I'd like to point out that insurance proceeds are creditor proof. In the scenarios where both parents are not around, yes the proceeds will be frozen and given according to the distribution act, but should i remember correctly, at least for the insurance 'estate', it is creditor proof.

This is why insurance is a great tool to quickly settle debts, funeral fees, lawyer fees, stamp duties and other things that pop up upon a person's demise.

Dying is expensive!

Firstly, as a buyer I feel that you should know as much information as possible. What do I mean when I say that.

Some things which I personally deem important that you should know are:

Annual, Semi-Annual, Quarterly, Monthly Premium rates.
Is plan participating or non participating. If participating how at what rate does it grow
Is plan purely Life coverage or does it have riders attached
If participating plan, approximately when will plan be self-sufficient (if ever)
Surrender returns from year 1 until final year.
Detailed break down of Surrender value and/or death benefit from present day until end of year coverage.

For reference: Participating plans means that the policy earns dividens /interest
Non participating plan means policies do not earn dividend / interest.

I am not meaning to talk bad about Prudential or any insurance company, but as with any product we as consumer / users before purchasing - we need to know all details about it including after sales service before making the decision.

In addition, with regards to you being single, you do need some sort of coverage. There are real life incidents which I can share if you are interested about people whom I know personally whom are single and had similar mentality. At the end of the day, the cash that you put aside for insurance isn't 'taken' by the company. You still can withdraw it later on in life if you wish to say, purchase a boat or property - that's do-able!

This post has been edited by Tatsumaki: Apr 27 2009, 01:00 AM

Dreamer: Are you familiar with what happens when a person is not around? What happens to that person's assets, loans, property and such?
Are you familiar with lawyer fees, stamp duties, and what happens if there is no will written? Even when a will is written are you familiar with the cost of processing that will?

Secondly, it seems you're just coming from a point of premature death with regards to life insurance. bbjslee has mentioned, dying isn't cheap.
Coffin alone cost a bomb. Funeral parlor rent? and all the other things? Have you given a thought to that?

When parents retire, they budget a retirement fund to support their lives. Are you able to run a questionnaire to 20 retired parents whom factored in funeral and burial charges of their children when planning for their retirement fund?

Premature death aside, what about critical illness? What if the single daughter or son is afflicted with cancer? One jab alone is 10k. Does the money come from the parent's retirement fund? If yes, do you as a son think it is fair to them? Do you feel good to burden them with your medical bills after all they have done, putting you to school and raising you?

Are you aware that upon a person's demise, that person still needs to settle his or her loans? Are the parents going to fork out their money again to finish paying their daughter/son's properties? cars? other bills like credit card on top of funeral expenses?

The family is already saddened by the demise of their child, why burden them more with all these creditors chasing the next of kin to settle loans.

Therefore I disagree with your statement that a spinster or bachelor with zero dependents do not require a life coverage. This is reinforced by the many questions I threw to you which translates to even in death, money is required for many reasons

This post has been edited by Tatsumaki: Apr 30 2009, 03:38 AM

Correct me if I am wrong, but it appears that you might not have a holistic picture here.

Disability
This is usually a rider. I am not particularly sure if there are specific disability packages. Therefore disability coverage being a rider, there need's to be a life policy (a main policy, like father and son)

Death
Dear Dreamer, when I mentioned all those things regarding death, it was nothing to do with being a guarantor. Briefly now without going into very deep details. (For example's sake let us assume the deceased did write a will. Let us assume the parents know that their child has a will)

Upon their only son/daughter's demise this is what happens.
Firstly there needs to be an executor for the will. If there is none then two administrator's need to be appointed. Without going too much in details, appointing administrators and being one isn't easy. (require a huge sum of money)
Let's say an executor was appointed. Even in this phase a court order is required to execute the will (IIRC required a probate)

Next they will need a lawyer to help with all the legal part. Here is where lawyer fees come into play. May I ask you now, who is going to pay the lawyer? Then comes property. Not everyone can pay for their house and/or other property in 5 years. Just because a person passed away, doesn't mean the bank will say "Aiyo, so sad. Nevermind, we will waive off your loan out of good faith" or do they?

