Common Insurance Misconceptions When in Your 40’s

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.

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.

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.   

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.

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.