Types of general insurance (Part 2)

4) Medical and Health Insurance

Medical and Health Insurance is an insurance policy which is designed to cover the cost of private medical treatment, which can be very expensive, especially with hospitalisation and surgery. This insurance also ensures that you won't have to worry about the cost of seeking treatment during emergencies. Besides, Medical and Health Insurance provides you with an income stream while you undergo treatment.

5) Travel Insurance

Travel insurance coverage is usually limited to the period of your travel. However, some insurance companies may offer various combinations of protection to cater to the specific needs of customers, including long-term annual policies for a frequent traveller. A travel insurance can be purchased for you or your family to insure against travel-related accidents, losses or interruptions, such as personal accident, medical-related expenses, loss of travel or accommodation expenses due to cancellation or curtailment of the journey, losing your baggage or passport, hijacking... ...

Types of general insurance (Part 1)

General insurance is basically an insurance policy that protects you against losses and damages other than those covered by life insurance. For more comprehensive coverage, it is vital for you to know about the risks covered to ensure that you and your family are protected from unforeseen losses. 

The coverage period for most general insurance policies and plans is usually one year, whereby premiums are normally paid on a one-time basis.

1) Motor Insurance

You need motor insurance when you buy a motor vehicle. Motor insurance covers your vehicle, be it a motorcycle, a car or a lorry, in case of accidents or theft.

2) Home Insurance

Home Insurance  is one of the most important insurance policies you can buy in your adult life. Your home is one of the largest financial investment you have made, and that's why it is so important to protect it.  There are three main types of policies which you can buy to protect your home:

a) Basic Fire Policy

This policy provides you with coverage against loss or damage to insured property such as  house, shop or factory that are caused by fire, lightning or explosion.

b) House Owners Policy

This policy provides additional coverage compared to the basic fire policy. It may include loss or damage due to flood or burst pipes.

c) House Holders Policy

This is a policy which covers your household contents and includes coverage for fatal injury to you as the insured. This policy does not cover damage to the house itself.

3) Personal Accident Insurance

Personal Accident insurance is an annual policy which provides compensation in the event of injuries, disability or death caused solely by violent, accidental, external and visible events. It is different from life insurance and medical & health insurance. 

You can either take a personal accident policy for yourself or a group policy for your family, protecting you and them anywhere in the world, anytime of the day. This insurance provides 24-hour worldwide insurance protection.

The scope of cover and scale of benefits differ between insurance companies and you should therefore ensure that you purchase a policy which meets your requirements. The types of coverage normally provided normally include accident death, permanent disablement, temporary total or partial disablement, medical expenses, corrective surgery, hospitalisation benefits and funeral expenses.

Types of insurance

All too often we hear about various types of insurance policies without really understanding what they are and more importantly, what they protect. The truth is, there are two main types of insurance, namely life insurance and general insurance which covers different aspects in your life.

1. Life Insurance 

Life insurance is an insurance coverage that pays out a certain amount of money to the insured or their specified beneficiaries upon a certain event such as death of the individual who is insured. The coverage period for life insurance is usually more than a year. So this requires periodic premium payments, either monthly, quarterly or annually. There are few types of life insurance too.

a) Term Life Insurance

Term life insurance is basic coverage that generally does not build life insurance policy cash value. Consumers typically buy term life insurance to provide death benefit protection for a specific period of time.

Premiums for term coverage are usually initially lower than other types of life insurance because the policy only provides a death benefit for a defined period. Later, some term insurance policies can be extended or converted into another type of coverage.

However, if you renew or convert your coverage, your new premium will probably be higher than your previous coverage, and can continue to increase as you grow older.

b) Whole Life Insurance

As its title indicates, whole life insurance provides a lifetime death benefit for a set premium amount and builds cash value you can use while you’re living.

The strength of a whole life insurance policy is that it provides guaranteed cash values and benefits in return for fixed premiums. A trade-off to consider is that a whole life policy may build cash value at a lower rate than alternative coverage options.

c) Guarantee Universal Life Insurance

Guarantee Universal life (GUL) insurance policies provide a death benefit as well as the opportunity to build policy cash value. This coverage is different from term and whole life insurance because, within policy limits, you can vary the amount and timing of your premiums. Typically, you can also increase or decrease your death benefit (based on your insurability). As long as you maintain sufficient policy value to keep your policy in-force, your policy’s flexibility enables you to pay premiums as your circumstances allow.

Your cash value in a GUL policy is determined by the amount of premiums you pay, the declared interest crediting set by the insurance company, and policy charges.

As a policy owner, you have more flexibility with GUL than with whole life, but you assume additional risk. GUL policies usually have fewer guarantees than whole life coverage, so you must carefully manage premium payments and any distributions taken to help ensure your policy will stay in-force. This type of life insurance policy usually offers a built-in no lapse guarantee that can last for the lifetime of the insured life or for a shorter period selected by the policy owner.

