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.

Definition of 36 Critical Illnesses or Dread Diseases in Insurance Policy

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Most policy holder who bought the common 36 critical illnesses coverage (also known as 36 dread diseases), will have the definition clearly stated in their life insurance policy. Here is the definition taken from Great Eastern Life insurance policy. Other life insurance company also uses the same definition although some wordings might vary. Anyway, the general definition should be the same. Here is the list:

1. Heart Attack

The death of a portion of the heart muscle (myocardium) as a result of inadequate blood supply and being evidenced by:-
(a) A history of typical prolonged chest pain; and
(b) New electrocardiographic changes resulting from this occurrence; and
(c) Elevation of the cardiac enzyme (CPK-MB) above the generally accepted laboratory levels of normal.
Diagnosis based on the elevation of Troponin T test alone shall not be considered diagnostic of a heart attack.
Angina is specifically excluded.

2. Stroke

Defined as a cerebrovascular accident or incident producing neurological sequelae of a permanent nature, having lasted not less than six months. Infarction of brain tissue, hemorrhage and embolisation from an extra-cranial source are included. The diagnosis must be based on changes seen in a CT scan or MRI and certified by a Consultant Neurologist.
Specifically excluded are cerebral symptoms due to transient ischaemic attacks, any reversible ischaemic neurological deficit, vertebrobasilar ischaemia, cerebral symptoms due to migraine, cerebral injury resulting from trauma or hypoxia and vascular disease affecting the eye or optic nerve or vestibular functions.

3. Coronary Artery Disease Requiring Surgery

Refers to the actual undergoing of coronary artery by-pass surgery by way of thoracotomy to correct or treat coronary artery disease but not including angioplasty, other intra-arterial, keyhole or laser procedures.

4. Cancer

Cancer is defined as the uncontrollable growth and spread of malignant cells and the invasion and destruction of normal tissue for which major interventionist treatment or surgery (excluding endoscopic procedures alone) is considered necessary. The cancer must be confirmed by histological evidence of malignancy.
The following conditions are excluded:-
(a) Carcinoma in situ including of the cervix
(b) Ductal Carcinoma in situ of the breast
(c) Papillary Carcinoma of the bladder and Stage 1 Prostate Cancer
(d) All skin cancers except malignant melanoma
(e) Stage I Hodgkin’s disease
(f) Tumors manifesting as complications of Acquired Immune Deficiency Syndrome.

5. Kidney Failure

End stage kidney failure presenting as chronic irreversible failure of both kidneys to function, as a result of which regular renal dialysis is initiated or renal transplantation carried out.

6. Fulminant Viral Hepatitis

This is defined as a sub massive to massive necrosis of the liver caused by any virus leading precipitously to liver failure.
The diagnostic criteria to be met are:
(a) A rapidly decreasing liver size as confirmed by abdominal ultrasound; and
(b) Necrosis involving entire lobules, leaving only a collapsed reticular framework; and
(c) Rapidly deteriorating liver functions tests; and
(d) Deepening jaundice.
Hepatitis B infection or carrier status alone does not meet the diagnostic criteria.

7. Major Organ Transplant

The actual undergoing of a transplant as a recipient of one of the following human organs:
(a) Kidney
(b) Lung(s)
(c) Liver
(d) Heart
(e) Bone marrow

8. Paralysis / Paraplegia

The complete and permanent loss of use of both arms or both legs, or one arm and one leg, through paralysis caused by illness or injury persisting for at least six (6) months from the date of trauma or illness.

9. Multiple Sclerosis

Unequivocal diagnosis by a Consultant Neurologist confirming the following combination, which has persisted for at least a continuous period of six (6) months:
(a) Symptoms referable to tracts (white matter) involving the optic nerves, brain stem and spinal cord, producing well-defined neurological deficits; and
(b) A multiplicity or discrete lesions; and
(c) A well-documented history of exacerbation and remissions of said symptoms / neurological deficits.

10. Primary Pulmonary Arterial Hypertension

Means primary pulmonary hypertension with substantial right ventricular enlargement established by investigations including cardiac catheterization, resulting in permanent irreversible physical impairment to the degree of at least Class 3 of the New York Heart Association Classification of cardiac impairment, and resulting in the Life Assured being unable to perform his/her usual occupation.

11. Blindness

The total, permanent and irrecoverable loss of the sight of both eyes. Certification by an ophthalmologist is necessary.

12. Heart Valve Replacement

The actual undergoing of open-chest surgery to replace or repair cardiac valves as a consequence of heart valve defects or abnormalities that have occurred after the date of issue or date of reinstatement of this contract.
Repair, via valvotomy, intra-arterial procedure, key-hole surgery or similar techniques are specifically excluded.

