yewkhuay,

If accident is the HIGHEST risk, won't a PA insurance is a cheaper and better way to cover that? By the way, I do not know the answer.

Dreamer

b00n,

I think that is disability insurance. It is not Personal Accident insurance. Disability insurance is normally attached to a life insurance and not sold separately in Malaysia.

Dreamer

b00n,

<<What is known as PA in M'sia is basically covering for disability caused by ACCIDENT>>

There is such a thing as DISABILITY insurance that cover disability cause MORE than death or accident.

In USA, it covers even more. As long as you cannot work (it can be psychological), it pays.

Dreamer

lin00b,

Let's say you have 1 million.

1) Why do you want to buy life insurance of 100K?? Additional 100K will not make a difference to your family.

2) How about life insurance of 1 million?? The premium will be so high that it costs a lot of money. Aka, in general any life insurance more that 200K, the premium increase exponentially.

There reach a point where you have so much money that

A) The coverage has to be SO HIGH in order to make a difference

B) At that coverage, the premium is SO HIGH that it is not worth the money.

C) You have ENOUGH MONEY that the payout in life insurance WILL NOT make a difference in your family life.

You MAY buy critical illness insurance when you have 1 million. But, life insurance may no longer make sense.

Are you another insurance agent??

By the way, do not do "BAIT and Switch". Be specific, what kind of insurance are you talking about?? I was VERY SPECIFIC. I was talking about life insurance.

Dreamer

lin00b,

I disagreed with that. You are missing ONE important parameter in the consideration.

1) How much coverage do you NEED??

It is a WASTE of money to buy more insurance coverage than you need. You are throwing money away.

The coverage need to be

A) High enough so that it actually helps when the incident happen.

B) Low enough so that the premium is affordable.

In general, 10 x Annual earning is the MAX life insurance that you should buy. Because life insurance's premium above 200K is so high, you may need to lower that too.

2 X Annual earning is the minimum life insurance that you should look at.

So, the RIGHT coverage is usually between 2 X Annual earning to 10 X annual earning and 200K or below.

Most people buy TOO MUCH life insurance in Malaysia.

<< "perhaps a better way of looking at it is how much %age of your total wealth it is paying out vs how much %age of your cashflow it is consuming?">>

Using that kind of formula for typical people in Malaysia will ended up buying TOO MUCH life insurance.

Dreamer

This post has been edited by dreamer101: Dec 26 2008, 11:54 PM

hamster9,

1) Show me the number for coverage of 100K and 200K. At 250K, you are on different scale in term of premium. You are above 200K.

<<1. If I can't work for a month or 2, or let's say 6 months on a worst case scenario. On labor law, I would have to resign if more than 3 months. How much extra cash I need to stash away, what seems to be my life savings, needed to be spent on my medical bills and also my food while paying my debts? Well of course it mayb a heartache coz of years savings all goes down to these. >>

2) Stop doing "bait and switch". Life insurance does not cover for that too.

<< 2. What if I'm dead? I have a will but then again, the assets are first to enter the Probate to have creditors paid off. Only after that, the money goes to the living. With all my card debts, house loan, study loan, personal loans, ah long loans, well of course my house loan is on MRTA, but my car loan? If deduct whatever cash I have, ends up with zero and sometimes negative. For the very least in Insurance Act, the beneficiary gets the money, creditors hands off At least beneficiary can have money to sustain their living. >>

3) What has that got to do with life insurance??

4) In general, you are in BAD FINANCIAL SHAPE if you need to buy MRTA on your house loan. It means you buy TOO MUCH HOUSE and you cannot afford a large down payment. In general, it is CHEAPER to do not not buy MRTA but increase your life insurance coverage. The survivors may not want to and afford to keep the house.

5) All my bank A/C are joint. I have standing instruction with my wife that if anything happen to me, she should withdraw ALL MONEY from those accounts and put into her own account.

6) Given the picture that you painted, you are in a very BAD CASH FLOW situation. So, how does paying MORE insurance premium and hope that you worth more death than alive helps??

7) What if you are ALIVE but lost income for 6 months or longer. We are almost reaching that point of recession in Malaysia.

<<Furthermore, to have RM1mil protection or more, usually the insurance company would require the person to show their actual income status to be highly insured Well, I guess none of us has reach this level yet>>

That is YOUR GUESS.

