Why is insurance important – 8 reasons?

1. Insurance is just another word for preparedness While it may be partly right that Murphy's law (“if anything can go wrong, it will”) smacks of a pessimistic outlook, the fact of the matter is that life is subject to uncertainties, and while being insured is not preemptive by any stretch of the imagination, it does offer the fallback that one needs if the unmentionable happens.
2. Insurance is neither an investment nor an expense A surprising number of people still belabour the notion that insurance is either a wasteful expenditure, an indulgent extravagance or a profit-minded initiative. The facts belie these assumptions. Insurance is none of these; it is just insurance. By being (and staying) insured you get the sort of fiscal discipline that savings and investments do not bring to the table. A word to the wise, as they say.
3. Your health is worth insuring The oft-quoted adage that health is wealth takes on an entirely different meaning if you ever find yourself in the unenviable position of having to pay for medical bills without health cover. Remember: health care is expensive; health insurance isn't.
4. Life insurance is an act of love As the head of a family, life insurance is one of the more thoughtful gestures that you can show. Life insurance helps your dependents tide over your loss with greater resilience.
5. You've worked hard to buy a home After spending years dreaming, planning and working for it, you finally have a home of your own, the way you like it. A small additional outlay in the form of home insurance ensures that what is yours remains yours. Home insurance is one of the prerequisites for modern lifestyles.
6. No, something doesn't have to 'go wrong' for you to benefit One of the popular misconceptions about insurance is that it is useless until something actually goes wrong. While this may have been true in the early eras of insurance and underwriting, insurance today is mandated by law in several everyday aspects of life, such as driving a car or a two wheeler. Frequently insurance also brings with it a tax exemption benefit commensurate with the value of the plan, so this is an additional inducement for people still fence-sitting about getting insured.
7. Business Insurance is standard operating procedure In business, particularly in businesses more prone to certain kinds of risk, insurance can be either a game-changer or an enabler. International shipping would be severely hampered if it weren't for transit cargo insurance cover, for example. Insurance is at the core of business and commerce.
8. If it is worth keeping, it is worth insuring Your precious belongings (jewelry for instance) are understandably, a cause of pride and joy to you. Insurance makes sure what is yours stays yours.

Malaysians have the advantage of availing of either conventional or Islamic insurance. Islamic insurance, known as Takaful, is is a type of insurance that complies with Islamic law, particularly the Shariah. Shariah prohibits certain concepts like interest (or “Riba”), uncertainty (“Gharar”), gambling (“Maisir”) and certain activities (called “Haram” or unclean as opposed to “Halal” or clean activities).

Takaful involves a group of participants who mutually guarantee (“Taawun” or mutual assistance)
each other against loss or damage. Each participant contributes a certain amount (or “Tabarru”) into a fund which is managed by a Takaful operator who operates using the Islamic concepts of Mudharabah (profit sharing) or Wakalah (agency). If any participant suffers losses or damages, the Takaful operator will disburse funds accordingly.

Any surplus remaining after the assisting of participants will be distributed amongst the participants. Takaful, thus operates both as a protection and as a profit sharing venture between the Takaful operator and the participants. Islamic Insurance is open to all, irrespective of religion. 

How to choose fixed deposits with high interest income

Fixed Deposits (FD) or Time Deposits are accounts that offer a fixed, guaranteed rate of interest for a fixed time period. Fixed deposits, in general, offer much more attractive rates of interest than standard savings accounts and have hence enjoyed immense popularity with generations of Malaysians. These tips can try and help you if you want to maximize the interest income on fixed deposit:

Junior & Senior Fixed Deposits – These deposit products are aimed at children (to help them inculcate the savings habit) and seniors (usually the over 50s). They carry higher interest rates than standard FD products. You could try opening FDs in your children / parents' name(s).

The BSN Term Deposit is available at an interest rate of 3.2%. You could also apply for a joint account or trust account. On maturity, the deposit is automatically renewed at the prevailing board rates. Although this FD product is not insured by PIDM it is 100% guaranteed by the government under the Bank Simpanan Nasional Act.

The Public Bank PB Golden 50 PLUS FD Account offers interest rate that ranges from 3.25% (on one and two month tenors) to 3.45% (for tenors of 12 months and above). This is meant for those over 50. This product also comes with a lot of other benefits including 50% discount on rental and renewal of a safe deposit box, 50% discount for will writing or creating a Trust with PB Trustee Services Berhad, discount on PB's sale rates for purchase of foreign currency and more.

Co-operative Bank Deposits – Cooperative deposits enjoy the reputation of providing some of the best FD returns in the market and for short tenors as well. Take the case of the Term Deposit-i Account from Bank Rakyat. It is an Islamic product based on the concept of Tawarruq. It offers interest rates ranging from 3.40% (for 1 month) to 3.70% (for 3 months) to 3.90% (for 6 months) to 4.10% (for 12 months) all the way up to 4.30% (for 48 months).

Foreign Currency Fixed Deposits – These accounts allow you to open deposits in a range of foreign currencies. Foreign Currency Deposits have become popular as they tend to provide higher returns than conventional deposits and in foreign currency but are subject to exchange risk. These deposits have become popular since the liberalization of the Foreign Exchange Administrative Rules on the 01st of April 2005. They are also popular with those who have foreign currency earnings, wish to invest overseas, have business interests outside Malaysia and/or wish to educate their children overseas.

Take the Foreign Currency Fixed Deposit from Alliance Bank. It offers up to 8 foreign currencies, tenors from 7 days to 12 months and interest rates that range from 0.10% to 3.00% depending upon the tenor and the currency. For instance, you get an interest rate of 3% p.a. on NZD for a tenor of 7 days.