They are strictly business people. The deceased owed them cash, next of kin has to pay up or they will take it from the deceased estate.
Thirdly, car. Same as banks. Whomever the deceased took the car loan out of, they will come knocking on the door and instead of saying
"Mr and Mrs xxxxx, on behalf of the bank of dadada .... " they would be saying "Mr and Mrs xxxxx, I believe your son/daughter took a loan with us on this date and this amount. Please settle the loan"
Again I say, the existing bills.
Their child's credit card bills, ISP, phone line, astro, other type of services bills (the list goes on)

After all that, back again to burial costs (which includes the whole package of coffin, parlor, herse, convoys, and the works) Again I ask you Dreamer, who is going to pay for all these?

Critical Illness
Firstly, like disability, Critical Illness is a rider. If I am not wrong, there are no standalone Critical Illness policies. Again using programming terms, there needs to be a parent-child relationship for riders.

Regarding Critical Illness versus Medical Card, both are important. Yes Medical Card allows the bearer to obtain medical treatment (in this case let's say cancer) in hospitals for free or a fraction of price (depending on what package)
Having said that, medical card firstly has limitations.

Two, they have their own panels. If at panel hospital, the bearer does not need to pay. If not at panel hospital, the bearer needs to pay first and then make the claims later on. So, money still needs to be forked out temporarily first.
Three, medicals have for lack of better word 'credit limit' per annum. This means that in a year, xxx amount can be claimed. Anything exceeding that, bearer will have to pay.

Fourthly, if the bearer is so critically ill, (and since medical card is renewed on a yearly basis) the company has the right not to renew the card (for instance if the bearer has made over quarter million worth in hospital bills)

Having both Medical Card and Critical Illness coverage is like using a seat belt and an airbag for your car. Is one more important than the other? I think you know the answer to that.

Regarding your point about "Young people have lower risk" of getting Critical Illness. I strongly suggest you do a little bit more research about our current state of health in our society. Heck maybe make a thread in Kopitiam asking fellow forumers how many of their 'young' friends do they know have been afflicted by critical illness. I myself have personally known two. Both females, one 24 years old, one 29.
Do you agree with me that Critical Illness is no respective of age, gender and ethnicity? (But you might be thinking I am bullshitting you and telling you horror stories right? )

Lastly, I appreciate your opinion. I don't judge you and say that you are wrong. You have your reasons to believe so, but if you with to rebut my points, I really appreciate it if you based your opinions on more solid facts and counter my points. I've listed many facets now about death and how it is costly, If you disagree - at least do me justice and explain to me where the cash is coming from because these are real procedures and systems of our very own country which sadly many people are not aware of.

Did you know upon your death, your estate still can be declared bankrupt? Death doesn't mean an 'escape' from everything "YAHOO I'm free" you know.

This post has been edited by Tatsumaki: Apr 30 2009, 11:51 AM

1. I will not comment on other insurance companies, but the one which I am attached to, Critical Illness is a rider. What is a rider? Riders are like add-ons for your car, ya know, bigger exhaust, sport rims, momo steering wheel.
Having said that, Critical Illness Rider requires a term life to act as the parent.

2. Yes there are standalone medical plans

3. There are no yearly benefits from critical illness, but there are for disability. Disability too is a rider.

@xavi5567: Again, I will not comment regarding other companies, but as far as I understand, what you are seeking is outpatient treatment. This doesn't qualify for normal medical card coverage. Medical card is basically a Hospital Card. The bearer must be hospitalized before being eligible for claims.
Outpatient treatment exists mainly in the form of company medical insurance. These are packages sold to companies. It is only these packages that outpatient treatment is covered. Even so, there are limitations.

On the flip side, if you are hospitalized with a skin disease and require a skin specialist to review your condition, then yes the medical card will take the brunt of the cost.

I hope my explanation doesn't confuse you

Xavi: Yes. Medical Card doesn't cover outpatient treatment. Medical card is only for hospitalization. If you're not warded, any treatment is considered outpatient.

Yes, company packages are the ones that tackle outpatient treatment. AFAIK, there are no packages that 'solo' people can purchase for outpatient treatment.

Outpatient means also in this scenario:
I fall ill, and I seek a GP. GP says it is a serious disease and I need specialist help. He refers me to one.
I seek specialist assistance and it costs say, 750 bucks.
If my company has a medical plan - can claim, otherwise cry and count the 50 dollar bills coming out of my wallet.


I hope my explanation cleared up your confusion.

Dreamer, it seems you are not educating anyone at all. What you're doing is actually what you are accusing us of doing, black-seeding your opinions into other people's heads.

