How To Choose An Insurance Plan

As a first-time customer looking to get insurance coverage, speaking to an agent from the insurance agency about insurance plans may sound overwhelming due to the different plans usually offered by insurance providers in Malaysia. 

First, insurance may be overwhelming due to the wide variety of products and terms used—especially when different providers offer the same benefits but with other product names. This is why it would be best to engage the services of a professional, such as a trained and qualified insurance agent or consultant.

To put things in perspective. It's only logical to hire an accountant to handle your accounting matters. And it's probably best to hire a lawyer to represent you in court - rather than try to represent yourself. Getting this bit wrong can land you in jail, but that's a different story for another time.

But for some of you who might need help figuring out what to ask your agent, here is a quick guide to what to ask and rough general answers you can expect from your insurance agent.

Do I need insurance?

Insurance is just as the term suggests and would usually only be needed in the worst-case scenario. So it's understandable that it's the last thing most people would consider. But with the rising rate of inflation, there will be times when your savings alone will not be enough to pay for anything, especially when it comes to medical bills. Having insurance would help in that respect.

How Much Can Hospital Treatments Cost?

Dengue - Up to RM20,000

Hip-replacement - Up to RM70,000

Chemotherapy - Up to RM5,000/session.

What are the most common insurance products out there?

Standalone Medical Card

If you are entering the workforce and have few monthly commitments, you may consider a standalone medical card. They're much cheaper than investment-link policies, an alternative solution, and a good starting point.

Investment-linked Policies

For those starting a family, education plans are a great way to save for your child's education. It allows you to slowly build up your savings given the longer time horizon you have to your advantage.

Retirement Plans (Also known as Endowment Plans)

There are also retirement plans for those saving up for their retirement. These plans are a great way to put aside money without investment-linked policies' inherent risks.

By the way, we're barely scratching the surface regarding the details of each product. It's best to schedule a discussion with a professional insurance agent or consultant to dive deep into the details.

Too Early or Too Late?

To simplify this, it's only considered too late when;

1. The person has contracted a critical illness (e.g., cancer, diabetes, stroke, etc.)
2. He/she is over 70 years old.

Why? Because the person would not be eligible to purchase, given any of the factors above.

How Much Is Considered Affordable?

This is the most important question of all.

There are many different plans, but it wouldn't do anyone good if you are not able to afford the premium. Some premium payments can be made monthly, quarterly, or annually. So, be sure to plan your payments right to ensure they are not something you lose sleep over.

A good rule of thumb is to ensure the premium is between 10% and 15% of your income. 

For example, if your income is RM3,000/month, then 10% of that would be around RM300. That would (theoretically) be a comfortable amount a person can manage as their monthly payments.

Be sure to speak to the agent and be honest with them about your budget. With the right information, they will be able to better plan your needs.

Start with that first, as upgrading your insurance plan over time is always possible.

Take-home tips:

• It is not a bad idea to meet with your agent at least once a year to touch base and update them on any changes in your life (e.g., divorce, death in a family, expecting a child, moving abroad, etc.).
  
  
• Budgeting for your insurance is a must. Keep it within 10%–15% of your income range.
  
  
• Communicate with your agent as honestly as you can. As professionals, they won't judge you and will be better informed to help you make the right decisions.
  
  
• Search for reputable insurance agencies and consultants. Look through their client testimonials. That alone will tell you if they're keeping their clients happy. Don't just assume they'll keep their clients happy just because they have won many awards. Remember that awards are given to top salespeople and may have little to do with how they will treat you.
  
  
• You can also explore other options, such as a Personal Accident insurance plan or great plans like Prudential's medical card.

Looking for some great advise? You can schedule a call or drop us a line. Our professional consultants will contact you within a few hours.