Bachelor of Financial Planning (Hons)

Insurance Planning FIN4206

Individual Assignment August 2011
Ng Jin Yan (Io9004720)

Lecturers Name: Dr. Shashi Kumar A/L Kanesan

Table Of Contents
The Importance of Insurance Planning ................................................................................. 1-2 Personal Accident Plan .......................................................................................................... 2-3 Health Plan & Medical Insurance .......................................................................................... 3-4 Life Insurance ........................................................................................................................ 4-5 Retirement Insurance ............................................................................................................ 5-6 Type of Products .......................................................................................................................... Inflation Protector Plus .......................................................................................................... 6-8 ING Prime Life Insurance ...................................................................................................... 8-9 Great Cash Wonder .............................................................................................................. 9-10 PRUlink one ...................................................................................................................... 10-13 ING I-Retire ........................................................................................................................ 13-14 References .......................................................................................................................... 15-16

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The importance of insurance planning

Insurance is a kind of device for indemnifying or guaranteeing an individual against loss. Besides it is also a promise of compensation for specific potential future losses in exchange for a periodic payment. Insurance is designed to protect the financial well-being of an individual, company or other entity in the case of unexpected loss. In general insurance, compensation is based on the proportionate of loss incurred while life insurance preferably fixed sum is paid. Insurance planning is a part of a comprehensive financial plan. With insurance planning we can gain security, financial dependability and comfortable life. (The Importance of Insurance Planning, 1999-2011) Insurance planning is one of the planning areas of personal financial planning ,it is often the planning area most neglected because old-fashioned clients are not thinking about any pre-matured death happen and their loved one will loss sources of income if only one income earner in the family. Insurance planning can helps to save money on paying unexpected bills of individual or family members in the event of critical illness, accident and diseases. Besides, insurance can help to cover all the unexpected medical bills such as hospital stay, surgery cost or medication which can be substantial. Insurance is a device that can ensure lifestyle continuation. In the event if someone dies, an entire family unit often loses a wage earner. With proper insurance planning, the income lost can be replaced and the family can deal with their grief without any added financial stresses. Insurance helps to remove various types of fear from the mind of the people. The insured is secured in the knowledge that the protection of the insurance fund is behind him if some sad
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event happens. It thus creates confidence and eliminates worries which are difficult to evaluate, but the benefit is very real. Personal Accident Plan Accidental coverage is important to everyone where it gives us value for money plan with broad and comprehensive coverage in the event of an accident where not resulting in death which able to help of supporting financial to our family where meets our needs and maintaining familys standard of living. Besides, accident coverage able to insured family members if any death happens on the insured party whereby without any insurance will cause financial losses if only one income earner in the family where his/her beneficiaries will suffer difficulty to sustain their living and education fees to those children of the insured still pursuing their studies in university, or their children still small and need financial support .Accident coverage also cover insured causing disability in the event of accident insurance company will compensate them in term of replacement income where he/she unable to continue their employment after the accident. With personal accident plan may we to claim reimbursements for medical bills for conditions resulted from accidents. As long as we have suffered some form of injury due to an accident and we have incurred a bill either from a hospital or from a clinic and included also traditional Chinese medicine we able to make claim from our personal accident plan up to certain limit depending on our type of policy purchased. In the circumstance, if the limits are high enough may entitle us to claim for future medical bills especially follow-ups for the current injury.

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If we suffer from a permanent injury for instance loss of an arm, loss of limbs or an eye suffered due to accidents we also can claim some form of compensations from the personal accident plan. Furthermore, we may suffer from temporary disablement such as broken arm that will result in us having to have a long medical leave and thus we are unable to go back to work which impact on our income. By having personal accident plan may help to lessen the financial impact because most plans only offer some cash benefits which never be high enough to cover your full months pay where to help us tide over the situations. Health Plan & Medical Insurance Health coverage also important to everyone because now days medical bills extremely high as compared to those days in 1980s medical bills due to usage of advancement of technology to cure the diseases. At any age, health care is a priority. When we retire, however, we will probably focus more on health care than ever before. Staying healthy is our goal, and this can mean more visits to the doctor for preventive tests and routine checkups. There's also a chance that our health will decline as we grow older, increasing our need for costly prescription drugs or medical treatments. Health insurance also helps people to get timely medical care and improves their lives and health. Medical insurance, also known as medical cards are consider very important in order to ensure everyone can have access to medical attention without having to worry about the medical bills. Most often, health is something that we take for granted until it is lost. (Importance of Medical Insurance or Medical Cards, 15th Sept 2010) Once health is lost, it will take a lot of money and time to recover it. (Importance of Medical Insurance or Medical Cards, 15th Sept 2010)

