MSYF Part IV: How should I manage my risk?

TEN THINGS ABOUT YOUR RISK

1. You should make your life insurance your first financial plan for yourself when you start work as there is no other plan could give you the cash you need when unexpected things happen.

2. As a rule of thumb, you should insure yourself about 10x of your annual income.

3. If you are in your early 20-30s, just graduated to work, you should insure against your loss of income on the comprehensive needs e.g. additional vs accelerated. This need would decreases towards your retirement age.

4. If you are in your 40s-50s, you should insure yourself against long term care or disability payout needs. This need would increases towards your retirement age.

5. At all time, you need to have the most comprehensive hospital and surgical plan/health plan. This plan reimburses your in-patient hospital and surgical treatments and some for out-patient treatments. You should never save any penny on this type of plan.

6. Remember a whole life is a plan that you own and term is a plan that you rent, therefore have a good mixed of these planning. Whole life stays with you till you die and term boost up your coverage for a period of time. You should give yourself some buffer and flexibility to deals with uncertainties of your financial situation.

7. Remember any endowment or saving plan with insurance coverage will mature in time. They serve to accumulated to reach a certain goal you need in the future and not to insure against loss of income. Be as clear as much as you can in your planning.

8. Review your risk periodically to ensure you have the most updated coverage based on the recommended affordability to safeguard your interest and do have a summary of what you have.

9. Make a nomination on your life insurance plans. Living proceed will still go to you directly and death proceed will bypass the need of probate or administrative process straight to your beneficiaries.

10. Prepare some trusted friends or relatives to help you make claims. This would be useful because during the unexpected events happen to you, most probably you or your family members are too emotional to make claims. Ask your advisor whether he provide such service.

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