I’m an advocate of one achieving financial freedom through savvy investing.

Now, with that said, I too believe that not everyone is ready to invest. I opine that one must first be financially fit in order to invest. This means, before we hunt for the next stock or property deal, we should get our financial house in order. In general, this involves having:


– zero or negligible outstanding credit card debt or personal loan.

– savings to fund at least 6 months worth of living expenses.

– a comprehensive life & medical insurance plan.


In this article, I’ll focus on life insurance matters. Why? Let us assume, we’ve built ourselves a sizeable investment portfolio for ourselves and are proud of it. If we met with a misfortunate event such as being hospitalized for medical treatments, without insurance, who do you think will be footing in the bill? I think, it makes sense to have the insurer to take care of it, and thus, avoiding the need to liquidate our portfolios to pay for it.

Most of us do get the idea. But, many are still substantially underinsured as I write today. Perhaps, it is due to a general misconception where insurance is expensive and unaffordable which stemmed from lack of financial education among consumers and from agents who are only interested to sell expensive products for commissions.


As such, I’ll share, from my viewpoint:


– how to get the best insurance deals in the market today?

– how to save or slash your insurance cost by 30 – 50% a year?

– how to fund your premiums by using investment income?


Thus, here are the 5 Life Insurance Hacks that you need to know before you buy your next policy:

#1: Improved Your Health Condition

Recently, I’ve just met up with my insurance agent. From him, I’ve learnt that 30% of his clients have received either a rejection or a conditional acceptance on their proposals to buy new policies from his insurer. In general, this is due to the current health condition of his clients.

Perhaps, you may think, ‘Ian, is it because your friend’s clients are old uncles and aunties?’ The answer is nope. His clients are relatively young where their age are below 40. Here, I’ll share 3 things that you can start doing now which can help to boost your chances of getting a straight acceptance for your next purchase of an insurance policy without incurring additional charges:


Tip 1: Body Mass Index Below 30

Here’s one of the main reasons why insurers reject a new customer: Obesity.

Presently, if you are overweight, don’t worry. I’m not here to condemn or to ask you to go on a food fast or a massive workout routine. Instead, I think it is helpful for you to have a 1-Year Plan filled with simple activities that help to reduce weight. This includes taking nice strolls in the park and to replace your diet to a much healthier one (not necessary a full green one).


Tip 2: Blood Pressure

If a new customer is found to have hypertension, he would pay at least 20% higher insurance premiums than one who doesn’t. If you found yourself to have nearly 140/90 in your blood pressure reading, then, it’s time for you to adjust your lifestyle and diet to reduce the reading. It can be salvaged.

Tip 3: Quit Smoking

It’s healthier. It saves you money. Your premiums would be cheaper by 10% – 15%. I won’t elaborate further as this is already a widely known fact.  

#2: When is Your Birthday?

Your insurance premium is calculated based on your ‘Age Next Birthday’. So, as I write today which is on 10 February 2018, if you are born on:


– 1 January 1988: Your Age Next Birthday is 31.

– 1 June 1988: Your Age Next Birthday is 30.

In general, your premiums would be lower if you buy your policies at lower age next birthday. Ideally, I would reassess my insurance needs at minimum of 3 months prior to my birthday. This allows me adequate time to get a new policy before the arrival of my birthday.

#3: What to Buy First?

If you are a fresh graduate where your salary is below RM 3,500 a month and intend to get your first insurance policy, I would suggest you to get adequate medical coverage as your utmost priority. You can get yourself other types of life insurance products as your income increases over time.

There are two types of medical cards you can buy today.


Standalone Medical Cards

This is quite affordable. Most college students can afford to get one of these cards as the price is around RM 50 – 80 a month for basic medical coverages. It comes in handy if you are on a tight budget.


Investment-Linked Cards

Nowadays, the ‘better’ medical cards are sold in a bundle with an investment linked policy, where it packages term insurance, medical cards and unit trust investment into one policy.

Here is what I did to get higher medical coverages from an investment linked policy. I requested for low term insurance and unit trust investment value for my policy. Your premiums would be greatly slashed as you are not paying for the term insurance and investing in their unit trust funds. Today, I think, you can get one policy like this for RM 200 a month where the medical coverage is set to be for almost RM 1,000,000 a year, with no co-insurance and lifetime limit. Hence, if your current medical coverage is below RM 1,000,000, I think you can shop around and consider an upgrade if the deal is good.  