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In order to allocate a small fixed sum of money every month for payment of medical insurance it is easy rather than uncertain huge sum of money need of paying for medical bills in the unforeseen circumstances that illness or injury where very difficult to predict. With the presence of medical insurance, it will not be problem because it have ready with uncertain huge sum of money to bear up all the high cost medical bills.

Life Insurance Plan Life insurance has ability to replace the earnings that would cease at the death of the insured. If we die during your earning years, our family could suffer a severe economic loss as a result of losing our current and future income. Unfortunately, our family would still have to pay its regular bills, the mortgage, and outstanding debts, and perhaps even continue saving for college and retirement. Unless we're independently wealthy, achieving these goals may be virtually impossible for our family with the loss of our steady income. Life insurance offers a way for our family to continue living comfortably and without worry. Life insurance is also used to pay potential federal estate taxes. Since these taxes must be paid in cash, life insurance can be a good way to ensure the fulfillment of this obligation. If we are single and have no children, then we will probably just need to take out a small policy to cover funeral expenses. If we are married and have children, we may want to take out a much larger policy. Death in itself puts a lot of strain and tension on a family, but if we are not financially where we need to be when our loved one passes away, then it hits us even harder. With a life insurance policy, we can protect a home or any other property for which we have an outstanding loan or tax bill or which requires significant upkeep from preventing our family or other beneficiaries from selling the property due to unaffordable to pay for it.
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Retirement Insurance Retirement insurance is to ensure us or our family members receive a regular pension amount upon post a retirement date. We have the flexibility to choose the retirement date and the manner in which we receive the pension. (Why retirement plans? , 2000-2011) Pension plans are designed to ensure that our retirement years truly become our golden years by providing us the financial security to pursue our unfulfilled dreams. In the circumstances, that the average life span rather increases which can causes the retirement years longer whereby the presence of rise in inflation which we needy of more money to live in comfort. Besides, some of them thinking of that they will depend on their children to take care of them during the post retirement. Meanwhile, modern individual would not prefer to maintain financial independence during the phrase of post retirement. Retirement insurance also can help to hedge against inflation where we need a regular income during post retirement in order our expenses can be met. Retirement insurance enable us to desire whatever we one in order to live comfortably upon retirement without having to compromise on the standard of living during the employment period. For instance, the reduction in living expenses upon retirement would mean giving up on activities such as regular visits to the gym or beautician, the monthly contribution to our grandchildrens savings account, the food supplements which have been keeping us fit, or even the yearly overseas trip to break free from lifes monotony. (Importance of retirement planning, 2011) With those items is obliged to have it in order to have which able to enhance our quality of life and people surround us. If us given a choice ,nobody wanted to reverse back after working for past 20 to 30 years of hard work.

