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