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WVA Insurance & Risk Management
- 1. Wealth Vantage Advisory Sdn. Bhd. Insurance & Risk Management Planning 20190407
- 2. Table of Contents Section 1: Using Insurance to Cover Your Wealth Protection Needs Section 2: Exploring the Right Life Insurance Products Section 3: Review of Existing Insurance Policies Section 4: Recommendations & Proposals Section 5: Summary of Benefits
- 3. The WVA Advisory System Financial Plan Cash Management Risk Management Asset Allocation & Proactive Investing Performance Management & Monitoring Financial Life Priority Tracking Managing your risks through insurance optimisation
- 4. Using Insurance to Cover Your Wealth Protection Needs
- 5. 5 Wealth Protection Needs Family Income Income Replacement Hospitalisation & Surgical Critical Illness Personal Accident
- 6. 1) Family Income • Settle all outstanding debt • Ensure smooth transfer of these assets to beneficiaries • Cover all expenses related to the last rites • Covers estate admin related cost and fees • Estimate 3 years duration to settle estate distribution • Covers short term living expenses for surviving dependents • Includes financial commitments for 6 months Family income insurance need seeks to ensure that surviving dependents have immediate access to the required funding needs upon one’s passing Debt Cancellation Final Expenses Estate Admin Family Support
- 7. 2) Income Replacement • Income replacement insurance need seeks to ensure that your dependents and you have sufficient funding in the event that you’re no longer able to generate income before retirement • Focused on total and permanent disablement needs Income Replacement Insurance Time of disablement RetirementCovers financial needs over the period Ideally covers the time of the TPD until retirement At least 5 years of annual expenses
- 8. 3) Hospitalisation & Surgical • Hospitalisation & Surgical insurance is a medical insurance policy that protects you in the event of a medical emergency which requires hospitalisation by covering for the cost of treatment • Everyone should have their own personal medical card and not solely rely on company benefits Room & board coverage – at least RM200 High annual limit – at least RM1m No lifetime limit
- 9. 4) Critical Illness • Critical illness insurance seeks to provide you with financial aid in the form of a lump sum payment upon diagnosis of a critical illness • Usually covers 36 main critical illnesses at critical stage Covers the lump sum amount required for medical treatment Covers cost of living during the recovery period Ideally, sum assured of 3 years’ annual income; min RM300k and max RM1m
- 10. 5) Personal Accident • Personal accident insurance helps you to cope with financial challenges due to life-changing incidents • Offers coverage in the event of a serious injury such as loss of limb or loss of use of limbs or in cases of accidental death Provides you with a lump sum payout in case of permanent disablement Ideally, sum assured of 3 years’ annual income; min RM300k and max RM1m
- 11. Exploring the Right Life Insurance Products
- 12. Main Types of Insurance Products for Individuals Term Whole Life Endowment / Savings Plans Investment- Linked Coverage Period Limited Years Age 100 Limited Years Age 100 Purpose Protection Protection Savings Protection / Savings Premium Low Moderate High Not Fixed Different products serve different purposes – choose the one that suits your needs best Purchase insurance for protection, not savings/investments!
- 13. Smart Life Insurance Planning 1. Identify protection needs 2. Decide to transfer the risk to insurance company or self-insure 3. Select the right product: Competitive pricing Right specifications
- 14. 2 Main Channels for Product Purchase 1. Traditional life insurance agents 2. Licensed Financial Advisor by Bank Negara Malaysia
- 15. 2 Main Channels for Product Purchase Agent Financial Advisor Access to Multiple Companies No Yes Access to the Latest Competitive Products Limited Yes Packaging Capability Limited Yes Sales Quota – Promotions, Maintenance, Trips Yes No Which would you prefer?