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TYPE OF PRODUCTS
Inflation Protector Plus (AIA) Financial freedom is the milestone that each of us plan to reach. We strive to provide for our family while attempting to set aside a decent sum for our golden nest. (Inflation Protector Plus, 09th Jan 2010) Each phrases of our human life span from adulthood, marriage and childbirth will comes with financial commitments and responsibilities added. As a result, financial planning instrument such as insurance products can help us for sufficient protection which requires periodical review and frequently, additional premium outlay. If we factor in the inevitable escalating cost of living, the task becomes even more challenging. (Inflation Protector Plus, 09th Jan 2010) Inflation Protector Plus equips with the unique feature of automatic upgrading of sum assured during our most productive years by increasing our protection as we take on the added responsibilities and commitments. Besides, premium outlay also one of the unique features where the guaranteed have and maintains level throughout despite of increasing on sum assured. The guaranteed duration is for 20 years or up to age 55, whichever is later. The guaranteed features enable us to make budgeting for our financial plan as much of more predictable and manageable. It does not only cover the sum assured increases meanwhile it also comes along with health review requirements which encompass with critical illness, disability and additional coverage such as hospitalization and surgical benefit, comprehensive female coverage, accident benefit and disability income.
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Both the critical illness and disability coverage act as a lifesaver which ensures us to have financial means to recover from such a debilitating experience. If any should unexpected happens first, it provides a legacy to our loved ones. Inflation Protector Plus is a plan that anyone is eligible from four weeks up to 60 years old and who is in good health. We also entitle for tax relief up to RM6, 000 for annual life insurance premium and EPF and RM3, 000 for medical tax relief. Inflation Protector Plus is a kind of endowment policy which participating up to age 85 with cash dividends and surrender/terminal dividends. My opinion on purchasing this policy is due to several benefits benefiting me which can help me to hedge against inflation in the circumstances where all prices are dramatically increases which given the sum assured will increases if any inflation happen. It also help us for tax relief where can reduce the tax bracket of paying tax. It prevent us to suffer difficulty of paying high price during retirement where it sum assured raises to help up on paying the expenses and medical bills increases during old age or leave from employment where easy us from falling sicks. The percentage of increase to your initial sum assured has been structured to ensure optimum protection during your most productive years :( adapted: www.aia.com.my/en/your-needs/forindividuals/savings/wealth/inflation-protector-plus
Policy Year 1: 2 - 4: 5 - 9: 10 - 14: 15 - 19: 20 - 24: >= 25: after 30 years or age 75, whichever is later: % of Sum Assured 100% 110% 120% 140% 160% 180% 200% 100%

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ING-Prime Life Insurance ING Prime Life Insurance offers insurance coverage and wealth creation opportunities to meet our different financial goals during the various stages of our life. It equips us the control of managing our protection and investment needs which eliminates our worries and start our living secure in the knowledge that we and our loved ones are protected against any unpredictable events. The funds of the policy are able to assure for growth. Some features of the plan are optional where vary in term of premium/sum insured, fund switching, investment top up, fund withdrawals and premium holiday. The coverage of this plan included with life protection and total and permanent disability coverage. Besides, there are several benefits which are optional such as accidental death and disability coverage, disability income, critical illness protection, spouse protection, coverage for specific female illnesses and maternity benefits, hospitalization and surgical benefits and premium waiver. I think of choosing this policy due to some reasons because it provides critical illness protection where it able to help me to reduce the burden of extra expenses and medical costs incurred in the event critical illnesses are diagnosed. If I am married it also accommodate to provide spouse protection in the event of death ,total and permanent disability or diagnosis of critical illness of the insureds spouse in term of providing yearly income to cope with difficult times. The policy also provide coverage for specific female illnesses and maternity benefits where woman have the specialty to claim for the compensation for particular female illness and maternity expenses such as delivery baby, hospital stay after delivery and doctor fees.

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Besides, it also benefits us in term of hospitalization and surgical expenses as well as out of hospital benefit. It also complement with premium waiver where depending on specific events that occurring on the life of the insured or the payor ,all future premiums would be waived. It also helps us to pay premiums first while us just focusing on faster recovery. Great Cash Wonder (Great Eastern) Great Cash Wonder is a kind of savings plan where enable us to enjoy the substantial savings growth which we seek to achieve our high expectations in life. It known as an endowment plan which specially designed to accommodate for movers and shakers who want to see their savings swell in the long term without any extra commitment of a prolonged premium payment term. It provided an annual guaranteed survival benefits added to the basic sum assured. The max value of basic sum assured is up to 145% but it also depends on the policy term chosen. Policy Year 1-5 Survival Benefit (as percentage of basic sum assured) 20 year 5% 25 year 5% 6%

6 - Maturity 6%

Total 115% 115% (adapted:http://www.greateasternlife.com/my/en/insurance/products/products_protection.htm#f ) Great Cash Wonder also offers a further avenue to grow savings with a yearly nonguaranteed cash bonus from the end of the first policy year.(Life Protection and Savings, n.d)This policy only entitle us to pay premiums for a short duration and see the money to accumulate well to able us to fulfill our needs in life. On the other hands, make decision on policy term which assists us to enhance financial security. The second year onwards of the policy entitles growth up to 150% basic sum assured without any extra cost. It also includes with other benefits such as accidental death benefit, maturity benefit likewise also tax benefit.
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Policy year 1 2 3 4 5