When a person educates another person, the teacher does not give ultimatum decisions. Here you're telling people "DO or else you're doomed". That is not educating anyone at all. Educating means "Have you thought about doing it this way? because -reasons as follows" or "How about looking at it in this perspective ? because - reasons as follows"

Secondly your 10 year buffer rule looks good on paper. Ideally it is nice to have a 10 year buffer, but in a realistic world, that is difficult to attain. I agree with you, on this statement:

If John Doe rakes in 50k per annum, it is absurd to set aside 17k for insurance. This is an unrealistic figure. The amount set aside is based on the customer by asking, "Mr John Doe, in the event you aren't around, how many year's salary would you like your family to have to assist them in moving on?"

Moving on, if a tycoon has 10 million in assets, paying 200k premium per year is peanuts to him. Why so I say that?
Firstly, chances are his lifestyle and his family lifestyle are above the mean of our society. Two He probably makes way above 200k per year. Like I said, it goes back to the customer by asking that very same question. If they buyer sees the value in it, price will not matter.

Some people see value in Iphone and are willing to pay 3k for it. Do you slam them and say "You're overpaying for a phone?" I highly doubt so. Therefore why is this different? You may not share similar value nor importance for insurance, and I respect your decision Dreamer.

I cannot stand here and condemn you on your opinion, but please - don't black seed that opinion into other people's head. Other people might have different value system than you do. You're free to educate - but telling them "Noooo, don't need. Wasting money. Don't, it's lousy" - these are black seeding. You can tell them opinions backed up with logical and sound reasoning, but leave the deciding factor to themselves.

And lastly, seeing your track record of debate with me, it appeared that time you were misinformed, to which you still haven't gotten back to me regarding Malaysia's distribution law and law regarding a person's demise - YET so confident you were telling people that Single people don't need life insurance if they live with their parents and have no dependents
Did you realize what damage you could have done if someone actually believe those words? How some poor parents would have their child's assets all frozen unable to use? How they might not even have enough money to conduct burial ceremony properly even in their grief?

Not within 2 days. I hope you're not being nit picky about this. Let's say the claims is done ASAP which is the quickest that I have known, 2 weeks (with all appropriate documents)

Even so, initial burial cost is taken care by the parents, but at the end of two weeks they are 'reimbursed' which means their retirement fund did not deplete.

@Dreamer:

I said that 17k per annum is high, but no where did I mention that life coverage is a waste of money. It appears you did not comprehend my sentence. I'll break it down for you for easier understanding

Ideal: 10 Years salary worth as backup
Realistic: X years (based on client's discretion)

Ideal: 17k premium for the 10 year salary coverage
Realistic: YY premium based on client's decision.

What I am saying is that realistically speaking, John Doe cannot afford 10 year buffer plan. What he can afford is let's say a 3-4 year one?
3 or 4 Year's worth of salary definitely is a good place to start off should John Doe pass away leaving his wife and two kids (age 10 and 13).
So please, don't put words in my mouth when you have misunderstood the sentence in the first place making me turn out to be the bad guy.

Why do people accumulate wealth? For various reasons. Do people like to spend this wealth simply? (some do but majority don't)
Even when a person has 10 mill worth in assets, would this person want his assets to decrease at the time of his/her demise?
Chances are, no. They would want 100% of their hard earned wealth be left behind for their beneficiaries.

You made a huge assumption that these 10 million were passive assets. I'll give you that. Perhaps this person owns shares to a hotel or a restaurant. Assets is just one thing. People don't dig into their assets to buy. What do I mean. Let's say you own a hotel, or a chain of hotels.

Would you sell your hotel to purchase say an empty plot of land? Quite likely not. You'd more likely use the profits from the hotels you own to make the purchase. This means you still have income (coming in from the hotels) on top of the assets you own (the actual physical hotel buildings which sum to 10million)
What the life insurance does is to temporarily supplement the income part, not your assets.

You mean to tell me, if a tycoon passes away, the spouse has to start selling the assets (shrinking it as time goes by) just to maintain their standard of living? Changing lifestyles isn't easy. Usually the rich people have different lifestyles and suddenly the lost of the bread winner or 'stable income' results in a drastic change in lifestyle which many people may or may not adapt to. This is where the proceeds of life insurance acts as a buffer.

Being an IT literate person, are you going to tell me there that you don't back up your important files? You just store them on one hard disk risking a bad sector or wear and tear that one day the disk will stop functioning?
Having 10 million assets you're telling me "But my hard disk is 2 Terrabytes, so I don't need to back up. I have more than enough space"
I hope you see the logic there, operative word being Buffer

Thirdly, I have told people that they are sufficiently covered at the moment. Did that satisfy you? I've clients whom has purchased from other companies, to which when I made a review for them, they had enough and I moved on. My intention is the person's well being, not the number of sales I make. If that person's well being is taken care of, then my goal has been achieved.

