Income Protection Insurance: A Must-Have for Everyone

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Our life is so uncertain. Despite all the planning and preparation one might make, almost no one can predict what may happen on the very next moment.

We are not being pessimistic when saying that life and existence are constantly fraught with danger, risk and uncertainty. You have been working so hard to build a strong financial footing for your future and your family, so you want to be sure that everything is protected.

Accidents and disasters can and do happen when we least expected it, and if you are not adequately insured, it could leave you with unexpected high medical cost.

There are plenty of choices of insurance that you can choose or purchase to provide you with the peace of mind. One of the highly recommended insurance that you should have is Income Protection Insurance

This type of Income Protection Insurance would generally provide a steady and regular income for a person who has suddenly taken ill or developed a handicap or disability.


When considering Income Protection Insurance, there are few factors which will affect the cost of the insurance premiums. The regular ones include your health, age, occupation, nominated income and your sex.

Do take note that Income Protection Insurance can be expensive if you are in a risky or stressful job, if you have health problems or you smoke.

Remember if it is hard to live with an income imagine how hard would it be without one. Therefore, without any delay get your Income Protection Insurance today.

Healthcare costs rise and rise

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THREE years ago, an appendectomy (appendix removal surgery) cost RM1,800. Today, it will set you back RM3,000. Potentially, this relatively simple procedure can cost up to RM20,000 in 20 years’ time. The fact is that the cost of medical healthcare goes up every year, and it usually outpaces the general inflation rate.

Dr Pawel Suwinski, Frost & Sullivan Malaysia Sdn Bhd’s senior consultant of healthcare practice for Asia-Pacific, believes that healthcare costs in Malaysia increases about 10% every year – approximately double the inflation rate.

“It is something to worry about, as we can expect healthcare to become more expensive with every year. We are already at the point that only few can afford to pay for more complex and sophisticated procedures directly from their pockets,” he says, adding that the majority rely on other sources such as insurance, health saving accounts, or public care.

According to a former cancer patient, a standard radiotherapy regiment of 35 sessions cost RM2,000 in 1999. Ten years later in 2009, it costs a whopping RM35,000 – although it should be noted that today’s treatment is better targeted and more localised than it was before.

Dr Suwinski says there are four levels of therapy classification. In 2008, standard, basic-level breast cancer treatment in private hospitals costs RM20,000 to RM30,000, but this can go well beyond RM100,000 for the maximum level, which uses the latest-available therapeutics.

Affecting confidence

The AXA Life Outlook Survey 2009 (covering 2,707 Asians across key markets in Malaysia, China, Hong Kong, India, Indonesia, the Philippines, Singapore and Thailand) shows that the increase in healthcare costs is affecting Malaysians’ confidence in their health levels in their retirement years. It shows that only 29% are confident of maintaining it, down 11% from 40% at the last survey in 2007.

The survey also shows there is a dip in respondents’ confidence levels in maintaining their health over the next five years. Only 40% of respondents are confident of maintaining it, down from 49% two years ago.

According to Nicholas Kua, chief marketing officer of AXA AFFIN Life Insurance Berhad, fewer Malaysians believe they have sufficient savings for medical care, due to the escalating cost of hospitalisation and medical treatment.

“In 2007, 71% of Malaysians were satisfied with their medical conditions and savings but in 2009, this figure has dropped to 48%. Consumers are also worried about using up the lifetime limit of their medical coverage while they are still early in their retirement years,” he says.

However, the fact remains that medical costs will continue to rise, and the so-called “medical inflation” rate outpaces even the general inflation rate every year. This can be put down to the continuous and sizeable investments poured into research and development for the continuing advancement of medical technology. This is not only necessary but also essential – without it, there would be no new drugs, treatments or tools, and the standard of healthcare will not improve.

In light of the increasing healthcare costs, we can count ourselves fortunate for the system put in place by the Government for the benefit of all Malaysians.

Association of Private Hospitals of Malaysia (APHM) president Datuk Dr Jacob Thomas was quoted in StarBizweek as saying there is only so much that the public hospitals can cope with as these hospitals are already overloaded with patients. Currently, there is a ratio of one doctor for every 1.3 beds for private healthcare, as compared to a one doctor for every three beds ratio in public healthcare.