References : www.insuranceinfo.com.my

Takaful

Takaful is a protection plan based on Shariah principles. By contributing a sum of money to a common takaful fund in the form of participative contribution (tabarru’), you undertake a contract (aqad) to become one of the participants by agreeing to mutually help each other, should any of the participants suffer a defined loss. The types of takaful are Investment link takaful, Motor takaful, Medical and Health takaful, Personal accident takaful, Family takaful and Houseowner takaful.

Both insurance and takaful have similar basic principles. For instance, the insured, such as yourself, must have a legitimate financial interest in the risk you are insuring, meaning you must suffer a financial loss when the insured event occurs.

You can also buy more than one policy or plan to protect a particular risk but in the event of loss or damage, you can only make one claim. The amount payable will then be contributed by the insurance companies involved. As such, you cannot profit from your general insurance policy or takaful plan. If you suffer a loss, you will be compensated accordingly and no more than that. You will be paid or ‘indemnified’ to the position you were in before the loss. However, if you wish to cover your life, you can buy more than one policy.

Insurance

What is insurance? Insurance is a guarantee of compensation for specified loss, damage, illness, or death in return for payment of a premium. When things go wrong it can be expensive and so, for many of these eventualities, insurance is there to take the financial risk on our behalf. A business that provides insurance agrees to take on risks on behalf of a company or individual, in exchange for a fee. It does this by providing the business or individual concerned with an insurance contract, sometimes called a ‘policy’. This policy will cover a person or business for many of the costs they have to meet as a result of a risk occurring and provides the policyholder with some security should the worst happen.

There are many types of insurance such as Medical and Health insurance, Retirement Annuity, Travel Insurance, Houseowner insurance, Investment Link insurance, Life insurance and Personal Accident insurance.

The word 'insurance' is quite familiar to all Malaysians. However, not everyone really understand the significance, types or advantages of insurance. Every one require an insurance. Insurance may provide us a guarantee because we could not estimate what will be happening next moment just like we never expect that earthquake will happen in Sabah, a place at the equator of Earth. 

In case of any tragic accident happens, we might face financial difficulties or other unexpected situation. Hence, we need insurance to protect ourselves against significant potential losses and financial hardship at a reasonably affordable rate. We say "significant" because if the potential loss is small, then it doesn't make sense to pay a premium to protect against the loss.

Mutual funds and real estates

4) MUTUAL FUNDS

An investment vehicle that is made up of a pool of funds collected from many investors for the purpose of investing in securities such as stocks, bonds, money market instruments and similar assets. Mutual funds are operated by money managers, who invest the fund's capital and attempt to produce capital gains and income for the fund's investors. A mutual fund's portfolio is structured and maintained to match the investment objectives stated in its prospectus.

Investing in mutual funds offers benefits you won't get from trading individual stocks and bonds on your own. It has less risk through more diversification. One mutual fund can invest in hundreds and sometimes thousands—of individual securities at once. So if any one security does poorly, the others are there to help offset that risk. 

Beside that, it has professional management so that you don't have to keep track of every security your mutual fund owns. The fund is managed by experts who take care of that for you.

Moreover, it is convenient because you can buy and sell mutual fund shares online or by phone and set up automatic investments and withdrawals.

4) REAL ESTATES

Real estate investment is the most common investment that most Malaysian make. Real estate that generates income or is otherwise intended for investment purposes rather than as a primary residence. It is common for investors to own multiple pieces of real estate, one of which serves as a primary residence, while the others are used to generate rental income and profits through price appreciation. The tax implications for investment real estate are often different than those for residential real estate.

Common examples of investment properties are apartment buildings and rental houses, in which the owners do not live in the residential units, but use them to generate ongoing rental income from tenants. Those who invest in real estate also expect to generate capital gains as property values increase over time.

 References : http://www.investopedia.com/

Stocks and Bonds

1) STOCKS

Stocks represent ownership in companies, and stock markets are the places where stocks are bought and sold. When you own a company’s stock, you own part of that company. If it does well, your stock will do well. 

You can beat the market if your stock is good; if your stock is excellent, you can really beat the market. You can pick the stock in an industry you understand. Also, your money is liquid, meaning you can access it at any time by selling your stock.

Unfortunately, if a company does poorly, so does your stock. Because a stock isn’t diversified, that can mean disaster for you (although you can easily reduce your risk by picking bigger, solid companies).

2) BONDS

Bonds are typically seen as a lower-risk accessory to a stock portfolio. But bonds aren't just for those nearing retirement: They have a place in every portfolio. The question that confuses investors is just how much of their savings should be in bonds.