13. Loss Of Hearing / Deafness

Total, permanent and irreversible loss of hearing in both ears as a result of disease or accident. Medical evidence in the form of an audiometry and sound-threshold test must be provided.

14. Surgery To Aorta

The actual undergoing of surgery via a thoracotomy or laprotomy to repair or correct an aortic aneurysm, an obstruction of the aorta or a coarctation of the aorta. For the purpose of this definition, aorta shall mean the thoracic and abdominal aorta but not its branches.

15. Loss of Speech

Total and irrecoverable loss of the ability to speak for a continuous period of 12 months. Medical evidence to confirm injury or illness to the vocal cords to support this disability must be supplied by an appropriate (Ear, Nose, Throat) specialist.
All psychiatric related causes are excluded.

16. Alzheimer’s Disease / Irreversible Organic Degenerative Brain Disorders

Deterioration or loss of intellectual capacity or abnormal behavior as evidenced by the clinical state and accepted standardized questionnaires or tests arising from Alzheimer’s Disease or irreversible organic degenerative brain disorders excluding neurosis, psychiatric illness, and any drug or alcohol related organic disorder, resulting in significant reduction in mental and social functioning requiring the continuous supervision of the Life Assured. The diagnosis must be clinically confirmed by an appropriate consultant.

17. Major Burns

Third degree burns covering at least twenty percent (20%) of the Life Assured’s body surface area as measured by “The Rule of 9” of the Lund & Browder Body Surface Chart.

18. Coma

A state of unconsciousness with no reaction or response to external stimuli or internal needs, persisting continuously for at least 96 hours, requiring the use of life support systems and resulting in a neurological deficit, lasting more than 30 days. Confirmation by a Consultant Neurologist must be present.
Coma resulting directly from self-inflicted injury, alcohol or drug misuse is excluded.

19. Terminal Illness

The Life Assured must be suffering from a condition, which in the opinion of an appropriate Medical Practitioner is highly likely to lead to death within 12 months. The Life Assured must no longer be receiving active treatment other than that for pain relief.

20. Motor Neurone Disease”

Motor neurone disease of unknown aetiology is characterized by progressive degeneration of corticospinal tracts and anterior horn cells or bulbar efferent neurons. These include spinal muscular atrophy, progressive bulbar palsy, amyotrophic lateral sclerosis and primary lateral sclerosis.
Diagnosis must be confirmed by a Consultant Neurologist.

21. AIDS Due To Blood Transfusion

The Life Assured being infected by HIV virus or AIDS provided that:
(a) the infection is due to blood transfusion received in Malaysia or Singapore after the commencement of the Policy; and
(b) the Life Assured is not a haemophiliac; and
(c) the Life Assured is not a member of any high risk groups such as but not limited to homosexuals, intravenous drug users or sex workers.
Notification and proof of incident will be required via a statement from a statutory Health Authority that the infection is medically acquired.

22. Parkinson’s Disease

Unequivocal diagnosis of Parkinson’s Disease by a Consultant Neurologist where the condition:
(a) Cannot be controlled with medication; and
(b) Shows signs of progressive impairment; and
(c) Activities of Daily Living assessment confirm the inability of the Life Assured to perform without assistance three (3) or more of the Activities of Daily Living.
Only idiopathic Parkinson’s Disease is covered. Drug-induced or toxic causes of Parkinsonism are excluded.

23. Chronic Liver Disease

End stage liver failure evidenced by permanent jaundice, ascites, encephalopathy and portal hypertension.
Wernicke’s encephalopathy and liver failure secondary to alcohol or drug misuse is excluded.

24. Chronic Lung Disease

End stage respiratory failure including chronic interstitial lung disease.
The following criteria must be met:
(a) Requiring permanent oxygen therapy as a result of a consistent FEV1 test value of less than one liter.
(Forced Expiratory Volume during the first second of a forced exhalation); and
(b) Arterial Blood Gas analysis with partial oxygen pressures of 55mmHg or less; and
(c) Dyspnoea at rest.

25. Major Head Trauma

Physical head injury causing significant permanent functional impairment lasting for a minimum period of three (3) months from the date of the trauma or injury. The resultant permanent functional impairment is to be verified by a Consultant Neurologist and duly concurred by the Company’s Medical Officer and must result in an inability to perform at least three (3) of the Activities of Daily Living either with or without the use of mechanical equipment, special devices or other aids and adaptations in use for disabled persons. For the purpose of this benefit, the word “permanent”, shall mean beyond the hope of recovery with current medical knowledge and technology.

