Investment-linked, Supreme Livin’ Care Plus and GMBS, Which to buy?

A few days ago, I received an email asking for life insurance advice from a blog reader. I got his permission to publish our discussion here. Below is the email from the reader.

Hi KC,

I’ve a question to ask you regarding on the insurance. Currently I’m 29 years old (male) and want to buy my first insurance plan. After few comparison, i felt that Great Eastern is my choice. I am very confused on choosing the product. Two products that recommended by the agent are Investment-linked and Supreme Livin’ Care Plus. My preferable is actually Supreme Livin’ Care Plus as the premium won’t increase but the medical card premium will increase. The agent actually recommended me the investment-linked plan where he said the attractiveness is the medical card premium can be waived even the CI (Critical Illness) portion is claimed. But I’m very afraid on the risk of the fund investment.

Apart from the above two choices, GE are promoting a group insurance to our company where the premium are significantly lower than the above 2 choices. But what i understand that my colleague that bought it didn’t receive any black and white policy as the agent said they don’t provide policy for us because we’re under group.

Is group insurance are advisable to buy? or shall i choose the two types that recommended by the agent.

FYI, The premiums are as below
Investment link – RM2200
(sum insured including life RM65000 and medical card)

Supreme livin care plus – RM1678
(sum insured including life, CI RM60000 medical card are excluded)

Group (GMBS) – RM600
(sum insured including life, CI RM50000 medical card excluded)

Please advise.

Below is my reply:

Hi,

If you ask me which product I bought, I actually bought all the 3 insurance plans you listed.
I am sure that you can afford all of them if your annual income is more than RM45,000. The total premium of the 3 policies is RM4478/year. As a rule of thumb, forking out 10% from your gross income to buy insurance protection is adequate. If you buy the right insurance policy, allocating 10% of your income for insurance premium will neither make you under-insured, or over-insured.

Let me show you the proper way to get the most suitable insurance plan for yourself.

1. Assess your protection need

Refer to my previous articles about all types of life insurance protection benefits available, and assuming that you earn an annual income of RM50,000, your insurance needs will be:
a. Accidental care – 3-10 times annual income – RM150,000-RM500,000
b. Hospitalization & Surgical – at least room and board RM150/day with annual limit exceeding RM50,000
c. TPD – annual benefit of total income per year – RM50,000/year
d. CI – 3 times annual income – RM150,000
e. Death – this depends on your commitment to your love ones. Anyway, when you get the CI coverage, it already include TPD and Death RM150,000

In order to calculate death benefit need, the simplest way is

Death benefit needed = a x n x 12

where

a = regular monthly allowance to your family ( parents, children, wife etc) ( e.g. RM500/month etc)
n = number of year your family need your allowance ( e.g. 20 years for your parents until the day they pass away, 25 years for your kids till they grown up as graduates etc.)

Image: Looking ahead in life © Rayna Canedy | Dreamstime.com

2. Source for the most suitable plan to meet your needs.

Since you already shopped around and limited the choice to 3 insurance plans, we will see whether those insurance proposal can fulfill your need. If you buy all the 3 policies, I think it is just enough to fulfill your protection needs based on RM50,000 gross income per year. Why should you buy all the 3 policies but not just one of them which might be the best? There is actually no such thing as “the best” insurance plan in the world. Let’s get back to your questions:

a. Investment link – RM2200 (sum insured including life RM65000 and medical card)

If you have the budget, buying both investment-linked and traditional policies actually compliment each other. But if you can’t afford both policies, normally this happens if the total premium you can pay is less then RM3,000 a year, investment-linked plan is the first insurance policy you should get. If you are skeptical about the fund performance, go for the low risk fund such as Lion Fixed Income Fund and Dana Sejati, which provide more than 6% return annually for the past few years. You have the right to make your investment decision. There is a form called Supplementary Investment-linked Form where you can instruct on the investment strategy to be used.

b. Supreme livin care plus – RM1678 (sum insured including life, CI RM60000 medical card are excluded)

Supreme livin care plus also provide the buy back option which is not available on any other insurance policy. The buy back option provides the life assured an option to buy another whole life non-participating policy which cover death only, after he is diagnosed with CI. The premium is guaranteed some more. But every prize comes with a price 🙂

c. Group (GMBS) – RM600 (sum insured including life, CI RM50000 medical card excluded)
GMBS only covers until age 65. It is cheap and affordable. Bear in mind that the premium is also payable until age 65 continuously. It covers almost everything except the H & S. But you shouldn’t depends on it as your sole and only policy because it is not a whole life policy. You still need coverage after age 65. I will look at it as a good top up offer after buying a and b. You won’t get the master policy but you will get a certificate of assurance instead.

Please get insured immediately. Life is full of surprise.

Contact me to inquire about life insurance planning.

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