<< Again, dear Uncle Dreamer....
I'm going to repeat as I've mentioned it in another thread. I'll be frank that I still servicing my housing loan, car loan and some credit card debts and other debts as well. There are also some cash stashed away in my bank. >>

Basic rule of financial survival. Your TOTAL LOAN PAYMENT per month cannot exceed 33% of your monthly gross income. If you exceed that, life insurance is the LEAST of your problem. In fact, buying LIFE INSURANCE is probably going to make it worse.

My rule of thumb is do not buy a house until you finish the car loan.

We are playing in a different league. I have 2 years of expenses in FD and CASH. I do not have to touch my investment for at least 2 years if I lost my job. That is my preparation for this recession.

Dreamer

hamster9,

1) We are NOT in the same league.

2) Average GROSS SAVING RATE in Malaysia is 33%. So, how normal are you??

3) Most people that I know is in the average 50% gross saving rate.

4) I save 50% of my gross income for the last 10 years.

5) How do you know that 2 years of expenses is equal to how many % of my total asset?? In fact, I excluded my 2 years of expenses as ANY part of my asset.

<<Would you have the ambulance sent you to the bank to get the money out?>>

6) Why do I need to do that?? I keep a few K at home and I have a credit card. Most of my family can muster up a few K easily. We are NOT in the same league.

<<Oh, yeah, I forgot. Sorry. Was rushing that day. Let's put a half of RM250K which is RM125K (to show u the non-exponential figures) based on the above 45 years old male again. The annual premium is RM1541 while monthly RM133. For information sake, RM100K would have an annual premium of RM1233 with monthly RM107>>

7) Are those quote = term life insurance or whole life insurance?

<<I dunno which MRTA you are meaning. Probably loan incorporated MRTA. But I have life insurance taken in as MRTA with a will to state that the insurance money obtained would be for repaying the remaining of my housing loan. I believe generally in public (as not many are like you, Unc Dreamer) would only pay 10-20% of the downpayment.>>

8) People that I know pay enough on down payment to avoid MRTA.

<<For the very least not only it reduces my interest rates but in case of any emergency, there is a flexibility to withdraw. >>

9) You do know that in many cases, bank can cancel your credit line with little or no notice. Please check your loan to confirm. This has happen to many people in USA.

<<With all fear of recession, losing income for 6 months with being able to work isn't much of an excuse unless you are being plain egoistic without working any job lower that your previous ones. >>

10) Let's assume that instead of working as professional, you work at McDonald as waiter. Can your income support your life style without losing your house??

11) How many recession had you been through? Survive one first before you can confidently make that kind of statement.

Dreamer

lin00b,

1) Buying MORE life insurance so that you worth more when you die??

A) I could have invested those money and get even better return.

B) I intend to SPEND and ENJOY ALL my money. My children had to work and earn their own way.

2) That is the MAX.

3) I know young fresh grad that done it with monthly income of 2K. They lived with their parent. They buy cheap car. After they married, they stay with their parent for a few years. Then, they ONLY buy a house when they paid off the car.

The YOUNG generation has it easy. I had to support my parent plus sponsoring my sister through college when I started working.


Transit,

What is the average income for Malaysian??

<<Average Premium is RM1,388>>

That means Malaysian BOUGHT TOO MUCH life insurance with the income that they have.

Kudos to the insurance agent. One down for the average consumer.

Dreamer

lin00b,

1A) Life insurance benefit the survivor. It does not benefit ME. So, why should I contribute more when I die??

1B) The GREATEST LUXURY in life is TIME. My current plan is to early retire. I do not plan to work for money for my whole life. And, the flexibility to do what I want and when I wanted.

3) I had seen people do that too. And, the person that lived with parent contributed towards support of their parent too.

Life insurance is for RISK MANAGEMENT. It is used to control risk that you DIE while your dependent is STILL rely on your income.

For people that save 50% of their gross income, they only live on 25% of their income. For every year that they worked, they save 2 years worth of expenses. After 5 years, they had saved at least 10 years worth of expenses. So, even if they died at that moment, there are enough savings to last 10 years. So, how does insurance comes into play for a person like me that had least save 50% for the last 10 to 15 years??

It is TOO LITTLE and TOO LATE.

I had at least 2 years of expense in savings. And, my investment portfolio far exceed that. I am aiming for early retirement in a few years aka I have enough passive income so that I do not have to work.

So, if my income level is the same regardless of whether I am alive or death, why should I buy life insurance to protect my income??

Death represent NO RISK to my income.

