FAQ : “How much should I set aside for life Insurance ?”

This is a normal question, right?

According to financial consultants, local & abroad, it’s advisable that you set aside
10 – 15% of your gross income for life insurance.

The main point when buying your very 1st life insurance policy : make SURE it protects your income. At least do a basic financial needs analysis with your agent/financial consultant & plan properly for the future.

Once the policy is inforce, do a periodical review to upgade the coverage/benefits as where & when necessary. There will come a time in the late future when all the coverage can be reduced i.e. after retirement as by then, your liabilities would be reduced to minimum (with proper retirement planning, of coure).

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Comments
4 Responses to “FAQ : “How much should I set aside for life Insurance ?””
  1. afza says:

    what do u mean by ’10 – 15% of your gross income’?

    is it the premium or the value of the contract?

  2. drnaz says:

    10 to 15% of your gross income should be the correct amount of premium you should set aside for life insurance.

    In terms of the amount of coverage in the event that you totally lose your income due to illness or disability, that would depend on the amount of monthly expenses that you currently need to survive.

    Thus, a simple Financial Needs Analysis (FNA) would be best.

  3. afza says:

    so, if u had a RM 30k anual income, u should get a RM 3k (or RM 250/month) premium policy?

    p/s: my car insurance dah nak expire, bile nak consult?

  4. drnaz says:

    Correct. But that is just a guideline. The RM 3k figure for the premium is not as important as how much coverage you should have.

    To simplify, if your annual income in 30k, the policy that you have must provide you with at least 70% of the 30k per annum, every year without fail, in the event of your death, total & permanent disablilty or critical illness.

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