Protect yourself and your loved ones from life's uncertainties with AIA's life insurance and takaful plans.
Your fourth decade comes with pretty significant milestones. You’ve worked hard in your career and it’s finally paying off, leading to a senior position at work and a steady climb up the corporate ladder. Your kids would be working their way into high school and toward their own future goals. You would also have paid off a number of loans and perhaps you’re finally at a place where you can afford the type of lifestyle you’ve always wanted – with your dream home, travel, leisure, and financial freedom.
While everything may be going great at the moment, it’s vital that you have the proper insurance policies in place to ensure that you lead a stress-free life for the rest of your days.
When you were in your twenties or thirties, you would have already navigated your way to an ideal insurance solution. However, many people in their forties fail to take into account the changing circumstances in their lives. Many of you have a higher net worth, a bigger portfolio of assets, perhaps a more affluent lifestyle and older children with different needs. The insurance policy you purchased in your twenties or thirties may no longer be sufficient or suitable when you’re in your forties and gearing up towards retirement.
According to Life Insurance Association of Malaysia (LIAM), only half of Malaysians are insured.
Additionally, only half of Malaysians are insured according to a recent statement by the Life Insurance Association of Malaysia (LIAM). This may be due to certain misconceptions surrounding insurance. Let’s take a look at the most common misconceptions you encounter from people in their forties.
Misconception #1: “I’m a senior executive and have comprehensive employer coverage, so I don’t need my own policy.”
Truth: Depending on your company’s policy, you may only be covered while you’re on the job. You will want to ensure that you’re adequately covered for retrenchment and (unless you are an employee of the government, which provides a pension) for retirement too, as some insurance policies may only provide cover for loss of income due to disability. Now that you’re in your forties, and having greater disposable income, you’re in prime position to ensure an independent future, regardless of your job.
On another front, a research study conducted by EPF states that life expectancy in Malaysia has increased which is good news. The key is now to consider that you are well-protected on a personal level, so that you and your family, or dependents, will have peace of mind for the long term.
Of course, this does not mean that your insurance policies have to overlap. Check to see what your coverage entails under your employer’s policy, and protect yourself further where necessary.
Misconception #2: “I’ve got mortgage insurance and critical illness cover in place already.”
Truth: Other than hospital bills and your mortgage payments, costs such as rehabilitation in the event of disability, medical equipment and healthcare at home, loss of income, and lifestyle adjustments are only covered on a limited basis.
Certain critical illness policies also expire after a payout, depending on the options you’ve selected. What you want to ensure is that you will be well-protected till end-of-life and have sufficient funds to support yourself and your family’s expenses in future.
A general guide in the case of life insurance is to ensure you are insured up to 10 to 15 times your annual income, in order to cover your family’s lifestyle in the way they’re accustomed to, for the next 10-15 years. Of course, how much coverage you need will vary according to the number of dependents you have, what their needs are, such as educational costs or special health needs.
Another factor affecting your calculations would be the amount of debt commitments you hold, and to ensure your family will be able to seamlessly maintain any commitments without interruptions.
Misconception #3: “I don’t need insurance because I’m not the breadwinner. My spouse already has comprehensive insurance, so I can get away with minimal coverage.”
Truth: Each individual deserves to be well-protected. Even if you don’t have an income to protect, you will want to ensure that your loved ones will have the support they need in the event of your absence. For example, there may be added childcare costs, and joint or personal debts to consider.
You will want to be in control of any unexpected medical costs that are not budgeted for in cases of debilitation, especially if it requires time for you to get back on your feet.
Human relationships are also often unpredictable. However, it’s good practice, even in good times, to just empower yourself with financial independence and the ability to leave a legacy for your children. There are solutions which you can consider as an individual to give you the upper hand financially, and this will benefit you, your spouse and your family members in the long run.
Misconception #4: “I have updated my insurance policies in my thirties. Since there aren’t any major life changes - I don’t need to review my policies.”
Truth: As time passes and your family grows, there may be different needs and lifestyle changes, debts or milestone plans that you have to cover. Perhaps you have college-going children and you need to ensure that their education is not disrupted, or you may have plans to make milestone purchases such as a second (or third) home, or a yacht! Apart from maintaining control of your family’s lifestyle for the next 10-15 years, you will want to look at protecting your new assets and milestone plans.
In your forties, as your net worth increases, so does your insurance needs. You may be covered for the basics in insurance (health, car, home) as you may have acquired those policies in your twenties or thirties. However your new assets may require further protection. Beyond your largest investments, such as homes, cars, or boats, you may wish to look into a high-net worth insurance policy which will provide customised protection to recover or replace items such as paintings, jewellery, and sculptures. Beyond that, insurance can also help you protect maintenance expenses such as the cost of your household staff, drivers, landscape artist and other contractors.
If you’re a business owner, you may also wish to look into excess liability insurance to protect you from major claims and lawsuits, which, in turn, helps protect your personal assets and your future.
Finally, you may have acquired a number of insurance policies over the years (some through your credit card perhaps) which may be overlapping, meaning you may be paying too much in insurance premiums. It would be advisable to review all your policies, to see where you can optimise your coverage, yet be sure that you are well-protected. If you have ageing assets which you plan to keep, have them revalued and insure them accordingly. Insurance products have also evolved and your financial or insurance advisor should be able to highlight the policies which aren’t serving you and guide you to new plans which may allow you to consolidate your insurance needs.
Misconception #5: “It's too late for me to get insurance now that I’m in my forties.”
Truth: This may be the largest misconception you hear from those in their forties. While it is true that insurance premiums are higher than they would be if you were in your twenties or thirties, premiums are not astronomical simply because you have hit the big four-O. In fact, it’s never too late to get insured. There are a great number of flexible options for policyholders in their forties, especially if you are in good health, which can ensure that you are protected in terms of healthcare, and even financially in the future. More importantly, it can also extend to protection for your assets, your life partner and family members.
There’s a risk of developing health issues when you are older, therefore, you’re in a far better position to get insurance cover in your forties, as compared to your fifties or sixties. Receiving support from an insurance policy in your later years can make a big difference.
Being in your forties can be an empowering and fulfilling time. While you’re making great strides in the art of living well, get peace of mind with insurance solutions that serve to benefit your future, as well as the future of your loved ones.
The above articles are intended for informational purposes only. AIA accepts no responsibility for loss which may arise from reliance on information contained in the articles.