Critical illness insurance may make more sense to me. Critical is more a REAL RISK to me.

Insurance is USED for RISK MANAGEMENT. You do not buy insurance for THINGS and RISK that does not affect you financially.

Dreamer

lin00b,

The KEY WORD here is DEPENDENT.

A) If you have enough MONEY and INVESTMENT to support your DEPENDENTS until they NO LONGER depend on your income, why do you need life insurance??

B) Unless you believe that as Asian parent, your children should NEVER WORK. You should feed them for their whole life.

C) For those ethical insurance agent, their STANDARD advice is to buy insurance coverage of 10 years worth of income. That is for normal people. For people that save 50% of their gross income, 10 years worth of expenses is more than enough for them to self insured themselves.

D) Whether you doubt or not, it is relevant. I known people that had done that. And, if you asked around lyn, there are others that had done that. Those people are tend to be low profiled.

<<thats a very self centered way of thinking>>

E) It looks like you have NO IDEA what is the goal of life insurance. How does throwing money into the pocket of insurance agent helps you?? Unless you are an insurance agent.

Basic idea:

1) Nobody will be your dependent forever. They do grow up.

2) You do grow OLD. Hence, you may no longer have income to protect.

3) In fact, now a day, you be unemployable or has lower level of income before your official retirement age. I know folks can no longer find job at between age of 45 to 50. Age discrimination is wide spread in Asia.

4) Whole life insurance or life insurance with cash back is a VERY BAD deal. The return is LOWER than FD. So, term life insurance make more sense if you need life insurance.

5) I have FREE life insurance coverage of 2 X annual income from my job for the last 10 to 15 years even though I do not need it.

6) Fair amount of people has more than adequate life insurance coverage from their job.

The PROBLEM in Malaysia is that they bundle everything (life, PA, disability, medical, critical illness). So, it is harder for a consumer to shop for exactly what they want and need. So, insurance can make MORE MONEY out of YOU. It is NOT in their best interest to make you a smart consumer.

Dreamer

athlon 11,

That is because we have VERY LITTLE competition in term of insurance in Malaysia. They price it this way so that you pay more.

Logically, for retired people with no income, why do they need death and tpd?? They have NO INCOME to protect. So far, I am not buying CI because it is not priced to worth my effort.

Dreamer

hamster9,

<<without going out to enjoy, say at age 20-30, clubbing, drinking, mamaking, holiday, scuba diving, mountain biking or photography, anything which suits their interest and hobbies, plus going out on dates and movie, paying for phonebills (mayb during your time, Maxis wasn't around to suck you dry) means they are not enjoying their life. Anybody agree sez Aye! >>

0) Those kind of people has NO MONEY to buy insurance. And, going bankrupt is MORE LIKELY that anything that is cover by insurance.

1) I made a lot more money than normal people in most of my career.

2) I was a sale manager once. At that time, all entertainment are paid by the company.

3) That is YOUR DEFINITION of enjoyment. It is NOT mine. My usual greatest entertainment expenses are BOOKS. I usually spent a few thousands on book every year.

<<What I meant is how could u save up with the expenses and how lond did it took you? >>

4) Simple maths. If I save 50% of my gross income and I live on ONLY 25% of my income. It only take me ONE years to save 2 years worth of expenses.

<<Have you factored it with the inflation rate? If comes with the inflation rate, then you would constantly need to top up. >>

5) inflation rate for FRUGAL people is lower than normal people.

<<Another thing is my guess is that you are very stingy>>

6) I live a FRUGAL life style.

7) Average people is not financially independent. Financially independent people is not average. So, you have to make a CHOICE to be AVERAGE or Financially independent. You had made yours.

<<ok... I believe you are taking the term insurance as the tip of the iceberg. What you mentioned is for life. Some people may not need just life. Some may need PA, and some 36 Critical Ilness and some medical card. What you are terming into is only life insurance which not many would know, that they generalize insurance as just life insurance or PA only etc. >>

8) Bingo. You must an insurance agent. It is in YOUR BEST INTEREST for people to buy as much insurance as possible. You do not care whether they need it.

<<What MRTA you talking about also I don't understand and what does it got to do with downpayment? Again I've mention that I insured the property based on their purchased value. Thus the sum assured would not go down even if I've paid an x amount when i KO.>>

9) General life insurance paid a certain amount. The benefactor has the CHOICE to use the money however they like. MRTA ONLY pay to the housing loan and nothing else. And, in general, Bank forces you to buy MRTA if you down payment is only 10% to 20%.

<<People want cheap and good which ends up the agent just bundled them up into an investment link policy which is so far cheaper of all in one compared to traditional policy >>

10) Investment liked policy is EVEN WORSE than normal policy. You are PAYING extra fee to insurance company to but Unit Trust for you. You could have done it yourself aka buying the unit trust directly but you CHOOSE to pay EXTRA.

11) What is WRONG with TOUGH and EDUCATED customer that actually shop around for the best deal?? Nothing. unless you are an insurance agent that cannot handle that.

So, if you are an insurance agent, why don't you LEARN and EDUCATE your customer on proper usage of insurance?? So far, it looks like you do not understand insurance to begin with.

Dreamer

All,

Insurance is for RISK MANAGEMENT and RISK POOLING.

A) Insurance company's goal is to MAKE MONEY.

B) Your goal as a customer of insurance is to cover your RISK with reasonable costs.

So, let's have some common sense here, if you are OLD and most OLD people are likely to get sick, do you THINK that insurance will intentionally LOSE MONEY and give you a good deal on PREMIUM??

In the end, if you BUY XYZ type insurance, it only covers XYZ type of incidence and NOTHING else. So, if you buy life insurance, you get $$ if you DIED.

But, the problem is LIFE is full of EMERGENCIES that does not cover by insurance. You need EMERGENCY FUND and SAVINGS to protect yourself from that. For example, recession, unemployment and so on. I know people that are in 45 to 50 that can no longer find a job. They are healthy but unemployable. And, that is normal economy. So, insurance does not cover for that.

Insurance agent like to "BAIT and Switch" sales tactic. Blah, blah, blah, somebody got hit by something and they are in financial ruins. But, they usually conveniently forget to you that:

A) Insurance may not cover for that too.

B) The premium is SO HIGH that you are more likely to go bankrupt first before that kind of incidence happened.

My RULE of THUMB is you need to SAVE at least 10% to 15% of your gross income for financial survival. So, before you EVEN talk about buying insurance, you need to have that FIRST. And, you need to have 3 to 6 months of expense as Emergency Fund before even talking about buying car or house. Of course, insurance agent will advice you something else. Because if that is the RULE, they will have much fewer customers.

Your Emergency Fund / Savings is your first level of insurance. It covers for any POSSIBLE incidence / risk. It is YOUR MONEY

Every 10 years, people have to learn this. Recession is possible and you may be unemployed for a long time. Now, it is time for NEWBIE to learn this again.

This post has been edited by dreamer101: Jan 2 2009, 02:54 AM

DannyOP,

<<In one area where insurance is useful is when the breadwinner of a family dies.>>

Have a JOINT A/C with your spouse. Tell him / her that if anything happen to you, withdraw the money out of the A/C first. Anyhow, that is a good idea in MOST cases anyhow. If the bread winner get into an accident, you need someone else to get money from the bank. Now, if you cannot TRUST your spouse with a joint A/C, you have a BIGGER problem than money.

Dreamer

bbjslee,

<<Define old? How many low yat members reading this is that old?>>

Conversely, if your medical insurance is CHEAP while you are YOUNG, it is because you are less likely to get seriously sick. It is not you are getting a BETTER deal. Insurance company is a MONEY MAKING business. They know the risk level that they are covering. They are charging you accordingly.

<<You are making this statement, because you only knows some insurance product. You've conveniently forgot to add that most Whole Life>>

Here we go again:

A) Whole life = term life + savings / cash back

Except that if you save the premium difference between whole life and term life and put into FD, you make MORE MONEY.

Oop, I forgot. You are SELLING Insurance as per your post.


<<ILP covers Dreaded Diseases. >>

B) Yes, pay more to insurance agent in order to buy UNIT TRUST.


<<TPD>>

C) Read the FINE PRINT. It ONLY covers disability under CERTAIN circumstances. In USA, as long as you cannot WORK under ANY medical condition, you are covered.

<<- Consumers have the right to ask what's covered, what's not covered.
- Consumers have 15 cooling days to read the policy thoroughly before agreeing on it, else they can cancel the plan and get full refund.
- Don't blame agents on this. Do car sales man tell you the weakness of his car? Do sales engineer tell you what his product cannot do in detail? Do real estate agents tell you the house got bad feng shui? This is SALES.>>

D) Why should we listen to you to BEGIN with if you ARE NOT going to tell us what is NOT covered??

