You cannot completely remove the investment or life insurance portion of an ILP and keep just the medical card — the medical card is a rider attached to a base life policy, and riders cannot exist without that base. But that does not mean you are stuck paying what you are paying now. There are several practical ways to restructure your policy so you are spending less while keeping the coverage that matters most.
Why the Medical Card Cannot Stand Alone in an ILP
Think of your ILP like a mobile phone plan. The medical card rider is an add-on — it only exists because you have a base plan underneath it. In an ILP, that base is a life insurance policy. Remove the base, and the add-on goes with it.
This is not a loophole or a contractual trick. It is the fundamental architecture of how ILPs are structured. The life insurance component is what the insurer underwrites first; the medical, critical illness, and other riders are then attached to it.
So if you want to keep your medical coverage, you need to keep some form of base policy. The question becomes: how small can that base be?
Four Ways to Reduce Your ILP Costs Without Cancelling
1. Reduce the Life Insurance Sum Assured to the Minimum
Most ILPs allow you to reduce the sum assured on the base life policy. A lower sum assured means a lower insurance charge for the life component, which means less is deducted from your investment units each month. The medical rider stays intact.
Ask your insurer what the minimum allowable sum assured is for your policy. For many products, you can reduce it substantially — from, say, RM 500,000 down to RM 50,000 or even RM 30,000 — and the total cost of maintaining the policy drops meaningfully.
2. Reduce the Investment Allocation
Some ILPs allow you to redirect a higher proportion of your premium toward insurance charges and reduce the portion allocated to unit trust investments. If your original plan was designed with a heavy investment component, scaling this back reduces your total premium outlay while maintaining the same coverage.
3. Add a Deductible to the Medical Rider
Adding a deductible — where you agree to pay the first portion of each hospitalisation claim yourself — significantly lowers the insurance charge on your medical rider. A RM 5,000 deductible can reduce the rider’s insurance charge by 20-30% or more. A RM 15,000 or RM 30,000 deductible can cut it further still.
This approach keeps your high-end catastrophic coverage intact while lowering your day-to-day cost. It works well if you have an emergency fund that can absorb the deductible amount if you do need to hospitalise.
4. Convert to a Standalone Medical Card
If restructuring your ILP still leaves you paying more than you are comfortable with, the cleanest solution is to move to a standalone medical card paired with a separate, simpler life policy.
A standalone medical card covers hospitalisation and surgical expenses directly — no investment component, no unit trust management, no depletion risk. You pay a straightforward premium for the cover you need. Alongside it, you can hold a simple term life policy for the life insurance element, which is typically far cheaper than the life component embedded in an ILP.
The combined cost of a standalone medical card plus a term life policy is often lower than maintaining an ILP at the same coverage level — particularly for policyholders over 45 who are being asked for top-ups.
BNM’s Mandate: Insurers Must Offer Alternatives
Under BNM’s current framework, insurers are required to offer policyholders who do not wish to continue their existing ILP arrangement an alternative product — at the same or lower premium — that meets the same medical coverage requirements. This is sometimes called the base MHIT (Medical and Health Insurance/Takaful) product.
If your insurer has not proactively offered you this, you can request it directly. This is especially relevant following Generali Malaysia’s repricing announcement, which prompted many policyholders to ask exactly these questions.
What You Should Not Do
Do not cancel your existing policy before your new coverage is confirmed and in force. There is a gap risk: if something happens to your health between cancellation and the new policy’s effective date, you may find yourself uninsured for a pre-existing condition.
The order matters: secure the new coverage first, confirm it is active and all conditions are noted, then cancel the old one.
A policy review with a qualified advisor is the safest way to map your options before making any changes. Bring your current policy document, the latest premium notice, and a note of any health conditions you have been diagnosed with since the policy was first issued.
Frequently Asked Questions
If I reduce my sum assured, do I lose my existing no-claim status or benefits?
Reducing the sum assured is an amendment to your existing policy, not a cancellation and re-application. Your policy history and any guaranteed renewability provisions typically remain intact. Confirm this in writing with your insurer before proceeding.
Can I convert my ILP medical rider to a standalone medical card with the same insurer?
Yes, most major insurers in Malaysia allow this. The process varies by insurer — some allow a direct conversion with simplified underwriting, others require a fresh application. The key advantage of converting within the same insurer is that your existing medical history is already known to them, which can simplify the underwriting process.
Will I need to undergo a new medical check if I switch to a standalone plan?
If you switch to a standalone medical card — whether with the same insurer or a new one — there will typically be some form of underwriting. With the same insurer, this is often lighter if your health history is already on file. Any conditions diagnosed since your original ILP was issued may be loaded with a premium or excluded, so get a clear picture of the terms before you commit.
What is the minimum life insurance sum assured I need to keep the medical rider?
This varies by product and insurer. There is no universal rule — some products set minimums as low as RM 20,000, others require RM 50,000 or more. Check your policy document or ask your insurer directly for the minimum applicable to your specific plan.
Is restructuring my ILP something I can do myself, or do I need an agent?
You can request an amendment directly from your insurer’s customer service. However, given the number of variables involved — investment allocation, insurance charges, sum assured, rider premiums — it is worth working through the numbers with an advisor who can model the impact on your projected unit value before you commit to any changes.
Have a question that wasn’t covered here? Our advisors at FINNO. offer free, no-obligation consultations — no hard sell, just honest answers about what’s right for your situation.