You pay one year and then died, can count as high return?

If a person has good financial management skills they will buy an insurance. Insurance is a key point in financial planning, not only in Malaysia but everywhere in the world. You may be good at earning money but saying you do not need insurance makes you fail completely in financial management.

Well it will be true if people are educated enough to know what they want. But in Malaysia, the insurance penetration rate is around 40%, and the medical fee is now the top reason that send people to bankruptcy. The insurance companies need the agents the market need the agents.

I think many has confused about the topics.

The topic is about annoying insurance agent.

But many people here derailed it to the importance of insurance, and say it as though insurance company ONLY sell simple insurance.

Which is absolutely not true in Malaysia if you ask me.

First of all ... there is almost NO insurance company that sell only INSURANCE. Most of them is investment related. And agents get bigger commission if they push the investment related product ... but there's a catch here ... many financial planner actually go calculate if I put money in insurance that related with investment, and compare if I separate them ... the situation is actually it is better to separate them. So most authenticate financial planner actually will advise people not to buy those products.

The second thing is ... many people actually bought the wrong insurance or unnecessary insurance. Because the thing is ... insurance agents DID NOT study and recommend what type of insurance suitable for each people needs. So you will see some people end up have 5 life insurances, half of them is saving or investment related with ROI worse than fixed deposit. Or buy 3 medical insurance ... but when get serious illness ... none of them can cover. The insurance agents will only sell what the company want them to sell.

The headache part is ... with so many insurance agents around ... it is still required FULLY the consumers to self calculate, plan, and read what insurance is suitable for them ... the INSURANCE AGENTS actually didn't help most of the time ... their function is actually no difference from sales.

The purpose of insurance is actually cover your risk. What is the risk that worry you right now? If you are single, then life insurance is not that suitable for you. If you are the bread winner of the family, then life insurance is very important. But how many insurance agents will actually tell you this?

The main reason why insurance agents doesn't work well in Malaysia is because Malaysian are seeking someone who can give insurance advise and get the most suitable insurance plan that suitable for their financial situation. Which is a total disappointment for most Malaysians here.

This post has been edited by ReWeR: Sep 15 2013, 04:12 AM

The market NEED insurance advise, we don't need someone who keep pushing us to buy insurance.

Don't let people brain wash you, insurance is just a small part of financial planning, most financial planner only advise the max you can put 10% of your income in insurance depends on your risk.

The importance of insurance also very well depends on a country's health care system, basically countries like Malaysia and Australia can required less a bit on health insurance because the social health care system is quite affordable for their citizens.

If you are very good in earning money, sometimes you don't even NEED a single insurance at all ... because basically you're risk free. Think about it, if you die, you'll left a lot money to your parents and spouse, if you crippled, you have a lot of money for the rest of your life, if you get cancer/serious illness, you can pay it with no problem.

So insurance basically is risk assessment and prevention part of the financial planning. It is actually not wise if your money goes too much on risk prevention, and also not that wise if you go buy insurance when you're risk free.

A lot of time when insurance agents call me and explain the plan to me, I analyze back to them and tell them this plan is actually totally worthless and doesn't help the consumers at all. Example if you pay rm50 a month, then when you hospitalize you can get rm100 a day. But the problem is, if you are hospitalize, do you think rm100 will gonna help you? If it is a small injury, this insurance give you rm100 and you won't feel anything, if you are serious injured, rm100 will not cover much of your bills. At the end, this SUPER PREMIUM insurance plan just doesn't help me to mitigate my risk of staying hospital and get charged with expensive bills.

It depends on how you see things in the first place. The idea that saying that you need insurance as part of financial planning is not applicable at least in Malaysia. In Malaysia, medical treatment is not as expensive as other places. Also, what makes you think that overall, you do not pay more for the insurance then the actual medical fee. Maybe you end up paying more for the actual insurance then the medical fee. There is no such thing as a free lunch. When you buy an insurance, you are normally insuring against something that is very unlikely to happen. You will not get insurance if you are already suspected of being sick.