- 16. 1. Our proposals are prepared based on your ideal scenario 2. We would consider your existing insurance coverage, current financial assets and the beneficiary nominations 3. We are independent and able to propose plans from any insurance company 4. Insurance should be purchased for protection purposes only 5. One shouldn’t pay more than 15% of gross salary for life insurance premiums Our Insurance Advisory Principles
- 17. Why Should You Source Insurance Needs From Us? With an agent - wrong product specifications? No big picture basis for recommendation Don’t understand other companies’ products No suitable product to offer With an agent - wrong pricing? Sales quota No cheaper product to offer You have already paid us the annual advisory fee
- 18. Review of Existing Insurance Policies ELIP
- 20. Disclaimer ● This document has been prepared by Wealth Vantage Advisory Sdn Bhd solely for informational purposes. Although great care has been taken to ensure the accuracy of all aspects of the document, it should be kept in mind that the various projections are based on numerous assumptions, and as such it is unlikely that the future will unfold exactly as illustrated. The Information includes certain statements and estimates provided within this document should not be construed as a prediction or guarantee of future performance. This document is design to help you chart the appropriate courses of action, and should be reviewed and revised regularly to ensure its timeliness and relevance to your changing financial position. ● This illustration shall not be read independently. It should be explain by an experience and authorized personal to ensure the better understanding. 21
- 21. Contact Us 1-2 Jalan 2/76C, Desa Pandan, 55100 Kuala Lumpur. hi@wealthvantage.com.my www.wealthvantage.com.my “Wealth Vantage Advisory - WVA”
- 22. Post purchase Summary of Benefits
Editor's Notes
- Before we start, let’s do a quick recap of the Wealth Vantage Advisory System comprising of the 6 step process We have already completed your holistic financial plan and reviewed your cash flow management. Today we will look at risk management matters, focusing on insurance optimization.
- I would like to share with you how insurance can be used effectively to ensure that you can protect yourself & family while preserving your wealth (“wealth protection”) so that you can still achieve your main life priorities in the event that any health related risks were to occur in the future
- There are 5 main wealth protection needs that you should be aware of. 1st – Family income 2nd – Income replacement 3rd – Hospitalisation & surgical insurance (also known as medical card) 4th – Critical Illness 5th – Personal accident Let’s look at these areas one by one
- Family income looks at the areas that require funding in the event of one’s untimely passing Debt cancellation – most people have some outstanding debt, especially mortgage on the residential home. Our recommendation is to have sufficient insurance coverage to settle the outstanding mortgage so that the home can be quickly transferred to surviving beneficiaries Final expenses – we also recommend setting aside some funds to cover the expected cost for the last rites Estate administration costs – in the event that a trustee is involved in unlocking your assets upon demise, there are estate admin related fees and legal costs that need to be covered. In some cases, it may take up to 3 years to complete the estate distribution process Family support – while the estate process is on-going, your surviving dependents would need to continue to meet their immediate funding needs – personal expenses, financial commitments and ongoing insurance commitments. We would recommend a minimum amount of 6 months of these expenses to be set aside for this purpose
- Income Replacement – to ensure that you and your dependents have enough funding to cover your on-going financial commitments in the event you’re no longer physically able to continue to earn a living due to total and permanent disablement Ideally income replacement coverage should cover the period of time before you can access your retirement funds (e.g. EPF and PRS) Due to the potentially long period of coverage (and associated high cost), you should ensure that you have at least have 5 years of annual expenses as your sum assured for income replacement
- H&S costs refers to the medical related costs associated with the need to be hospitalized for medical treatment. This insurance is commonly known as the medical card Many people, especially employees usually rely on their employment benefits for the H&S coverage. This is not prudent as one might leave employment one day (or upon retirement), and future health conditions may make it impossible to get a medical card in the future. As you are aware, medical inflation is very high – the Global Medical Trends Survey Report indicates medical inflation at 13.2% p.a. As such, you need to ensure that you have your own medical card with a R&B coverage of at least RM200, high annual limit of at least RM1m and no lifetime limit to ensure that future medical expenses does not erode your wealth
- Critical illness insurance – provides a lump sum payment in the event that you are diagnosed with any one of the 36 covered critical illness Most CI policies will pay at the point when the illness is at the critical stage. However, there are CI policies in the market that do make payment at the early stage of diagnosis – but this comes at higher premiums. CI payout is used to cover any medical related expenses when one is not hospitalized. Often those inflicted with CI are also unable to work, so the CI payout is also expected to cover cost of living and on-going financial commitments during the recovery period The recommended sum assured is 3 years of annual income, with a minimum of RM300k and maximum sum assured of RM1m
- Personal accident insurance covers you when you have an accident related injury or death Receive a lump sum payout upon claim The recommended sum assured is 3 years of annual income, with a minimum of RM300k and maximum sum assured of RM1m
- Exploring the right life insurance products. The objective of this presentation slide is to educate you about life insurance products and WVA’s best practice in insurance selection. After the presentation, I will highlight your current insurance summary and our proposals that best suit your needs. You can choose to act on our proposals or even KIV. We are ok!
