Subsidised Micro-Takaful and the Financial Well-Being of Low-Income Households in Malaysia: Evidence from the Perlindungan Tenang Voucher

This paper evaluates the Perlindungan Tenang Voucher (PTV), a Malaysian government subsidy that enabled low-income households to buy micro-takaful and micro-insurance cover. Using a survey of 599 heads of household who reported on the periods before and after the intervention, a difference-in-differences model compares the change in health expenditure of PTV beneficiaries with that of non-beneficiaries, and the same comparison is made for households holding other takaful or insurance policies. Kaplan–Meier estimates and a Cox proportional hazards model describe the risk of a hospital visit, and a logit model identifies which households hold unsubsidised cover. Health expenditure fell for all households after the intervention, but by less among PTV beneficiaries than among non-beneficiaries, so the voucher did not by itself produce a measurable reduction in out-of-pocket spending; this is consistent with the very small number of claims made under the programme. Households with other takaful or insurance policies, by contrast, recorded a large relative fall. The risk of a hospital visit rises with household spending and chronic illness, and unsubsidised cover is more common among households with higher income, more education and more assets. Because pre-intervention values were recalled and households chose whether to use the voucher, the estimates are best read as associations. A premium subsidy alone is not enough: a renewed programme should simplify claims, tell beneficiaries what they are covered for and match benefits to the health costs that low-income households face.