Buy investment linked insurance for investment purposes is very very very bad bad bad move.

Good day everyone. Recently, I had a look again at my above policies in further detail. I realised that:

B - RM40,000 upon death/maturity at age 65, no TPD after converting
C - RM500,000 upon death, and my agent cancelled the CI cover supposedly because the minimum premium is not enough to maintain the rider. The TPD cover is not a straightforward payment of my basic sum insured, but instead has a certain formula.

It was also at this point I remembered my medical policy also has death & TPD cover of RM100,000 each. After a lot of thinking, I had come to realise that:



Since my adjustments last year, I no longer have problems with cash flow (touchwood) and now have ample savings for actual investing.

As for insurance protection; in summary, I find the cover provided by my medical and Policy A are sufficient. I do not see a need for additional cover from B & C.

I'm now only realising the earlier suggestions to cut policies B & C and slowly recover the lost money.

Do u mean u cut policy B and C already?

Not yet, but I have pretty much decided to do it soon. Policy C's next payment is due in June

I think u better keep it, u can use it as MLTA if u buy house

you mean let the death benefit help my dependent to finance the mortgage?

Okay, that does sound like a nice safety net, but I dont even know yet if I will be buying property in the future.
I've also read a few comments that for my age with no commitments or dependents, I should not be spending money on unnecessary/unconfirmed protections. But I guess that's a matter of opinion and mentality.

I dont think I could say "yes I want to have this protection" yet.

ADD: Policy C automatically closes at age 55 but only pays out cash value

ckdenion Ramjade yklooi Holocene any thoughts?

This post has been edited by RigerZ: Apr 29 2020, 10:46 AM

Hi RigerZ, I can't comment much on this specifically to your needs as I have no idea how's your financial status. in general, i will make sure medical and critical illness (plan for 3-5 years of income protection/replacement during the recuperation period) is enough first. then for life insurance, in general, 8-10 years of income protection. there are various ways. btw, your premium is how much % of your gross income?

Hi, how much detail would you need to know about my financial status?
Currently earning RM4k per month.
My monthly expenses is about half of my net income, the balance would now go to investing/savings.
My critical illness cover now is RM172k
Life insurance is as per A, B and C.

However, policy C automatically closes at age 55 and pays out cash value only

Combined with my medical insurance it's about 12%.

This post has been edited by RigerZ: Apr 29 2020, 10:47 AM

okay, what is the current insurance plan you have. i remember you mentioning Plan B you are paying 12k and Plan C paying 15k. what are the changes that you have made so far to your Plan A,B, and C? and for your medical plan it is a separate one (not in A,B, and C) right?

Hi Denion, the changes are below:

A - convert to paid-up assurance (RM72,000 death/critical illness/policy maturity at age 85)
B - convert to paid-up assurance (RM40,000 death/maturity at age 65)
C - reduce to RM2,400 per year minimum premium (RM500,000 death OR cash value payout at age 55, whichever first)


I have medical policy a (Smartmedic Xtra with Extender) which is totally separate from plans A, B and C, and another life policy that my dad bought for me after I was born, but not too sure how much is the sum insured. I only know that he made the yearly cash bonus pay for the premium.

Keep in mind this mindset:

At the end of a day, any agent who approaches you always have profit in mind. if not they won't be selling you something.

Same goes to good ol' financial institution with nice looking piece of metal credit cards or insurance with complicated plans...The reason why they all survive till this day is because of profits they make out of everyday consumer like you.

And if you are not aware enough, and not resilient enough to tell them off, you are going to get ripped out by these agents piece to piece until you go broke from these hyenas.

KISS: Keep It Simple, Stupid!

It's just that easy, financial planning doesn't have to that complicated with multiple products, multiple savings scheme, retirement schemes, bla bla bla

One product for protection (life + medical insurance), one or a few in investments (index funds, mutual funds, etc etc.) then you're all set.

I see you mentioned you have another 2 insurance plan. I would suggest you table out all your insurance plans on an excel sheet and then decide. Your information is all over the place (thread).

Best,
Jiansheng

ok RigerZ, I'd chart out things that you'd provided. so far i dont see difficulty for you to retain what you have at the moment. if you were to maintain what you currently have at your current lifestyle and expenses, your insurance will be enough to cover you for 3-5 years recuperation period in the event of critical illness. TPD payout can cover you 10 years of your living expenses too. (I'm assuming that you are paying RM480 per month for your Plan C and Medical plan), your premium is 12% of your income sounds okay for me too at the moment. whatever balance you have now, you can diversify and invest.

