Takaful Ikhlas Bhd aims to introduce its online platform for basic term life insurance by year-end to encourage youths to obtain insurance coverage.

Its Senior Vice-President, Wan Rosli Shaharuddin Wan Yaacob, said with 24/7, 365-day accessibility, the online platform will be able penetrate the market of "night owl" youngsters.

"The Generation Y (those born between the 1980 and 2000) is doing everything online now.

"I believe this is one of the reasons Bank Negara Malaysia (BNM) is encouraging insurance and takaful companies to sell the products online," he told Bernama.

Wan Rosli is optimistic the online platform will attract youths as they will be able to compare the products' features, policies, as well as pricing via the platform.

He said Malaysians below 35 years old currently constituted the largest group in the country who have yet to be covered by any insurance company.

"Citizens in developed countries such as Japan and Singapore are well aware of the importance of being covered by insurance, but here the lack of awareness is the main reason that led to the low penetration rate in Malaysia," he said.

Asked if the pricing was the main deterrence, Wan Rosli had a different view.

"Many can afford two cell phones, and they spend on shopping or cigarettes. Why can't they fork out about RM150 a month for a medical card to ensure a secure financial future for their families and loved ones?" he asked?

He said people should learn to prioritise, it's either the cigarettes or protection for their family.

"Those who are covered by their employers should still buy insurance policies.

"If you suffer from critical illness after retirement, you would probably be rejected on any policies that you want to buy," he said.

Furthermore, he said, the policies will be way too expensive for those who intend to buy at the age of 40 or 50.

"My advice is, buy insurance when you are still young and healthy, you can start doing that once you get your first job," he said.

According to BNM's Financial Stability and Payments Report 2016, Malaysia's overall insurance penetration remained flat, within the range of 54 per cent to 56 per cent over the last five years.

The central bank had earlier set the penetration rate target at 75 per cent by 2020, in line with the country's aim of becoming a high-income nation by then.

To achieve this goal, BNM had introduced the Life Insurance and Family Takaful Framework (Life Framework) in 2013.

Under the framework, all life insurers or family takaful operators were required to offer commission-free standalone pure protection products, namely, term, critical illness and medical and health insurance/takaful through at least one direct channel, such as online platform or direct counter.

It specifies that term products must be available through direct channels from Jan 1, 2017, followed by critical illness and medical and health insurance/takaful products by Jan 1, 2018. - BERNAMA