Saturday, January 31, 2009


Insurance proceeds are compensation or money received by his beneficiaries after an insured's death.

The answer for the first question above can be yes or no. It all depends on whether a policyholder makes nominations during the application of life insurance. If he does, the life insurance proceeds will usually be distributed to his beneficiaries in less than one week. If he doesn't, the life insurance proceeds will become a part of his estate and the money will be distributed according to his will or the related law. It usually takes at least six months to get the money. This rule also applies to personal accident insurance proceeds.

So, it is very important to make nominations when we are buying insurance so that our family will get the compensation as quickly as possible in order to prevent them from facing the problem of getting the money in a short time. When we are no longer around, six months will be a very long period for those who depend heavily on us such as our surviving spouse and children. They still need to spend money on food, education and others.

For details about the elements of an estate, please read my post titled WHAT ARE THE ELEMENTS OF AN ESTATE? (January 29, 2009).

Thursday, January 29, 2009


The general meaning of an estate was explained previously in my post titled FINANCIAL PLANNING SEMINAR (THIRD DAY). (January 21, 2009).

Generally, a person's estate refers to all of his property like
  • real property / immovable property
  • personal property / movable property
  • tangible personal property
  • intangible personal property
  • property right

Before his estate can be distributed according to his will or the related law, he has to settle all of his debts or liabilities like taxes, loans and others. So, he still has to settle his debts even with a will. Without a will, the distribution of his estate will take a longer time than the time he takes when he has a will.

Real property refers to anything that is permanently attached to a land such as buildings, houses, shoplots and so on (including lands). These items can't be moved.

Anything that is not real property is called personal property. Personal property can be either tangible or intangible. Tangible personal property refers to physical personal property such as cars, watches, jewellery and so on. Whereas intangible personal property refers to anything that we can't touch or hold like shares, bonds, business secrets, copyright, trademarks and others.

Generally, a property right is the legal right to use resources or refers to the ownership of resources like lands, capital and other goods.

The theories of property are very complicated. For details, please click the following links:

Wednesday, January 28, 2009


When a person dies testate (with a will), his assets will become an estate. His estate will be distributed to his loved ones only after his liabilities have been settled even though he has a valid will. After his liabilities have been settled, his remaining estate will be distributed according to his will.

Tuesday, January 27, 2009


When a person dies intestate (without making a will), his assets will become an estate. After his liabilities have been settled, his remaining estate will be distributed according to the Distribution (Amendment) Act 1997 in West Malaysia and Sarawak. Intestate Succession Ordinance 1960 is the law governing intestacy in Sabah. Both laws are only applicable to non-Muslims and non-natives. For Muslims, the law governing intestacy is Islamic Distribution Laws.

For details, please click the following links:

Please read my posts titled WHAT WILL HAPPEN TO A PERSON'S ESTATE IF HE DIES TESTATE (WITH A WILL)? (January 28, 2009) and FINANCIAL PLANNING SEMINAR (THIRD DAY). (January 21, 2009).

Monday, January 26, 2009


On 15th September 2008, AIA Berhad received Malaysia's first International Takaful Operator (ITO) license from Bank Negara Malaysia. AIA Berhad's wholly owned subsidiary, AIA Takaful International Bhd. (ATIB) is allowed to carry out composite (family and general) takaful and re-takaful business in international currencies like USD. ATIB is allowed to offer takaful solutions for the middle and affluent segments of qualified residents and non-residents in Malaysia.

Please click the following links (press clippings):

1. English

2. Bahasa Malaysia

3. 华文

Sunday, January 25, 2009


NCB is a bonus or discount given to private car drivers (policyholders) upon renewal of their motor insurance if they don't make any claim. It is a reward to careful private car drivers. Once they make a claim (with exception to windscreen and No-fault Own Damage claim), their NCB will be 0 % and they have to wait for another five years in order to enjoy 55 % NCB.

For those who have more than one car under their name, NCB is transferable from one car to one of the other cars. For example, car A is a new car (high premium) and car B is an old car (low premium) and they are entitled to a bonus of 25 % and 55 % respectively. The owner of these two cars can transfer the NCB from car B to car A to enjoy more discount. In other words, car A and car B now are entitled to a bonus of 55 % and 25 % respectively. Car A and car B must be owned by the same driver in order to enjoy this benefit.

