Life Insurance VS Life Unexpectancy - The Wisdom of Financial Planning

Stop saying Insurance is a scam!

Insurance is designed to mitigate the impact of RISK! Even Big Banks insure themselves, let alone average folks.

Do not try to measure RISK, using your calculator, if it is doable, then it is definitely not RISK.

Insurance can not change the way you lead your life, but can definitely prevent the quality of your life being changed.

Often the importance of Umbrella (Insurance) is realize on Rainy days, when you do not have one.

It is just like after your "Toilet business", and you are stranded in the cubicle without Toilet paper (Insurance).

Ain't it too late to ask for help?

Wisdom is the ability to plan ahead of life.

The function of Life Insurance is to provide financial security against Life Unexpectancy. Traditional Whole Life policy provide such benefits. As we progress, Insurance companies designed different policies, to cater to every individual needs.

Today, Insurance has evolved beyond their basic functions. Other than just financial protection, it is also a tax free wealth with compound benefits, which can also serve as your retirement nest.

Most would think, having Insurance is a shield against RISK, and is exactly the same, if I were to save with the banks, should there be any emergency, I will have easy access to the money.

The truth is, Not the same.

Let's say a Bypass surgery, cost $50,000 for a stem and $100,000 for 2. Supposedly, you save $3,000 with the bank each year, how long would it take for you to save up to $100,000? 30 years!

In the event, you need this sum of money within the next 10 years. Would your bank pay you interests of $100,000?

However with the same premium of $3,000, you would have successfully transfer your $100,000 obligation to Insurance and be assure of the pay out. 

Most have the misconception that, if they remain healthy during their lifetime, the premiums would be forfeited. Which is absolutely not the case, after 30 years, in addition to the principal, you will be enjoying the compounded interests.

2 Distinctive differences:

So if you save with the bank, you need 30 years to accumulate $100,000, whereas Insurance would pay the lump sum immediately, in the event of any mishap.

What if you remain healthy after 30 years? Fret not, you still get back what you pay, together with accrued bonuses.

Some say, I am very healthy, "it" would never happen to me. IF really happens, I am sure the bills would be affordable.

I ask, if a person has so much money, that he would never be able to finish in his lifetime, is it true that medical issues are insignificant?

World's richest man, Bill Gates say:" Medical Insurance is the lowest costs policy, yet the most efficient tool to manage healthcare." Falling sick does not just affect your lifestyle, it also affect the quality of your life.

If you deposit $500K with the bank, should the bills cost you $500K, your account would be wiped out instantly. What kind of impact do you think, it would have on both you and your family?

Alternatively, you could deposit $400K with the bank, $100K with insurance to create a $1 million Sum Assured. This is how the sums would work out to be, you get the million compensation, $500K to pay for the medical bills, the balance of $500K plus the $400K in your bank account, you have a decent $900K, to take care of your lifestyle.

Why we need to buy life insurance

Why we need to buy Insurance

Buy insurance is buy its multiple effect

For an example today I buy life insurance, unfortunately accident happen to me the next day, the life insurance companies  will pay me a large amount of cash that equivalent to many multiple amounts of insurance premium I have pay for the life insurance like 20 times of insurance premium. It is a great evidence to justify the important and benefits of life insurance in multiple effects.

Insurance protection is financial risk management  to divert the risk of unpredicted tomorrow

My friend told me that if today he buys a 1 million life insurance policies and every year he pay 50k of insurance premium, total premiums he paid for 20 years will also amounted to 1 million. If this is the case, why not he just saves the money monthly by himself and flexible to use the money? To answer his question, it needs to go back to the basic definition of risk management in insurance nature. Risk means that we don't know what will happen to us tomorrow. Tomorrow or accident, which will come first? Who know when accident will knock the door? Insurance protection is to protect for unpredicted condition. If risk is predictable, then there are no existences of life insurance companies. No company will want to make a loss business.

Insurance is for financial planning, not an investment

We always saw people calculating on how much he can earned if he bought life insurance policies now. The insurance agent also always emphasis on how much principal the policy holder can take back and interest earned after end of life insurance period. It is although correct and accurate, but it is not intended for investment purpose and you wouldn't gain the return as like investment in other financial products. Fundamentally, there is cost of protection an insurance company provides to you.

