Common Misconceptions of Insurance When in Your 30’s

Truth: Take advantage of the fact that you’re fit and healthy to look at an insurance solution!  Having a personal medical card, and critical illness coverage will ensure that you have the funds you need in the event of hospitalisation or the need for medical treatment, as employer coverage may be limited to only when you’re on-the-job. 

Having the right insurance plan will also ensure that you are protected if you’re unable to work for a while, as many employers’ policies may only cover treatment and hospitalisation. Having a medical card could help significantly while you’re trying to get back on your feet and ease the burden on your life partner or family members.

While you’re protected from unwanted occurrences, there’s an added perk. Many medical cards today offer a savings mechanism with a cash value, or an investment option, so that at the end of the policy term, you may have some extra funds for retirement.

Truth: Life insurance is crucial to ensure your personal financial independence throughout your life. You don’t need to have kids to consider empowering yourself in this way!

Likewise, it’s important to ensure a peace of mind for yourself and the other people in your life, which could include a spouse, an ex-spouse, life partner, dependent parents or siblings, or even employees or a business partner.

The idea is that insurance will smooth the way for loved ones when it comes to the costs of final expenses, debt commitments, planned educational expenses and lost income. This is why life insurance is crucial for the bread winner of a single-income household, just as it is important for a stay-at-home spouse.

Even if you don’t have dependents, insurance is a good way to ensure that you will have retirement funds and that all your needs are looked after in old age.

Truth: Your annual or monthly insurance premium is usually fixed when you subscribe. It may be true that insurance premiums escalate the older you are when you sign up. This is because the risk of providing insurance cover to an older person is higher to the insurance company. However, once you subscribe, the premium will be locked in at the same amount, till the end of the insurance term.

This is why you are encouraged to subscribe as soon as you can, in order to enjoy a lower premium. Applying in your thirties yields a significantly lower premium than if you apply in your forties, for example. If you are considering private life insurance outside of work, whether to cover a new baby or protect a spouse, you should do so as soon as possible to get the best rates. Also, the younger you are, the lower the risk of developing a condition that could raise your premium price.

Truth: There’s always light at the end of the tunnel! In the case of insurance, the Malaysian government has extended a helping hand to ensure that all citizens can enjoy insurance coverage. Malaysian taxpayers are entitled to claims in three categories of tax relief when it comes to insurance:

Life insurance and EPF contributions (combined): up to RM6,000 in claims;
Education or medical benefit insurance (in addition to the above): up to RM3,000;
Deferred Annuity policies and Private Retirement Schemes: up to RM3,000.

Additionally, you are also entitled to this relief if you pay your premiums through salary deductions and it covers medical riders too. Depending on your income and insurance policy/policies, the calculations and deductions will vary; be sure to speak to your accountant or insurance advisor on how best to take advantage of the government’s aid.

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Truth: The good news is that insurance policies have increased in variety and flexibility and there are many options available to policyholders today. Applications are usually analysed based on a person’s age, medical profile, lifestyle and occupation. The lower the risk you pose to an insurer, the lower the premiums you pay.

Despite having a health condition, insurance companies will review a person’s insurability to find a solution. Some policyholders may be asked to pay a higher premium for their insurance coverage (usually referred to as loading); and there are even plans which do not require medical checkups before signing up.

However, if you’re in your thirties, there’s a good chance that certain health conditions can be reversed through changes in your lifestyle and the adoption of healthy habits, and this is often considered by insurers. Needless to say, in your thirties, you’re considered a prime candidate for insurance plans, particularly if you’re in good health. 

Truth: While the Malaysian public healthcare system has been ranked one of the best in the world, there is a misconception that everything, from consultation to treatment and medication is free. This is not the case as the cost of some items (such as implants, stents, eye lenses and certain chemotherapy drugs) are borne by patients. Although these items are partially subsidised by the government, you certainly want to take control of any costs which can add up in the long term.

With insurance cover, you have the option of private healthcare and skipping the queues at the public hospital. A critical illness plan, for example, will pay you a lump sum that you can use towards medical needs and other non-medical expenses such as household help, dietary supplements, or medical equipment for use in your home.

If you are blessed with good health, a life insurance policy when it matures, will offer you funds for your retirement, or for purchases and investments in your later life.

The bottom line is that in your thirties, you are in your prime. You’re healthy, your career is on the rise, you have a relatively higher disposable income than when you were in your twenties, and for some of you, you will be starting a family. You’re therefore in a good position to take advantage of all the benefits of having insurance solutions in place to build a truly independent and enjoyable life.