26. Aplastic Anaemia

Chronic persistent bone marrow failure which results in total aplasia of the bone marrow and requires treatment with at least one of the following:
(a) Regular blood product transfusion
(b) Marrow stimulating agents
(c) Immunosuppressive agents
(d) Bone marrow transplantation

27. Muscular Dystrophy

The diagnosis of muscular dystrophy shall require a confirmation by a Consultant Neurologist of the combination of 3 out of 4 of the following conditions:
(a) Family history of other affected individuals
(b) Clinical presentation including absence of sensory disturbance, normal cerebro-spinal fluid and mild tendon reflex reduction
(c) Characteristic electromyogram
(d) Clinical suspicion confirmed by muscle biopsy
No benefit will be payable under this Covered Event before the Life Assured had reached the age of 12 years next birthday.

28. Benign Brain Tumor

A life-threatening, non-cancerous tumor in the brain giving rise to characteristic signs of increased intra-cranial pressure such as papilloedema, mental symptoms, seizures and sensory impairment. The presence of the underlying tumor must be confirmed by imaging studies such as CT Scan or MRI.
Cysts, granulomas, malformations in or of the arteries or veins of the brain, haematomas, tumors in the pituitary gland or spine and tumors of the acoustic nerve are excluded.

29. Encephalitis

Defined as severe inflammation of brain substance, resulting in permanent neurological deficit lasting for a minimum period of 30 days and certified by a Consultant Neurologist. The permanent deficit must result in an inability to perform at least three (3) of the Activities of Daily Living either with or without the use of mechanical equipment, special devices or other aids and adaptations in use for disabled persons. For the purpose of this benefit, the word “permanent”, shall mean beyond the hope of recovery with current medical knowledge and technology.
Encephalitis as a result of HIV infection is excluded.

30. Poliomyelitis

Unequivocal diagnosis by a Consultant Neurologist of infection with the Poliovirus leading to paralytic disease as evidenced by impaired motor function or respiratory weakness. Cases not involving paralysis will not be eligible for this benefit. Other causes of paralysis (such as Guillain-Barre syndrome) are specifically excluded.

31. Brain Surgery

The actual undergoing of surgery to the brain under general anesthesia during which a craniotomy is performed. Bur Hole and brain surgery as a result of an accident is excluded.

32. Bacterial Meningitis

Bacterial meningitis causing inflammation of the membranes of the brain or spinal cord resulting in permanent neurological deficit lasting for a minimum period of 30 days and resulting in a permanent inability to perform at least three (3) of the Activities of Daily Living either with or without the use of mechanical equipment, special devices or other aids and adaptations in use for disabled persons. For the purpose of this benefit, the word “permanent”, shall mean beyond the hope of recovery with current medical knowledge and technology.

33. Other Serious Coronary Artery Disease

The narrowing of the lumen of at least three major arteries i.e. Circumflex, Right Coronary Artery (RCA), Left Anterior Descending Artery (LAD), by a minimum of 60 percent or more as proven by coronary arteriography. This benefit is payable regardless of whether or not any form of coronary artery surgery has been performed.

34. Apallic Syndrome

Universal necrosis of the brain cortex, with the brainstem remaining intact. Diagnosis must be confirmed by a Consultant Neurologist and condition must be documented for at least one month.

35. AIDS Cover of Medical Staff

Infection by any Human Immunodeficiency Virus (HIV) only if the Life Assured is a Medical Staff as defined below, and that such infection was considered by the medical authorities involved to be caused by a needlestick/sharp instrument injury or by exposure to blood or bloodstained body fluid which occurred after the commencement of the Policy. The accident must have occurred whilst the Life Assured was following his normal occupational duties and reported in accordance with the established occupational procedures for such accidents. The Life Assured must, within 5 days of the accident have undergone a blood test indicating the absence of HIV or its antibodies but a further blood test performed within 6 months of the accident must indicate the presence of HIV or its antibodies after the commencement of the Policy.
However, the benefit payable will not apply if any medical cure is found for Acquired Immune Deficiency Syndrome or the effects of the HIV virus or a medical treatment is developed which results in the prevention of the occurrence of AIDS.
“Medical Staff” is defined as Doctors (General Physicians and Specialists), nurses, laboratory technicians, dentists (surgeons and nurses), ambulance workers who are working in the medical centre or hospital or dental clinics/polyclinics in

36. Full Blown AIDS

The clinical manifestation of AIDS (Acquired Immune-deficiency Syndrome) must be supported by the results of a positive HIV (Human Immuno-deficiency Virus) antibody test and a confirmatory Western Blot test. In addition, the Life Assured must have a CD4 cell count of less than two hundred (200) and one or more of the following criteria are met:
(a) Weight loss of more than 10% of body weight over a period of six (6) months or less (wasting syndrome)
(b) Kaposi Sarcoma
(c) Pneumocystic Carinii Pneumonia
(d) Progressive multifocal leukoencephalopathy
(e) Active Tuberculosis
(f) Less than one-thousand (1000) lymphocytes
(g) Malignant Lymphoma

Why do People Delay in Purchasing H&S Insurance?