Let us consider a simple question: You have bought  1 million life insurance policies. Unfortunately accident knocks the door the next year, insurance company need to pay you 1 million dollar compensation. Do life insurance companies really pay for the compensation itself? Where the money come from? Frankly speaking it takes the insurance premium from other policy holders to pay for this compensation. This is the life insurance cost policy holders undertake when nothing happens to them. So if you want to make money from investment, don't buy life insurance. The only way you earn money through buy insurance is accident occurs to you during protection period.

Insurance is not a product that you can buy anytime you like

Many people have mindset that they are still young, always exercises, cautious in diet and drive slowly on the road. For the time being there should be nothing happen to him, buy insurance for protection can be waiting first until older age. 

I have one friend have such mindset and not bought any insurance. One day I received his call said that he has sudden stomach ache and conduct medical checkup. Doctor told him that the symptom is caused by myocardial infarction and he needs to place 2 frames inside. The medical fee cost him 70k. He is so regret for not bought medical insurance; otherwise he can claim from medical insurance company. He should even more regret because he is unable to buy health insurance in his whole life. 

Medical insurance only sell to people who are in healthy condition at the time he buy insurance.

Life insurance is writing a will

Chinese is not like westerners to have the habit of writing a will when they are young. Will writing by frankly speaking should not be a taboo. A person who already writting a will might face uncertainty and accident calmly and at ease because he know that he has already realize his love to his family through financial panning and financial support. His families wouldn’t facing economic difficulty although he is no longer alive or lose of working capability.

Life Insurance

10 number let you completely understand life insurance

1.       Life insurance existence is only for 1 purpose

Principles of insurance are financial protection for unpredicted and unprepared condition. When is the money critical condition we may face in our life? Serious illness from us or our family members, losing of working ability causes by illness or accident, or death of our selves or family members will need us to use a lot of money at the same time following by the decrease of income or total loss of income generation. We will face the situations like no money, money not enough, using up all the spare saving. Life insurance can help us to avoid such situations. Life insurance can provide us with huge cash in short term period.

2.       Life insurance only sell 2 products: Time and Money

If you have “no time”, life insurance will pay you large amount of cash; if you “have enough time”, life insurance will return you the principal with interest altogether.

The definition of “no time” means that you are no longer able to work (disability insurance), to generate income for your family daily expense (income protection insurance), for children education expense, for medical expense (medical insurance), for mortgage payment (mortgage protection insurance) and etc. In this situation, life insurance will fork out large amount of cash for your family, like pay for your “work for few years” income depending on the amount of life insurance you purchase.

The definition of “have enough time” means that you are able to enjoy long life after your retire age. In this situation, you will need to have large amount of cash to support your daily expense like medical expense and social activities expense after you are retire. Life insurance will pay you back principal with interest for all the insurance premium you have paid over the 20 years or 30 years, let you to enjoy your retirement life without financial burden.

3.       Life insurance can help you undertake 3 family responsibility

1.       Parent living expenses – parent used up their life to take care of us, it is the responsibility to support their cost of living when they are old.

2.       Couple – Couple should share the mutual respect and love, and the responsibility to support family.

3.       Children – Raising up children and let them educated is our responsibility.

The 3 responsibilities above are the things that we are most willing to do with our inner deep love and it need a lot of money. The time and money that life insurance sells help us to undertake these 3 responsibilities.

4.       Life insurance can help us undertake 4 burden

Life: Cost of living. To lead a quality life, we need to have money to sustain the living cost and quality of life, and also prepare for cost of living increase over the time.

Aged: Retirement planning. Decrease of income generation or total loss of income generation, increment of expenses, gradually weakness of body function – After work hard for few 10 years, how we can spend our golden age in comfortable condition? Do we prepare enough saving for retirement or money to support life after retirement? Early retirement may be realize if you have retirement planning.

Sickness: Medical expenses. Does anybody here never get sick in his/her whole life? No matter it is minor illness or serious illness, we need to pay for the medical expenses and prepare for the unpredicted cost arising from the medical expenses.

Death: Funeral expenses.

