Rising insurance premiums are stressing out Malaysian households. According to our RMFLS 2025 report, roughly one in five insured Malaysians has been forced to make difficult decisions about their coverage in the past year, and the burden falls heaviest on those who can least afford it.

The National Impact Of Rising Premiums

Our data shows that though 64% of policyholders managed to keep their existing insurance or Takaful plans despite higher costs, 22% weren’t as fortunate. Within the second group, 18% either switched to a cheaper plan or reduced their coverage, while 4% cancelled one or more policies entirely because they simply couldn’t afford the premiums anymore.

For households already managing tight budgets these aren’t easy choices. They represent real decisions about whether to protect against medical emergencies, provide for dependents, or free up cash for immediate needs like groceries and utilities.

It’s worth noting that 12% of policyholders didn’t notice any change in their premiums. But for the majority who felt the pressure, the strain was significant enough to prompt action.

Who Is Most Affected? A Breakdown By Income

The impact of insurance cost inflation isn’t felt equally across income groups. There is little surprise about who is being hit the hardest.

Among Malaysians earning below RM2,000 monthly, 26% reported switching to cheaper plans, reducing coverage, or cancelling policies in the past year. For those earning RM2,000 to RM4,999, the figure was nearly identical at 25%.

In contrast, only 16% of those earning RM5,000 to RM9,999 made similar adjustments, and the same proportion amongst earners above RM10,000. Higher-income Malaysians were better positioned to absorb premium increases without compromising their protection.

It’s a pattern that connects directly to the middle-income squeeze we explored in our previous article. That middle group is seeing savings power erode and emergency buffers thin, and lower-income Malaysians are confronting even harder choices about basic financial protection. 

The Bigger Picture: Coverage Gaps

The challenge extends beyond premium increases. A substantial portion of Malaysians lack protection entirely.

According to our survey, 43% of Malaysians have no medical insurance coverage at all, and 15% rely solely on company-issued medical cards. For the second group that’s coverage that disappears the moment they change jobs or face redundancy.

On the life insurance front, less than half of our respondents (48%) report having a life insurance policy or Takaful contract. Even before factoring in those who’ve had to downgrade or cancel due to cost, millions of Malaysians have no safety net for their families in the event of death or critical illness.

For lower-income earners now cutting back on existing coverage, the gap between what they need and what they can afford is widening at precisely the wrong time.

What To Consider Before Changing Your Coverage

If rising premiums are putting pressure on your budget, here’s how to approach the decision strategically rather than reactively.

Before downgrading your plan, ask these questions:

• Does the cheaper plan exclude pre-existing conditions that your current plan covers?
• What’s the new co-payment structure? Will you pay significantly more out-of-pocket when you claim?
• Does it cover hospitalisation in both government and private facilities, or only government hospitals?
• What’s the annual claim limit, and is it realistic for your family’s needs?
• Are there waiting periods for certain conditions that would leave you unprotected in the short term?

If you’re considering cancelling coverage entirely:

• Gaps in coverage can make it harder or more expensive to get insured later, especially if you develop health conditions during the gap period.
• If cost is the primary concern, speak with your agent or insurer about adjusting your plan structure rather than cancelling outright.
• Check whether your employer offers voluntary top-up coverage that might be more affordable than individual plans.

Making the most of what you have:

• Review your policy annually to ensure it still matches your needs. Life changes like marriage, children, or job changes should trigger a coverage review.
• Use comparison tools to see whether similar coverage is available at a better price from other providers.
• Understand what you’re actually paying for. Some riders or add-ons may not be necessary for your situation and can be removed to reduce premiums.

Impact Of Insurance Inflation 

The pressure of rising insurance costs isn’t likely to ease in the near term, making it all the more important for Malaysians to approach coverage decisions with clear information rather than panic.

When one in four lower-income Malaysians is forced to reduce financial protection due to cost, we’re looking at a structural problem that extends beyond individual household budgeting. The system isn’t working for those who need it most. More affordable product structures, clearer policy information, and targeted support for vulnerable groups could help close the gap between what people need and what they can reasonably afford.

Review, compare, and plan. Take the time to understand what you’re covered for, what you’re paying, and whether adjustments might give you better value. 

Want The Full Picture?

Use our Money Meter to compare your insurance coverage against other Malaysians based on our RMFLS 2025 data. You’ll get a clear picture of where you are and what might need adjusting.

For deeper insights on insurance, saving, and managing your financial safety net, download the complete 2025 survey report for detailed findings and analysis.

Dive deeper into these results on the RinggitPlus blog, where we’ll continue to provide practical advice, expert insights, and real solutions for everyday Malaysians.

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• TAGS:
• Impact of Inflation
• Inflation
• Insurance
• Insurance Coverage
• RMFLS 2025