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Many people are aware the importance of H&S insurance, however, some common beliefs / mental barriers still hold them back from taking up H&S insurance. The common beliefs are:

Belief: I do not believe in H&S Insurance

The fact is: Everyday many people who thought they are healthy admitted to hospital. Ambulances that drove past you on the roads are not just out there practicing.

Belief: I cannot afford it

The fact is: We never heard H&S insurance policyholders who admitted to hospital complained about having H&S insurance. If you cannot afford the premium, you certainly would not able to settle the hospital bills.

Furthermore, there are various H&S insurance products ranging from basic coverage which is cheaper to comprehensive coverage which is more expensive.

Belief: I need to think about it

The fact is: Procrastination is one of the biggest enemies in our life. Many companies allow applicants to submit their application form without paying the premium. You only need to make a decision when the application result is out and proceed with the premium payment if you satisfy with the insurance plan.

Belief: Do not need it

The fact is: You need to have H&S insurance when you do not need it. If you wait until you get sick or injured, then it is too late to buy. You need to have good health conditions when applying for H&S insurance.

Belief: I will never failed sick / I am always healthy / Accident will never happen to me

The fact is: Nobody knows what is going to happen on us tomorrow. We seldom use the spare tyre in our car boot but it must always be there for emergency purpose.

Belief: Never ending comparisons

The fact is: It is worthy to compare plans from various insurance companies, however, give yourself a deadline. Without deadline, you will never make a decision.


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While we are privileged to live in a wonderfully rich, peaceful and beautiful country we call home, we are faced with worrying medical statistics. The number of Malaysian needing medical attention is increasing. Attributing to the sicknesses are mostly overeating, more people smoking and not exercising! Meanwhile, the cost of medical and hospitalization is also on the hike! Based on recent statistics, the Malaysian medical inflation is between 10% to 15% per annum!

In 2005, according to survey conducted by BNM, it is estimated that only about 15% of the total population have Medical & Health Insurance (MHI) protection. A Genuine Cause of Concern! ADMISSIONS IN GOVERNMENT HOSPITAL YEAR 2005 1,842,688 CASES 3.5 ADMISSIONS per minute !!! Sources: Planning and Developmet Division, Information & Documentation System Unit,Ministry of Health Malaysia, July 2006

On our part, we still can make a difference! As responsible individuals and family figures, we should seriously address these worrying facts. Within our own control, we can decide to do a couple of VERY IMPORTANT things ...
  • Adopt Healthy Diet & Do NOT Overeat!
  • Choose to Stop Smoking or Do NOT Start Smoking!
  • Exercise Regularly!
  • Go for Regular Health Check Ups!
  • Ensure You & Your Family is Adequately Covered with Medical & Health Insurance! Transfer your Risk Away!

Health Insurance Coverage -Take care, take good health cover

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We all learn the hard way…especially when it comes to insurance cover. Many young people avoid buying any health insurance cover, thinking they are invincible and ‘nothing ever will happen’. While the positive attitude it perfect, it does help if it is padded up with some cover. Accidents and mishaps can happen anytime and body harm can change an entire life pattern for some. The only quantum of solace one gets is in some health insurance coverage. It is not a bad idea to look up some policies that can benefit not only the physical life but also earn some tax benefits. It’s this dual advantage that many customers gain from buying any health insurance coverage. Considering that so many health cover plans are available for people from all walks of life, ailments any cover should be done with some consultation. Policies are available tailor-made to suit individuals, groups, families and companies with flexible premiums. So it does not really tax one a lot to pick up at least one health insurance policy.

Health insurance works on the premise that medical expenses are cared for by an insurance company. This is a periodical renewable contract. Some health care policies are limited to a certain amount. The insured person is expected to pay any charges in excess of the health plan’s maximum payment limit for a specific service. In addition, some insurance company schemes have annual or lifetime coverage maximums. In these cases, the health plan will stop payment when they reach the benefit maximum and the policy-holder must pay all remaining costs. Health insurance coverage also depends upon kind of policy one opts for. Certain policies pay a certain proportion of the money each time there is a medical expense. For example, if your health insurance plan promises to pay 80% of the costs that will be incurred each time you visit the doctor, for getting the prescription or for any other treatment; you would bear just 20% of the cost each time. Other expenses are taken care the insurance company. Generally the insurance company sets up a fixed amount for particular health related issues. Also having a preferred list of physicians, experts and hospitals is another common practice.

Health insurance cover depends upon the treatment. In most cases, insurance policies cover physicians and specialist visit. Costs vary depending upon the kind of treatment needed upon hospitalization. But for serious or terminal illness the policy could have other terms and conditions. A comprehensive plan is also available to take care of every medical expense. These are generally very expensive ones and in most cases are obtained through an employer. Policies and plans for health insurance coverage vary in different places.

Save! Save! Save!

Nearing Retirement? Are You Ready for It?

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Last year, the retirement age for Malaysia’s civil servants has been raised to 58 years old. This is a personal choice for those who want to work for a few more years. For some people, it is not a choice but a must as some really need the income to live on. This situation is quite common as even retirees in the United States are facing the same dilemma.

A survey conducted by the Employee Benefit Research Institute in the USA shows that only a small percentage of workers (13%) have confidence of a comfortable retirement. Only 20% of retirees believe that they have sufficient money for retirement which is down from 41% in 2007.

The above situation stems from the fact that more and more people have to depend on their own savings for funding their retirement. In the United States, the average amount saved by people in their 60s is only USD100, 000 in 2007. Do not be surprise to hear that people in this age group still have debts to pay where the median debt is USD50, 000 and 45% of them still carry balances on their credit cards.

In Malaysia, according to the Employees Provident Fund (EPF), the average savings of members are low. The average savings at age 54 is RM114, 402 as reported by the EPF in 2006. Members are encouraged to increase their retirement savings in order to have at least RM120, 000 in their EPF fund when they reach 55 years of age. This is sufficient to generate RM500 a month and would last for 20 years until the person is 75 years old.

The following ideas are gleaned from for those approaching their retirement. These are tips to get your finances in order and ensure a happy retirement.

1. Set a target retirement date

Having a target retirement date will enable you to plan how much money you need and how much money you have to fund it. Be flexible as you may end up having to work longer, part-time or otherwise in order to boost your retirement fund.

2. Determine where you are going to live

Where you live will have an impact on your expenses and how much money you need to cover for it. Are you going to live in a mortgage-free house, a small apartment, an expensive condo or holiday home? If necessary, you have the option of moving to a cheaper abode which also allows you to free up your home equity for other purposes.

3. Get the proper insurance coverage

Before you reach retirement, get enough health insurance coverage. As you get older, your health will deteriorate and your insurance will help to offset part of the medical or treatment cost.

4. Settle your debts

Ideally, you should not have any debts to deal with going into retirement. You may be relying mostly on your pension, savings or retirement funds which may not be sufficient to repay any outstanding debts or loans.

5. Come up with a retirement budget

Draw up your retirement budget and actually practice using it before you retire to get a good feel about it. Eventually, you can design a budget that is suitable for you upon retirement.

6. Time to review your estate plans or living will

As you get older, the risk of getting seriously ill or being incapacitated increases. Hence, it may be the right time to draw up a will if you do not have one yet or to review an existing will or estate plan. This is to ensure that your loved ones are properly taken care off. At the same time, you may also want to update your beneficiaries on your retirement, bank or savings accounts, investment accounts, life or health insurance policies, etc.

Malaysians less confident about preparing for retirement

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LOTS of working adults are paralysed when it comes to planning for retirement. Most people will delay this as long as they can, possibly due to their lack of knowledge about financial matters.

Generally, the more knowledgeable an individual, the more confident he is in taking control of his financial destiny, which usually is about securing a comfortable retirement.

A recent study by the non-profit Employee Benefit Research Institute in the United States found that only 13% of Americans said they were confident of a comfortable retirement – drastically reduced from 27% in 2007.

Figures in Malaysia show a similar sentiment. The AXA Life Outlook Index findings for 2009 indicate that Malaysians’ satisfaction with their preparation for retirement has dropped. In 2007, 23% were confident about their retirement years, but this has since dipped to 14%.

While many working Malaysians are reasonably financially literate, certain groups are less so and therefore less confident in managing their finances. This is a worry considering that the elderly make up an increasingly large proportion of our society.

Demographic and socio-economic forecasting provider Global Demographics Ltd forecasts senior citizens (those 50 years and above) to increase from 15% to 25% of the total Malaysian population over the next 20 years.

As the Malaysian population ages and retirement looms for many, the issue of financial literacy in a retirement planning context has become particularly salient.

Abacus for Money chief executive officer Carol Yip says that there is no single product or solution available to guarantee one’s comfortable retirement.

She notes that the main asset likely to be available to most working Malaysians upon their retirement is their Employees Provident Fund contribution.

Other assets may include property, shares, unit trusts, term deposits, inheritance, insurance, government pension as well as emerging private pension funds.