You know exactly how much you’ll get when you invest in a bond. You can choose the amount of time you want a bond for (1 year, 2 years or 5 years). Longer time periods yield you higher return rates. Also, bonds are extremely stable, especially government bonds. The only way you’d lose money on a government bond is if the government defaulted on its loans–and it doesn’t do that, it just prints more money.

Unfortunately, bonds have significant disadvantages. Because they’re so stable (lower risk), the reward on an excellent bond is dramatically less than an excellent stock. Investing in a bond also renders your money, meaning it’s locked away and inaccessible for a period of time. 

Actually, it’s old people and rich people who find bonds most attractive. Old people need to know exactly how much money they’re getting next month for their medication or whatever old people do; they can’t stand the volatility of the stock market because they generally don’t have much other income to support themselves.

Types of investment

Knowing how to secure your financial well-being is one of the most important things you’ll ever need in life. You don’t have to be a genius to do it. You just need to know a few basics, form a plan, and be ready to stick to it. There is no guarantee that you’ll make money from investments you make. But if you get the facts about saving and investing and follow through with an intelligent plan, you should be able to gain financial security over the years and enjoy the benefits of managing your money. There are many different ways you can go about making an investment. This includes putting money into stocks, bonds, mutual funds, or real estate.

Investment

Investment is an action that you put something (time, energy or matter) in to get more. For example in finance, if you invest money, you pay it into a bank or buy shares so that you will receive a profit. And in general, if you invest time, money or energy in something, you try to make it a success. For instance, our parents send us to the tuition centre is also an investment. They pay for or tuition fees and spend their time and energy sending us to the tuition centre so that we learn more and excel in our examinations and we can get a better job in the future. After getting a great job, we will earn more than the tuition fees which means that this investment is a succeed. (So remember to thank your parents sending you to tuition ;)   

Save smart

I ever read an article about a humpbacked old man years ago. The old man lived alone in a simple old house where nobody ever come to visit him. He was a scavenger and was living a poor life. The villagers did not know where he came from or even his name. 

One day, the old house came out with a strong rotten smell. The villagers called the police. They broke into the house and found his dead body. While the villagers was helping to clean up his house after his death, they found out that this old house contained a lot of containers where the old man kept an approximately 2 million ringgit in. These containers were separately hidden. The villagers felt shocked and were asking why should an old man with such amount of money kept his cash at home and lived such a hard life.

  

From the story, we should know that money is not for us to keep but for us to cycle it and know how to enjoy by using it. And of course enjoy using it does not mean we can squander our money. Hence, we must be smart in saving and be brilliant in spending.

How to 'grow' money in the bank~

We can just save our money in the piggy bank but we can't make the money 'grow'. In order to increase our savings, we may try few secure and simple ways of saving through the bank.

1) Savings Account

Save your money in a savings account in any bank. You may earn interest which usually credit in your account half yearly. The interest rate may be different depending on how much you have saved in your account. The interest rate for savings account is much lower than others (maybe 0.25% per year) It is suitable for those who may withdraw often (of course you have to deposit in your money XD) However, the interest rate for Junior Savings Account might be higher, which is approximately 3.10%. Hence, remember to train your kids to start saving when they are young.

2) Fixed Deposit Account

Fixed deposit is the most secure investment choice which almost contain 0 risk. It has high interest rate which vary on the amount you deposit too. The minimum placement is RM 500. The interest rate for fixed deposit account is usually 3.10% and above which might vary according to the economic status. You may choose the period you want to deposit in the account with a minimal of 1 month.  The longer the tenure, the higher the interest rate per year. During the period of tenure, you are not allowed to withdraw the money otherwise you might loss all the interest you have earned. It means that your money is temporarily bond to the bank and the time your money are 'released', they pay you the interest. For instance, Ali places RM 2000 in his fixed deposit account and he chooses a period of 12 months. The interest rate for a tenure of 12 months is 3.30% per year. Hence, after 12 months, he will return to the bank and withdraw an amount of RM 2066.

Little actions in life to save

Happy Saving~

1. Switch off the unused switch

We usually have a bad habit that when we enter a room, we will certainly switch on ALL the light even when it is unnecessary. We should switch off unused switch so that we can reduce the electrical charge. Besides, we should remind ourselves to check if all the switches are off before we leave the house. Do you know that in Sarawak, those consuming less than RM 20 per month are paid for by government which mean that if we used less than RM 20 of electricity, we would not have to pay for the electric bill.

2. Turn off the water tap/ hose

Always remind yourself not to let the water running while brushing your teeth. Moreover, it is advisable to wash the vegetables and fruits in a basin of water rather than bathing them under running tap. And do you know that there are a lot of advantages of saving the rain water? The storage of rain water can be used to wash the toilet, water the plants, wash our car, clean the car park... ... 