Hi Denion, greatly appreciate your effort and advice. if it helps you see better:

Monthly net income (apprx): RM3500
Monthly expenses (apprx): RM1250
Monthly premiums: RM500 (Plan C + medical)

Total death payout: RM712,000 (before age 55) / RM212,000 (after age 55) / RM172,000 (after age 65)
Total TPD cover: RM100,000
Total CI cover: RM172,000

This post has been edited by RigerZ: Apr 29 2020, 08:55 PM

ok. for the death payout and TPD will be the same coverage. so it will be like this:
Total death payout: RM712,000 (before age 55) / RM212,000 (after age 55) / RM172,000 (after age 65)
Total TPD: RM712,000 (before age 55) / RM212,000 (after age 55) / RM172,000 (after age 65)

I should clarify that policies A & B no longer have TPD benefits after I converted to paid-up assurance.
Whereas policy C states it will calculate the TPD cover as:
(Sum assured + supplementary sum assured) - (total investment value)

But in any case, is it about time we mentioned EPF as a worthy additional cover ?

This post has been edited by RigerZ: Apr 29 2020, 10:54 PM

ok, i missed out the paid-up assurance part. yeap, EPF can consider as part of the asset to cover in case of disability/critical illness event.

Put in EPF. Register at EPF counter office for online transfer from bank. EPF, the power of compounding dividen.

Don't invest your retirement to insurance companies. Once you cannot pay, you finish. All your previous monthly payment gone.

This post has been edited by farizmalek: May 4 2020, 11:11 PM

Hi RigerZ,

I was once in your predicament as well when it comes to insurance planning=financial freedom?, when we all starting out in the workforce and many agents were quick to pounce on us offering many financial wisdom.
Now i am in my late 30s and i am glad i made firm decision to turnaround my life.
If i can go back in time, i would have done exactly what i am going to advise u, and having said that i am not certified financial planner or sort and none would it matter at least for my case.
When they sell u, its always showing u best scenario projection, when maturity, then grandfather story comes out.

1st, u mentioned u were living on very tight budget due to over-commitment on those plans. Now, u have to get your life back.
since its still early in the plan, you can cut off some/all the policies. get back financial control NOW. cut the losses and consider that as paid lessons.
Next, just get a medical card with unlimited claims, this should cost<RM200/mth for your age and commit to it religiously.
(this is where insurance company very pandai, every few years they will adjust the premium based on whatever reason la, so what happen to what I sign??)
Then, buy life insurance/PA ONLY to protect your asset like house outstanding loan OR MRTA to replace it.
If the company you working for provides medical benefits e.g. outpatient/hospitalisation or even PA coverage then utilize this first if any unfortunate occurs. Or get into large corporate company/MNC to have these benefits (some company offers higher 16/17% EPF contribution).

2nd, from your combined plans monthly commitment, u were paying up to RM2,500 everymonth. the rule of thumb for insurance is never more than 10% from your nett income.
Get this right in your head, Insurance=medical protection, dont mix investment with insurance companies.
Now with min RM2,000 disposable income at your control, invest it wisely according to your risk profile. never invest in something u dont understand and "hope" for the best outcome.
you would rather spend time to upskill, learn new things that will eventually be earning income for yourself (hobbies, youtuber, coding, etc).


On credit card, combine all your expenses into 1 credit card, make payment on time and over time ask to up your credit limit. this will serve as your lifeline when u truly needs it as it is liquid enough.
On personal loan, do not be entice with low interest%, 3,4 or 6%p.a (just dont)
a simple 50k loan can ended up with total payout up to 80k, so its not worth it.
On car, dont listen to all those YOLO shit, just get perodua and dont spend your time/money anymore on depreciating liability.

Run simulation on your financial target using this -> https://www.thecalculatorsite.com/finance/c...tcalculator.php
even at 5% p.a, with RM2,000 monthly, you would have ended up >RM2mil in your 60. This could be higher as your contribution increases along with yearly increment.
Inflation is another thing altogether but hey,at least u could survive with the interest from the entire fund.
just make sure u do not have any more commitment by that time.

so thank me later in 2050, if i am still around

very insightful read ---> https://e27.co/li-ka-shing-teaches-buy-car-...years-20150408/