Do I really need life insurance or term takaful if I already have savings?
Most people procrastinate on getting life insurance or term takaful coverage, but the best time to get one is when you are still young and healthy. It’s tempting to just have the YOLO attitude, but the longer you wait to have life insurance or term takaful, the greater the cost of your premiums or contributions.
According to recent reports from the Employees Provident Fund (EPF), 6.1 million EPF contributors are now left with savings of less than RM10,000, and of this figure, 3.6 million have less than RM1,000 in their savings! Among many reasons, getting term life insurance or takaful is crucial in ensuring the livelihood of your loved ones.
Not sure if you need a life insurance or term takaful plan? Here are a few reasons why you should be getting one.
You are planning to get married or start a family
A significant life change is usually a strong motivator to get life insurance or term takaful, especially if hitting that milestone is going to increase your financial commitments. Most people consider getting life insurance or term takaful coverage in the hopes that the benefits of the plan can protect their loved ones from the financial costs that can be incurred in the event of their passing, such as:
Living expenses of the family
Especially if you are the breadwinner of the family, the life insurance or term takaful plan can help provide temporary income while your loved ones get back on their feet.
Costs incurred in the future by your loved ones
For example, a lump sum benefit can help pay for your children’s education costs in the event that you are no longer around.
Outstanding liabilities and debts
Perhaps you’ve just bought a new property with your spouse. The benefits of a life insurance or term takaful plan can help ensure that your loved ones are able to continue to foot the bills and temporarily ensure that their financial wellbeing isn’t affected if you pass away.
You support your aging parents financially
Ideally, your parents are also well covered with their own insurance or takaful plan as part of their retirement planning. However, according to the New Straits Times, an increasing number of Malaysian adults are entering the sandwich generation, taking it upon themselves to provide not only for their children but also for their elderly parents, in-laws, or even relatives. In fact, 8 out of 10 elderly parents receive financial support from their children, showing how much filial piety is part and parcel of our Malaysian culture, of which the cost can really add up! With a life insurance or term takaful plan that pays out a lump sum death benefit, your parents can continue to be well supported throughout their golden years even in your absence.
You work for yourself or have a family-owned business
If only one member of the family is key to the business, it can be detrimental to revenue streams in the event of their disability or death. Furthermore, when you own a business and have a loan to fund it, it is likely that you have outstanding liabilities and debts that will need to be continually paid for even when you aren’t able to. A good life insurance or term takaful plan will be able to temporarily cover the cost, so your family’s financial wellbeing isn’t affected.
Your job is high risk
At the end of the day, a life insurance or term takaful plan is risk management to deal with untimely deaths, loss of income, or disability. If you’re working in a high risk or dangerous environment such as construction, transportation, agriculture and farming, maintenance etc., the chances of you getting into an accident, whether fatal or not, are much higher than for someone who is in a desk job. Even if you have some financial protection offered by your employer, you should consider your own personal plan to ensure you have sufficient coverage for the long term.
Life insurance or term takaful is ultimately for those who are left behind
Life insurance or term takaful is essential to ensure that your loved ones are financially supported in the case of your demise. Your savings may not be sufficient if you factor in the liabilities or debts to be paid off, any outstanding medical bills, and the number of years you intend for your dependants to be supported till they are self-sufficient.
Some things to take note of before you choose a plan are understanding the period of protection that the plan offers, knowing how much pay-out you want to provide for your loved ones, and having a clear understanding of your life stage.
At FWD Takaful, we offer a family takaful pure protection plan, which is a Shariah-compliant option that provides the same protection benefits as an insurance policy does.
One good term takaful plan to consider is FWD Protect Direct. Our family takaful plan ensures that your loved ones' futures are protected from life's curveballs from as low as RM11.17/month. The plan comes with a death benefit of up to RM500,000 and the lump sum payout can be used to cover funeral expenses, support the living expenses of your loved ones while they get back on their feet, clear outstanding debts or liabilities that you may have, and more.
FWD Protect Direct also comes with a waiver of contribution benefit, which means that your family’s contribution will continue to be paid for upon your demise. This ensures that they remain covered in your absence. You can opt to participate in the term plan as an individual or cover up to 4 family members in one plan.
Alternatively, if you’re looking for a microtakaful plan, you can opt for FWD Kasih. From as low as RM2.03/month (as affordable as a cup of coffee!), the plan provides coverage of up to RM80,000 for death and Total & Permanent Disability benefit.
