Debt After Death

Nearly 60% of people don't have a life insurance policy and 64% have a mortgage which they haven't fully paid off, potentially jeopardising their families' financial futures. Despite the potential advantages of life insurance being all too clear, many people still don't have this protection.

Most people (60%) don't have life insurance to protect their family financially if they pass away, even though nearly two-thirds (64%) still have a mortgage - which means they would leave their loved ones with a hefty bill if they passed away.

However, one in three (34%) are prepared for any eventuality and admit they are worth more dead than alive due to the size of the life insurance policies. 

According to the Association of British Insurers (ABI), insurers in the UK pay out on average £37 million every day to help people cope with the financial burdens that come following a death in the family.

Yet the research found that the loved ones of more than one in ten (11%) of those polled would be homeless if they died. Insurers are concerned that many people are not sufficiently covering their families for such eventualities.

And with (30%) of couples having a joint mortgage and more than half (57%) holding a joint bank account, many would struggle with bills if one party dropped out and this could also mean they'd have to take on joint debt on their own without life insurance.

The loss of a loved one is a stressful time without having to worry about not being able to afford the mortgage bills. A debt such as a mortgage should ideally be backed up with life insurance so that it can be paid off in part or in full if one of the mortgage holders should die.

Term insurance, the most common type of life insurance, is what is usually used for mortgage protection. It will pay a tax-free lump sum if you die within a specified period of time, for example 25 years.

The aim is for the lump sum to be used to clear any outstanding debt against the property, which will ensure loved ones are not left without a roof on their head or with hefty bills they cannot service if you die.

Source: http://askpakdeh.blogspot.com/

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Cardiovascular Disease - No. 1 Killer in Malaysia

Cardiovascular disease remains the number one killer in Malaysia, with hypertension topping the list. Malaysian Society of Hypertension vice-president Dr Azani Mohamed Daud said although hypertension was the most common disease in Malaysia, many were unaware they had it.

“Last year, only 35 per cent of people with hypertension were diagnosed, with the rest unaware they had it,” he told the “Are you at risk?” campaign at a hotel yesterday.

The campaign was organised by the Heart Foundation of Malaysia and pharmaceutical manufacturer Xepa-Soul Pattinson Malaysia in conjunction with World Heart Day in September.

The foundation director, Datuk Dr Khoo Kah Lin, said it was cheaper to prevent the disease rather than to cure it. He said there were two main approaches to prevent hypertension — the polypill and polymeal concepts.

“These two methods can help reduce heart disease and stroke, and could prolong life,” he said. Polypill, in use since 2003, is a combination of six drugs and vitamins that address the risk factors of heart disease.

According to the British Medical Journal, taking the combination of pills daily lowers the risk of a heart attack by 88 per cent and stroke by 80 per cent.

Polymeal is a diet plan that includes red wine, dark chocolate, and fruit and vegetables that can reduce the number of patients with cardiovascular disease by 76 per cent.

“With the correct amounts each day, those who adapt these approaches when they reach 55 years old will see a positive outcome.”

He urged people to consult their doctors on both methods, and said leaflets would be distributed with explanation on them.

Source: http://www.asiaone.com/Health

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Cancer - Global Killer

Cancer is a generic term for a large group of diseases that can affect any part of the body. Other terms used are malignant tumours and neoplasms. One defining feature of cancer is the rapid creation of abnormal cells that grow beyond their usual boundaries, and which can then invade adjoining parts of the body and spread to other organs. This process is referred to as metastasis. Metastases are the major cause of death from cancer.

The problem

Cancer is a leading cause of death worldwide and accounted for 7.6 million deaths (around 13% of all deaths) in 2008. The main types of cancer are:

• lung (1.37 million deaths)
• stomach (736 000 deaths)
• liver (695 000 deaths)
• colorectal (608 000 deaths)
• breast (458 000 deaths)
• cervical cancer (275 000 deaths) (3).

About 70% of all cancer deaths occurred in low- and middle-income countries. Deaths from cancer worldwide are projected to continue to rise to over 13.1 million in 2030.

Source: WHO

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Medical (Hospitalization & Surgical) Insurance

There is another protection that you should already have in your risk management portfolio. Let me put it straight to you, after the chance of involving in an accident, the next highest possible mishap would be ending up in the hospital and required to stay a night for observations. Your admission could due to any causes, accident-related, common symptoms such as food poisoning, dengue fever and even acute appendicitis!

Rest assured that your stay will definitely cost you money. If you are admitted to a private hospital, prepare to pay an arm and a leg (simply means paying a lot of money for something).

What is covered under the Medical (Hospitalization & Surgical) Insurance?

