June 15, 2017

I got a text message from a good friend of mine today. His father passed away at work this morning. It came as quite a shock to me of course but then me being me, getting him back to KL quickly dominated the agenda of the afternoon.
Sure enough the people that I called were right on it providing me with all the information and constant updates on the options available.

As the arrangements were finalized, I went back to working on my lists, and following up on my appointments. The usual day to day tasks.

After my last appointment, I checked back with my friend as he arrived and gave him a ride home. We spoke about many things and I tried to distract him as much as I could. He then told me about the series of events that led to him contacting me, all the while choking every few phrases in an attempt to hold back.

He shared with me a lot about his family. They have always had enough and his parents recently had a plan together that is to buy a new car, the latest Subraru SUV. They bought it and the car will be delivered in about a week's time. It is quite unfortunate that he didn't get to even drive it..

It wasn't until when I left that I began to tear. It was painful to hear my friend say
"已经哭了一整天了。 原来人是可以有那么多眼泪的”.

I'm grateful for my friends in the travel industry willing to help me help my friend on such short notice. I may never find out how much work you put on hold to get my friend through the system, and I want to thank you in person. 

Guys, you know who you are and I am grateful to you for making time and to extend your helping hand. 

Thank you. 

____________________________________________________

An Update 
It turns out that his father has bought a few life insurance policies in his lifetime, and my friend has reached out to me to help with identifying them and going through the claims process. Though none of it was bought from me, I am very honored that it was me that he reached out to help in this area. 

So what I will be doing with him for the next few days is to collect all relevant documents and also to work together with his mom while we go through the claims process. 

Now, some of you might be skeptical about claiming due to your past unfortunate experiences dealing with your respective agents (or those that suddenly became "secret agents"). But I want to point out here that it is often the case that unpaid claims are due to incomplete documentations! What I mean by "documentation" is the relevant documents such as a Death Certificate, Marriage Certificate, copy of IC, doctor's report, etc. 

If you or someone you know had filed a claim and it was never paid, you may feel free to contact me on the right column,

or

If you or someone you know may want to dispute an unpaid claim (medical claims, accident, life, etc), you may contact Ombudsman Financial Services .
Their services are completely free. 

What are the Reasons People Choose to Ignore Health Insurance?

The modern medical industry is fast growing with many fatal diseases of the past becoming easily treatable today. As we progress further, we find ourselves getting healthier and living longer with a generally better quality of life!
There is just so much that technology has empowered us to do, and there is so much more to share and do together!

As the medical sector continue to grow, yet many of us (in fact one in two persons* in Malaysia) still shy away from taking health insurance coverage for many reasons (or any insurance at all).

Here are some of the top few reasons from my own encounters:

1. Reliance on Group Coverage
Individual Health Insurance in Malaysia, as opposed to Individual Life Insurance which is widely publicized, does not benefit from the same level of penetration despite it being the single most sought after employees benefit item in the employment market. Unfortunately in this day and age, job security is not a given.

Your employer’s health insurance coverage will only protect you as long as you are employed with the company. The second your employment stands terminated for whatever reason, your health insurance cover stops too. Between the time you have no employer insurance and find another policy, you will be out of insurance cover and liable to pay every penny for hospitalization. Even with a new job at a new company, chances are you will not be enrolled into the company's Health Insurance benefit for the duration of your probation period. And even after that, there are waiting periods that apply for specified illnesses too. It is the same process every time you switch companies. 

It is evident that health insurance awareness is there but yet a big group of salaried professionals choose to ignore purchasing their own Individual Health Insurance.

Note: What about retirement? (Keep reading)

Having an Individual Health Insurance policy will keep you covered despite your employment status.


2. Underestimating Medical Inflation
Many do not opt for health insurance policies without an accurate understanding of the escalating prices of drugs and treatment.

What does 16.1% mean to you and I? 
Well, if that is the FD interest rate, I would jump for joy! 

However, 16.1% is the currently running medical inflation rate in Malaysia. 
Which effectively means that hospitalization expenses are on the rise and for years it has been proven to be too burdensome for employers and organizations providing the benefit for their employees, as well as the general public without an Individual Health Insurance coverage. 