For details, please click the following links:


The answer for the question above is very simple. Many general insurance companies suffer from loss due to a continuous fall in average motor premium while the insurers suffer from higher-than-expected claims ratio.

In order to overcome this problem, the insurers have to adopt more stringent underwriting controls on motor insurance including the application of premium loadings. As a result, the renewal and availability of motor insurance in 2009 will be significantly affected.

However, fortunately, motor vehicle owners who find difficulty in obtaining or renewing their motor cover can turn to the Malaysian Motor Insurance Pool (MMIP) to obtain motor insurance protection for their vehicles.

For details, please click the following links:


Wednesday, January 21, 2009


After today, I finally finished my Financial Planners Program (FPP). Today, I learnt about Estate Planning. Estate Planning is the most interesting subject in Financial Planning Seminar (FPS).

The speaker who was from AIA Berhad told us a lot of real stories on how badly people will behave when they are discussing the portion they will get from the distribution of their parent's wealth. We can image the real stories by watching the Hong Kong dramas such as 溏心風暴 (Heart Of Greed) and 溏心風暴之家好月圓 (Moonlight Resonance). At first, some people will cry because of their parent's death. However, when their lawyer comes and announces the contents of their parent's will, the first thing they want to know is how much they will get from their parent's will.

From the seminar, I learnt that having a will is very important in our life but it is not the end of the story. Most people including me generally presume that our assets will be automatically transferred to our loved ones after our demise. Unfortunately, there is no such law in Malaysia. Once a person dies, his assets will be frozen immediately even with a will and the frozen assets are known as an estate. Once assets become an estate, it can't be transferred to his loved ones although he has a will until his liabilities like tax, personal loan and borrowing have been settled by his family. We still have to settle our liabilities even though we are no longer around. From here, I know that we can't escape ourselves from paying tax. We can only minimize our tax payment in legal ways. Some people may think that they can transfer all of their assets to their children early before they are no longer around. However, many people are sent to old folks' home after their assets have been transferred to their so-called obedient children. So, we must think carefully when we want to transfer our assets to other people before it is too late.

Tuesday, January 20, 2009


I learnt about Tax Planning today. Tax Planning is a very complicated subject for those who earn a lot of money and want to minimize their tax payment. Sometimes, we want to save our money by not hiring a tax consultant. But, I think that if our earning power is very high, it is better to hire a tax consultant. In general, a tax consultant may charge us from RM 50 to RM 300. By hiring a good tax consultant, we can actually save more than the amount we pay to the tax consultant.

From the lesson, I know that we can only minimize our tax payment. Escaping our tax payment will only cause us and our family a big problem when we are no longer around in the future.

Monday, January 19, 2009


When Financial Planning Seminar was over, I met a friend of mine in Pandan Jaya, KL. He bought a medical card from me. The annual limit and overall lifetime limit are RM 90,000 and RM 300,000 respectively. The annual premium is RM 445.50. He signed immediately after our dinner.

Unless my clients want, I will never fill the application forms in front of them not because I want to do hide something but because I want to save my time and their time. In fact, it is alright if an insurance agent fills the application forms without our presence as our application forms will be photostatted and attached to our policy contract. After we get our policy contract, we must make sure the photostat of application forms are correctly filled by the agent. If there is a mistake, we can ask the agent to correct it. If we find that the policy contract is not relevant or doesn't have the benefits the agent has mentioned earlier, we still have 15 days from the date we receive our policy contract to cancel it and get back our money after deducting all the expenses incurred by the insurance company like what I have mentioned previously in my post titled WHAT IS A 'COOLING OFF PERIOD' OR 'FREE-LOOK PERIOD'? (January 6, 2009).


I took Financial Planners Program (FPP) last year January. FPP is specially designed for AIA insurance agents who possess degree or higher qualification. Financial Planning Seminar (FPS) is the final part of the FPP. There are three sessions from 19 to 21 January 2009. Today, I learnt about Business Insurance Planning. The speaker was from AIA Berhad. He spoke a very good English.

One of the points he impressed me very deeply was "We, as insurance agents or planners, should never always just think of U$$$D when we approach a prospect. We are there to help him". Of course, money is very important as we don't have any income and subsidy from AIA Berhad if we can't close a sale. But, if we just think of our commission without taking our clients' needs into consideration, our commission and career will not last long. Once we can take care of their needs, they will never surrender their policies unless they have problem in paying premium. I am not very sure how much my commission is for certain life insurance plans. So, when I approach a prospect, I can pay more attention to his needs instead of my total commission from the sale.

