04 Jan 2007 | 17 comments | insurance | Comments feed
Types of Life Insurance Benefits
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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.
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Hey that is a lot of benefit in one package. :- )
I should get this one for my risk management.
Relax - 17 Aug 07 at 1:48 am
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
orange - 17 Jan 08 at 5:48 pm
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 - 08 Apr 08 at 11:11 am
@Christopher
“Buy term and invest the rest” is a great concept. I found the cheapest term insurance in investment-linked policy.
KCLau - 08 Apr 08 at 12:18 pm
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 - 08 Apr 08 at 10:44 pm
@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.
KCLau - 08 Apr 08 at 10:55 pm
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.
Christopher - 08 Apr 08 at 11:00 pm
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 - 08 Apr 08 at 11:10 pm
@ 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
KCLau - 08 Apr 08 at 11:31 pm
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.
Corene Goon - 22 Jul 08 at 12:36 am
Hi Corene,
Good to hear from you. I will gladly share my knowledge with you if needed.
KCLau - 23 Jul 08 at 5:37 pm