How Much Insurance to Buy?

As discussed in the previous article, a complete insurance should consist covers you against the risk of life/total permanent disability, critical illness, hospitalization & surgery, and personal accidents. We've also talked about the type of insurance that one can purchase. The next question is how much to buy?

I'll elaborate about my personal opinion on the quantum of insurance coverage to buy according to the basic components of a complete insurance:

What Type of Life Insurance to Buy?

Following up from the previous posting, you may have decided to buy a life insurance for yourself. But wait a minute...there are tons of life insurance out there by so many companies! Which one is the best life insurance policy, you might ask?

Well my dear, there is no such thing as the BEST life insurance policy. To me, a good insurance policy is the one which fulfills 70-80% of your and your dependencies life protection needs, and the one which is affordable to you at that point of your life.

Since most of the insurance companies are regulated by Bank Negara Malaysia, most of the insurance policies have very similar coverage. Generally, life insurance can be categorized to the following categories:

When Do You Review Your Insurance Coverage?

Like most of the young and innocent fresh university graduates, we were approached by many insurance agents and bombarded with tons of insurance jargons. And most of us obliged by buying insurance without knowing in details what we bought. To make it worse, most of us would just buy and never look at it ever since. Many don't realize that once you've purchased an insurance, it is like a life contract, i.e. hard to get out of the contract if you make the wrong decision initially.

Over the years, with more financial literacy, I've picked up quite some knowledge on investments and in particular, insurance. From my personal experience, one should proactively review their protection needs based on these two factors: