INSURANCE
The Young Family and Young Couple Guide to Insurance and Financial Security
 


 


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Insurance is important.
 
Read this:
 
“There was once a young family. The husband was working and the wife was a full time housewife. They had several children when the husband died of a heart attack. He did not have any life insurance and the wife had to resort to selling snacks to pay off the housing loan.”
 
And this:
 
“There was once a young family. Everything else about the unfortunate couple above is the same, except that they had life insurance coverage. When the husband died of illness, all their loans had been paid for.”
 
A couple of generic stories to highlight the importance of life insurance … or are they? These are actually true stories, over-simplified but true.
 
Which would you rather be? I’d rather be alive and kicking, thank you very much!
 
But seriously, life insurance is important. So are medical insurance, personal accident insurance and education insurance, just to name a few.

Life insurance and general insurance companies in Malaysia are highly regulated. This is true for developed countries and most countries in the developing world. This reflects the extreme high level of responsibility carried by such companies.

It also means that the question of whether your money would be safer in a bank or in an insurance company should not arise; although interest rate levels and return rates may differ. 
 
 


Life Insurance
 
The basic idea of life insurance is that if you die, your unpaid debts will be paid for by the insurance company. Your loved ones who are left behind will be able to carry on with their lives without being burdened by, say, the house instalments or your outstanding study loan.
 
The types and methods of life insurance cover are practically endless.
 
Surf the internet for life insurance companies in your country or ask friends and family for recommendations. Your life insurance agent is important because this is the person who will explain the policies to you – always select an agent with whom you are comfortable with. Avoid agents (even if they are your own uncles or aunts) who make you feel pressured into buying any policy.
 

Medical Insurance
 
In countries such as Malaysia, companies normally cover medical expenses of their employees. However, in other countries this may not be the norm.
 
The cost of medical treatment is, and will always be, high. Medical insurance coverage is a must. Without disrespect, there are very few countries (if any) where you would rather be admitted into a Government as opposed to a private hospital. Even in government hospital, in most cases you would still be subject to minimum costs of medical treatment, which may still be a substantial amount.
 
 
 
For those who think being covered by your employer is sufficient, consider this:
 
One fine day, you change jobs. The short period where you are unemployed, you are without medical insurance coverage. If you require urgent medical attention then, you would not only have to pay for it yourself but you may also be denied new medical coverage when you start at your new place of employment.
 
And this:
 
All this while you have been employed and your medical coverage is taken care of. Unfortunately, bad health forces you to retire at 45. When you are no longer employed, your medical coverage lapses and you may not be eligible for a fresh medical insurance policy at that point due to an ‘existing medical condition’.
 
Therefore, it would make sense for you to maintain medical insurance coverage for your whole family at all times, regardless of whether you are covered by your employer at that particular time or otherwise.
 


 






 








Personal Accident Insurance
 
This insurance is exactly what it claims to be – insurance in case of personal accident.
 
Different from medical insurance, you will be entitled to the benefits in the event of disability as the result of an accident. Important, as in the case of loss of limb, for instance, you may require special (and expensive) medical equipment and may not be able to perform your job to the same level of competence as prior to the accident.


Education Insurance
 
It’s a simple fact of life. The higher the level of your study, the higher the chances that you will succeed better in life. Attending university is therefore a requirement, not an option.
 
Education Insurance ensures that whatever happens to you, your child will have the necessary funds to pay the tuition fees. Most education insurance policies also double as savings and investment funds so if you do not collect on your policy (ie nothing bad happens), upon maturity you would have saved up a substantial amount for the same purpose.
 
Be mindful though of the cost of education and where you intend for your child to study. For instance, the cost of local university education in Malaysia may be a fraction of what it would be in, say, an European country. These early decisions make a world of difference.  


What now?
 
There are of course many other types of insurance products from many different insurance companies. Being a ‘passive’ product, most people tend to procrastinate and ignore its importance … until it is too late.
 
We never want anything bad to happen to our families or ourselves, but in case something does, would be great to have somebody on your side … 


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