Understanding Life Insurance In Malaysia
Life insurance is financial protection for you and your loved ones that pays out a lump sum in the event of one’s death, disability, or sometimes even retirement. According to a 2022 study, 1 out of 3 working Malaysians are uninsured. Life insurance is important in that it keeps your family financially protected in the event something happens to you. The lump sum they receive can be used, for example, to pay off debts, help with living expenses, or final medical expenses. You can also claim income tax relief for life insurance in Malaysia.
The types of life insurance in Malaysia
Provides coverage for a specified term, usually 10, 20, or 30 years. This type of insurance is ideal if you are seeking affordable coverage for a specified period. It has lower premiums than whole life insurance.
Starting from only RM9.75 a month, i-Care is a term life insurance plan that has death and total & permanent disability benefits. Get an instant quote here.
b) Whole life insurance
Offers coverage for the entire life of the insured. It combines protection with a savings component. Although with more expensive premiums, they are level throughout the policy. It builds cash value over time, which can be withdrawn or borrowed against your life insurance policy.
Matures after a specific period or upon the insured's death, whichever comes first. The period is a set number of years or until you reach a target age. It guarantees a lump sum payout if you live until the maturity date, serving as a savings plan. It is often used to achieve savings goals such as for a child’s education or homeownership. There is also a death benefit if you pass away before the maturity date.
d) Investment-Linked Insurance
Combines life insurance with investment opportunities. It allows policyholders to participate in the potential returns of various investment funds. There is potential for higher returns, but it involves investment risks. The risk tolerance level is managed by the policyholder.
FWD WealthLink is an investment-linked insurance plan where coverage increases by 10% every 5 years, up to 50% of your original coverage.
Source: Tenor
Choosing Your Life Insurance Policy
It depends on many factors.
The key things you should take into consideration are the following:
a) Life insurance goal – If financially protecting your family is your primary goal, then term, whole, or investment-linked insurance are options you should consider. However, if your primary goal is one related to savings, then endowment insurance would probably be more appropriate.
b) Your coverage needs – They depend on what your current financial obligations are such as outstanding debts, mortgages, and expected future expenses.
c) Your life stage – Whether you are single, married with kids, or planning for retirement, each life stage has its own coverage needs. For example, a single person would most likely have less dependents compared to someone married with kids. The latter would then probably have bigger coverage needs.
d) Premium and payment options – All of the above need to be considered in relation to the affordability of the premium payments, and selecting a payment frequency that aligns with budgetary constraints.
It is also important to note that it’s important to review your life insurance policy at least once a year after you purchase it.
Life insurance is a fundamental aspect of financial planning for Malaysians. By understanding the types of insurance and their benefits, you can make a more informed decision in securing your legacy and ensure a stable future for your loved ones for generations to come. One of the ways to do that is by not only financially protecting but also investing for your loved ones. With FWD WealthLink Pro, you can do that with these 2 key benefits:
- Wealth Bonus - 105% cash bonus of your total premium paid in year 20 (T&C Apply)
- Life Insurance Protection – Up to additional 400% coverage
Boost your investment and get protected all at the same time.
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