5.       Life insurance provide us with 5 protection in our whole life

1.       Income protection:  It guarantees us with large amount of money equivalent to few years of income when unpredicted accident happens to us. Early financial planning and risk management by life insurance are important to realize the goal.

2.       Wealth protection: It ensures our wealth will not taken by outsiders and make sure the wealth will not shrink.

3.       Clan future protection: It ensures our children able to enjoy education to realize clan prosperity.

4.       Family responsibility protection: To realize “support our parent”, “raise up our children”, and “mutual financial responsibility for couple”

5.       Living value protection: It protects our living dignity that arising from money issues.

6.       Life insurance concern about 6 door 

         Life insurance is not a complicated product, it closely related to our daily activities in our life.

         1. Family door:  Family is where we work hard for, the places we rest and re-energize, and the place we enjoy our life and joys.

         2. School door: School is the source of education for our children future.

         3. Job market door: The place where we earn our income to sustain our life and provides quality life to our family.

        4. Shop door: The place we expenses for our daily activities like shopping mall, car retailer shop, wet market, shopping mall, etc.

        5. Hospital door:  We need to able to pay for the hospitalization fee and daily expenses until we gain recovery and able to work.

       6. Heaven door: At this period, what do we leave to our beloved family? Heritage or debt? We give all the wealth to our family or half of our wealth going to tax department?

 7.       Life insurance involves 7 types of people around us

          1.  Our parent: At their retirement age, they need our support from aspect of material (living cost) to mental (respect and dignity).

         2. Wife/husband: We need to ensure our partner not to take the financial burden alone when anything happen to either one of us.

        3. Our children: Before step into job market, we need to make sure our children have education protection.

       4. Our business partner:  We need to make sure our wealth not taken away by business partner.

       5. Our employee: Better company protection easily and better to maintain employee.

       6. Our creditor: With more financial protection in hand, the creditors are not worry about default and urge for debt repayment.

       7. Our savers: We need to be able to pay for medical fee and lawyer fee.

8.       Life insurance’s 8 metaphor

           Life insurance might not be a necessity but it definitely a spare tire that save our life in emergency situation.

9.       Life insurance help us in 9 essential planning

           1. Clothes         2. Food        3. Accommodation        4. Transportation        5. Medical expenses        6. Entertainment        7. Education        8. Socialize        9. Investment

These are the 9 essential planning we need to have in our life to lead to quality life.

10.       Life insurance display 10 objectives

           1. Happiness         2. Safety              3. Family responsibility  4. Mental health and ease           5.  Serenity and ease           6. Growth            7. Future              8. Dream              9. Oneself           10. Root of unity

Life insurance fulfill our needs in our daily life in all aspects and essential for us in our financial planning and financial protection. The existence of life insurance is definitely a saver for us. Since we can't predict what will happen to us, we should plan for uncertainty tomorrow and risk divert to protect our family and our loved one.

For Malaysia Johor area and Singaporean only, feel free to WeChat : alexmah_hua for more details and quote.

Life Insurance

Life Insurance

What is Life Insurance?

Life insurance is a contract between insurance policy holder and an insurer, where the insurer promises to pay a designated amount of money in exchange for a insurance premium, upon the death of the insured person.

Why do I need Life Insurance?

Why we work day in and day out? Where do we expense our salary? The answer is simple; we need money for foods, for accommodation, and fulfil our daily activities. Money is needed to sustain our daily life. Who will financially protect our family, our loved one if something happen to us? Tomorrow and unexpected, who know which one will come first?

Life insurance is the only solution for uncertainty we are facing by providing peace of mind in term of financial protection to our family and our loved one. Here are few reasons why life insurance is important to us, why we should buy life insurance in our financial planning portfolio.

1.       Financial protect your family and loved one

If your family and loved one depend on you to support their livelihood, then life insurance as a income protection is a must. Your wife is not working, don’t generate any income and your children is still studying, so whenever any fatal happen to you, they will lose all the financial support.

Life insurance is the only source to replace your income to sustain their daily life and cost of living.

2.       Mortgage protection

Think about it – do you want your family and loved one to be homeless if you die unexpected? Where your families have money to pay mortgage loans if you as the only source of income left?
Life insurance can be used to pay off the outstanding home mortgage balance.