The main coverage would be the Room & Board (R&B), almost like a hotel room package. A typical Medical Insurance R&B package would look like this:

Source: www.allianz.com.my (MediCover)

Room & Board RM200 means that you are entitle to stay in ward package with rate of RM200 and below. However, you can still request the hospital to upgrade your room to a better one (e.g. from Twin Sharing to Single Room), but there are terms and conditions applied by respective insurance companies.

The Annual & Lifetime Limit is tied to the R&B. In general, the Table of Benefits would look like the above table. You should refer to your policy documents for the actual Table of Benefits to see the exact figures. The Annual & Lifetime Limit gets lesser as you make claims.

Co-Insurance / Co-Payment is a common phrase in Medical Insurance policy write-ups. It means that you as the policyholder will be required to pay a certain percentage from the total claims made. If you policy didn't mentioned anything on Co-Insurance or Co-Payment, then it usually means that all claims are to be borne 100% by the insurance company.

Various insurance companies has different percentage set as Co-Insurance or Co-Payment, ranging from 10 to 20 percent. Some plans would also have cap on the Co-Insurance / Co-Payment, and some don't!

For your own benefit, you are encourage to check if your Medical Insurance has no Co-Insurance / Co-Payment or, if there is, make sure there is a cap limit for it. Else, it would seemed illogical for you to pay your insurance premium and fork out for the medical bill at the same time.

Here are some other important elements in the medical coverage that you should look into:

i) Pre-hospitalization and Post-hospitalization claims, where you need to find out how many days of pre-hospitalization and post-hospitalization is claimable.
ii) Limits payable for outpatient treatments; for Accident, Cancer and Kidney Dialysis respectively.
iii) Room & Board and Intensive Care Units (ICU).

Here are some tips for Medical Insurance:

i) Declare all your health and medical history when you are applying to ensure you will not any problems when it comes to claim later on. You might want to ask your parents about any disease that you might have inherited.

ii) Always keep the Original Receipts for speedy claims.

iii) Always keep your Medical Card (if any) by your side (or in your wallet).

iv) You might need to place a deposit even if you have a valid Medical Card, so it is best to have a credit card or two to ensure a smooth admission process.

v) Go for the best possible Medical Insurance plan you can afford, it is always easier to downgrade than to upgrade. As long as you are healthy, upgrading should not be a problem.

Medical Insurance should be in your priority when you are shopping for your first insurance policy due to the high possibility of being admitted in a hospital.

Let's hope one day that banks or private hospitals can provide loans for medical fees which we all can pay by installments. But until that day comes, it is a better idea to ensure you and your entire family is protected at least with a minimal amount.

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Personal Accident

Personal Accident (PA) insurance is consider one of the most important insurance protection not only because it is very affordable but the possibility of claiming from a personal accident insurance protection is higher than natural death or critical illness claim. 

PA coverage protects you from accidental risk - any injury or death caused by accident. You can make a claim from losing an arm or accidentally cutting of a finger while preparing your meal. However, do not mistaken with Total and Permanent Disability (TPD) protection.

TPD is usually defined as:

(a) Becomes permanently and completely unable to engage in any occupation and is permanently and completely unable to perform any work for remuneration or profit.

(b) is deemed to be caused by any of the following:

i) Totally and irrecoverably loses sight in both eyes.

ii) Totally and irrecoverably loses by severance one limb each at or above his wrist and ankle, or two limbs at or above his wrist or ankle.

iii) Totally and irrecoverably loses sight in one eye and totally and irrecoverably loses by severance one limb at or above the wrist or ankle.

(c) Or by unable to fulfill any 3 of the following activities:

i) Transfer 

ii) Mobility

iii) Continence 

iv) Dressing 

v) Bathing / Washing

vi) Eating 

From the definition above, it is not easy to fulfill the TPD's requirements. If you happen to lose only one arm in an accident, your TPD protection will not provide any payout. The chances of involving in an accident are way much higher than any other risks that we might face every day.

One more reason why you must have a Personal Accident protection in your risk management portfolio is that the premium is super cheap! The insurance charges rate is the same from the day you were born till the day you leave Earth. Oh, there is a maximum entry age though, usually age 55.

Here is an example of Personal Accident protection premium rate.

Due to space, table above only shows the Principal Sum Insured. There are 18 other benefits in the protection.

Source : www.allianz.com.my

As you can see from the table above, a RM240,000 (with 18 other benefits including Weekly Benefit) Personal Accident protection cost only about RM358 a year. That is RM29.83 a month and it is renewable at the same rate as long as you can afford it.

So, you should seriously look into your policy documents to check if you have a Personal Accident Protection either attached as a rider or a stand-alone plan. You might want to check with your employer to see if they have a Group PA for staff. PERKESO (SOCSO) benefits should be given by your employer too. However, there is a limit to the benefits covered. For more information on PERKESO, visit PERKESO.

