Life Insurance

Life insurance gives your family financial protection and support if something unfortunate happens to you. The life insurance policy payout can help cover home loans, credit card balances, or daily expenses. It is a way to ensure your children’s schooling and your family’s basic needs are still taken care of, even if you are not around to provide for them. Some policies also include protection against total and permanent disability, which can be helpful if illness or injury stops you from working. In short, life insurance gives your loved ones breathing room when they need it most.

The amount of life insurance coverage you need depends on several personal and financial factors, including your income, existing debts, dependants, lifestyle, and long-term finances. A general rule is to aim for coverage of about 10 to 15 times your yearly income. This can help your family pay for essentials like rent or mortgage payments, education, food, and bills. The right life insurance plan will help cover short-term needs and future plans. It is worth reviewing your numbers carefully to work out what would keep your family going.

In Malaysia, the three main types of life insurance are:

• Term Life Insurance: Provides protection for a fixed period (e.g., 10, 20, or 30 years). This type of life insurance is usually more affordable and offers basic protection during your working years.
• Whole Life Insurance: This type of life insurance offers lifelong coverage with a cash value component. Premiums may be higher, but the plan builds savings over time. Many policyholders use it as a long-term financial planning tool.
• Investment-Linked Life Insurance (ILP): This gives you both protection and investment in one. Your premiums go into life insurance and investment funds. It is flexible and suits people who want coverage and a chance to grow their money at the same time.

Choosing the right type of life insurance depends on your financial goals, risk appetite, and whether you prefer protection, savings, or a combination of both.

While life insurance covers many situations, there are some exclusions. Certain causes of death may be excluded from coverage.  

Common exclusions in life insurance policies in Malaysia include:

• Suicide within the first 12 months after buying the policy.
• Death due to illegal or criminal activities.
• Death resulting from war, riots, or civil unrest 
• Pre-existing conditions that were not disclosed during the application process

The right life insurance plan will help cover short-term needs and future plans. It is worth reviewing your numbers carefully to work out what would keep your family going.

Although both are essential components of a comprehensive financial plan, life insurance and medical insurance serve different purposes.

• Life Insurance: Provides a lump sum benefit to your beneficiaries upon your death or TPD and helps them manage the loss of your incom.
• Medical Insurance: Pays for treatment if you get sick or injured covering hospital stays, specialist care and outpatient visits.