Everyone needs medical insurance, but not everyone needs critical illness protection.
Life Protection
Protect your loved ones’ future from life’s uncertainties.
Your Guide to Buying Your First Life Insurance
08 June 2017
Your Guide to Buying Your First Life Insurance
What’s the purpose of life insurance? Do I need it if I’m young? Can I buy it when I’m old? How much coverage do I need? While you may have a life insurance policy, there is a possibility you are not making the most out of it and are underinsured.
We answer the most frequently asked questions when buying life insurance.
What is life insurance for?
Life insurance is protection against the financial impact that a person’s family may experience in the event of that person’s passing OR a Total & Permanent Disability (TPD)
The amount called the payout can be used to cover:
- Immediate expenses
- The loss of income
- The payee's debt
What are the Different Types of Life Insurance Available?
TERM INSURANCE
- A Term life insurance provides coverage for a set period (the “Term” of coverage)
- It is the least expensive form of life insurance for people under the age of 50
- It is the most basic policy with no cash value (i.e. no returns on maturity/surrender of policy)
WHOLE LIFE INSURANCE
- A Whole life insurance provides coverage throughout a person’s lifetime
- Premium payments are higher than term life policies, but premiums do not increase with age
- It offers a guaranteed cash value/return upon maturity or surrender of policy
- You can build tax-deferred cash values with whole life insurance (i.e. only pay the tax on the insurance in the future)
- An insurance plan that also has investment capabilities
- Premium payments are divided between payment for the life insurance and investments in funds that you can choose
- You can also invest more when you have extra money or withdraw from your investment funds if required
What affects my premium?
- A premium is the payment you make periodically for your insurance policy
- Certain factors affect the amount of premium you pay for your insurance:
AGE
The younger you are when you purchase the life plan, the more affordable it will be
RISK OF OCCUPATION
High-risk occupations have a higher premium tied to it
HEALTH CONDITION
Certain factors such as smoking, BMI, etc will affect your eligibility and premium rates
TYPE OF POLICY
Your premiums will depend on the length of your policy term and the amount that you are covered for
References
https://www.nerdwallet.com/blog/insurance/how-much-life-insurance-do-i-need/
http://www.lifehappens.org/insurance-overview/life-insurance/calculate-your-needs/
https://www.forbes.com/sites/lawrencelight/2013/04/29/how-much-life-insurance-do-i-need/
http://www.cnbc.com/2014/10/03/how-much-life-insurance-do-you-need.html
http://www.insureuonline.org/consumer_life_ten_tips.htm
http://malaysiandigest.com/news/600094-90-per-cent-of-life-insured-malaysians-under-insured-says-liam.html
https://www.imoney.my/articles/the-essentials-of-life-insurance-in-malaysia
http://www.investinganswers.com/financial-dictionary/tax-center/tax-deferred-2477
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.