Thursday, January 15, 2009


The answer for the question above is yes for life insurance only. However, there is a very important condition.

According to the policy contract of life insurance of AIA Berhad, if an insured, whether he is sane or insane, commits suicide within one year from the Issue Date or Commencement Date, whichever is later, the liability of AIA Berhad shall be limited to the refund of premiums paid without interest. In other words, the insured will be compensated by AIA Berhad if he commits suicide after one year from the Issue Date or Commencement Date.

This is not to encourage people to commit suicide after one year from the Issue Date or Commencement Date. Hopefully by imposing the condition, people will have a sufficient time to think whether it is rational to commit suicide before it is too late.

Tuesday, January 13, 2009


In financial planning, there are four decisions that can't be delayed:

  1. Last Expenses.
  2. Children's Education.
  3. Retirement.
  4. Cost Of An Operation.

The last expenses include funeral expenses, medical expenses, hospital expenses and others. These expenses must be settled immediately after a person's death.

If our children want to further their study at the age of 18, we, as parents, can never ask them to delay the decision. Of course, they can borrow money from Perbadanan Tabung Pendidikan Tinggi Nasional (PTPTN) but if the total cost of studying medicine in four years is RM 300,000, the maximum amount they can borrow is around RM 100,000. The balance RM 200,000 must be borne by parents. They can also try to apply for a scholarship. However, the competition of getting a scholarship in the future will be fiercer as more and more students are able to get very good results nowadays.

Everyone of us hopes to retire at the age of 55 or earlier. But, without sufficient retirement funds due to the lack of retirement planning, we are not able to achieve the dream. As a result, we still have to work after 55 years old unless our children are willing and able to take care of us. Unfortunately, parents can raise many children but a child sometimes can't even take care of a parent.

A hospital especially a private one is a very realistic organization. The cost of an operation must be settled immediately. Sometimes, we can't even get the treatment we deserve not because we are poor but because we have no enough money with us. That's why we must have a medical card with us all the time to avoid this undesirable situation.


As an insurance planner, I will do the following steps:
  1. Goal Setting - I will determine a prospect's goal of buying an insurance plan like retirement, children's education and so on.
  2. Fact Finding - I need his information about cash flow, asset, liability, investment, insurance and others.
  3. Analysis - Based on the information provided, I will analyze it scientifically to see whether he is fully and financially protected by his insurance plans.
  4. Recommendation - Based on the analysis, I will provide practical suggestions and solutions. If the result shows that his insurance need is fulfilled, no recommendation will be made.
  5. Review - If the prospect accepts my recommendation, I will do a review once a year for free in order to make sure that his insurance need is always fulfilled.


Some of the rich people think that they don't need any insurance. In fact, insurance is one of the best assets that they should possess because insurance is the only asset which will not be taxed by our government. The money obtained from insurance is not a profit or income. It is a compensation.

Insurance is not useful when we don't need it but it is the best financial instrument in the world when we need it the most. Unlike shares and mutual funds (unit trusts), generally, the amount of compensation from insurance will never be influenced by the performance of the current market.

During good times, rich people will be able to earn a lot of money from their business. However, in times of crisis like what is happening now, any uncertainty can arise. If their business is facing a shortage of capital and they have bought life insurance, they can apply for a loan from their insurance companies which will only charge a quite low interest rate. Actually, they are borrowing their own money. They will be charged an interest and get an interest from their cash value at the same time.

Even though our banking sector is encouraged to lend money to qualified people to stimulate our economy, unfortunately and in reality, most of their loan applications are rejected due to the world economic uncertainty now. If you do notice, there are several advertisements about micro financing recently. The advertisements show that it is not easy to get a big loan from a bank nowadays. Micro financing is a very small loan to micro entrepreneurs (small and medium enterprises or SMEs). According to StarBiz, with minimal documentation, these people can get a loan without collateral. Application process takes between two days and two weeks. Nevertheless, the loan amount is very small such as RM 50,000 at most.


There were a lot of people who asked me about the stability of AIA Berhad last year especially in the month of September. They were very worried because of the instability of AIG in US.

From the meeting yesterday, I am surer than ever that AIA Berhad is very stable and is not influenced by all the bad news about AIG in US. Recently, one agent of AIA Berhad has closed an international takaful case worth USD 100,000 (USD 1 = RM 3.6020, 14 January 2009). This premium is paid every year. There was another application of international takaful worth USD 150,000. But this application was already rejected by AIA Berhad due to certain reasons. These two cases are only two of the similar cases I know. It shows that consumers in Malaysia are still very confident with AIA Berhad.

Please click the following links (press clippings):

1. English

2. Bahasa Malaysia

3. 华文

Sunday, January 11, 2009


Some consumers think that insurance plans such as medical card, life insurance and 36 critical illnesses are very expensive. Is it true?

Every one of us wants to live comfortably. We want to protect our family, at least financially, if we are no longer around. We want our children to get the best education in the world. We also want a comfortable life after retirement. We have unlimited needs. In order to fulfil these needs, there is a price we have to pay as there is no such thing as a free lunch in the world. The price is reflected in the premiums of insurance plans.

I think that insurance is very expensive only when we don't need it. Believe me. If an insurance agent asks a seriously ill patient in a hospital to buy a medical card, life insurance and 36 critical illnesses, for sure the patient will buy them without hesitation even he has to pay a monthly premium of RM 10,000.


Last year, I met a friend. I helped him to do a review on his protection plans. He has only bought a medical card. He said that all he needed was just a medical card. Other insurance plans like personal accident and 36 critical illnesses were not useful to him as he was still very young.

I think it is wrong to say so as we all don't have the ability to predict when a critical illness will strike. If we have the ability to predict our future, I think all of the consumers in the world don't need to buy any insurance plan. They only have to buy insurance several days before an unfortunate event happens to them. Besides that, as we all know, many people nowadays die young due to critical illnesses such as cancer and heart attack. Those people always think that they are very healthy. In fact, I myself also think like that. But, I will never know how my state of health is until I go for a check-up.

The importance of a personal accident plan was explained previously in my post titled WHY IS A PERSONAL ACCIDENT (PA) PLAN VERY IMPORTANT IN OUR LIFE? (January 9, 2009). Then, why do we need to have a 36 critical illnesses (CI) plan?

If a man who has only bought a medical card in his entire life has been hospitalized due to a cancer, his medical bill will be paid by insurance company. However, a more serious problem is waiting for him after he is discharged from the hospital. Normally, a person needs to rest about one year to fully recover from a critical illness. During this one year, he may lose his source of income due to his inability of working. In addition, he has to take some supplements like vitamins and other special food in order to make his immune system stronger. A strong immune system is very important if he intends to recover faster.

By having CI, he doesn't have to worry about the mounting medical costs and he can also concentrate on getting well. As we all know, once a person suffers from a critical illness, the same and other critical illnesses may strike again in the near future. Fortunately, he still has CI as his backup funds if his medical bill is not enough to be paid by his medical card. So, he may not need to pay his medical bill by his life savings which are very important when he retires in the future.

According to a survey by AIA Berhad in the year of 2006, 39 % of Malaysians polled said that they could last no longer than 12 weeks (around 3 months) financially without any form of income protection if they faced a sudden loss of income due to a critical illness.

So, are you one of them?

Friday, January 9, 2009


Source: Modified from http://www.hanger.com/

I met a prospect yesterday. He has already bought life insurance and medical card two years ago. So, I recommended him to buy a personal accident (PA) plan. He asked me why he should buy it. The picture above shows the importance of PA in our life.

If the old man has only bought life insurance in his entire life and he losses one leg now due to an accident, will he be compensated by insurance company? The answer is NO. The reason is that life insurance doesn't cover this kind of disability unless he losses two legs like what I have explained previously in my post titled WHAT IS TOTAL AND PERMANENT DISABILITY (TPD)? (January 9, 2009). As a result, he will now have a problem to continue paying his bills, daily expenses, life insurance premium and so on. His life insurance now becomes a burden to him. At the end, what he only can do is blaming his insurance agent for not telling him the types of disability his life insurance doesn't cover. However, it doesn't mean that life insurance is not important. It is just that life insurance is only one part of a comprehensive coverage we should possess in our life.

How can we solve this problem? The solution to this problem is PA. By having PA, permanent total loss of one limb is covered. So, the old man will only be compensated by insurance company if he has bought PA.