<<What about other incidents then?
- Medical expenses.
- Lost of income due to dreaded diseases.
- Housing loan debt, debtor passed away.>>

E) So?? Is that the ONLY kind of financial emergency that you can thunk of?? Of course, you are SELLING insurance. You ARE NOT going to tell when insurance does not work. We have to find out ourselves.

<< I can only think of one.
- Lost of income due to bad economy>>

F) You are either YOUNG and FOOLISH or DISHONEST. So, why should we listen to you??

G) Who say that economy has to be BAD for you to lose your job??

<<Imagine cases above, how would you finance them? would you rather
- Use your own saving?>>

H) "Bait and Switch" again. If you BUY all the insurance and cover to the MAX, you will go bankrupt FIRST.

<<Financial planning rule is set aside 10% of your income for Insurance. >>

I) Which is a bunch of BS. If a person cannot save 10% to 15% of their gross income to BEGIN with, why should they spend 10% on insurance?? In fact, if they do not have 10% to 15% savings, they will go bankrupt spending 10% on insurance.

J) Here we go again. Another sell tactic. You are INTERESTED ONLY in selling versus what is GOOD for the financial health of your customer.

K) Did you ever ask your customer whether they have EMERGENCY FUND before asking them to buy insurance??

L) Given that MOST young people is having problem saving money to begin with, I doubt they have ANY emergency fund. So, how does buying insurance and putting them in deeper hole help them??

M) You NEED to pay insurance premium in order to be covered. For people with NO SAVINGS, how long can their insurance last of they lose their job / income.



Dreamer

---

Added on January 2, 2009, 3:30 ambbjslee,

That is WHY you have practice. Make sure both spouse withdraw money regularly. Come on. you can withdraw money from the counter too.

transit,

That is WHY that you have a WILL and assign TRUSTEE when you have children.

This is BASIC financial and estate planning.

Dreamer

This post has been edited by dreamer101: Jan 2 2009, 03:30 AM

bbjslee,

I use to be a sales manager. I know how to do "bait and switch" too.

<<What about other incidents then?
- Medical expenses.>>

Medical insurance or Critical illness insurance.

<<- Lost of income due to dreaded diseases.>>

TPD coverage with dreaded disease

<<- Housing loan debt, debtor passed away.>>

MRTA or life insurance.


<<Did I advice forum readers to buy ALL the insurance >>

If that is not playing FUD and advising people to buy ALL the coverage, what is??

<<cover to the MAX?>>

Now, how much is ENOUGH?? 2 x Annual income?? 10 X annual income??

Oops!! I am sorry. You told us. Used up to 10% of your income to buy insurance. Regardless of whether you NEED it or not. Regardless of whether that will put you in a deep DEBT hole.

So, here we have IT. Insurance Agent is out to SELL you insurance. BUYER BEWARE!!!

Dreamer

---

Added on January 2, 2009, 6:42 ambbjslee,

Of course, since they had paid UPFRONT for 20 years, they should not have to pay ANYMORE. Those insurance premium is DEFINITELY more that the normal term life insurance.

<<The cash bonus accumulated is more than enough to cover the future premiums.>>

Ditto, if the person save those money from premium and invest, they would have A LOT MORE, Heh, they MAY NOT even NEED insurance anymore.

Dreamer

This post has been edited by dreamer101: Jan 2 2009, 06:42 AM

transit,

<<A person save those premium MAY NOT guarantee to have HIGHER profit along the 20 years as the investment also having risk of loss. I don't think there is a finance company can guarantee sure gain along the years. (except those Low Risk Profile such as FD, ASN/ASW Fund).>>

How about FD?? We DID a comparison before and it turns out that if the person save the extra premium in FD, he/she still comes out ahead.

It is in the earlier pages of this thread.

How many times that I have to REPEAT this?? When you are OLD and RETIRED, you have NO INCOME from your works. So, why do you need LIFE INSURANCE to protect your income stream in case that you are DEATH??

Dreamer

This post has been edited by dreamer101: Jan 2 2009, 08:08 AM

DannyOP,

Come on. Do I have to tell you everything?? It will take a while to report someone is DEATH. Get the money out first!! In fact, if a spouse is in ANY serious danger of DEATH, get the money out first.

Do I have to spoon feed you everything??

Dreamer

This post has been edited by dreamer101: Jan 3 2009, 09:27 AM