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Wealth & Investing

9 Common Insurance Myths in Malaysia, Busted

CIMB ❘ 2 Nov 2026

5 min(s) read

Insurance has a branding problem. For many young Malaysians, it sounds like something you deal with "later", right after you've bought a house, gotten married, and magically become a full-fledged adult. 🫠

But here’s the plot twist: many common assumptions about insurance are outdated, exaggerated, or simply inaccurate, and believing them can leave you unprotected or cost you money. The Life Insurance Association of Malaysia (LIAM) data shows that once you strip out people with multiple policies, only about 4 in 10 Malaysians actually hold life insurance or takaful protection¹.

By the end of this guide, you’ll understand which common misconceptions could leave you under-protected or cost you money, and what to consider instead. True financial wellness comes from swapping assumptions for facts, so grab your iced latte ☕ and let’s bust nine of the most common insurance, motor and travel myths in Malaysia.

🛡️ Part 1: General Insurance and Takaful Myths

Myth 1: "I'm young and healthy, I don't need insurance yet" 💪

🌚 The Rumour: You're in your 20s, you hit the gym (sometimes), and you feel invincible. Insurance is a "future you" problem.

🌝 The Reality Check: This can be one of the costliest myths to believe. Accidents and illnesses don’t check your IC for a minimum age. Factors such as age, health, smoking status, lifestyle and occupational risk can affect your life insurance premium. Applying while you are younger and healthier may therefore help you access a more favourable premium, subject to the insurer’s underwriting assessment².

Myth 2: "Insurance will break my budget" 💸

🌚 The Rumour: Coverage costs hundreds of ringgit a month; money you'd rather spend on travel and bubble tea.

🌝 The Reality Check: Premiums vary according to factors such as age, health, coverage amount, insurer and policy terms. Bank Negara Malaysia’s Perlindungan Tenang initiative also offers simple and affordable insurance and takaful protection³. The amount you spend on protection should reflect your income, financial commitments and protection needs.

Myth 3: "My employer's coverage is all I need" 🏢

🌚 The Rumour: Your company gives you medical insurance, so you're fully sorted.

🌝 The Reality Check: Employer-provided coverage can be a useful starting point, but its benefits, limits and duration depend on your employer’s plan. If you change jobs or become self-employed, check whether your existing employer-provided coverage will continue and whether its benefits or limits will change.

Myth 4: "Takaful is only for Muslims" ☪️

🌚 The Rumour: Takaful is a religious product, so it's not for me.

🌝 The Reality Check: Takaful is open to Muslims and non-Muslims. It is a Shariah-compliant protection model based on mutual assistance, under which participants contribute to a shared fund used to support eligible claims, subject to the certificate’s terms⁴.

Myth 5: "Insurance is a scam: they'll always reject my claim" 🚫

🌚 The Rumour: Insurers just take your money and find loopholes to avoid paying out.

🌝 The Reality Check: Insurers and takaful operators in Malaysia operate within the regulatory framework overseen by Bank Negara Malaysia⁵. Claims are assessed according to policy terms and coverage conditions. Accurate disclosure and understanding the policy’s coverage, exclusions and claim requirements are therefore important.

🚗 Part 2: Motor Insurance and Takaful Myths

Myth 6: "All car insurance is the same, so I'll just auto-renew" 🔁

🌚 The Rumour: Every provider charges the same, so there's no point shopping around.

🌝 The Reality Check: Since Malaysia’s motor insurance liberalisation in 2017, insurers have been able to determine premiums using their own risk-pricing approaches. As a result, premiums and available benefits may vary between insurers according to their underwriting criteria and policy terms⁶. It also helps to know the three tiers:

Third-Party: covers damage/injury you cause to others, not your own car.
Third-Party, Fire and Theft: adds fire and theft protection.
Comprehensive: covers damage to your own vehicle as well as third-party liabilities, subject to the policy’s terms. Additional protection, such as special perils cover for flood, may need to be added separately.

💡 Pro tip: Compare premiums, benefits and exclusions before renewal, whatever the age of your car.

Myth 7: "My No-Claim Discount (NCD) can be passed to my family" 👨‍👩‍👧

🌚 The Rumour: Your hard-earned 55% NCD can be gifted to your spouse or sibling.

🌝 The Reality Check: Your NCD is generally linked to you as the policyholder. If you change cars, ask your insurer whether it can be transferred to another eligible vehicle registered in your name and what steps are required. Transfer rules are subject to the insurer’s terms. Encourage your family members to build their own NCD history early.

Myth 8: "Roadside assistance is just towing and any tow truck will do" 🛻

🌚 The Rumour: If you break down on a balik kampung drive, roadside help = a tow, and you can flag down any tow truck.