Maybe you should do the actual calculation. For example, like what is the likelihood that you would get cancer, have a critical accident or even have a critical sickness before you are 40. The probability is almost none.

Let's just look at this from a business point of view. Insurance companies make a huge profit. Insurance Agent makes a lot of money. Consumer has to pay for the profit of the insurance companies as well as the insurance agent which is pretty significant. So in the end, those are money that a consumer can save. You say that insurance is a key point to financial planning. I argue against that. What if say if instead of paying insurance company, that same person invest that money in something more tangible and can actually generate actual returns. He may have generated a large sum of money before he got sick. And the difference between the amount of money that he generate and the actual hospital cost may be significant.

Why would you say that if you do not buy insurance, you fail in financial management? If say I am making a million dollars a year, I should be insured? I think this is pretty crappy. Why should I get insured if I have enough money to cover for illness? I think this is ridiculous. That money spend on insurance would have been better used on investment opportunities and generate even more money. You are making a statement without even justifying your claim but this is what to be expected from people who are brain washed right?

And if insurance companies can just get rid of agents, at least people buying insurance can save some money. I do not see the need for agents espacially in this info age.

This post has been edited by sylar111: Sep 15 2013, 07:51 AM

For the same premium amount, investment portion have a much lower commission rate than insurance portion. If an agent concern about bigger commission, he will try pushing savings plans instead of investment-linked plan.

Risks has been around as long as human existence. Even though singles don't have dependants, doesn't mean their life is risks free. Singles still expose to the risks of sicknesses, disability and etc.

However, people have a choice to either self-insured or transfer the insurable risks to the insurance company. It's just a matter of choice.

Your example is flawed. Hospitalisation Income generally cost around rm150 - rm200 per year. It is an option for people that worry their lost of income during the confinement period, there is a world out there with plenty of people that do not have sick leave with their jobs.

The general advise of the 10% of the income into insurance is a very true and sound advice, but the fact is how many people had done that? Most people that have insurance do not even have a coverage of up to 50K.

It should be treat as an option or something extra, but not a must or very important for most people, may be except for as said some like those do not have sick leave benefit at all, and badly need income loss compensation, but those income loss compensation sometimes may not high enough, which may also not helping much in bigger picture in certain circumstances.

It may suit to some, while for other it is not that important, money of Rm150~200 can be saved each year, as for middle class, every money count, you cannot have everything, must prioritise which is important and essential. (I always said middle class, because poor one not afford to have insurance, wealthy one insurance is secondary important already).

Many people still do not get the right insurance, some over-covered or redundant,, some bought the wrong insurance, some bought insurance that is needless or secondary, while not getting the more important one, so that's where should be the agent role to ensure clients get the right insurance.

From your statements, you seem to be generalising a lot. Not all agents are that naive to propose a high level premium to clients when they knew there is a high possibility of lapsation. In fact, we need to meet up with them face to face in order to find out the facts regarding their background before coming up with the suitable proposal for them. Some life insurance are also comprehensive and include medical and critical illness protection, some facts I don't expect a layman to know.

When we buy insurance, there's something we should learn about which is called INSURABLE RISK.

Element of insurable risk state that the risk exposure MUST BE LARGE. There must be enough exposure to the risk for the frequency to be predicted and to be grouped for the purpose of establishing rates. When a risk is unlikely to happen, it CAN'T BE insurable. Just like you see the SicBo game in the casino, there will be no slot to bet for 2 points and below or 19 points and above. When it is unlikely to happen, who will be stupid enough to place a bet on it?

When a person is suspected of being severely sicked, definitely no insurance company shall entertain his insurance application. This is because insurable risk MUST BE due to chance and randomly selected. Accepting insurance application from an unhealthy person will be very unfair to the other healthy policyholders. Just like we buy 4D, we can't possibly make our bet when the result has came out. If we can do like this, everyone shall place their bet at 8pm on the 1st prize no of the day.