Additional sum assured (% of basic sum assured) nil 10% 20% 30% 40%

6 until 50% maturity (adapted:http://www.greateasternlife.com/my/en/insurance/products/products_protection.htm#f ) The advantages to me are to help me of enhancing an accumulated of savings which enable me to serve a better retirement plan without of reducing my expenses during retirement. Furthermore, it complement of accidental death benefit which can compensate parents or spouse and children to sustain the living expenses if there is event of death due to accident are eligible to compensate .I also can use the funds accumulated of the plan for supporting children education to tertiary level. It provides continuation income for me during retirement for long duration of supporting my expenses during retirement without depending on children of taking care and gives allowances. PRU Link One (Prudential)

PRU Link One is a comprehensive, all-in-one regular premium investment-linked insurance plan that provides protection together with local and overseas investment opportunities that can cater to our changing needs at different stages of our life. The policy ability to add-on covers of basic death and disability coverage by paying additional premium to enable to suit our budget and prevailing needs.

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PRU Link One also included with comprehensive medical options which is PRU health by adding on this benefits which are PRU medic overseas and PRU medic auto upgrade. a) PRUmedic overseas: In addition to comprehensive coverage for hospitalization and surgical expenses under your PRUhealth plan, you now have the option of obtaining overseas medical treatment for 5 types of covered conditions in Singapore, Hong Kong and China.(PRU Link One, 2011) b) PRUmedic auto upgrade: With this new option, your plan will be upgraded to the next benefit level on the 5th and 10th year rider benefit anniversary regardless of your health condition and any previous medical claims you may have made. This upgrade will follow the policy terms and conditions at the start or as and when it is attached to your PRUhealth plan. .(PRU Link One, 2011) It also included with enhanced accident benefits for extra protection in terms of PRU acci guard, PRU acci med and PRU acci income. PRUacci guard: Should you be involved in an accident, you will be covered with: (PRU Link One, 2011)

Compassionate Allowance Accidental Death & Disablement Benefit Double indemnity or double the benefit if the accident occurs when you travel in public transport, in an elevator (excluding elevators in mines and construction sites) or is in a burning theatre, hotel or public building.

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PRUacci med: For injuries caused by accidents, the following expenses are amongst a few that will be reimbursed :( PRU Link One, 2011)

Medical treatment, hospital confinement or nursing services Medical expenses to treat an injury caused by an accident by a Traditional and Complementary Medicine Practitioner (a licensed acupuncturist / herbalist / bonesetter / chiropractor)

Return air ticket for one immediate family member to visit you if admitted to an overseas hospital for 10 days or more, and a one-way ticket for you to return to Malaysia immediately after hospitalization

Reimbursement of reasonable cost of purchasing a wheelchair if you become permanently paraplegic or artificial limb (prosthesis)

PRUacci income: If you are admitted to hospital, you will receive :( PRU Link One, 2011)

Weekly income of RM100 and RM50 for Temporary Total Disablement and Temporary Partial Disablement respectively

Daily income of RM50 a day when admitted to a Malaysian government hospital

PRU Link One features also provide us with broader investment opportunities through local and global funds with the flexibility to build a healthy investment fund by earning potentially higher returns over the long term of investment that choose to invest in. This plan also reward loyalty bonus to those pay their premium on a timely basis of giving 5% annualized premium which excludes premiums for top-ups and PRU saver upon completion of the 10th policy year and every 3 years thereafter. (PRU Link One, 2011) It also provides flexibility,

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convenience and controls us to be varied and customize our protection and investment needs that fit our life.

