At the beginning I never thought of writing about this topic because I had limited exposure on this insurance product but now I feel like it’s appropriate to write about it. The reason is; for the past 2 years (ever since I started my career) I’ve met like 4 agents (these good Samaritans approached me, not me approaching them) from 4 different insurance firms and all had the same thing to say, PLEASE TAKE THE POLICY, FOR THE SAKE OF YOUR FAMILY!!!
Now, when I meet up with these agents my question always starts with a simple WHY till it becomes endless. At times I just get some insinuating answers and pestered to take the policy without even having a glance at the terms and agreement. I’m sure that many of you tend to have the same question that I have in my mind. Since I have discovered some answer I thought of sharing it here. (I do welcome readers to correct me if I’m wrong)
What is Insurance?
To put it in a nutshell, Insurance is all about transferring risk from an individual or an organization to the Insurance firm.
Now let’s analyze the keywords one-by-one in the LIFE INSURANCE product scope:
Now, after going through all these definitions, my first question to the agent was as below:
Me: Why do I need a policy when I’m a single?
Agent: It will benefit your parents and the monthly premiums you need to pay will be less if you take it now.
Now this makes a lot of sense, my dad who’s still working as an Executive and makes 3 or 4 times (I don’t know my dad’s pay) more than me in a month is going to benefit from the insured amount if something happens to me? Give me a break people!!
When is the right time??
Important keyword here is, when you are the PRINCIPAL SOURCE OF INCOME for the family. No matter you are a single or not, when you are the principal source of income for the family and you have dependents, sure you do have to get a life insurance policy. Now let’s look at the possible scenarios:
When some agents say this is the right time for me to get a policy because I need to pay very less premium every month, I just feel like its not right. The reason being is, at this point of time, I can’t forecast what sort of spending habit my future family will possess and my pay scale can be totally different 5 or 6 years down the run.
How much to insure?
You have to look into the monthly expenses, bills, mortgages and all other liabilities before considering a life insurance policy.
From what I get to know by reading online articles and some personal finances book, the easiest way to calculate is multiply your annual income by 6 or 8. That amount would be sufficient for your dependents if something happens to you.
Where can I get to know more about Insurance in Malaysian context?
Insurance Info - is a joint effort between Bank Negara Malaysia and the insurance and takaful industry to educate consumers on Insurance or Takaful products.
Conclusion
Life Insurance premium is very important ONLY when you have DEPENDENTS so that you can bring them to the shore (temporarily) from the sea of financial crisis if something happens to you.
Author: Thiagu
Now, when I meet up with these agents my question always starts with a simple WHY till it becomes endless. At times I just get some insinuating answers and pestered to take the policy without even having a glance at the terms and agreement. I’m sure that many of you tend to have the same question that I have in my mind. Since I have discovered some answer I thought of sharing it here. (I do welcome readers to correct me if I’m wrong)
What is Insurance?
To put it in a nutshell, Insurance is all about transferring risk from an individual or an organization to the Insurance firm.
Now let’s analyze the keywords one-by-one in the LIFE INSURANCE product scope:
- Risk = If I die/face permanent disabilities
- Transfer = I transfer the risk (possibly, financial difficulties of my dependents) to the Insurance firm
- Benefits = My dependents benefit from the insured amount
Now, after going through all these definitions, my first question to the agent was as below:
Me: Why do I need a policy when I’m a single?
Agent: It will benefit your parents and the monthly premiums you need to pay will be less if you take it now.
Now this makes a lot of sense, my dad who’s still working as an Executive and makes 3 or 4 times (I don’t know my dad’s pay) more than me in a month is going to benefit from the insured amount if something happens to me? Give me a break people!!
When is the right time??
Important keyword here is, when you are the PRINCIPAL SOURCE OF INCOME for the family. No matter you are a single or not, when you are the principal source of income for the family and you have dependents, sure you do have to get a life insurance policy. Now let’s look at the possible scenarios:
- When you are a single but you are the principal source of income (e.g: Your parents are retired)
- When you are married and your spouse is not working
- When you are married and your spouse is working (is not applicable in most cases unless your liabilities are high)
- If both you and your spouse are working, the most appropriate time to get one is when you already have a junior.
When some agents say this is the right time for me to get a policy because I need to pay very less premium every month, I just feel like its not right. The reason being is, at this point of time, I can’t forecast what sort of spending habit my future family will possess and my pay scale can be totally different 5 or 6 years down the run.
How much to insure?
You have to look into the monthly expenses, bills, mortgages and all other liabilities before considering a life insurance policy.
From what I get to know by reading online articles and some personal finances book, the easiest way to calculate is multiply your annual income by 6 or 8. That amount would be sufficient for your dependents if something happens to you.
Where can I get to know more about Insurance in Malaysian context?
Insurance Info - is a joint effort between Bank Negara Malaysia and the insurance and takaful industry to educate consumers on Insurance or Takaful products.
Conclusion
Life Insurance premium is very important ONLY when you have DEPENDENTS so that you can bring them to the shore (temporarily) from the sea of financial crisis if something happens to you.
Author: Thiagu
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