In Malaysia, not everyone is born to be rich or capable to earn a milion a year. Most of us are suffering in our livings and have insufficient savings to cover any emergency expenses. Insurance is one of the way to create a big fund for emergency purposes at the shortest time possible. You may be an active investor that earn high return from your investments. However, the higher the return, the more fluctuate the market trend it will be. No one can say his investment is guaranteed earn big at all the time, is it? What if the investment return is not meeting our expectation at the time we need it for emergency purpose? Of course you may say you are willing to take the risk of loss, but I don't think everyone have such a high risk appetite.

Some people think that rich people don't even need insurance in their financial planning. Well, I think it depends. If the rich person can make sure his cash can reach his beneficiaries hands before everything get frozen, why do they need insurance? However, how many can do that in time? How many rich people will keep his savings at home? How many willing to provide ATM password to his spouse and beneficiaries before he dies? After his estate being frozen, it is not surprise to take about one year to complete the estate transfer process even if he has made a written Will prior to his death. Not to say those rich chineses with billions estate and "pantang" to write his will before he dies, which may take forever to process the transfer of estate.

Insurance is one of the good way to solve a financial problem occurs when an unfortunate event has happened to us, but I'm not saying that this is the only way. Just like you say if you want to eat at outside. You can go to cafe, restaurant, mamak stall and etc, the choice is totally all up to you. I think there's nothing wrong no matter what your decision is, as long as it suits your appetite.

Generalising a lot?
I said some people suit, some may not, and since when I said all agents propose high premium?

I never said a single bad word about agent all along, never said agent propose high premium at all.... I wonder where this idea come from?

While the fact poor cannot afford to have insurance, and for wealthy people, insurance become an secondary important, I do not see what's wrong with this statement.
A poor one earn Rm1000, you tell him to buy a medical insurance that cost several hundred premium?
Every month also not enough for basic thing already, still buy life and medical insurance?

For wealthy one, with millions in the banks, still need to rely heavily about ten or up to hundred of thousand sum insured from insurance?
Yes, good to have, but not as important as middle class.

Unless you could substantiate "the medical fee is now the top reason that send people to bankruptcy", you are one of those annoying insurance agent.

Statistically, buying life or medical insurance is a poor financial planning.

Why medical insurance have to cost several hundred premium? A standalone medical card for a 30 years guy only cost rm700 per year, that's about rm2 a day. A 50k critical illness plan non par but with cash value cost like rm936 per year. A 100K PA cost like rm200 per year. They have plenty of choices to pick from. If anything they are actually more aware of the importance of insurance because they are expose to the risk more (motorcycle, labour work, poor health)

Everyone is buying an insurance, it is either you be your own insurance company and pay everything yourself or you join in the pool to let others help you.

Out of 100 30 years guy, how many of them spend over rm700 on medical in a year?

"join in the pool to let others help you" is not dissimilar to buying lottery ticket. If one is buying rm936 lottery ticket, probably will have a better chance to win 50k prize than claiming 50k critical illness.

You know what is financial planning?

Wikipedia - Financial Planner

Fortunate or not the agents are forced to pay to study the Registered Financial Planning courses.

Guess "Registered Financial Planning courses" didn't include statistic?

You can never give a proper financial planning advise if you are force to sell products for your company.

So an authenticate financial planner MUST be independence from any investment company, else it is just a sales agent and not financial planner.

So basically insurance agents who called themselves 'financial planner' are totally worthless.

If you are an agent from insurance company A, will you go advise people go buy company B products or invest in share or forex as investment?

Well ... unless you're freelance and you can give an clear guideline how to invest, save and plan the finance and get commission from your clients directly.

30 years old guys? Plenty
20 years old guys? Not much
10 years old guys? Almost all

It is a lottery, called 3D (death, disease, disability) and you are guaranteed to at least hit one jackpot, but if you are unlucky enough to hit them and make it to 100 years old, the company will compensate you 50K, guaranteed! Start the fun earlier at age 20 will cost you only rm613 yearly!

Insurance is a risk transfer tool. Comparing it to a lottery is a joke.

Let me dig out an overused line by a rich man...

香港巨富李嘉诚说： "别人都说我很富有，拥有很多财富。其实真正属于我个人的财富是给自己和亲人买了足够的保险"