Common Misconceptions of Insurance When in your 20s

YOUNG PEOPLE DON’T NEED CRITICAL ILLNESS INSURANCE.

”I only need to make sure that if I’m covered if I fall sick. I doubt I will need any additional illness coverage at my age.” - Siva

 “I am young and healthy. I doubt I will get any critical illnesses at my age.”- Ying

• According to the Ministry of Health’s statistics, 11.6 million of the 16 million adults in Malaysia are suffering from non-communicable diseases like diabetes, hypertension or cancer. When an illness strikes and you don't have proper insurance coverage, the costs of obtaining a policy after that will be significantly higher than it would have been beforehand. Health problems can occur at any age.
  
  
• On top of that, the road to recovery for an NCD is longer and may be more complicated than a usual illness. There are also additional costs to look into such as rehabilitation, physical therapy, and other lifestyle adjustments, not to mention possible loss of income during hospitalization and treatment. Here are further factors to consider.
  
  
• Protect your long-term financial security with a Critical Illness plan, like the A-Life Cancer360, which provides complete cancer protection from the early to late stages. https://www.aia.com.my/en/our-products/critical-illness-protection.html

SINGLE PEOPLE DON’T NEED LIFE INSURANCE

“It doesn’t matter if I kick the bucket. No one is depending on me to provide.” - Chong

• Single people have many financial obligations that can outlast them such as car loans, student debts as well as credit card bills. So, even if they don’t have the same responsibilities as other married adults with children/a partner, the liability left behind could be a burden to their closest living relatives, such as their parents.
• If you have minimal dependents and liabilities and are new to life insurance (or looking to increase your current coverage), a simple and affordable life insurance plan such as the AIA One Plan could be sufficient to help safeguard your loved one’s future. You can even purchase it online and be protected immediately, from as low as RM50/year. https://www.aia.com.my/en/our-products/life-protection/aia-one-plan.html
   

INSURANCE IS A SCAM

“When unfortunate circumstances happen, it takes forever to claim my insurance. So why invest in nothing but a piece of paper?” - Mohan

• The biggest concern when purchasing insurance usually stems from of the stories of friends and family who share how tedious and difficult it is to claim insurance when unfortunate circumstances happen. Work hand in hand with your agent, as he/she will guide you through your claim process. With proper documentation and proof available, the claim process should be smooth and fast.

FINANCIAL INSURANCE IS NOT NECESSARY

“I just turned 23. Why should I start investing in financial insurance?”- Muhammad

• Gaining financial stability is often not a top priority for those who are in their early 20s. The extra income is used to satisfy daily entertainment or travel needs. Why should young adults look at investment-linked insurance policies? With the cost of living increasing exponentially over the years and the increasing financial responsibility overtime, it is always advisable to start investing when you’re young. The only way to ensure the value of the Ringgit you have today is equivalent or more in the future is to invest it.
  
  
• A flexible investment-linked life insurance plan like the A-Life Link ensures you not only have basic life protection, it also gives you an avenue to invest and grow your savings. https://www.aia.com.my/en/our-products/life-protection/a-life-link.html
  
  

IT’S BETTER TO INVEST, THAN TO BUY INSURANCE

 “I’d rather spend the extra money I have to make more money, than getting insurance.” - Aina

• Investing and insurance are two different financial vehicles to help a person be financially independent and free. It is important to consider if you would be comfortable putting all your financial eggs into one basket (whether the basket is insurance or investment).
  
  
• As they say, the only two things in life that are certain are death and taxes. It is wise to be prepared and to leave a legacy for your dependents, and it is also wise to invest with the long-term future in mind.
  
  
• This is not true. Until you have accumulated your assets, you need life coverage. For example, once you amass RM1 million of liquid assets, you can consider whether to discontinue (or at least reduce) your million-dollar policy. [LF1] But you take a big chance when you depend solely on your investments in the early years of your life, especially if you have dependents. If you pass on without coverage for them, there may be no other means of provision after the depletion of your current assets.
  
  

INSURANCE IS EXPENSIVE

“I cannot afford to take up a liability which will consume a huge chunk of my monthly income.”- Chiew Hock

• Insurance is customisable based on your level of income as well as your personal needs. There are many companies in Malaysia that offer a selection of basic, no-frills insurance that is created specifically to offer coverage at an affordable cost.
  
  
• The type of coverage plan that you select as well as the type of riders that you add on will affect how your insurance premium is calculated. After all, it boils down to what are your long-term financial needs and how much are you willing/can afford to pay for a life insurance.