% per year and reaching 11 to 13 percent penetration rate
by 2040. The premium market is predicted to grow to 45 trillion yuan which around 7 trillion
Dollar by 2050.

Today, the Chinese population is exposed to 1,600 trillion yuan in life-related risks.
Healthcare expenditure and pension support are the two most critical financial needs for
Chinese households which is around 1,050 trillion yuan 370 trillion yuan respectively.

23
 OTHER RELATED INFORMATION (Insurance Planning)

Members of the Life Insurance Association of Malaysia (LIAM) had a better overall
performance in 2021 than in 2020, with a double-digit increase of 12.4% in new business
total premiums. The industry recorded RM12.8 billion in new business total premiums for the
financial year ending December 2021, up from RM11.4 billion in 2020. Because of the rise of
consumer awareness in the significance of life insurance protection during Covid-19
outbreak, it led to a better result, according to Liam. Despite the adverse economic
environment caused by the pandemic, Liam president Loh Guat Lan said that the industry had
a better year, thanks to a robust return in investment-linked policies, which grew 31.2 percent
to RM6.6 billion in 2021. Other than that, new business total premiums for group policies
increased by 7.7% to RM4.1 billion in 2021.

She stated in a statement that traditional policies, on the other hand, had a 17.3
percent drop during the year. The total new business sum assured grew to RM461.1 billion,
up 5.4 percent from RM437.2 billion in 2020. She also stated that the new business sum
assured of investment-linked policies increased by 14.4% from RM107.7 billion to RM123.2
billion in 2021, while group policies increased by 2.8% and traditional policies saw a little
drop of one percent. Liam showed a 53.5% increase from 1.2 million in 2020 to 1.9 million in
2021 in terms of new policies issued in 2021. This was primarily due to traditional policies,
which has seen a massive 99.7% growth to 1.2 million policies in 2021.

Loh expressed her optimism about the country's prospects in the next months in terms
of the industry's vision for 2022. The BPR/BKM recipients' strong take-up rate of the
Perlindungan Tenang Voucher (PTV) programme bodes well for the industry's financial
inclusion objective, she mentioned. In the long run, the exemption from stamp duty for the
purchase of Perlindungan Tenang products until 2025 would encourage more recipients to
continue with their protection plans for making sure that their family members are covered
against major life risks. To support the demand for life insurance policies which will assist
drive life insurance adoption throughout the country is expected by introducing PTV
programme to the lower-income groups.

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 CONCLUSION (Insurance Planning)

To sum up, there is a saying “prepare an umbrella before it rains.” By doing insurance
planning it is very crucial to keep us safe against future uncertainties. For Muslims, there is
obligatory takaful and it is also a jihad in Islam. This is also important so that our heirs get
compensation. Insurance planning it is a lifelong process, from time to time we will use it as
a building block to strengthen our finances. We know that the things we do every day have
risks and may be open to new risks as well, with insurance we can reduce risk. On the other
hand, our lives and property are in great danger, and there are no promises or guarantees
about the future. Furthermore, there is no guarantee that our property or ourselves will not
suffer unexpected loss or damage. What is more, if we as the main breadwinners, if anything
undesirable happens to us such as loss of ability to work, with insurance our family will not
bear the financial burden. If we do not create an insurance plan, for example, emergency care
or an expensive treatment plan that results in poor credit or bankruptcy. It is important to
protect our financial position so that there is no liability for losses. There are a variety of
insurance products that can help us meet our protection, savings, and investment needs. Make
sure we correctly declare the required criteria as well as understand and know our rights
regarding the insurance policy that has been funded. Having insurance is a great investment
that will ensure the safety of our lives.

RECOMMENDATIONS (Insurance Planning)

In planning insurance, we need to know the option that best suits your budget. Do not
take it easy in choosing cheap insurance but look at the pros and cons of the product. Take
some time to find a suitable insurance package. Next, deal exclusively with a recognised
broker or an insurance/takaful business directly. Dealing with parties licensed under Bank
Negara Malaysia and registered with the Association of Insurance and Takaful Brokers
Malaysia (MITBA) to avoid any insurance fraud. Review the plans on a regular basis so that
we can allocate enough money towards the expenses that are needed at that time. Keep track
of the coverage period and the deadline for payment or contribution. Make a request for a
receipt as proof of premium payment. Insist on specific bills for repairs and medical
treatments and double-check them. Finally, we have experienced looking at the current
situation of a pandemic, this opened our eyes about the importance of finding new effective
security options such as travel insurance with Covid-19 coverage which gives consumers

25
travel protection and coverage against Covid-19 whether they are travelling overseas or
locally.

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APPENDICES

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