3.       Education protection

Does education important to our children especially in current society which emphasis on certificate, skill and knowledge? Certificate is the only way as a stepping stone for you to access to corporate door in the job market.

What will happen to your children if something happen to you and you don’t have any money left for them for their school fees?  Should we have backup plan to protect our children for their future, invest in their education protection?

4.       Final expenses

Funeral expenses and medical bills is a hefty burden. At the junction of difficult and emotional time, your life insurance can cover these expenses without financial hardship.

5.        Leave an Inheritance

If you don’t have any assets to pass to your children, you can create an inheritance through buy life insurance policies and naming them as beneficiaries. This provides your children a good financial future and provide for any monetary needs that will arise. Just take an example: You buy an insured value of 100k life insurance with monthly insurance premium of 100 dollar. 20 years of total premiums is 24k.  Let say accidentally something happen within 10 years, try to imagine the amount of 100k you get from it. How much and how long period you need to save for 100k? How much you have paid for the exchange of this 100k? Yet the best part is that you get back the entire 24k insurance premium you have paid for with interest if nothing happen to you.

6.       Supplement for your retirement

Life insurance contains cash value that will be return to policy holder once its term is ended. You not just take back the cash value of total insurance premium you have paid for the 20 years term life insurance, yet you earn the interest for the insurance premium that you have paid for. Ultimately, it let you save your money at the same time you earn the free benefit of financial protection.

Life insurance is the best way to save money while getting financial risk management in financial planning for your family and loved one. Buy life insurance is first priority in financial planning for anyone who wishes to have peace of mind at the same time saving money and obtain financial risk management.

Just see people around us, who doesn't need life insurance? If they already have bought it, are they getting the right life insurance policies based on their current needs? What life insurance rates suitable for them? 10 years ago life insurance policies you bought when you are single and without property is not suitable again to the current needs after you have married, have children and have property. The life insurance policies need to be reviewed and upgrade to the latest financial needs.

Eventually,  buy life insurance is equal to you take your money out from left pocket and put into your right pocket. The best part is you get free financial planning and financial risk management that is most needed in your financial planning to protect your family and loved one. Do you agree?


Here is an example of life insurance:

Alan has a family of 5 persons, himself, his mother, his wife and 2 children. Alan work for a company with salary 6000 per month. He needs to pay car loan and home mortgage. He is the only person to financially support his family. What will happen if he doesn’t buy life insurance and fatal accident happen to him?

Scenario 1 without Life Insurance:

His family lost the only source of income. Tough burden is awaiting them; funeral expense, medical bills, car loan, home mortgage, medical expenses for his mother, school fees and tuition fees for his children.

–>His family may loss the house resulting from unable to pay the home mortgage. They will loss the only shelter.
–>They may need to borrow money from relatives or get help from social welfare organization through    fundraising for immediate expense like costs of funeral expense and medical bills.
–>His wife will need to seek for job to financial support his mother and their children, end up that nobody to take care of his mother and children.
–>His children may force to enter job market earlier as unable to pay school fees.
–>Any medical bill arising in the future will create another big financial impact and burden to them.

Scenario 2 with life insurance:

A large amount of cash will be given to beneficiary. With the tailored life insurance policies  Allan had purchase, the amount will able to pay off the mortgage loans in one go, an amount of money to support his two children school fees  until they are graduate, and cost of living daily expenses  needed in future including immediate and emergency expenses.

–>His housing mortgage loans balance is fully paid off. They can continue stay there and own the house.
–>His wife can continue to stay at the house, take care of his mother and their two children.
–>His mother medical expenses that may arise in future are taken care of.
–>His children can concentrate on their study, complete their college.

All the living cost and financial expenses are taken care of by life insurance that Alan has bought, thanks to his sound financial planning and mindset of financial  risk management for any unexpected.

Best life insurance is the life insurance tailored to individual need. It plays the most important part for the success of life insurance role in financial planning and financial risk management. Tomorrow and unexpected, which one will come first? Who know?

For Malaysia Johor area and Singaporean only, feel free to WeChat : alexmah_hua for more details and quote life insurance quotes.

Life Insurance