A Personal Finance Blog for Malaysian: What are the usage of Life Insurance policy?

Friday, October 8, 2010

What are the usage of Life Insurance policy?

High premium life insurance policy:-
  • Wealth transfer
  • Asset Accumulation
  • Asset Allocation (Portfolio Balancing)
  • Loan protection
  • Business protection
  • Business stand-by fund (Cash Flow Planning)
Low premium life insurance policy (Annual premium RM10,000 and below):
  • Income replacement
  • Loan protection
  • Force saving plan
  • Regular saving plan
  • Education fund planning
  • Retirement fund planning
  • Business: Keyman protection / Business Continuity 
  • Business: Buy-Sell Agreement
Super low premium life insurance policy (Annual premium RM1,000 and below):-
  • Income replacement (mainly term life)
  • Childcare (the death of a stay-at-home parent may immediately trigger the need find and pay ofr childcare) 
  • Final expenses (funeral expenses, medical bills, credit card outstanding, personal loan, income tax etc)
Everybody needs life insurance but the rich want life insurance as a tool to manage their wealth.