Yip asserts that individuals must increase their level of financial literacy so that they can go cherry-picking from the wide array of products available in order to ensure a comfortable retirement.

Besides the usual means of consulting financial planners and reading financial magazines to improve financial literacy, Yip calls upon employers to provide training to their staff in order to empower them with financial knowledge to plan their future.

Yip also encourages retirees who are in the early stage of retirement to equip themselves with financial knowledge in order to wisely invest their money so as to protect it from inflation as well as to provide recurring income over the medium term.

The senior citizen population of 50 and above in Malaysia as well as regionally is said to be rapidly expanding into a large, affluent market.

MasterCard Asia Pacific, in a study, estimates that the spending power of the retired population in Malaysia to exceed US$10bil (RM35bil) by 2015 – more than double the figure from 10 years before.

Madam Chong (not her real name), 56, who recently retired but is still an active investor with a moderate risk profile, was looking to diversify her portfolio.

The ideal product that she is looking for is one that can offer recurring income with double-digit returns annually, monthly or quarterly. It should also be capital-guaranteed as well as easy to liquidate with no penalties over five to ten years.

“I was prepared to consider regional investments with a slightly higher risk,” she says.

After looking around, she discovers that there are no such products that meet all her criteria except for two that offer returns between 6% and 7% per annum, but require high deposits of RM250,000.

“There are a couple of insurance companies that offer returns of about 4% annually with smaller deposits,” Chong says.

Given the current economic uncertainty and the absence of investment products specifically catering for retirees, Chong reiterates the need for retirees to be financially savvy instead of just depending on advice from third parties to manage their wealth.


Are we there yet?

Why do I need medical insurance?

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First of all, do you know that a medical and health insurance policy is generally designed to help you cover the cost of private medical treatment such as cost of hospitalisation and healthcare services, if you are diagnosed with covered illnesses or have had an accident.

Just imagine the cost of not having any health insurance. If you are involved in an accident, or contract a serious illness, you have to pay the hospital bills from your own pocket. Prior to admitting to certain private hospitals, you would also have to pay a deposit. If your family members, i.e. your spouse or children, get seriously ill or hurt, the medical costs can lead to a total depletion of your savings. In some cases, it may even cause bankruptcy!

Another reason is that your family will have to opt for public health care facilities, and wait in line with hundreds of other patients. Besides that, you still have to pay for expensive operations that are not covered under public health care.

I want to relate to you a true story which happened last night. I was frantically trying my best to assist my client to see which hospital had neurosurgeon facility and would accept an seriously injured accident victim from another hospital.

You see, last night my client’s uncle was involved in a very bad motorcyle accident and was immediately rushed to a public hospital. Due to the severity of the injury, a neurosurgeon was required but unfortunately that particular hospital did not have the necessary facilities. My client was left in a dilemma. Her uncle was already admitted to the hospital but nothing could be done at the moment because the hospital did not have neurological facilities.

You might ask, why wasn’t the injured sent to a hospital which had the necessary facility in the first place? Well you see, her uncle did not have any insurance medical card. Fees at private hospital as you know are costly and the expenses might be too much for the family to bear. Therefore the family had no choice but to send the injured to a public hospital. For this case, the family did not expect that certain facilties were not available at public hospitals.

Sad to say, that in such a time where life or death is at hand, the family was ’stranded’ in a hospital where the required facility was not available. There was also a tricky situation where once the injured was admitted to a particular hospital and if the family wanted to send the injured to another hospital, the attending doctor at the current hospital was required to call the hospital to inform of the injured’s current situation. Once the hospital accepts the injured’s condition, only then can the injured be transferred to the new hospital.

Can you imagine how much time was wasted to settle this, when at the beginning if the injured had a medical card, he or she would have been immediately sent to the best hospital available and operated on at once!

I believe I need not have not stress anymore on the importance of medical insurance. For those of you who have good health and still do not have medical insurance, go and get a medical card for yourself. Get yourself protected! For those who already have a medical card, well done! You have done something good for yourself.

Rising pressure of healthcare cost

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Increases in medical bills are outpacing the general inflation rate each year. That raises the question whether healthcare is reserved only for those who can afford it

“I got the bill for my surgery. Now I know what those doctors were wearing masks for”
– American bureaucrat, James H. Boren (1925)

WHAT is the value of a human’s health? Sixteenth-century English scholar and vicar at Oxford University Robert Burton put it at such: “Restore a man to his health, and his purse lies open to thee.”

Tan Sri Dr Abdul Khalid Sahan

That denotes that health is priceless, and almost everyone would pay anything to get well. With the doctors’ power to demand, medical services do not come cheap.

And with the continuous rise of investments in research and development as well as the adoption of the latest technologies to deal with the rapid emergence of new and complicated illnesses (and the re-emergence of some deadly ones), healthcare costs are soaring by the day.

