Issue No.6


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This article is reproduced with permission from
Normandy Advisory Services Sdn. Bhd (Licensed Investment Advisor)
15th Floor Menara Multi-Purpose, No 8 Jalan Munshi Abdullah, 50100 Kuala Lumpur
Tel : 03 - 469 5560 Fax : 03 - 294 5561

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Forget the house, shares, fixed interest or property. Your most important investment is you. After all, your personal wealth is built by working for money and spending wisely so that at the end of the day there is some left over to invest. So, this important asset - you - must be protected. And that means insurance.

What would happen to your family if, for example, you fell under a bus or was diagnosed as having terminal cancer? Your savings and the benefit from your EPF will not be much help, what with all the huge medical bills and living expenses. You would want your family to be able to maintain the present lifestyle with you around. You would also want the rest of your life to be as comfortable as it can be.

Today there is a large range of options available in life insurance to safeguard the future of the breadwinner and his or her family.

Life insurance costs may appear daunting, but then think about what would happen if your income suddenly stopped. The main thing is to see life insurance as part of an overall financial plan and not just in isolation. First, ask yourself about all your personal and family needs. Then, pick out what's best for you because if you took advantage of all types of life insurance available, you would go broke paying the premiums.

As part of this review - be aware of what cover you already have. Then you should work out how much you and your family need to live on each month. This will determine how much cover you need.

The risks covered by life insurance are:

Since mankind is subject to this risk at all times, thus, it is essential to protect the monetary value of our lives. Premature death of the breadwinner would result in the financial loss to the family. Life insurance is the answer to provide the financial security.

This is sometimes referred to as 'economic death' since the breadwinner stays alive but ceases to be a productive force. The living expenses and medical attention required may pose additional demand on a diminishing resource of savings.

Provision would be made in life insurance policies to ensure disability income or lump sum payment in the event of disability.

Though not as serious as total permanent disability, temporary incapacity may pose some problems to the breadwinner and his family.

This temporary hazard can be covered in terms of an accident and/or sickness insurance policy.

There are basically three types of life insurance which can be considered when you lay out your financial plan. On top of the three, there are other types of insurances which are called riders. That is riders complement other benefits like accident coverage, hospitalization coverage, health coverage, critical illness coverage, etc. Chart 1 shows the distribution of new sums insured in Malaysia for the year 1994.