3. Selling recycling items

We could collect old newspapers, unused paper or aluminium cans and send it to the recycling center. Doing this is just like killing two birds with one stone. We get to save our Mother Earth and we get pay for the recycling items too. My family get to do this for years and we are always happy to see daddy coming back with ABC which is bought using part of the money.

Saving 10 sen an hour means you are saving RM 2.40 a day. Saving RM 2.40 a day means that you have saved approximately RM 72.00 a month. Hence, saving RM 72.00 per month means that you can save around RM 864.00 a year. So, do not look down on a single cent you have saved. It might buy you a smartphone after a year. ;)

Be a rational consumer to save more! ( Part 2)

There is a saying goes, 'Time is money". Most people think that it is fine to spend their money on anything they like without saving because they can earn it back anytime. However, if we are extravagant in spending our money, it is actually a waste of time where we have to work hard to earn it back again. On the other hand, if we have systematic financial planning, we could shorten our working days and finally retire earlier than the others. Don't you want to have a trip traveling around the world when you are still fit?

As a smart consumer, we should :-

1. Make a shopping list before going to the supermarket or shopping mall to avoid unnecessary expenses. Do not get attracted by the PROMOTION, DISCOUNT or CLEARANCE SALES! Remember WHAT YOU NEED but not WHAT YOU WANT. Buy the things you have targeted on the shopping list only.

2. Spend for your needs, not for your emotion. SHOPPING MAKES YOU HAPPY Do not shop without abstinence when you quarrel with your partner, especially girls. Otherwise you might regret for hurting your own wallet.

3. Learn to compare. Compare prices of things we buy to save more.

Do not look down on the simple decision we made. It may influence our status quo and future. If we spend extravagantly, we are not only wasting money, but our time too.

Handle our money well to create a better future :)

Be a rational consumer to save more! ( Part 1)

In this modern era, whenever you are reading magazines, watching television programs or stepping into the shopping mall, you may easily sense something fishy. It's either year end discount or the buy one free one promotion. The businessmen are just like hunters. They set up traps to tell us that, 'there's something good for you~ come and get it!'. At the time we are trapped, just then we realize that our pocket is bleeding.

In certain condition, some consumers just cannot refuse the temptation of little free gift and ending up buying things they do not require. This act is just like buying a cow just to get a rope. Even when the goods are very cheap, if it is unnecessary, still, it is not worth to buy it.

Economy in our country is now facing recession. In order to survive, we must live a moderate life. People should starts to reduce on unnecessary expenditure. For instance, we could eat 'nasi lemak' breakfast instead of dining in Starbucks. If we have found comfortable shirt to wear at the 'pasar malam', why should we sneak into Hush Puppies outlet?   

In a nutshell, as an astute consumer, we should have self-restraint before buying anything in order to avoid unnecessary expenses. We should know it is hard to earn money. So, we should always think twice, or even more before spending it.

Saving, simplest way of Financial Protection~

As a saying goes, "A penny saved is a penny earned". Saving money in our piggy bank is almost same as earning it because it will still be in our pocket. Only if we have perseverance in saving, we will for sure accumulate more than what we have expected.

Days before, i read an article about the concept of money to celebrities. Bill Gates is the co-founder of Microsoft which is the world largest PC software company. He is the richest man in the world whom net worth is 79.2 billion dollar. However, he never squander his money. There's once, Mr. Gates went to Hilton Hotel for a meeting with his friend. Unfortunately, there was no more parking. His friend suggested to park the car in the parking lot for VIP which charge 12 dollars. Mr. Gates refused even his friend volunteered to pay for it because he did not think that it is worth to spend that 12 dollars. Lastly, they still able to find a space to park their car. 

We might think that, 12 dollars are just a tiny part of his wealth, why should he acts like this? As a entrepreneur, he profoundly understand that we should not waste on what is not worth for, even a single cent. He has taught us the virtue that we should always save for a rainy day and makes us realize what 'many a little makes mickle' means.

Financial Protection

Let's have a brief introduction to my topic, Financial Protection. Referring to the definition aforementioned, we get to know that financial protection is mainly about what can we do to 'protect' our money and property or even 'grow' them for a better future.

Living in this highly materialistic society, we know that only money can bring us an i-Phone, a Porsche, a mansion, or a trip to travel the world. For the sake of more money, a person with enough greed can do almost anything to get it. Corruption, robbery, kidnapping and all kind of crimes related to money are just like spices in the newspaper which appear daily. Do they really need to do these to prove that money is very important to them? But why do the others can be freed from financial problems without committing crimes?

These acts can only prove that they are not rational enough. Only if they can plan and manage their money and property systematically, they would not have to 'kill' for money. So, financial protection is a good way to lead people in a good path.