So, who can afford to fall sick these days?

Across the world, the increases in doctors’ bills are outpacing the general inflation rate each year. It is estimated that the global medical inflation averages about 10% each year.

In Malaysia, medical inflation is estimated to be around 15% each year. That is to say, a simple appendicitis surgery that cost RM1,800 three years ago will set you back by about RM3,000 today.

The next question then: Is healthcare reserved only for those who can afford it?

Far from it. As former Health Ministry director-general Tan Sri Dr Abdul Khalid Sahan puts it, healthcare has been universally accepted as a basic right of all citizens.

Dr Pawel Suwinski

“Everyone has a right to receive it irrespective of his or her ability to pay,” Khalid explains, adding that the Government is accountable for ensuring that healthcare is made accessible to all citizens.

The existence of public healthcare services in Malaysia is in line with that notion. Although the system is not perfect, its services are provided almost free of charge because they are heavily subsidised by the Government.

And complementing the public healthcare system in Malaysia is the private sector, whose existence is supposed to help improve the delivery standards of the public healthcare sector – in that the “richer” patients would go to the private hospitals, and therefore, help lighten the workload of the public sector, so that the “poorer” patients can have better and faster services at government hospitals.

Private healthcare services are expensive (or as some would complain, ridiculously expensive) mainly because they are profit-driven centres.

Shocking bills

Over the years, there have been growing concerns that private hospitals tend to overcharge their patients. According to Dr Chan Chee Khoon, professor and convenor for health and social policy research cluster at Universiti Sains Malaysia, there are built-in incentives for over-investigation, over-treatment and over-medication in a profit-driven, fee-for-service system.

Therefore, some patients have been slapped with exorbitant charges by private hospitals due to “unnecessary” treatment courses.

Datuk Dr Jacob Thomas

For example, there is the case of Madam LC, in her 60s, who had been diagnosed with breast cancer with metastasis to liver stage IV, and was admitted to a private hospital in Kuala Lumpur in January. Upon discharge the following day, she was slapped with a bill of more than RM7,000. Of this amount, nearly half was for a specific medication called Injection Aclasta, which, according to the patient, retailed at only RM1,400. In addition, LC was also billed for a bilateral mammogram, when she actually did a single one, as she had a left mastectomy more than 10 years ago.

Upon protest, LC was offered a 7% discount, which included a revision of the mammogram charges. She turned down the offer because she felt she was still being overcharged for the medication.

In the middle of last month, she received a telephone call and an SMS from the hospital’s public relations officer, offering a 20% refund. She requested the offer be made in writing but to this day, she has yet to hear from the hospital.

Unfortunately, LC’s experience is not an isolated case. As an industry analyst puts it, whenever the patient is unaware and “can afford it”, such practices tend to occur because private hospitals are driven by profits.

However, a private hospital doctor told StarBizWeek that most of them do not mean to over-diagnose or over-treat patients. He explains that doctors in the private hospitals tend to subject their patients to “better monitoring” as part of what they call defensive medicine, due to the rising risk of litigation.

He adds, “So, gone are the days when the doctor would send the patient home for self-monitoring before admitting him or her for further treatment.”

Nevertheless, thanks to the introduction of medical insurance, certain medical expenses incurred by policyholders can be taken care of. Hence, it is viewed as increasingly important for individuals to have such insurance policies, with sufficient coverage.

This is because we have often heard of how terminally ill patients had to endure the high costs of treatment. Some even had to borrow money. Some had exhausted their insurance coverage and some had given up hope for medication.

Then again, while medical insurance policies have helped to alleviate the financial burden of patients, they have also contributed to the rapid increase of medical costs at private hospitals. This is because insurance policies are another opportunity through which private hospitals can make quick bucks.

Affordability issue

It is estimated that only about 40% of the country’s population, or 10.8 million Malaysians, are medically insured. This leaves about 16.2 million people without health insurance policies. Then again, this may not be a big concern in Malaysia as patients can always turn to the Government.

Over the years, the steep costs at private healthcare centres have caused some patients to go back to public healthcare. And with the global recession, even more are expected to seek public, rather than private, healthcare services.

Dr Pawel Suwinski, Frost & Sullivan Malaysia Sdn Bhd’s senior consultant of healthcare practice for Asia-Pacific, says this may be the trend, given the present economic condition, which has an impact on consumers’ incomes, making private healthcare services increasingly unaffordable to many.

Suwinski points out that people will obviously make their choices based on affordability. And between the options of a cheaper but more troublesome public healthcare and a more convenient but expensive private healthcare, patients are now more likely going to opt for the former.

