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By YEOW POOI LING-The Star

PETALING JAYA: Insurers are still finding positive response for their investment-linked plans despite the prevailing volatile markets.

CIMB Aviva Assurance Bhd chief executive officer Kevin Jones said sales of its EasyLife Solutions, launched late last year, had surpassed RM30mil so far.

The EasyLife Solutions comprise a series of investment-linked plans – EasyLife Kids, EasyLife Men, EasyLife Women and EasyLife Retirement. EasyLife Health was introduced this year to complement the portfolio.

»In these challenging times, we need insurance all the more to provide a safety net if anything unfortunate were to happen« THOMAS WONG

Prudential Assurance Malaysia Bhd, meanwhile, introduced in June an improved version of its two existing investment-linked plans, PRUlink assurance and PRUlink education, which have been its best-selling products since they were introduced in 1999 and 2000 respectively.

Chief marketing officer Thomas Wong, in an e-mail reply to StarBiz, said the strong demand was likely to continue as investment-linked plans were the company’s main earnings contributor.

Manulife Holdings Bhd also continues to see high acceptance as sales of investment-linked plans had contributed 60% to 70% of its yearly new business premiums in the past few years.

“Our success is mainly due to the plans meeting the specific needs of customers and having top-performing funds in our suite of investment-linked plans,” said group chief executive officer Michael Chan.

He said the economic recession would have a greater impact on single-premium investment-linked products than regular premium ones as customers buying the former were more interested in the returns than insurance.

“During recession times, dollar-cost averaging helps mitigate the drop in investment values. Customers also have the option to switch to more conservative funds to preserve their investments,” he added.

CIMB Aviva, however, did not experience a slowdown in demand for its single-premium investment-linked plans despite the weak economy, partly due to consumers adopting a short-term investment horizon, as shown by the 2009 Aviva Consumer Attitudes to Savings Survey.

Jones said the survey found 37% of respondents preferred an investment that could supplement their income at present and that 45% rated guaranteed rate of return as the most important element for savings and investment.

“Customers need to understand that there is a cost for such guarantees and that long-term investments in unit-linked products may, in the long run, offer a better return,” he added.

Wong said premiums invested in investment-linked products were unitised; hence the volatility would be less compared with investing directly in stocks.

“We do not aim to maximise the return in any one year by assuming excessive amount of risk that may have a negative impact on the funds subsequently,” he said, adding that investment return should not swing in any extreme direction as policyholders pay regular premiums.

Malaysian Assurance Alliance Bhd vice-president of life business development services, Chan Yok Chor, said down markets offered opportunity to bottom fish for value, and when recovery came, the investment might increase manifold.

He added that investment-linked plans should be positioned based on needs like protection, education, retirement and healthcare, as well as affordability.

Manulife’s Chan said investment-linked products should meet specific needs and the choice of investment funds must fit the risk profiles of customers.

Meanwhile, Prudential’s agents and wealth planners are trained to sell investment-linked products as a protection plan first, then investment.

“In these challenging times, we need insurance all the more to provide a safety net if anything unfortunate were to happen,” Wong said.

Jones said consumer awareness of investment-linked products was still “inadequate” as indicated by the Aviva survey, that showed many Malaysians still took financial advice from family and friends rather than financial institutions.

Moreover, only one-third of Malaysians are insured, whether by traditional or investment-linked insurance products.

Wong said the country was a relatively young market for investment-linked insurance products compared with the United States and Britain as Prudential was the first to introduce them in 1997.

According to Bank Negara, the total annual premium in force for investment-linked plans sold by direct insurers last year amounted to RM4.6bil, or 30% of the total annual premium in force for all insurance product categories.