#4: High Coverage-to-Premium Ratio

Last Tuesday, I’ve attended a 1-Hour Live Webinar conducted by Peter Lim. I learnt a concept from it and I think it’s worth sharing to all. It’s known as the coverage-to-premium (CTP) ratio, which measures your amount of coverage per RM 1 in premium.

The rule of thumb is to get the highest possible CTP ratio for our insurance products. The ideal CTP ratio varies according to our age, gender and health conditions. For instance, if you are currently under 35, you may aim for CTP ratio of 150 and above. Here’s the formula:


Month Premium = RM 150

Annual Premium = RM 1,800

CTP = 150

Minimum Sum Assured = RM 1,800 x 150 = RM 270,000


This means, if you can afford a monthly insurance premium of RM 150, you may aim to buy a life insurance policy that covers at least RM 270,000 in the event of death, total permanent disability and 36 critical illnesses. Of course, that is if you are under 35 years old.

#5: Minimum Cash Value

‘But Ian, if I go with a high CTP insurance policy, what about its cash value?’

Obviously, it would be low. I’m not expecting much cash value after 20 or 30 years of paying for my insurance policies. Why? Shouldn’t I expect to receive some ‘investment returns’? Nope. This is because insurance policies are solely meant protection, not investment. Let me give you a simple comparison:


Fictitious Quote



Sum Assured

RM 300,000

RM 300,000

Yearly Premium

RM 1,800

RM 5,000




Cash Value @

Year 20


RM 100,000


Personally, I prefer the investment-linked policy over a whole life policy. This is because I would save RM 3,200 a year in insurance premiums which could be invested for higher returns than a whole life policy. As a matter of fact, you can even build an investment portfolio that funds this policy by itself.

For instance, I’m making about 6.5% a year in dividend yields from my stock portfolio. Thus, I would need to increase my stock investment by RM 27,692 so that it can ‘self-fund’ this policy like virtually forever as it makes RM 1,800 a year in dividends. By this way, I was able to upgrade my insurance policies without being overly-burdened by new commitments.

Of course, this method only works if you invest for cash flow, not for capital gains. As inspired by Robert Kiyosaki, it is good to invest in cash generating  assets to pay for your expenses.


There you go, the 5 Insurance Hacks that allows you to slash your premiums, increase your coverages and to raise capital faster for investments which puts money into your pocket.

If you have any comments & enquiries on insurance matters, please feel free to drop them at the commentary box below:


Ian Tai
Ian Tai

Financial Content Machine. Dividend Investor. Produced 500+ Financial Articles featured in KCLau.com in Malaysia and the Fifth Person, Value Invest Asia, and Small Cap Asia in Singapore. Regular Host and Presenter of a Weekly Financial Webinar with KCLau.com. Co-Founded DividendVault.com, an online membership site that empowers retail investors to build a stock portfolio that pays rising dividends year after year in Malaysia and Singapore.

    20 replies to "Insurance Hacks 101"

    • KS

      Hi KC & Ian, Great advice & article. I’m 43yrs old & have a ILP (Combine PA,Life & Medical)since 2004.
      I have some doubt whether to terminate or upgrade from the same insurer on the medical part due to low annual 75k+ life time limit 225K. I wonder its beneficial to apply another new insurer with stand alone Medical plan with no limit & annual 990k.

      • KCLau

        It is good to upgrade your medical card since there are better options available now.
        If you do it with your existing policy, you will not reset the first 6-years low allocation period (mainly for commission), but only the new portion of top up premium required.
        So you should find out the upgrade option, then compare it with other options from other insurers, see if it make financial sense to switch to a new insurer.

    • Liew

      Great article! Thank you so much!

    • Lolo

      Just wondering which insurance company you went with and if you would recommend your specific policy?

    • Des

      Great article, good reading material.
      I have a question, may I buy life and medical insurance for my parents?
      Any problem if put myself and my siblings as the nominees?

      • Ian Tai

        Hi Des, Thanks for your kind words. Yes, you may buy both life and medical insurance for your parents as long as they are healthy and no further medical complications. And, no problem if you put yourself and your siblings as nominees (provided who pays for these policies and the level of generosity you have towards your siblings, I will leave that to you). Please do note that these policies would be higher priced as compared to younger ones like us. If you are not well-insured, you may want to start with your own coverage. But, all in all, a good insurance agent is one that is able to tailor-made a solution that best suits your needs and your family’s. Regards. Ian.