Most of the insurance providers in Malaysia are now offering very high annual coverage figures for Individual Health Insurance. 
In the case of AIA Malaysia, the coverage starts from RM100k/year to RM1,1mil/year, to RM1.76mil/year with no lifetime limits. 
The numbers might seem far-fetched for us 80s and 90s babies now, but at 16.1%, we are going to need it when we retire. 


3. Losing Focus on Personal Financial Management
Most people tend to think twice before investing in their Individual Health Insurance since they assume that such policies do not have any sizable returns. 

While it is true that the upkeep of an Individual Health Insurance policy may sometimes come across as a burdensome cost, or unnecessary even, do keep in mind that your Individual Health Insurance policy may someday do more than just to take care of your healthcare costs.
It can sometimes make the difference of preserving family dignity in more serious and/or complicated conditions.

In our investment ambitions in property, business ventures, or the stock market, sometimes the premium for Individual Health Insurance may seem small, hence unimportant or even relatively negligible.
The idea of keeping your investment portfolio afloat and shielding it from the probable impact of healthcare costs is quite obvious!

Think: What would be the first thing you liquidate to fund your healthcare costs should you not have any Health Insurance?

In many ways, an Individual Health Insurance (and Life Insurance) only compliments your financial portfolio with significance and with purpose.

*Note: Should a serious health condition strike, wouldn't your Individual Health Insurance policy be your best investment with the highest returns?


4. Underestimating Between Now and Retirement
As mentioned earlier, you will only be covered for the duration of your employment with the company. After your retirement, which is when you’ll need insurance coverage the most, you will have to put in an application and be at the underwriter's mercy. 

Getting a policy after the age of 50 is an extremely arduous task, and requires medical tests to be undertaken. Getting a new insurance policy after the age of 50 also means that you will be signing a form that says there will be no coverage for “pre-existing medical conditions” – which effectively means that the insurance provider has no liability or responsibility towards you, should your hospitalization be due to a disease or medical condition that you’ve had before taking the policy. 

A majority of hospitalizations for senior citizens are for pre-existing conditions picked up during their 20s, 30s, and 40s, and this does not help you at all. Getting a private insurance cover in your youth, which extends beyond your retirement age, is definitely how you need to play this. 

Why Do People Buy Life Insurance?

For most of us, our first experience with life insurance is when a friend, relative, or someone we know gets an insurance license. In my case, my father is an insurance agency manager. All I knew about the industry was that my father's commissions fed all of us, and kept that roof over our heads. You can say that I am a walking and breathing example that there is a life and a career in life insurance!

Unfortunately, how most people acquire life insurance is through someone they know, who got hired by a major insurance company not too long ago and calls you up one fine day to buy a policy underwritten by whatever company they represent. It is not bought, but rather sold to you. Did you really need life insurance? Or was it merely pushed to you by a salesperson?
While the latter seems to ring true, there are actually many reasons why you SHOULD purchase life insurance.

REASONS TO BUY LIFE INSURANCE
As I age, and now recently married, and handling my business, I have come to realize that life insurance is an indispensable and a foundation to my family finances. Over the years, life insurance has given my parents a peace of mind knowing that money would be available to protect us and to fund the education aspirations of my siblings; to keep our home, and maintain our family estate in a number of ways.
And now as I work it out with my wife, these are perhaps the same ways life insurance would work for us:

1. To Fund Final Expenses
The cost of a funeral and burial can easily run into the high 5 digits, and would never want my wife, parents, or future children to suffer financially in addition to emotionally upon my departure.
At the very least, the lifestyle that I have created for us remains unchanged with the funds to finance and support the obligations to the banks, and/or other services that we subscribe to.

2. To Cover Children's Expenses
Like most couples who want kids (and are gearing up for them), I want to ensure that my kids will be well taken care of and can afford a quality college education that both my wife and I had. For this reason, additional coverage is absolutely essential while we are young, healthy, and able to do so.

3. To replace the Spouse's Income
Like most families today, both my wife and I work and contribute to our family finances. If I myself or my wife had passed away any time between now and 20 years into the future, I would've needed to replace any one of our income, which was essential to our lifestyle. I also would need to hire help for domestic tasks which we currently share like cleaning the house, laundry, cooking, etc.

