Here was the solution:
For some reason, the circuit was showing a reading of 120v on the multimeter. This led me to believe it was good. Since it is a 120v water heater, I went ahead and hooked it up to a nearby circuit which I KNOW was good. Sure enough, we had hot water within 45 minutes.
I am not sure how the multimeter read 120v if the circuit was bad.
Apparently water heater elements need extremely consistent and constant supply of power or else they won't heat up.
Problem Solved. Thanks for all of the pointers and advice.
Too much current for switch (probably - so check it)
Previously, the light indicator(switch) was a half dimmer
The neon indicators don't last forever, they are not essential to the working of the switch.
same thing happened ... no matter how i smack it, turn on and off, it wouldn't work
I think that switch is not rated for the current it is passing. It may be only rated for 20A. Passing a higher current can cause the contacts to burn out over time due to arcing.
An electric shower is usually on a 32A circuit in older houses or on a 40A circuit in newer houses.
A 9 kW shower at 240V uses 9000/240 amps = 37.5A.
You need to install a dual-pole 45A switch designed for use with an electric shower. These kinds of switches are sometimes physically larger than the "20ax" switch you show. 20ax suggests 20A only. It isn't capable of handling the current and is just waiting to set fire to your home.
I wish to know if I could use a test pen on certain parts to test if electric is passing through?
Most non-contact testers test for voltage only, not current.
However, testing for voltage is probably sufficient.
If there is a voltage drop across the switch, when on, it would indicate that the contacts are burned or pitted, or that you didn't tighten the wire connections enough. The switch would also get warm or hot.
To measure current you would need a clamp-meter around one of the individual wires connected to the switch (not round the whole cable)
Take extreme care when testing this, it is lethal.
See When doing electrical work, what do I use to check wires are safe?
Bottom Line
Replace that switch with a 45A dual-pole switch. If possible, make sure it isolates both live AND neutral.
Best Answer
Doesn't have to be, but we always have a disconnect switch by water heaters for any commercial building.
Yes, it's fine as long as it's wired right and such.
Seems you've already discovered it, but yes they do make double pole switches. Typically a disconnect is used (as answered prior) and they're not any more complicated, but are safer. It's just a big switch.