1. Critical care until at least 70 y/o (growing with inflation)

Less important
2. Death benefit that grows with inflation
3. TPD that grows with inflation

I was quoted the great Enhanced Living Care by an agent recently. Without the policy wordings however, I am not sure whether the critical care cover is as per my requirement.

Also, can you please let me know the difference between the guaranteed and non-guaranteed schedules? Seems like the agents kept giving me non-guaranteed schedules only- I take it that non-guaranteed means that the return on the insurance is non-guaranteed?

Will greatly appreciate any advise you can give.

I think a reasonable estimation of coverage needed is 5x of your annual salary for death benefit and 3x for CI benefit. May be about 10% of the salary spends for insurance plan. What is your recommendation though?

Getting IL allows me to pay with lower premium (RM2600) and get high coverage now. And surrender it or it lapses at older age. Then I have to hold on the AIA. It sounds good for now, but if I also consider for retirement, AIA can be a burden later.

In another word, if “affordable”, I can increase the premium of Option A to about RM3300 in order to have RM200k +cash value CI/TPD/death benefit before age 66 and RM120k + cash value CI/TPD/death benefit after age 65. I keep this policy and surrender my AIA at age 56 with cash value of RM100k. Of course, I have to make sure I can “survive” paying the Option A and AIA for the next 25 years.

I also try to stick on basic of insurance, but when I plan for my retirement. I feel the dilemma. As a professional financial planner like you, I am sure you can provide a good second view. It is very interesting.

It is more expensive to get insured with traditional policy vs. ILP. So if you can only afford RM2600, but you need higher protection, go for ILP

I’m not sure if AIA is different.

Currently, I am holding AIA whole life insurance, RM100k critical illness (CI) and RM200k death benefit. Pay till age 99. It has been with me for 8 years.

I am 36 and having a kid now, hence I am thinking to increase my protection.

I found 2 options.

Plan A: Traditional whole life traditional plan and pay for 25 years term only.
Pan B: Investment link whole life plan

Option 1) Buy Plan A and have approximate RM140k+cash value CI/TPD/death benefit till age 65, and RM84k+cash value CI/death benefit after 65. I just need to pay RM2400 per year for 25 years. If either CI or death occurs, the policy will terminate. The policy covers forever. The 5% projection cash value at age 66 is RM80k.

Option 2) Buy Plan B and have RM200k+cash value CI/death benefit till age 75 (CI), till age 99 (death), till age 65 (TPD). I have to pay RM2600 till age 99. If I die after CI, I can claim RM200k+RM200k both CI and death benefit. The approximate 9% (policy year 1-20) 6% (after 20 yr) projection cash value at age 66 is RM25k.

Benefit of Option 1 is I no need to pay the premium when I am old. I can surrender my AIA (get cash value) when I am old/retired and when no need high protection but still have min protection of RM85k. It covers you as long as you are still alive. But it is just either CI, TPD or death.

Benefit of Option 2 is I have the high protection with the approx same annual premium. However, high insurance cost when get older hence less cash value left. I suspect it will lapse soon after age 66. Hence, I have to hold on my AIA and keep paying till age 99. CI benefit will terminate at age 75. TPD benefits terminate at age 65.

Well, sorry for long writing, but this is typical dilemma or case study with traditional and investment link.

Lastly, can I find your book at Popular?

Thanks again. I’m really appreciate your advice.

The medical card is not standalone policy. What I meant is medical card with traditional plan versus medical card with investment link plan.

Since IL plan insurance charges will increse expontially with age, will that possible the IL policy will lapse and hence the medical card will terminate as well? In IL plan, we cannot see what beyond 30 years and since the charges jump significantly when we go older, the cash value reduces very dramatically.
Traditional is much steady in charges though.
Well, insurance always promote investment link plan though.

But when it is attached as a rider in ILP, insurance company will use your policy cash value to pay the insurance charges, which keeps the H&S coverage in force even though you forget and can’t pay premium for several months.

I have 2 queries here and need your explaination.

1) Why is Traditional Plan is always more expensive than Investment Link?

2) If we are stop paying premium when we are old age, the traditional plan will become APL ( 7 to 8% interest yearly), while IPL will cancell the unit at the basic account to cover back the premium. If comparing between this 2, which is more costly to the policy holder?

Pls advice and thanks in advance

For some people who don’t save regularly, this is a saving system that is proven to work.
If you are already good and disciplin in money handling, the rate of return of whole life saving plan is not something to brag about.

How do you comment on the insurance whole life saving plan which nowaday is an argument on this plan. Which the feature is high premium low protection because it emphasis on saving. Does it really can achieve the target of saving? Perhap it only yield 4% to 5% return a year only after lock-in 20 years (including the GUARANTEE income yearly or every 2 or 3 years depending on the policy). Is it worth for lock in 20 year just to get 4% to 5% a year while the inflation is about this rate.

It works like back up plan. When the medical bill is RM50,000 – you claim first RM15k from existing medical card and balance from HLA. Therefore, a relief to existing medical card’s life time limit.

Since ILP can give high protection at low charge, ask for higher protection like RM300,000 for few reasons:
1) You might need it in future;
2) When you need it, you may not qualify for it any more.
3) It is marginal cost to you.

Therefore, you need to monitor the Statement from GE closely to avoid out of coverage. If required, pay premium or settle the Automatic Premium Loan which charge you 7%-8% (if you are under APL now).

This concept is not always true, especially:
1) Term life in Malaysia not very cheap (as KC mentioned)
2) ILP is cheap for younger people looking for high coverage.

Only upon an informed analysis, the only you conclude if TL better or ILP better.

By the way, Keyman insurance has a limitation from tax point. Check my blog for further info.

Yes, ILP is best for anyone below 40 and need high protection. If you load too many benefits into an ILP policy, beware of the increasing charges when you grow old.

Manage it actively. Review with spouse (if any) and/or financial advisor (a good one).

I have a RM500,000 life insurance using ILP as the charges is much lower. Check my blog for details. I have even use present value to compute it.

When I am older, my asset grows and need for protection lowered, then I will revise the sum assured gradually to as min as possible.

Lastly, I can harvest the account at right time and transfer the fund elsewhere to avoid high insurance charges. (provided I am totally no need insurance / still have another traditional life)

Financial planning is something we need to actively engaged with.