4. To Pay Off Debts
In addition to providing income to cover our living expenses, my family would need the funds to cover debts like mortgages, loans (our cars) so they wouldn't have to sell anything to stay solvent.
In some parts of the world, this kinds of funds is equivalent to preserving the family's dignity in every sense of the word.

5. To Buy a Business Partner's Shares
Since I came into the business of getting involved in my clients' professional partnerships, it is they who told me "I need insurance on my partner's life! And he needs one on my life too!"
The reason is so if one party dies, the remaining party would have enough cash to buy the deceased interests from his/her heirs, and pay the deceased's share of the company's obligations without having to sell the company altogether!
It works very well, and it keeps each other from having to worry about spouses and heirs who know nothing about their practices from coming into the picture, which in many cases almost certainly ruin the operations and sink the business altogether.

6. To Pay Off Taxes
Unpaid taxes can be steep, not to mention any penalties from unpaid taxes (if any)! So having an insurance policy in place to pay them is essential to avoid jeopardizing assets or funds built for retirement. The use of insurance for this purpose is most common, especially in parts of the world where an Estate Tax (Inheritance Tax) is to be paid! Larger estates usually uses Whole Life insurance policies to ensure that the coverage remains until the end of life.

How Much Coverage Should I Buy? 
The sum insured, or sometimes known as "death benefit" of an insurance policy (to be paid to your beneficiary) should be high enough to replace the income (after tax) you would have earned, should you have lived till the retirement age of 60 (or more in other parts of the world). In other words, the insurance policy replaces the income you should have earned but robbed of the chance to earn due to a premature death.

An adequate amount of insurance allows your family to continue their lifestyle, even though you and your income are no longer around. The actual amount that you should purchase depends upon your present and probable future incomes (increments?) for the next 8 to 10 years.

If you, like me, have special considerations for specific situations or circumstances affecting you or your family, or your existing budget for premiums should be communicated directly to your servicing agent/provider.
Remember: your agent/provider is only able to do his/her job as accurately as the information you supply to him/her.

Whole Life or Term? 
Some of us prefer to drive higher end cars such as a Mercedes Benz or a Jaguar, which often comes with all of the electronic gadgets that make driving safe and as easy as possible. Others prefer less of the gadgets and more of hands-on driving makes. They are equally reliable to their more expensive cousins, but require more attention throughout the journey.

Whole life is the "Jaguar" of insurance. Its providers try to do everything for you beginning from Day 1, specifically and intentionally investing a portion of your premiums so that the annual costs doesn't increase as you grow older. The premiums may be generally higher than a similar term policy with the same sum insured, but after all, the whole life insurance is intended to cover you for... your whole life!

Term insurance, on the other hand, is a stripped-down model of life insurance. In other words, the bare necessities. There are no excess premiums to be invested, no guarantees or promises beyond the end of the insured period (5, 10, 20, up to 30 years). The annual premium for term insurance are usually less than whole life. However, lacking the investment component, your premiums will rise once the term period expires (often substantially).

Both types of life insurance policies (or their forms of derivatives) have their unique benefits as well as their drawbacks. Both have their place depending on specific needs, desires, goals, and financial objectives of the purchaser. A knowledgeable professional insurance agent can help you devide which type of policy is best for you depending on your circumstances.
Whichever you select, be sure to always keep in mind and be sure that you have enough coverage to meet your objectives in the short term and the long term.
My parents and myself have spent many thousands of dollars in premiums for life insurance of both types, and through the claims experience of our customers as well as our own, not a single penny of their upkeep was ever regretted.

Final Word
Some people mistakenly believe that life insurance is a scam. This is due to the fact that the money for premiums is lost if death doesn't occur within the coverage period (in the case of term insurance), or because many people have bought from someone they know who were once new into the business but have left the insurance profession entirely, without ever knowing exactly what they have bought but nevertheless continued to pay their premiums into a ripe old age. Such naysayers compare life insurance protection to gambling, and forgo the initial objective for financial protection entirely.

There is really no bet - because you will die eventually, but nobody knows when. It could be later today, tomorrow, next year, or 50 years from now. Whenever it is, it is bound to happen. Life insurance protects your heirs from the unknowable financial impact on their lives, and helps them weather through an otherwise uncomfortable and difficult time of loss.