Malaysians in general prefer private healthcare – but its escalating costs, combined with effects of the global recession, may drive patients to the public healthcare system.

Dr Suwinski says that where middle-class wage earners are concerned, savings alone may not be sufficient to pay lifelong medical bills.

“The funds for essential medical care need to come from other sources,” he says, citing national and commercial insurance, and health saving accounts as examples.

“Relying only on savings will mean rationing the care,” he says, explaining that this may preclude the use of latest advances in treatment as these tend to be more expensive.

Increasingly unaffordable

Dr Suwinski says the present economic situation affects consumers’ income, and make private healthcare increasingly unaffordable. He believes third-party payers (like insurance) will play a more prominent role in the future.

He also sees the possibility that people may spend less on healthcare. “The so-called discretionary care, which is non-essential, will suffer most as people will be less willing to dispose of their savings in bad economic times.

“However, essential care, mostly related to curative and life-saving, will be affected to a lesser degree. People will need to consume these services to become healthy. Also, this type of healthcare is paid mostly by third-party payors and does not affect savings,” he says.


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While health insurance premiums may not be large, it's never prudent to spend more money than you need to. So don't just opt for the most expensive health insurance. Be discriminate.

"Choose a level of protection that meets your expectations of service," advises Sonny S.H. Tan, acting chief executive officer of The Pacific Insurance Bhd. "Do you want privacy? Do you have any preference of hospital?" he elaborates.

"The most expensive product does not necessarily provide the best coverage," agrees Alexander Ankel, chief executive officer of Allianz General Insurance Malaysia Bhd.

Insurers will be able to provide you with some indication of the costs of hospital room and board and the costs of surgical procedures.

"We do our own research, but sometimes hospitals move too quickly in their own reviews," say Bernard Ong, head of business development at Aviva Insurance Bhd.

Insurers therefore say it is wise to do some of your own research.

"Determine your preferred hospitals and find out the costs of the services and facilities befitting your expectations. Only then should you decide the level of coverage," says Tan.

Choosing a hospital is not just about the cost of the facilities on offer.

"Sometimes the name precedes the person. Sometimes it depends on your own experience and also on information from your peers," suggests Ong. "But hospitals are usually quite transparent and will give information on room and board cover," he says.

"But be mindful that hospitals can increase their fees at any time," notes Tan.

Room and board rates are roughly consistent among private hospitals. A four-bed hospital room will cost between RM80 and RM100 per night. A two-bed room will cost between RM120 and RM140 per night and the cost of a private room is between RM195 and RM220. These prices include meals. If you are looking for deluxe accomodation, expect to pay much more.

"The cost of treatment varies from each hospital. It all boils down to the doctors and the treatment provided," says Ankel.

Tan says it is unlikely that the hospital administration would be able to help you forecast these costs in advance. "Your preferred doctor may provide better advice," he suggests.

"The insurer would also be able to assist the policyholder as the company can obtain discounted rates from the hospitals," says Ankel.

Hospitals are only likely to be able to provide you with a rough figure for the cost of surgery. The cost really does depend on the individual doctors and of course you can't know in advance whether surgery is likely to meet with complications and involve further expertise and a prolonged stay in hospital.

As an indication only, hospitals will say that charges for major operations such as heart surgery start between RM22,000 and RM25,000. An intermediate operation such as appendicitis will cost in the region of RM4,000 to RM6,000. Smaller operations such as the removal of a cataract or a lump would be between RM2,000 and RM5,000.


In order to control premium levels, insurers apply limits to various types of costs. You need to understand how and where the limits apply in order to be able to decide which is best for you.

Ankel explains that a plan with inner limits means that the cost is limited per item. So if your surgery coverage is RM5,000 and the actual costs are RM11,000, you will pay the outstanding RM6,000.

Plans on an as-charged basis with an annual limit means that you have a certain limit each year, and each time you are admitted the cost will be deducted from you total amount. If your annual coverage is RM30,000 and your first visit costs RM10,000, you have a balance of RM20,000 left for the year.

