Insurance Strategies For Every Stage in Life

As your life changes, so should your insurance needs. Whether you're walking down the aisle, or hanging the towel for retirement, it's important to protect your most valued assets with the right amount of coverage.

Insurance Protection Is Like Having A Parachute

Having the surety of insurance or takaful protection is a lot like having a parachute strapped to your back at all times - the weight might be burdensome, but you'd be thankful when you need it to cushion your fall. Having the foresight to know what kind of insurance policy and when to purchase it is key to keeping your finances in tip-top shape.

While we have segmented when you should get a specific policy, these are just guidelines - they're not set in stone. If you become a homeowner while still a bachelor, that's when you would need a home insurance. Below is a brief overview of the insurance policies that you should be getting at specific points in life:

Starting Your First Job

Priority: Establishing a career, setting financial goals, including adequate medical and accident coverage

Medical and Health Insurance

How cheap (or expensive) is basic healthcare in Malaysia? With the recent allowance for medical practitioners to raise medical fees and charges, the simple fact remains that for most Malaysians, healthcare is hard to afford without access to a medical card - which allows you to claim for costly hospitalisation and surgical fees.

If you have been insured under your parents' medical insurance policy all these years (usually up to a maximum of 23 years old), you'll need to fork out some cash for your own after your coverage has expired. If you have a confirmed employment, you will usually obtain one through your employer.

Motor Insurance 

Malaysia currently has the dubious honour of being one of the top 25 countries most dangerous to road users, with an average of 30 deaths for every 100,000 individuals - the road accident rate in Malaysia is really quite alarming! Not only that, because of the often clogged roads and frantic driving in urban cities such as Kuala Lumpur, many drivers have succumbed to road rage - just ask our good friend Kiki below:

The point is not to scare you from ever driving again, but to emphasize the importance of having comprehensive insurance protection for your vehicle, be it a car or motorbike. For a new vehicle, the insured value will be the purchase price while for other vehicles, the insured value is the market value of the vehicle at the point you apply for the insurance policy.

Personal Accident Insurance

If you rely purely on your monthly salary to support your daily expenses, you should get yourself a personal accident insurance policy - it will provide you with financial compensation in the event of injury, disability or death caused by violent, accidental, external and visible events. That is unless you are working in a high risk environment that has already provided you with a specialised PA policy i.e. law enforcement, pilot, military, and divers.

While employers traditionally provide you with PA insurance policy, some people may prefer the increased coverage provided by buying private policies to supplement those of their employers. This is especially important when you have dependents relaying on your income.

Starting A Family

Priority: Pay for mortgage loans, protection for your spouse, and financial security for your child's education

Term Life Insurance

A term life insurance, similar to your personal accident insurance, is meant to replace your income for those relying on it should something unfortunate were to happen resulting in your death or permanent disablement. Again, having this policy is very important when you have dependents such as children and a spouse who is not employed.

Once your children are all grown up and can support themselves financially, a term life insurance won't be too necessary.

Critical Illness Insurance

Often times policyholders will supplement a term life insurance policy with a critical illness rider or stand-alone policy. This policy gives you a lump sum benefit upon diagnosis of any of the 36 major diseases and illnesses including cancer, heart attack, stroke, diabetes including diseases often associated with old age such as Alzheimer's disease and Parkinson's disease.

Fire/Homeowner's insurance

If you own or plan to own a home, you will need a home and fire insurance - this cannot be negotiated. A homeowner's insurance will insure everything from the home itself to your belongings to someone getting injured on your property. 

You will also be covered from natural disasters such as flooding and landslides. A home is potentially the biggest investment you will ever make, and many struggle everyday to afford to have a roof over their heads, so protecting your home should be a top priority.

In Malaysia, you can either take up a MRTA or MLTA insurance to insure both your family and mortgage. Of course, you will have no need for one if you decide to put your home up for sale, go back to renting, or make alternative living arrangements - move in back with the parents, maybe?

Getting Ready For Retirement

Priority: Secure regular income for retired life, update medical and critical illness coverage

Retirement Insurance

As you slowly move into this stage in life, your financial woes will mostly relate to maintaining a plan to ensure a steady flow of funds with the absence of paid employment.

Once you reach your late 30s, sign yourself up for a retirement insurance plan, also known as a retirement annuity plan. You receive a guaranteed level of income each year that can be paid out monthly. For some, their Employees Provident Fund( EPF) contributions may be enough to tide them over through their golden years, but on average, most people would have run out of funds within only 3 years.

As an example, you can start by paying a RM3000 premium per year from the age of 40 until the year you retire. Your policy will then be able to pay out a higher amount based of say RM7000 per year for 10 to 30 years after you retire. 

With a retirement annuity, unlike a Private Retirement Scheme (PRS), which requires you to produce a GP (Grand of Probate) or LA (Letter of Estate Administration) to unfreeze and withdraw money in the event of your death, you will only need to make a nomination to pass on your wealth to your beneficiaries.

Know your options

The best thing to do before deciding on a insurance policy is to get yourself educated - get quotes from different insurers, read the nitty-gritty details of your policy, and whenever in doubt, ask your insurance agent questions.


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