Based on my perception, PRU Link One is plans that provide me medical coverage even though I obtaining overseas medical treatment for 5 types of covered conditions in Singapore, Hong Kong and China. Besides, it also allows me to upgrade no matter how is my health condition and any previous medical claims that I may have made. Thus, it also providing return air ticket for one immediate family member upon we admitted to an overseas hospital for visiting us and one-way ticket for us to return to Malaysia immediately after hospitalization. It also reward loyalty bonus of being long term customers. ING I-Retire

ING I-Retire is a plan that enhances the sustainability during retirement. It provides us income during retirement which able us with freedom to live our days as we please. It is a plan with short premium paying period of 20 years or up to age 60 or earlier. Upon reaching age 55, we will receive a guaranteed annual retirement income till age 85 meanwhile this plan also pays dividends whereby dividends are not guaranteed which depend on the performance of the company.

ING I-Retire also pays out family income which equivalent to our annual retirement income with the maximum period of 20 years in the event of death or total and permanent disability happens before or upon age 45.The number of annual payment will reduces if death or disability occurs after age 45 but before age 65.(ING I-Retire,2011)

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It also provides more flexibility to reach for the dreams that we aspire likewise also can aid in offering security to our family. The benefits encounter in are life protection and total and permanent disability coverage, maturity benefit, annual retirement income, annual cash dividends, terminal dividends and family income benefit.

I choose ING I Retire as my retirement plan because it provides of sum insured of 20 times of annual retirement income for life protection and disability coverage. Upon the maturity which allows me to received a lump sum maturity benefit which consists of insured amount and non-guaranteed dividends. I will receive annual retirement income in multiples of RM120 for support expenses during retirement. It provides income to family under the circumstances of our death and disability which helps our family for income protection and income replacement to survive in their living.

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References
AIA , 09 Jan 2010. Inflation Protector Plus.[online] Available at:< http://www.aia.com.my/en/yourneeds/for-individuals/savings/wealth/inflation-protector-plus>[ Accessed 30 October 2011]

AIA , 09 Jan 2010. Planning for your Retirement.[online] Available at:<

http://www.aia.com.my/en/your-needs/for-individuals/retirement/retirement-planning/retirement-planning

AXA EQUITABLE, March 2007.Why do I need life insurance? [online] < http://www.axaequitable.com/life-insurance/plan/why.html> [ Accessed 03 November 2011] Chan D.D , 19 May 2011. The Importance of Having A Personal Accident Plan in Your Insurance Portfolio.[online]< http://www.haveyouplanned.com/the-importance-of-having-a-personal-accident-planin-your-insurance-portfolio/> [Accessed 02 November 2011]

eHow Contributor, 1999-2011.The Importance of Insurance Planning.[online] Available at:<

http://www.ehow.com/facts_6170221_importance-insurance-planning.html> [ Accessed 01 November 2011]

Great Eastern, n.d. Great Cash Wonder.[online] Available at:< http://www.greateasternlife.com/my/en/insurance/products/products_protection.htm#f> [Accessed 05 November 2011] ICICI PRUDENTIAL LIFE INSURANCE, 2000-2011. Why retirement plans? [online] Available at:< http://www.iciciprulife.com/public/Retirement-Plans/Retirement-Plans-Need.htm>
[Accessed 12 November 2011]

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ING Malaysia, 2011. ING I-Retire.[online] Available at:<

https://www.ing.com.my/IIBNet/2.0/ING.Application.Web/IIBDefault/product.aspx?target=retirement#> [Accessed 07 November 2011]

ING Malaysia, 2011. ING Prime Life Insurance.[online] Available at:<

https://www.ing.com.my/IIBNet/2.0/ING.Application.Web/IIBDefault/product.aspx?target=savings#>

[Accessed 07 November 2011] Life Insurance Malaysia, 15 Sept 2010. Importance of Medical Insurance or Medical Cards.[online] Available at :< http://plan.life-insurance.com.my/ > [ Accessed 30 October 2011] McDaniel.M, 1999-2011. The Importance of Life Insurance.[online] Available at:<
http://www.ehow.com/about_5271414_importance-life-insurance.html > [ Accessed 01 November 2011]

Nilum , 2011. Advantages of Insurance. [online] Available at:<

http://nilum.hubpages.com/hub/Importance-of-Insurance> [Accessed 03 November 2011]

PRUDENTIAL ,2011. PRUlink one.[online] Available at:<

http://www2.prudential.com.my/corp/prudential_en_my/solutions/protection/prulinkone.html>[Accessed 02 November 2011]

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