I would recommend at least a RM500,000 of Personal Accident protection for a 30-year old working adult. If you are married, why not consider getting a Family Package for your spouse and children since it is usually cheaper this way.

Not to forget, some credit cards or telcos even give free Personal Accident protection for a year at absolutely no cost to you!

Contact us if you want to add on Personal Accident Protection into your portfolio.

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Comprehensive Protection / Coverage

In most of my post, the word "protection" will appear most of the time to replace the term "coverage" because I strongly believe that Insurance is Protection.

In the context of risk management portfolio, we always wanted the most comprehensive protection which protects as many risks as possible. One very good example that can be used as a metaphor is - Home Security. There are a few things we need to take note when it comes to setting up a good Home Security.

First, we do not know which door or window the burglar will try to break in from. If they really want something from our house, they will even dig a tunnel that leads right underneath our safe. In this sense, it is pretty much the same as the risk we faced everyday, you will never know when you will step right in front of an oncoming vehicle!

A good Home Security system takes care of every door and window from burglar infiltration. Every door and windows that might be an entry for the burglar to your house is protected, leaving nothing to chance.

If a good Home Security system keeps each and every door and windows from potential break-ins, what should your insurance protection plan do to ensure all your personal risks is taken care of?

We start with one of the most important protection you should already have by now - Personal Accident Insurance

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Insurance - Needs vs Wants

Here's a truth.

You don't need insurance. Yes, you heard me right, you do not need insurance. However, before we discuss further on this topic, let us make sure our definition of "need" is the same.

To me, my needs are something that is essential to keep me alive. For instance, food, drinks, clothing, shelter and etc. I came across the Maslow Hierarchy which illustrates the classifications of human needs.

The Maslow Hierarchy

According to the hierarchy, you don't need insurance to survive. Rather, the decision to insure one's life or a loved one's is purely an act of love (Class No 3 in The Maslow Hierarchy). 

What happens when you don't have a single insurance protection?

It simply means that when you pass away, there isn't any compensation of money for that event. Sounds pretty crude huh? It's the fact!

So let's get back to the initial question: how would the act of love affect the way you choose your insurance coverage?

In the insurance industry, there's a term called "insurable interest". To illustrate this term, let's just say everyone is considered to have an insurable interest on their own lives, the lives of their spouse and dependents. And for your extra knowledge, insurable interest for life insurance needs only to exist at the time the policy is purchased. 

For example, after you sack one of your employees at work, the insurance policy that you bought for that employee would still be considered valid even after he is no longer under your employment. The insurance industry seems to take the term “true love never dies” pretty seriously.

Therefore, the insurance protection that you should have in your risk management portfolio should ideally shows the "amount" of love you have for the "insurable interest". Put it in another context, the coverage amount compensated should be adequate to protect you and your loved ones from a sudden financial crisis. The coverage amount should also be adequate to buy you and your family enough time to recover from the financial loss during the crisis.

If you are having problems finding out how much and what type of insurance you already have, you should seek out professional advice as soon as possible.

Contact us for a no obligation consultation

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What is Life Insurance?

Life insurance is a contract between an insurance policy holder and an insurer, where the insurer promises to pay a designated beneficiary a sum of money (the "benefits") upon the death of the insured person. Depending on the contract, other events such as terminal illness or critical illness may also trigger payment. The policy holder typically pays a premium, either regularly or as a lump sum. Other expenses (such as funeral expenses) are also sometimes included in the benefits.

The advantage for the policy owner is "peace of mind", in knowing that the death of the insured person will not result in financial hardship for loved ones and lenders.

Life policies are legal contracts and the terms of the contract describe the limitations of the insured events. Specific exclusions are often written into the contract to limit the liability of the insurer; common examples are claims relating to suicide, fraud, war, riot and civil commotion.

Insurance allows individuals, businesses and other entities to protect themselves against significant potential losses and financial hardship at a reasonably affordable rate. We say "significant" because if the potential loss is small, then it doesn't make sense to pay a premium to protect against the loss. After all, you would not pay a monthly premium to protect against a RM50 loss because this would not be considered a financial hardship for most. 

Insurance is appropriate when you want to protect against a significant monetary loss. Take life insurance as an example. If you are the primary breadwinner in your home, the loss of income that your family would experience as a result of our premature death is considered a significant loss and hardship that you should protect them against. 

It would be very difficult for your family to replace your income, so the monthly premiums ensure that if you die, your income will be replaced by the insured amount. The same principle applies to many other forms of insurance. If the potential loss will have a detrimental effect on the person or entity, insurance makes sense.

Insurance = Protection

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