    • Kelvin

      Generally what is the rule of thumb for monthly insurance commitment against your income. Personally I think my monthly commitment is too high for insurance, is almost 18% of my net income. I need some advice

      • Ian Tai

        Hi Kelvin, it’s hard to put a figure to it as the figure varies depending on your age, income, number of dependents and what you intend to provide for them (just in case you somehow couldn’t). For instance, if you are a single guy and bought tons of endowment or savings plan (where coverage is low but premiums are high), then, it depends on whether you want to continue keeping them or cancel them to free up your monthly cash flows for other stuff. For exchanges of idea, you may email at ian@kclau.com. Thanks. Ian.

    • Eric

      Hi KC/Ian,

      I am 30 this year and I have purchased a term life + medical insurance since 2014. Recently I heard from a friend (non-insurance agent) that about 2-3 years ago there is a blanket revision on all insurance policies in Malaysia to increase/double up the insured amount at no extra premium payment. And that it is not applied automatically to my policy if I don’t ‘update’ it with the insurance company. I want to know if there is such a thing and if so, what do I refer to when I’m talking with the insurance company?


      • KCLau

        You can write in to their customer service, or ask your servicing agents for the details. I believe each insurance company uses different term or jargon for the similar benefit.

    • Newbie

      Hi Ian, thank you for the sharing. For the ILP shown does not include medical card right? Because its impossible for the CTP to realise if medical card and accident included. The premium will be way higher.
      Or are you suggesting on getting ILP for Life and standalone medical card?

      • KCLau

        Best to have medical card included in the ILP.
        For age <30, the premium is quite affordable.

      • Ian Tai

        Hi, here’s how I do it for my own policy. I had one specific ILP for medical card where the sum assured for life insurance is low. That policy is meant for medical insurance and thus, I don’t consider its CTP but instead, I consider its medical benefit. Meanwhile, I bought several policies which are specifically for life insurance. For them, I do consider their CTP. Regards, Ian.

        • Newbie

          So that’s how it is. Is it cheaper this way by the purchase of 2 ILP? Under age 30 btw.
          Some mentioned using less than 10% of net income for Insurance, is the CTP of 150 and above still achievable given the above example?

          Thank you for the sharing and reply!

          • Ian Tai

            Hi … it depends on the specific plan and your net income. In short, you should be able to achieve CTP of 150 and above if your age is below 30. If you find anything below, then, I think, you should shop further to verify. 🙂

    • Amal

      Hi Ian , thanks for writing this great article about Insurance hacksin general ,

      I am thinking of buying a medical insurance for my elderly parents and happens to come across this article :

      My parents stay in Malaysia only 6 months per year so do you find it worth buying one for tem ?

      • Ian Tai

        Hi Amal, thanks for your nice words and feedback.

        Insurance premiums for individuals above 50 would cost more than individuals in their 20s and 30s, assuming that all are healthy without any health complications. In most cases, if an elderly person wishes to buy medical insurance, he or she would be asked to go for medical checkup which enables the insurer’s panel of underwriters to underwrite the medical risk of an elderly person. If an elderly person is fit and healthy, then, the premium is of a standard rate. Otherwise, he or she would be loaded with extra charges or be rejected.

        So, let’s assume that your parents are still ‘sihat’, then of course, you can choose to buy medical insurance for them. It can cost a few hundred dollars a month depending on the plan you choose according to your means. The few hundred dollars may seem hefty to some but the medical policy could be a life-saver if it’s needed. If you have the means to pay for it, you may shop around for a suitable plan for your parents. Cheers 🙂

    • damiazara

      Its really a Great Information, Thanks for sharing such a great articles
      Get More info about Insurance

    • Shamila

      Hi Ian. I’m looking for a medical card that covers min 100k per annum for my son 20yo and daughter 17yo. A basic standalone plan that works. I’d also like to know how do insurance companies check if one has an existing medical condition.

      • KCLau

        For standalone plan, you can shop online and get quotation from insurance companies.
        If you want to talk to someone that I recommend, please email your query to me and include your phone number and location.

        For existing medical condition, if there is no prior record with the insurance company, normally they assume you are okay.
        Until when claim arises, and it raises suspicion (e.g. claim within the first few months of having a new policy), insurance company will investigate. What I understand is that they will take months to contact hospitals and clinics near to your residence to ask for past history.

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