- We have discussed the areas in which insurance can be used to protect & preserve your wealth. Now we will look at the type of insurance policies available in the market I’m sure you have been approach by insurance agents with different type of proposals. For your information, any proposal will likely fall into one of 4 types of insurance plans. Term Insurance has a limited coverage period - it could be 5 years, 10 years or even more. Whole life plan cover up to age 100 while endowment & savings plans usually cover a limited number of years, mostly is 20 or 25 years. For investment link policy, all covered until age 100. These policies tend to serve the protection needs, with the exception of endowment / savings plans which tend to focus on savings (investments) In terms of cost – the premiums for term policies tend to be lower compared to whole life policies while investment linked plans can have its premium costs raised over time (not fixed). Due to the nature of the product, endowment & savings plans tend to have very high premiums Different types of plan comes with different purposes to suit your needs. Therefore, selecting the types of policy is very important. Remember that insurance should be purchased for protection, and not for investments!
- Smart Life Insurance Planning consist of 3 key steps: Step 1: Identify you protection needs. After fact finding, as your advisor, we have prepared and presented your financial plan. We have identified your protection needs based on your current asset, current insurance protection and your current risk requirements 8e88- Step 2: You will have to decide your options - whether to transfer your risk to the insurance company or to self insure Step 3: If you decided to transfer your risk to insurance company, you will need to select the right product to meet your needs by: Choosing the right product at a competitive pricing, and Getting the right specifications that suit your requirements
- There are 2 main channels to access insurance products: A life insurance agent A licensed financial advisor by BNM Online channel is still very new in Malaysia and might not offer the full range of products to meet your specific needs Bancassurance – purchase of insurance thru bank is also getting common
- In deciding if you should purchase an insurance product from either an agent or financial advisor, you should compare the following areas: Access to multiple companies – if you can’t source products from multiple insurance companies, how do you know that you’re getting the best product available to meet your insurance needs (best of breed product) Access to latest competitive products – with an agent, your access is limited to the most competitive product offered by 1 insurance company only Packaging – with an agent, are you able to mix and match products to meet your needs best at the most competitive pricing? Sales quota – due to sales pressure, you might be recommended products that help the agent meet their quota instead of products shat suit your needs best So which channel would you prefer?
- Before I share with you your insurance needs based on your full financial plan and provide you with the necessary proposals to meet your needs, let me share with you our insurance advisory principles first (the points are self explaining)
- All said and done, why should you come back to us – your financial advisor to source your insurance product needs? An agent does not have your full financial plan – as such they can’t make an informed recommendation from your total financial perspective You might be offered products that might not serve your interest best in terms of pricing & costs You have already paid for our annual advisory fee – make full use of your hard earned money by leveraging on our advisory service!
- Present the insurance proposals prepared by PS according to client’s FFP report
- Present the insurance proposals prepared by PS according to client’s FFP report
- Present the SOB, highlighting the key areas covered by the new policies purchased Pass the insurance policies to client – highlight main points to note Sign acknowledgement of policy