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22 is not too young for life insurance—making sense of the confusing myths and facts

[This is a sponsored article with Manulife Malaysia.]

When we’re young and spry, life insurance is probably far from our minds. Even if we do have an insurance plan, it’s most likely a plan chosen and paid for by our parents. That’s how it was for me until I turned 30 this year and decided to get an insurance plan for myself as I have more responsibilities now compared to when I was just 22.

In the event of my unfortunate passing, I know that I won’t burden my parents to pay through their noses for my mortgages and debts. Although life insurance is something that should be considered when you’re young, many fail to take the time to clarify the misunderstandings and myths that surround it.

In partnership with Manulife Malaysia, we will be addressing some common facts and misconceptions when it comes to getting your first life insurance plan. 

Myth #1: My net worth is so low, is it even worth getting insurance?

You might not have a long list of investments now in either stocks, properties or a huge amount of savings. But that doesn’t mean you don’t need life insurance. For most life insurance plans, it doesn’t matter if you have a high or low net worth, you should consider one if you have dependants (parents, spouse and children) to look after.

In the event of your passing, the lump sum payout from your death can be used by your dependants to handle their daily expenses or to pay off debts moving forward. 

That said, you should keep an eye out for the insured amount. Some insurance plans come with low premiums (monthly or annual payments that you pay to the insurer) and low insured amounts. So it’s important to know how much you’ll be insured for.

Myth #2: Life insurance is expensive because it includes add-ons that I don’t need.

There is actually a range of life insurance plans, even from the same insurer, to cater to different protection needs. Some come with multiple add-ons such as medical rider, critical illness rider, personal accident rider and so on in a single insurance plan. 

Note: In insurance, a rider means additional benefits included in the insurance plan.

However, if you’re just starting out, you might not require an insurance plan with multiple riders. There are standalone insurance plans that only insure your life in the event of your passing.

Myth #3: I should only consider Investment-linked Plans (ILPs).

Unlike standalone life insurance plans, Investment-linked Plans (ILPs) are life insurance plans with investment opportunities. With an ILP, you’ll be given the choice to budget your payments to be invested into funds.

ILPs’ perks are that it allows you to reap potential investment returns through investment-linked funds, but they do come with higher risks compared to standalone insurance plans, and their returns are not guaranteed. You can even withdraw money from it in case of an emergency. That said, they do usually come with a higher entry premium, compared to Manulife Easy Protect.

So if you’re looking for a simple standalone plan with no savings or investment elements, Manulife Easy Protect can be an option. Personally, I’ve signed up for an insurance plan that isn’t an ILP as I already have an investment strategy in place.

A word from the sponsor: If you’re considering a no-frills insurance plan, Manulife Easy Protect is a simple and easy to purchase life insurance with hassle-free enrolment as it requires no medical and financial underwriting. It offers high coverage for death and total and permanent disability at affordable premiums and it covers you until you’re 80 years old.

Insure up to RM250,000 / Image Credit: Manulife

Myth #4: I’m still young and I don’t have any health issues, so I don’t need life insurance.

Even if you’re healthy, life insurance can be a safety net in case something does happen. And if you suddenly fall ill or become disabled, it might be too late to get one then.

When you’re healthy with no health conditions, getting life insurance can potentially net you a cheaper rate compared to rates you get when you are in bad health. Besides that, when you get life insurance when you are younger, you get a lower entry premium.

Myth #5: Life insurance benefits can only be claimed after I have passed away.

While regular life insurance would only pay out to your beneficiaries after you pass away, there are insurance plans that pay out a lump sum amount due to Total and Permanent Disability (TPD). For instance, if you get into an accident that renders you totally and permanently disabled, there are plans that cover exactly that.

There is also a life insurance plan such as Manulife Easy Protect that offers a guaranteed survival benefit. You will receive 50% of your annualised premium at the end of every 5 policy years.

Quick Maths: Assuming you’re a male aged 26 next birthday and you purchased the Manulife Easy Protect with a coverage of RM100,000. You will be paying RM61 per month or RM732 a year for your insurance plan.

At the end of the 5th policy year (age 30 next birthday) you will get RM366 via the guaranteed survival benefit.

How Manulife Easy Protect’s Guaranteed Survival Benefit works / Image Credit: Manulife

Myth #6: I’m a stay-at-home parent without an income, thus I don’t need life insurance.

For those who are already married and with kids but don’t have an income (as a househusband or a housewife), life insurance can be vital. As the main homemaker, your role is usually to manage household affairs, such as taking care of the young ones, preparing meals or running errands.

In the unfortunate event of your passing, a life insurance payout may be of help to your family as it could contribute towards the costs of hiring someone to fill in your roles temporarily until they get a grasp on how to move forward.

A straightforward life insurance plan

If you’re just looking for a standalone term life insurance plan, you can consider Manulife Easy Protect. It comes with a hassle-free enrolment that doesn’t require medical and financial underwriting. The premiums can go as low as RM1.23 per day for coverage of RM100,000 for a female aged 25 next birthday.

It also comes with a guaranteed survival benefit of 50% of annualised premium payable at the end of every 5 policy years. You can get covered from RM50,000 to RM250,000 too, for up to 80 years old. 

In the event of an accidental death, your loved ones can get a payout of up to 300% on top of your life protection (additional 300% payout applicable to Accidental Death occurring outside of Malaysia or due to natural disaster).

An example of how the additional 300% payout works / Image Credit: Manulife

Featured Image Credit: Manulife Malaysia

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