Since I am an insurance agent myself, it is my job to always ensure my clients are all well protected. I will try to put it in a simple form so that you will know what can be insured in a life insurance policy. There are 5 major benefits:
1. Accidental Care
This is usually a rider attached to a main policy. It covers permanent disability, and death caused by accidents only. Accidents include car accident, fall down, etc. Normally it pays double the amount of sum assured if accidental death happens at a public conveyance (bus, passenger airplanes,LRT)
Adequate coverage: 5 times annual income
It is cheaper to get this accidental policy as a standalone plan from General Insurance companies.
Some people only have this type of policy. I always laugh at them. They never realize that they actually go to war with underwear only, no armour, no helmet, no nothing!
2. Hospitalization and Surgical Benefit (known as medical card or health card)
This benefits can cover all or most if not all of your medical expenses at hospital.
Adequate coverage: >RM150/day room and board benefit. Yearly limit of >RM50,000. Lifetime limit of >RM150,000.
Health card is not a credit card and it does not have money in it! If it is genuine cases, there will be not much trouble to get the Letter of Guarantee from the insurer when you are hospitalized. However, insurance company have the right to investigate before they pay out the claim.
3. 36 Critical Illnesses (Cancer, Stroke, Heart Attack etc)
It is different from the health card. This benefit is paid in a lump sum to our account, but not to the hospital. The purpose of this benefit is to replace out potential income loss when we take long leave for medical care.
Adequate coverage: 3 times annual income.
4. Total Permanent Disability (TPD)
TPD is a very severe case. After a person becomes TPD, it can be defined that he lost his ability to earn a living. There are 2 forms of benefit for TPD:
a) Lump Sum – this benefit is normally included when you purchase the policy for 36 Critical Illnesses.
b) Annuity – This is a separate rider which will pay you a yearly benefit. It is advisable to get the protection up to our annual income. However there is a maximum cap of RM50,000 per year per life assured per insurance company. If your income is more than that, you can consider to buy different policy from different insurer to get yourself fully covered.
5. Natural Death
No matter how you die, they will still pay your family this death benefit, except committing suicide within the 1st year. Since the life assured can’t enjoy this benefit, it is up to the individual commitment to their dependants to calculate how much coverage they should get. For instance, a father whose wife is taking care of his 1 year old son full time, it is advisable to be insured for at least the expenses of the family for up to 25 years.
{ 19 comments… read them below or add one }
Hey that is a lot of benefit in one package. :- )
I should get this one for my risk management.
hi. can i know why until now still got a lot of ppl no buy life insurances???
pls tell me. for my assignment. sob sob
Hi Orange,
I think it is because of most of the people think they don’t see immediate money on having an insurance policy, yet they still want to pay out the premium every year. Thus they think insurance is an expense for them instead of an asset. However, they neglect insurance can create wealth and assurance for them when they have trouble, like death, hospitalization expenses and such, and also they don’t understand how important of early retirement plan can benefit for them when they old or even can carry forward the money to the following generation.
Hi KCLau,
I just want to say that your website is excellent. Good analysis and advice. I wish more insurance agents were like you.
Having said that, what is your opinion on the philosophy of ‘buying term and invest the rest’?
Thanks,Chris
@Christopher
“Buy term and invest the rest” is a great concept. I found the cheapest term insurance in investment-linked policy.
KCLau, thanks for the prompt response.
But since investment-link would be the cheapest, then why don’t we all shift all our traditonal policies to ILP. Considering the fact that the sharp increase in insurance charges would only occur after the age of 65, we can just surrender our ILP at that time. Most people do not need protection after 65 anyway.
Appreciate yr comments.
@Christopher
The other plans are still available because they still have the market. Some people just don’t like “investment” linked to their protection.
Some people can’t save money so they need endowment plan to force them into the habit of saving money. Some people like to have adequate protection while provide some nest egg during retirement.
There is no one plan that can suit all. That’s why any kind of plan will get its buyer. I think you know what I mean.
Thanks, KCLau for your prompt reply. Did not expect you to be awake at this hour.
BTW, do you have any downline in JB whom I can support when the need arise? If I need to upgrade my existing policies, you should be the one who deserve my business.
Further to my request for yr downline in JB, I would also like to ask you about GE’s ILP Health Protector. From my understanding, this medical card insurance is guranteed renewal subject to GE still offering this product in force in the market. What will happen to policy holders if GE decides to pull out this product one day due to non-profitable reasons? Wouldn’t we be stucked in the middle of the ocean?
Appreciate your view on this matter.
@ Christopher,
Currently I don’t have any downline at JB. I was living in Skudai for 5 years during my study in UTM. Even though I am staying in Penang, I still have a few clients in JB and Singapore.
When you need any support, I have a few colleagues who will be helpful if necessary.
Regarding GE ILHP (Health Protector) as you mentioned, I am impressed that you got all the info accurately. Before HP was introduced years ago, GE sell another H&S plan called SHCB. The policyholder who bought SHCB were offered free-underwriting upgrade to HP. That means as long as they are willing to pay for the new plan (HP), they don’t have to go through all the medical & health requirement.
I believe whenever there is any major changes of policy, the existing policyholders will be given a compatible offer.
Hope this answer your question.
Thanks for your participation in this blog. You should try the forum. I think you will like it : forum.kclau.com
Hi Dear KC,
Good evening.
I just have a glance over your blog as I just accidentally came into this & I found out that there are lots of things I need to learn from you….
I don’t have the habits of reading ppl’s blog but I think I am very interested on yours…sounds great right? ^_~
Anyway, Im staying Penang too actually….more doubts from me that haven’t “resolve” need clarification from you in future probably…hope you will not mind to lend me a hand of yours…
Best regards,
Corene.
Hi Corene,
Good to hear from you. I will gladly share my knowledge with you if needed.
Hi KC,
Its great to read your blog and I can learn a lot about insurance. Im currently working part time at Kuching GE Agency. But my exam will be on next Saturday so Im still feeling worry whether the questions will be difficult or not. I did manage to close 2 cases on Centennial Wonder last month. Thank God!
Best Regards,
Chai
@ Neo Chai,
Don’t worry about insurance exam. If you really study the tax book, it is quite hard to fail actually.
Welcome to the insurance line.
Hi KC,
May I know why u said those people who only have accidental care is actually go to war with underwear only, no armour, no helmet, no nothing?
HI KC,
I need some help here. Were trying to be an agent and choosing the right company to join 1. ING 2. Great Estern. Can you provide me some opinion and information to me i will greatly appreciate your opinion on this.
BEst regards,
Danny Chea
HI KC,
I need some help here. Were trying to be an agent and choosing the right company to join 1. ING 2. Great Estern. Can you provide me some opinion and information to me i will greatly appreciate your opinion on this.
Hi Danny,
I represent GE. And there is no comment on ING because I’ve never been their agent.
You can get more info on my agency on this online training site: http://www.SACWealth.com
Appreciate your reply ty.
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