Monday, June 15, 2015

Types of Insurance in Malaysia

There are few types of insurance and each serves a different purpose. 

People buy insurance is for financial protection and for risk transference.

The risk transfer here means that by paying a fee to the insurer, the insurer in turn provides insurance cover for a particular event.

Basically the life insurance can be segmented to the life insurance, critical illness, medical insurance & accidental insurance.

Life insurance is meant to replace the income of the breadwinner of the family if sudden death were to occur.

Example if the family needs at least Rm5k per month to pay for bills, food, tuition fees, clothings, that translates to Rm60k per year or Rm600k for 10 years. 

This doesnt even take into account the education fees if he has a young 1 yo daughter nor does it take into account the inflation.

The purpose of the Critical Illness is to provide a lump sum of money if the person being covered is down with a critical illness.

Example Stroke, bedridden and unable to generate an income for the family.

This is even worse than death because on top of the daily family expenses, the family needs money for the medical bills.

This is where the medical insurance comes in. A 60 days ICU due to Stroke at a private hospital can costs Rm400k.

Of course the medical insurance is optional if you think the general hospital is goid enough for you. If you do buy the medical card, there is option to get treatment from second opinion. Choice is yours.

Accidental insurance pays in the event of death due to accident or lost of limbs die to accident. 

Example if a programmer lost both of his arms due to accident, will it impact his ability to generate an income?