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Grow your savings, protect your future

In today's economic environment, Bruneians are urged to plan their money better – spend less and save more for a rainy day. In the previous article on National Savings Day 2016, the benefits of savings was explained. One of the ways to protect your savings and family welfare is through life insurance or family takaful, which offers both protection and a disciplined way to save regularly.

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​There are many life events that can be planned for and saved up for such as going for Haj pilgrimage, for you or your children's wedding, for your children's education, or car purchase. Saving for such life events should be carried out through efficient, diversified, and low cost investment products. However, there are many unexpected events that can occur such as job loss, illness or death of the family breadwinner that can affect your finances and lifestyle. This is where insurance and takaful can help provide financial protection to you and your family.

​What is life insurance/family takaful?

 

Insurance and takaful is the business of taking on your risks and providing you with financial protection in case something happens for a fee. In life insurance and family takaful, this means that if the policyholder falls ill, becomes disabled or dies, the insurance company or takaful operator will pay out money to the policyholder or his beneficiary.

Life insurance and family takaful can help you to plan your finances as it can be used in the following ways:

  1. For financial protection or coverage against death and permanent disability.
    e.g. to ensure that a family has cash and income after the death of a breadwinner; or to ensure that there is extra income when you are not able to work due to a serious illness or accident.
     
  2. For retirement planning, savings and investment.
    E.g. to save money for your children's education; or to build a relatively safe nest egg for retirement.

Life insurance / Family Takaful Savings Plan

There are several types of plan that you could consider depending on your savings purpose:

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Some basic features of the plans include:

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​When should I buy this plan?

You can buy the plan anytime. The maximum cut-off age limit depends on the plan. It is advisable to start at a young age when one is young and healthy, and the premium/contribution is cheaper and benefit is maximised.

Is savings plan affordable?

Depending on the savings goal, some savings plans allow for a minimum premium of as low as BND 100 per month.

 

Tips when participating in buying savings plan

  • Shop​ around - get quotes from different insurance companies/ takaful operators and compare what they offer. Do not be afraid to ask lots of questions. 

  • Decide from whom you want to buy. If you decide to buy from a life/family agent, make sure that the agent is registered and has a good reputation and you are satisfied with their service.
  • Choose carefully - write a list of the things you need (i.e. what you want covered) and pick the policy that meets your needs. Work out how much money you need for your retirement? How much do you want to provide for your family?
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  • Always ask what is and is not covered by your policy.  Before you sign, make sure you know what your policy covers and does not cover. Ask the agent to explain to you until you are satisfied. 

  • Check the costs - you will contribute or pay a regular fee, known as 'premium', for your cover. 

  • Be honest with your insurance company/ takaful operator - tell it like it is because your 'duty of disclosure' means you must tell the truth when you apply. If you leave details out, any future claim may be denied. Update your insurance company/ takaful operator if there are any changes to your personal details.

  • Keep your documents in a safe place. Let your family or a friend or lawyer know where your policies are kept.  Ask them to notify your agent at once, in case anything happened. Notify the insurance company/ takaful operator if policies are lost or destroyed.

  • Pay on time - Make sure you pay your premiums/contributions in a timely manner to avoid the policy being lapsed.

Points to note

When it comes to choosing a plan, always:

  • Consider a policy that best suits your life stage. Factors such as your marital status, number of dependents and cost of their support, future education needs, current and anticipated family income, and your current assets and debt obligations; some or all play a role in determining the amount of savings plan that is right for you.
  • Understand the benefits and coverages provided under the plan
  • Be aware of the circumstances should you need to switch plans 


Your life / family planner may be able to help you identify and analyse your needs and make recommendations on the savings strategy and specific savings plan that may suit you best.

You may learn more by reading the "My Takaful and Insurance Book", available for download at www.ambd.gov.bn. Please check www.ambd.gov.bn or download AMBD Smartphone Application for the list of registered Takaful operators and insurance companies.

 

Prepared by: Autoriti Monetari Brunei Darussalam​