Step-up Fixed Deposits – These fixed deposits split the deposit tenor into periods and offer different rates of interest for each period. The interest rate offered during successive periods becomes higher till it reaches the highest interest return / advertised rate during the final period.

The Public Bank Step Up FD is an example of one such product. You get 3.95% p.a. for the first 3 months; on the next rollover for 3 months the interest rates climb up to 4.18% and on the second rollover (for the next 3 months) the interest rate moves up to 4.38%.

General Tips

 

Tenors – The longer the tenor of a fixed deposit, interest rates are more likely to increase. Take the Unfixed Deposit from CIMB Bank for example. It provides an interest rate of 3.15% for tenors of 1 and 2 months, 3.20% for tenors between 3 to 5 months, 3.25% for tenors ranging from 6 to 11 months and on up to 3.60% for a tenor of 60 months.

Promotions – They are another good way to get more from a standard fixed deposit. For example, HLB Bank is offering a 3-month FD promotion (01st Mar 2016 to 30th April 2016) that offers an interest rate of 4.20% p.a. for a 3 month tenor. Minimum placement amount is RM 10,000 and the maximum placement amount is RM 5,000,000.

Benefits of taking a home loan

A home loan, or a mortgage loan, as it may be called, is a financing product that enables you to buy a property or piece of real estate, usually a house, a condominium or an apartment. Here, we will explore some of the benefits of taking a home loan:

Property ownership – Buying a property can be one of the biggest financial commitments that you may make during your lifetime. That is because buying a home is not an easy task. And, a home loan allows you to become the proud owner of a home.

Home loan product innovations – Home loan products have evolved from plain vanilla home loans that used to exist before to semi-flexi and fully-flexible home loans and Islamic home loans. Although the core benefit of these products is giving you home ownership they have other benefits too.

Semi- and fully-flexible home loans allow you to make extra payments towards your home loan principal; your interest payments diminish and you can get to own your home faster. You can also make payments into your home loan account and withdraw from the account whenever you have a need. You can even write cheques or use an ATM card for withdrawals.

The RHB Equity Home Financing-i and the HSBC HomeSmart are examples of such products.

Property renovation – You may already own a home; but that home may be in need of renovation or repairs. Or, you may want to make changes to your home, including structural changes. You can use a home loan or more appropriately a mortgage on your home to finance the necessary repairs or changes.

Tax Benefits – If you had signed the sales and purchase agreement for your home between 10th March 2009 and 31st December 2010, you could get to enjoy a tax relief of up to RM 10,000 (for one unit) for every year for the first three years on the interest of your housing loan.

Benefits of Islamic home loans – Islamic agreements carry a 20% stamp duty discount. In case of refinancing from a conventional to an Islamic package there will be a 100% stamp duty waiver on the existing refinance loan balance (not applicable to amounts over the loan balance).

For floating profit rates, profit rates are capped at a maximum. Conventional floating interest rates have no such cap.

Late settlement of loans can incur lower charges than Conventional loans as there is no concept of compounding interest calculation. However, in practice, other fees and charges may apply that could offset this benefit

Benefits of refinancing – Refinancing means the process of ending your home loan package with your current lender and shifting your home loan repayments to another lender. You can go in for refinancing for the following reasons:

• To take advantage of lower interest rates. This could result in savings and also in you repaying your home loan in a shorter amount of time. 

• Cashing out: Here you can takes an additional loan amount from your new financier. This is useful when you urgently need some cash and have no other avenue to raise cash. You can also use this cash in an investment that can give higher returns than the interest that you are currently paying on your property.

If you want to extend or reduce the tenor of your loan.

Overview of Online Banking

When the World Wide Web became functional and practically usable, just after 1995, almost everything that people wanted access to, got hoisted onto the online space. Banking too joined the bandwagon. But unlike many other 'not so important' things that went online, with or without a real need, banks going online was a logical progression from the early 'Home Banking' system that had already whet the banking customers' expectations.

Even before 'www' could come into currency, in the 80s, Citibank, Chase and a few others were offering, what was then considered unmatched access to banking services, through their innovative use of numeric keypad and a telephone line. A customer, using the numeric pads, could key in an instruction and the tone, carried over the phone, would tell the bank what was needed. The first usage of the term 'online banking' was, as a matter of fact, with reference to this numeric pad phone-line system.

From there, to where we are now, has been a long evolutionary journey in banking, but the core focus has remained unchanged: greater banking flexibility. Here's a quick appraisal of our online banking experience today and the greater banking flexibility we enjoy:

Anytime anywhere banking: Online banking allows us banking from anywhere at anytime as long as we are connected to the bank's server either through our computers – desktop, laptop or notebook or device – mobile, smartphone or tablet. Anytime, anywhere banking is usually offered 24/7 with the exception of maintenance downtimes, of course!

Cheaper and more effective banking: It is cheaper (and easier) for the user, given that the user does not have to spend time and money going to a branch, and cheaper for the bank because now branches have become optional. Many branches have actually been shut down by banks.

Single-platform access: From paying bills online to sending money to a third party account, just about everything can be done today through online banking and done one after the other via the same platform. An offline experience however, typically allows only one request at a time. Your teller line, for example, is usually different from an address change request line and it would mean having to stand in two different queues for two different service requests. Now, with online banking, one can stop a check payment, set up standing orders, change profile information, make payments, add beneficiaries and do almost everything that one regularly does with an account.

Almost every bank in Malaysia today offers online banking. As a user though one needs to be doubly sure of a few things. While the offerings are by and large the same, a comparison of factors like – the security offered, the flexibility offered, the ease with which service requests can be made – will come in handy while zeroing on a particular online banking offering.