Life Insurance Business

"Malaysia’s life insurance business is expected to grow by 9% to 10% in 2013" - LIAM

Critical Illness Coverage

Do you need critical illness cover (also known as 36 dread diseases cover)?

Increasing Medical Cost

Healthcare costs in Malaysia increases about 10% every year - approximately double the inflation rate.

2 out of 3 people will be diagnosed with Critical Illness

If you think that the premium is high, what about the cash needed for a critical illness?

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“In the next 5 years, without changing our current situation, can we achieve the time, money and lifestyle that we want?”

Thursday, June 19, 2014

Why is Life Insurance a Useless Product?


In my first few years as an Insurance Consultant, the biggest challenge I face everyday is to convince my clients and prospects to look at a life insurance policy as a necessity!
Most of the prospects I've seen, bought a savings or investment plans. The most I could do is to convince them to consider a medical insurance plan to provide for emergency hospitalization bills. Sometimes, selling medical & health insurance plan is an uphill battle with certain prospects.
In financial planning, life insurance is always form the foundation of the planning process. Unfortunately, it's the most important product that is hardest to buy, because it's meant to be useless!
4 years back, I met a young account executive who just started working, and I go on to explain the importance of putting a life insurance in place for her. As she is young, it's so easy to convince her about taking this small step towards financial planning. With the lower income as a fresh graduate, I suggested for her to start a life + medical insurance at the lowest premium that she can afford and she can upgrade it later when her income increases. She was completely sold on the idea on our first appointment. However, she said she will need to talk to her mom on this matter.
One week later, when we met up for the application, she told me she agrees with me but her mother told her that buying a life insurance is totally useless. Thus, she have second thoughts about signing on the dotted line.
My reply to her was simple, "Aren't you glad that your mother told you that life insurance is useless?"
Shocked, she asks, "I don't get you, what do you mean?"
I look straight into her eyes and told her, "Nobody would ever buy a life insurance hoping it's going to be useful. And I'm sure you are glad your mother did not get to use it."
From that day onwards, I never had any problem selling this "useless" product anymore!
Life Insurance is meant to be useless because it's money given to you at the time you would need it the most, when you lose your job due to death, disability and diseases.

Thursday, June 5, 2014

Insurance Saving Plan, Really That Good?

After many months of resting, I am back in action.

Today, we shall talk about Insurance Saving Plan, is it really that good?

Let's look at an example from one of the Insurance Company.

Disclaimer:
No Right, No Wrong. It is just my personal opinion. It depends on ones' priority and objectives.


Looking at the, obviously self created, table above, the term is 5 years. Sum Assured for the plan is RM110,000. Premium per year is RM43,975.

Characteristics of this plan:

  1. First to 5th Policy Year, client will be entitled for RM6,500 yearly guaranteed cash payment. 6th to 19th Policy Year, client will be entitled for RM8,500 yearly guaranteed cash payment. Client can choose to withdraw or to keep it in the policy and at the end of Policy Year 20, the total accumulated Guaranteed Cash Payment will be RM249,586.
  2. There will be a bonus of RM7,403 at the end of Policy Year 20.
  3. There is another Non Guaranteed Bonus (which the agent says return depends on company's performance). If the return is as illustrated and no withdrawal is done, there will be RM51,545 at the end of Policy Year 20.
Therefore, after 20 years, the total payout will be:
RM110,000 + RM249,586 + RM51,545 + RM7,403 = RM418,534.

RM418,534 - (RM43,975 x 5 years) = RM198,659


Let's say we save in Bank FD, at a rate of 3.96%
Bank Rakyat Deposit Account-i


The return from saving in FD (3.96% per annum) is guaranteed at RM443,020.

Other than that, it is more flexible as the FD savings renew every year. Which means, if there is any emergency that requires you to do any withdrawal, there will be no penalty imposed.

Unlike the Insurance Saving Plan, if there is any withdrawal made in between 20 years, there will be penalty imposed (other than withdrawing the Guaranteed Cash Payment).

In my opinion, looks like Insurance Saving Plan is not that good after all.

Better stick with buying Insurance for the purpose of PROTECTION.