🌝 The Reality Check: Roadside assistance benefits vary by insurer and policy. Check your policy for the services provided, any applicable limits and the authorised assistance channel to contact if you break down. Contact your insurer’s approved provider whenever possible.

✈️ Part 3: Travel Insurance and Takaful Myths

Myth 9: "Travel insurance is a waste, especially for short or domestic trips" 🧳

🌚 The Rumour: You're only going for a weekend, or just a local trip, so why bother? And your credit card already covers you, right?

🌝 The Reality Check: Two myths in one, so let's unpack both:

Short trips still carry risk. Lost luggage, flight delays, and sudden illness can happen on any trip, not just long-haul ones. Based on SITA Baggage IT Insights 2025, 33.4 million bags were mishandled globally by airlines in 2024 alone⁷.
Credit card and medical benefits vary. Some cards or medical plans may provide travel-related benefits, but eligibility, activation requirements, medical coverage, evacuation benefits and trip-cancellation protection can differ. Check those terms before deciding whether separate travel insurance is needed.

💡 Bonus myth-buster: Travel policies differ in their coverage, exclusions and limits, so review the product disclosure sheet and policy wording before purchasing.

The Myth-Busting Table

#	The Myth	The Verdict
1	"I'm young and healthy, insurance can wait." 💪	❌ Busted: Age and health can affect premiums
2	"Insurance is way too expensive for me right now." 💸	❌ Busted: options exist for different budgets
3	"My company's coverage is more than enough." 🏢	❌ Busted: benefits may change when your job does
4	"Takaful? That's not for me." ☪️	❌ Busted: open to all
5	"Insurers always find a way to reject claims." 🚫	❌ Busted: claims depend on policy terms
6	"All car insurance is basically the same, just auto-renew." 🚗	❌ Busted: prices and benefits can vary
7	"My NCD can be passed to my family." 👨‍👩‍👧	❌ Busted: it's tied to you
8	"Any tow truck will do if I break down." 🛻	❌ Busted: check your authorised assistance channel
9	"Travel insurance is pointless for short trips." ✈️	❌ Busted: short trips can still carry risks

💬 Frequently Asked Questions (FAQ)

How much does insurance actually cost a young Malaysian?

Premiums vary according to factors such as age, health, coverage amount, insurer and policy terms. Initiatives such as Perlindungan Tenang offer simple and affordable insurance and takaful protection³. Compare the benefits, exclusions and renewal terms rather than price alone.

What’s the difference between third-party and comprehensive car insurance?

Third-party only pays for damage or injury you cause to others. Comprehensive insurance also covers damage to your own vehicle, subject to policy terms. Protection against risks such as flood may require additional special-perils cover. Third-party, fire and theft sits in between. Vehicles used on Malaysian roads must have the minimum insurance required by law.

How do I move my NCD when I change cars?

Your No Claim Discount is generally linked to you as the policyholder. If you change cars, ask your insurer whether it can be transferred to another eligible vehicle registered in your name and what steps are required. Transfer rules are subject to the insurer’s terms.

Does travel insurance cover flight delays and lost luggage, or just medical bills?

Depending on the plan, travel insurance may cover eligible medical emergencies, trip cancellation, flight delays, missed connections and lost or delayed baggage. Benefits, limits and exclusions vary, so check the product disclosure sheet before purchasing.

Do I legally need travel insurance to leave Malaysia?

Travel insurance requirements may depend on your destination, visa and travel arrangements. Check the latest official entry requirements for your destination before travelling.

What is the difference between insurance and takaful, and is takaful open to non-Muslims?

Both provide financial protection but operate under different principles. Conventional insurance transfers specified risks to an insurer, while takaful is a Shariah-compliant model based on mutual assistance through a shared participant fund. Takaful is open to Muslims and non-Muslims, subject to the product’s terms⁴.

Is insurance worth it for someone in their 20s?

Insurance can be relevant in your 20s if you have income, dependants, debts or medical protection needs. Age and health can affect life insurance premiums, so assess your needs and budget rather than waiting for a particular age².

💡The Bottom Line

Insurance isn’t about expecting the worst, it’s about protecting the life, car and adventures you’re building now. Once you strip away the myths, the next step is to understand your needs, compare suitable options and review your cover as life changes.

If you're comparing travel or motor protection options, explore CIMB Travel Insurance and CIMB Motor Insurance, now available on CIMB OCTO App, and get rewarded with 10% cashback when you purchase by 31 March 2027. Terms & Conditions Apply.

References:

This article is for informational purposes only and CIMB does not make any representation and warranty as to the accuracy, completeness and fairness of any information contained in this article. As this article is general in nature, it is not intended to address the circumstances of any particular individual or entity. You are advised to consult a financial advisor or investment professional before making any decisions based on the information contained in this article. CIMB assumes no liability for any consequences arising from your reliance on the information presented here.

#Insurance #Wealth & Investing