Thinking or talking about life insurance was once considered a taboo in many cultures. This discussion was often avoided as it meant talking about death or disability. However, to truly be prepared for the unexpected, you will need to have life insurance coverage to ensure your loved ones can carry on leading a comfortable life.
Just as savings can help your family in time of need, having a life insurance coverage will come in handy when you are no longer able to care for them. Giving your family this peace of mind would mean you have planned well for your family.
Did you know that over half of Malaysia’s population live without insurance coverage? According to the Life Insurance Association of Malaysia (LIAM), life insurance penetration rate in Malaysia has been hovering at about 54 per cent for the past five years. Whether you have just started working or run your own business, having life insurance coverage can help your dependents manage financially should the unexpected happen to you.
What is life insurance?
Life insurance is a form of protection that gives you cash payout in case of death or permanent disability. An insurance policy is a contract between you and the insurance company for the premiums you pay in return for the protection they provide. Generally, life insurance centres around term life or whole life.
Term life insurance, as the name suggests, covers you for a fixed term and pays out the sum insured in the event of death or permanent disability. On the other hand, the whole life insurance covers you for the full term, for example, 30 years, and pays out upon maturity.
What should you consider when choosing a plan?
As there are plenty of insurance companies offering various plans, you need to determine what your needs are to purchase a policy that is right for you and your family with insurance premiums that you can afford. A life insurance consultant would be able to help you find the best policy, so don’t hesitate to speak to one.
Among the key considerations to find the policy that fits you best are your age, your health condition, your family members and whether you are self-employed or otherwise. This is important to gauge your financial liabilities and how these debts can be paid off by insurance in the event of your death.
If you’re still young, your life goals will matter too in selecting the best policy. For example, if you plan to have children or if you plan to retire early, these goals will help you decide how much life insurance you should take.
Those who are still planning to buy a life insurance policy must take note that the longer they wait to buy it, the more expensive it typically gets. It’s best to start early so that you don’t have to pay high premiums. Those who are covered with life insurance through their employers, need to be mindful that the coverage may be basic and not sufficient to help their beneficiaries lead comfortable lives.
Insurance with a purpose
In addition to covering death and disabilities, life insurance can also be purchased for savings, retirement or investment purposes. Understanding that a term life insurance might not offer you the additional protection you may seek, there are options to withdraw the money from the whole life policy which can double as an investment-linked savings account.
Those who want their insurance to do more, can opt for investment-linked policies that not only cover death and permanent disabilities, but also help generate potential extra income from investments.
Anyone can sign-up for more than one insurance policy and that’s why many people also have health insurance to manage possible health issues as they age. Critical illness plans are also fast gaining popularity as people seek protection from rapidly growing illnesses and diseases.
Get familiarised with insurance jargons
When deciding on insurance plans, you will come across some common jargons which will help you understand life insurance better. They include:
Seek good advice before you decide
Speak to an insurance consultant who will listen to your needs, and advise you on a plan that meets your requirements, according to your budget. As buying a life insurance policy is a long-term commitment, choose wisely for a plan that you can afford. Pay your premiums on time and consistently to ensure that your policy does not lapse. A lapsed policy means all benefits promised to the policyholder are terminated.
Many insurance companies also offer free online quotations for potential customers. Alternatively, you can also check your coverage sum and premium payments through insurance companies’ online calculators. This can help you get a clearer picture of how much you will need to allocate for your coverage for that peace of mind.