Dearest buddies,
This is base on my view about how much Life Insurance is enough ?
Take me as an example, I bought my Life Insurance with 36 Critical Illness as rider
Year 1998 age = 33 years old (the year I bought my policy)
Year 1998 monthly salary = RM2,800
Sum assurred = RM150,000 for Death or Disability (TPD) +RM50,000 for 36 CI
From age 33 till my retirement age at 55, what's the minimum income (Human Economic Values) I will earn over the next 22 years ? (assuming no increments or bonuses)
2,800/mth x 12 months x 22 years = RM739,200
I guarantee that I will earn this minimum RM739,200 on one condition, that from age 33 to 55, nothing happen to me.
CAN I GUARANTEE THAT ?
! If something does happen to me here, my minimum RM739,200 value become RM 0 almost overnight!
Something really happen to me in year 2005 and I make a 36 CI claims of RM54,000 and used up around RM100,000 on my medical card.
So how much insurance do I really need?
Logic will tell me that I will need RM739,200 of life insurance. However, not many people can afford that. I can't afford it for sure. So, what's the minimum sum assured that I need to aim for?
Minimum insurance amount recommended:
At least 10 years of INCOME
Salary x 12 months x 10 years
RM2,800 x 12 x 10 = RM336,000
WHY?
I should insured myself for at least RM336,000 because:
for eg. I was strike with 36 CI in 2005 at age 39, I should get RM336,000 critical illness coverage.
Invest the money - 10% annual return (assumption)
Therefore
RM336,000 x 10% = RM33,600/year = RM2,800/month
which is equivalent to my current salary
Therefore, in the event of a claim, I can withdraw a regular monthly income without touching my capital.
For Peace of Mind and everything that matters.
I'll always be here for you.
Cheers.
Michael Gan
019-3333632
PS this is the end of my initial education process on Life insurance, will update you all accordingly whenever I gain new experience
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2 comments:
Well, not to say the calculation is wrong, but once anyone gets struck by 36Ci, a big portion of the 36CI claims should have been utilized to pay off your hospitalization & medical bills, it leaves you not much to invest. So, what is your view on this.
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