Fourthly, you should realize that assets could turn into liabilities. Same example, single person, unmarried, no dependents and living with parents.
You asked Why should the parents shoulder the liability?
The answer, because it is our law my friend. I didn't make this up to "win the argument"
This is our Malaysian Law
Creditors have the right to make claims on the deceased estates via their next of kin. If you don't believe me, ask a lawyer who is familiar with these laws.

Fourth point one, the son or daughter might have an apartment, let say for investment or rented out. This was an asset while the person was living. Upon the demise, it turned into a liability. Who is going to pay the loan? (This is where MRTA steps in. MRTA is an insurance coverage see?)

Property is one, what about cars? Let's say the son or daughter owned a car. Who is going to pay for that car now? Asset: Car. Liability: Car. See the correlation?
Credit card bills? Who will pay those? Back to the question again - If somehow supernaturally I was able to communicate with the dead and I asked the deceased:

"Are you comfortable that your parent's had to use their retirement fund to settle your debts, and conduct your funeral?"

What do you think the answer would be?

This post has been edited by Tatsumaki: May 5 2009, 02:01 PM

Which is why I always revert to the sentence "based on the client's desire" (with regards to sum assured) Some people want more, some want less. Perhaps I could have misinterpreted it wrongly, but from previous post, Dreamer has taken the standpoint that life insurance for the single person, without dependents whom is living with parents is totally useless.

To answer your question, the general rule of thumb would hover from 3-4 years gross salary if the main or sole bread winner is not around.

You're correct, when people rent out it covers the cost of the loan, therefore making the property self-sufficient. My mistake that I wasn't clear enough. When I mentioned property it referred to both which are rented and some whom might not be so fortunate whom are unable to find a tenant.

I can't go and tell another parent "Hey! you didn't do a good job bringing up your kids!" now can I?
Yes term insurance is a low-premium high coverage plan which some people prefer, without the frills and fancy of dividends.

Regarding wealthy families, there are cases where the parent isn't too trusting of their children in the sense they fear that their wealth might be squandered away when they (the parents) are not around.

Annuity type insurance coupled with will is also a tool to supply enough cas for the child, but not releasing all of it one go until the child reaches a certain age (here we link age with maturity) where only then the child can inherit all the wealth.

There can be no price to put on a person's head where we can come to a mutual conclusion. We can argue till the cows come home, but pegging a price to a person's head is not what I am aiming to do.

Remember when I mentioned gross income? I will take that example, the Nobel Prize dude. I agree, perhaps lets say his life is worth 34 Bajillion dollars reason being he discovered Time Travel. The reason why his life is worth so much is because this is an intelligent person.

Who knows what more he can discover!
Fine and dandy. Back to the topic, his salary for his family. His salary for his family has nothing to do with what his life is worth. Is some NGO paying him 34 Bajillion dollars each year?

So you have to take two things into consideration when you're talking about Life Insurance & Sum Assured which are:

a) A person's gross annual income
b) How much he or she would like their dependents/family to have in the event of premature death.

Now we're not going to argue family man versus bachelor anymore are we? I take it by your silence that you did not rebut my points about Malaysia's Distribution law and how creditors can chase after the deceased, that at least we reached a point of mutual understanding.

Lastly, you can be bias against Insurance, I frankly and honestly respect your decision. I am in no position to stand here and tell you that you're wrong, I'm right - No authority.
However, I'd like at least the opinions to have some sound reasoning or facts.

For example, should I make claims like : Mr. ABC is a terrible person. Fair enough - Why?
Reason being he burnt my house down on purpose 2 years back.

There is an opinion, and a reason. Maybe we might not agree that the reason is concrete enough, but as long as there is a reason, I can accept the difference in opinon. What I cannot accept is claims like:

Mr. ABC sucks - Why? Because he sucks. He's a bad man, a terrible person.
Reason: None.

If lowest cost is your greatest factor in decision, I would say Term Insurance would be the appropriate one.

This post has been edited by Tatsumaki: May 5 2009, 07:01 PM

@xuzen

In order to give you a rough estimate, three things are required.

1) Your birthday
2) Occupation
3) Smoker or non-smoker