WHAT insurance is right for you really depends on your life stage and circumstances. For now, we will skip things like motor, property or travel insurance which are self-explanatory.
We will focus on insurance that will protect you against unexpected events that have a big impact on your life.
For example, an accident that renders you permanently disabled. A cancer diagnosis that requires surgery and chemotherapy. Or even the loss of your life as a breadwinner of your family.
- Medical insurance: A must for everyone
Unless you want to rely exclusively on government hospitals, everyone at all life stages should get medical insurance. This includes your children. Do you know that you can insure them from 15 days old?
Even if you were stricken with cancer, most medical plans will pay for hospitalisation, surgery and chemotherapy without you having a critical illness plan (see critical illness Insurance).
- Life insurance: If you have dependents
If you have dependents who rely on you for financial support like your spouse, children or retired parents, you need life insurance. If you died unexpectedly, life insurance will provide a lump sum to them when you’re gone.
A RM1 mil life insurance policy is not uncommon and can be bought for less than RM200 per month for a 35 year old man with a clean bill of health.
But if you’re single, and your parents do not depend on you for financial support, there’s no need to get life insurance. And you certainly do not need to insure the lives of your young children.
- Total and permanent disability insurance: Usually comes with life insurance
This pays you a lump sum should you suffer total and permanent disability (TPD). TPD results in a worse financial situation than dying as not only would your family have lost a source of income (you) but you will need funds to support yourself in your disabled condition.
TPD insurance is usually packaged together with life insurance. If you strictly do not need life insurance but would still like TPD coverage, consider buying life insurance with TPD packaged together.
- Critical illness insurance: Consider in your mid-30s?
Should you be stricken with a critical illness (CI) like stroke, cancer or heart-attack, your medical plan in medical insurance above should already cover your hospitalisation and treatment costs.
But if in addition you want to replace your lost income as you are recovering or pay for experimental therapy not covered by your medical plan, consider CI insurance. CI insurance pays you a lump sum upon diagnosis of a covered CI.
The CIs covered depends on the plan offered which could number above 40 types.
Statistically, the incidence of most of these CIs occur when you are older. But it’s hard to advise precisely when to buy a CI plan. For most, consider CI insurance when you are in your mid-30s.
- Personal accident insurance: Consider if you’re an active sports or outdoor person
Should you suffer injury from an accident, a medical plan should cover your hospitalisation and major surgery costs.
But there are many injuries from accidents that do not need hospitalisation, eg wounds that require stitches from a clinic or a sprain that requires physiotherapy. Personal accident insurance will cover the cost of these.
Consider it if you are prone to injuries from an active sports or outdoor lifestyle, for your accident-prone children or frail parents or if you commute to work on a motorbike.
These are five of the insurance policies that protect you and your family’s lives. Choose those that suit your life stage and circumstances the best.
Malek Ali is the founder of Fi Life Sdn Bhd and a CFP professional at Financial Planning Association of Malaysia (FPAM), the exclusive licensee of the CFP Certification programme in Malaysia.
The views expressed are solely of the author and do not necessarily reflect those of Focus Malaysia.