The Fundamentals of Protection Planning

Unsure of how much coverage you should be getting? Find out in this article.

FSM Oct 31, 2018 4812


Do you really need RM 1 million in coverage? With no one size fit all solution for insurance; individuals, whose needs vary, would then require different levels of coverage. Therefore, while RM1 million in coverage may suffice for some, others may require different coverage amounts.

According to the study by the Life Insurance Association of Malaysia and Universiti Kebangsaan Malaysia, Malaysian households are substantially underinsured. The average protection gap is from RM553,000 to RM723,000 per family.

Are you perhaps guilty of having a protection gap? In this article, we explain the fundamentals of protection planning and the type of coverage that you should have at each stage in life.


The essentials: Hospitalisation and Life Insurance

With medical inflation, we are likely to continue facing rising healthcare costs. Therefore, having hospitalisation insurance then ensures that we would be able to afford medical treatment should the need arise. If you have bought a medical insurance quite some time and have not reviewed it since then, the coverage may not be sufficient to meet your current and future needs. Hence, should you wish to receive a more comprehensive coverage and seek treatment in private hospital, you may consider enhancing your existing medical insurance.

Those with dependents may also wish to consider using life insurance. Generally classified into term or whole life insurance, the former provides temporary coverage while the latter provides coverage for life. By using life insurance to cover your protection gaps, this protects your family and ensures that they would be financially able should anything untoward happen to you.


For those worried about being unable to work: Income replacement policies

Apart from the essentials, your next consideration should be to protect yourself in the event that you are unable to work. This would require income replacement policies such as critical illness, cancer plans and/or disability insurance.

Both critical illness and cancer plans provide a lump sum pay-out upon diagnosis. This amount can then be used to offset any outpatient and/or follow up treatment costs or serve as an income replacement during your recovery period.

Disability insurance on the other hand, provides monthly pay-outs for as long as specified in your policy. These pay-outs will commence upon the inability to perform activities of daily living (ADL) thus providing income protection in the event that you are unable to work.


For those planning for retirement: Annuities

Lastly, when planning for your retirement, your finances are likely to be one of your biggest concerns, especially if your EPF savings may be insufficient for your retirement expenses. If you are worried about outliving your savings in retirement, perhaps consider annuities.

Providing pay-outs for a specified number of years, annuities ensure that you would be able to retire with a peace of mind. This stable inflow of income also provides financial security. Combine this with other avenues such as investments as part of your retirement plan allow you to retire worry-free and indulge in your desired retirement lifestyle.



Life Takes Unexpected Turns. Be Prepared for the Worst. Request for a quote from FSM INSURANCE.

Our team of friendly advisers are able to help you review your financial objectives, long term commitments, and customize investment and insurance advice specific to your needs. Email us at for more information.


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Protect yourself and your loved ones now and enjoy savings at FSM INSURANCE!

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