An as-charged plan with a fixed limit on a per disability basis means that if you are covered for RM30,000 per admission each time you are admitted you will have a coverage of RM30,000, regardless of how much is left from your previous admission.

Medical cost inflation is always at the forefront of any discussion of health care. Insurers say in Malaysia it is currently running at about 20 per cent a year. So when you take out a policy you should bear in mind that if you end up having to have an operation towards the end of your policy period, chances are the costs will be higher than they were at the start of the policy period.

"Policies are renewable annually. Companies cannot guarantee the costs down the line in five years' time," says Ong.

"But if you are purchasing a guanranteed renewable policy, you may wish to choose a policy with coverage higher than your present expected costs because you may not be able to increase your coverage limits in later years when inflation sets in," explains Tan.

"For yearly renewable policies, you should determine the level of protection based on the current cost of treatment," says Tan. "To ensure adequate protection, always choose a policy with a coverage level 15 to 20 per cent higher than your current expectations," he concludes.

Top 10 reason to buy life insurance

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We spend money to buy something for the satisfaction of possessing it. But life insurance is a product we can’t see, can’t touch, and probably can’t enjoy it either in our lifetime. Why should we buy life insurance then?

Protect your wealth

This is the main reason people buy life insurance. Nobody likes to see his hard earned money all swept away in diseases related disaster. We work hard in our whole life to increase our economy value. There is no guarantee that we can enjoy a long life to realize our economy value. Only two things are certain: tax and death. When death arrive sooner that we thought, life insurance will be our wealth creation tool to instantly generate the cash we could have earned.

Show your love to your family

“We love because it’s the only true adventure.” - Nikki Giovanni

Love is indeed an adventure. Our life is an adventure too. It is full of risk. We can show our love in a thousand ways when we are still around. But when we die, how are we going to love our family? At least, life insurance can take care of our family’s financial well-being.

Show that you are a responsible person

Did you ever notice that most of the victims who died in road accidents didn’t buy life insurance? I can say most of them have none or buy only a tiny sum assured. An irresponsible person drives recklessly and carelessly almost all the time. If you are a responsible person, you will care for others. Certainly buying adequate life insurance shows that you are responsible and trustworthy to your spouse, your children, your parents and the one you love!

Our health is deteriorating everyday

Do you know anyone who is getting healthier everyday? By the time he is 100 years old, he is at the peak of his health condition. He can live on forever! Gosh, people are getting older and this is an undeniable and unstoppable fact. Our health is deteriorating every minute. We never know the exact time a disease will strike us. Fear of illnesses motivates people to buy life insurance.

Practice the habit of forced saving

When we face the shortage of cash, withdrawing money from our life insurance policy is always the last resort. In the fear of losing the life insurance policy, we are forced to make the regular premium payment. In the long term, life insurance is a great saving tool. It forces us to save for the future, and also for the unforeseen disaster.

Funding a trust

A trust is an arrangement under which one person, called a trustee, holds legal title to property for another person, called a beneficiary. People create maintenance trust to provide regular income for family. The cheapest way to fund a trust is using life insurance. The cost of premium is only a few percentage of the trust fund we intend to create. For instance, paying premium of $1000 annually is able to get a life insurance policy worth $100,000 for a person below age 30.

Funding a business operation

An employer takes out an insurance policy insuring against loss of profits arising from the death, sickness or injury of a key employee. The beneficiary is the employer. The life insurance policy bought is known as key-person insurance. The insurance payout will be used as emergency fund for business operations.

Funding Buy-sell agreement in partnership business or corporation

Every co-owned business needs a buy-sell agreement the moment the business is formed or as soon after that as possible. Every day that value is added to the business without a plan for future transition, it increases its financial risk. What happen if one of the partners decided or forced to exit the business? The most common triggering events are dispute, death, disability and retirement. Life insurance can be used to fund purchases of the deceased shares in the event of death.


A charitable trust is a trust established for charitable purposes. Charities may take the form of charitable trusts, companies or unincorporated associations. Some wealthy entrepreneur buys insurance to fund their charitable trust.