Association of Private Hospitals of Malaysia (APHM) president Datuk Dr Jacob Thomas concedes that it is possible that patients will turn to the public healthcare system in these troubled times, but he argues that there is only so much that the public hospitals can cope with. As it stands now, these hospitals are already overloaded with patients.

The healthcare gap

Undeniably, there is a huge disparity between public and private healthcare services in Malaysia. First, the public healthcare sector continues to lose its trained medical professionals to the more lucrative and usually urban-based private sector.

Also, it has to cater to the growing number of patients as the bulk of the Malaysian population cannot afford private healthcare.

The massive brain drain and the higher volume of patients have resulted in an overwhelming workload for the public healthcare sytem. At present, the public sector accounts for about 39,000, or 77%, of the total hospital beds in the country, while the private sector accounts for the remainder of about 12,000 beds.

But there are almost 9,000 doctors in the private sector, compared with about 13,500 doctors employed by the Government.

So, the ratio of doctors to hospital beds is still lower for the private sector, which has one doctor to attend to every 1.3 beds, versus the public sector’s one doctor for every three beds.

As a result, patients at government hospitals wait longer to get medical attention and they get less personalised attention from the doctors. Therefore, there tends to be a lack of communication between doctors and patients.

Equally competent

However, industry observers say this does not mean that doctors at public hospitals are any less competent than their counterparts in the private sector.

Frost & Sullivan’s Suwinski says the public healthcare sector, in fact, has more experienced specialists, who are also involved in the teaching process for the medical profession.

APHM’s Thomas concurs, saying that most doctors in the private sector are after all, products of the public sector. Hence, there is not much difference in the competency levels between doctors of both sectors.

He adds that the private healthcare sector has been “fortunate”, as it does not have a large volume of patients, and is therefore able to provide more personalised attention.

According to Suwinski, the perception that public healthcare services are inferior is mainly due to the longer waiting hours at government hospitals and their less attractive facades. “But these have no connection with the quality of care delivered,” he points out.

He thinks the public healthcare sector can overcome the poor perception by upgrading older facilities, acquiring new technologies and equipment, and improving its manpower.

Meanwhile, Thomas points out that the public-private partnership was recently established to help the Government cope with its growing list of patients.

The partnership involves the Government sending some of its patients to the private sector for certain consultation and treatment. The process will not burden the patients as the costs incurred are still borne by the Government.

“It is a win-win situation, whereby the private sector can help ease the load of public hospitals,” Thomas explains.

Beyond borders

A recent study by the National University of Singapore shows that the process of transforming Malaysian healthcare into a global commodity is well under way. This is underpinned by the Government’s effort in institutionalising various incentives such as tax support, accreditation, sales promotion and marketing activities to promote the country as a healthcare hub.

According to Thomas, the private healthcare sector has been tasked to be the driver of medical tourism in Malaysia.

Among the factors working to Malaysia’s advantage, Thomas says, are its cost-competitiveness compared to the regional and international markets, the good infrastructure, and the fact that English is widely spoken here.

In addition, the overall performance of Malaysia’s healthcare system is considered remarkably good by the standards of the World Health Organisation (WHO).

Indicators supporting this are the country’s health-adjusted life expectancy, which is around 63 years (comparable to that of industrialised countries), and the maternal mortality rates, which have fallen by more than ten-fold over the last four decades (from 320 deaths per 100,000 livebirths in 1957 to less than 30 deaths per 100,000 livebirths currently).

According to Suwinski, WHO considers the Malaysian healthcare system to be one of the best and a role model for developing nations.

Frost & Sullivan had earlier estimated that Malaysia’s healthcare industry would grow 8% this year, supported by a 2009 budget allocation of RM13.7bil. Last year, the Government spent about RM13bil on the healthcare industry.

Room for improvement

Malaysia devotes only a small portion of its gross domestic product (GDP) annually to healthcare. Over the years, the Government has consistently spent less than 3% of its GDP on the healthcare sector. The WHO-recommended level is 5%.

But it is almost in line with the trend of neighbouring countries Singapore and Thailand that have been dedicating around 4% of their GDP on health spending. On the other hand, the expenditures on health by the governments of rapidly developing China and India have both exceeded 5% of their GDP since 2002.

In general, developed countries allocate larger portions of their budgets to healthcare. The US, for example, dedicates around 15% of its GDP annually to health spending, while Japan dedicates around 8% and Britain, 7%.

According to an analyst, by consistently spending less than the WHO-recommended amount, a country could turn its healthcare system into a laggard.

Industry observers say the importance of healthcare cannot be underestimated. As Khalid puts it, healthcare goes beyond the individual recipients to the family and society, and investment in health is an indirect investment in the economy of the country.