In sum, buying life insurance without PA is like buying a BMW car without an airbag. For sure your car is still safer to drive compared with other cheaper cars but it doesn't reduce your risk on the road to the lowest level.

So, for those who have not bought PA, what are you all waiting for?


According to the policy contract of life insurance of AIA Berhad, Total and Permanent Disability or TPD means complete and continuous inability of an insured due to injury, sickness or disease to perform or engage in any gainful work, occupation or business for which he is reasonably qualified or fitted by knowledge, training or experience.

In order to determine whether the nature of an insured's disability is TPD, the disability must be uninterrupted for at least 6 months from its date of commencement except in cases of Presumptive Disability. In other words, the insured must wait for at least 6 months before he will be compensated by AIA Berhad in order to determine the nature of his disability unless the case is Presumptive Disability.

According to the policy contract of life insurance of AIA Berhad, Presumptive Disability means the occurrence of any one of the following:

  1. Total and irrecoverable loss of sight of both eyes.
  2. Severance of two limbs at or above wrist or ankle.
  3. Total and irrecoverable loss of sight of one eye and loss by severance of one limb at or above the wrist or ankle.

If any one of the three cases above happens to an insured, he will be compensated immediately.

Wednesday, January 7, 2009


A brief description of the occupation classes is as follows:
  • Class 1 - White collar workers in non-hazardous industry and confined within the office premises.
  • Class 2 - Workers overseeing or superintending, engineer, supervisor of non-manual work with semi-hazardous industry.
  • Class 3 - Skilled or semi-skilled workers using light machinery.
  • Class 4 - Industrial workers using machinery or unskilled workers.

The classification of the occupation classes above is set by AIA Berhad. The occupation classes for other insurance companies may be different from AIA Berhad.


Yesterday, I met a prospect. She asked me the above question which was weird to me and her. A housewife, a friend of my prospect bought a medical card from an insurance company and the agent asked the housewife to pay extra premium requested by the insurance company after she had given a cheque to the agent around two weeks ago. The reason given by the agent is that a housewife has to do dangerous housework like cooking. I think the explanation is not logical and reasonable because some of the office ladies cook at home but they just pay standard premium. In addition, some of the housewives don't need to do housework nowadays.

The answer for the question above can be yes or no. For AIA Berhad, it all actually depends on the state of health of the housewife. If the housewife is still healthy, she doesn't need to pay extra premium. Whereas, if the housewife is not healthy, she has to pay extra premium or her application will be rejected by the insurance company.

Another important factor to determine whether an applicant has to pay extra premium is the occupation class of the applicant. For details about the occupation classes, please read my post titled OCCUPATION CLASSES. (January 7, 2009).

Tuesday, January 6, 2009


Generally, the 36 critical illnesses covered are:

  1. Stroke
  2. Cancer
  3. Heart Attack
  4. Coronary Artery Disease Requiring Surgery
  5. Other Serious Coronary Artery Disease
  6. Angioplasty Or Other Invasive Treatments For Coronary Artery Disease
  7. Heart Valve Replacement
  8. Fulminant Viral Hepatitis
  9. Chronic Liver Disease
  10. Primary Pulmonary Arterial Hypertension
  11. Chronic Lung Disease
  12. Kidney Failure
  13. Surgery To Aorta
  14. Aplastic Anaemia
  15. Major Organ Transplant
  16. Blindness
  17. Loss Of Hearing / Deafness
  18. Loss Of Speech
  19. Coma
  20. Major Burns
  21. Multiple Sclerosis
  22. Paralysis / Paraplegia
  23. Muscular Dystrophy
  24. Alzheimer's Disease / Irreversible Organic Degenerative Brain Disorders
  25. Motor Neurone Disease
  26. Parkinson's Disease
  27. Terminal Illness
  28. Encephalitis
  29. Benign Brain Tumor
  30. Major Head Trauma
  31. Bacterial Meningitis
  32. Poliomyelitis
  33. Apallic Syndrome
  34. Loss Of Independent Existence
  35. Aids Due To Blood Transfusion
  36. Cardiomyopathy
  • For critical illness no. 6, only 10 % of the sum assured, subject to a maximum of RM 25,000 shall be payable (limited to only 1 payment). The remaining balance of the sum assured will remain in force.
  • Critical illnesses no. 24, 26 and 34 are covered up to the age of 65 of an insured.
  • The waiting period for critical illnesses no. 2, 3, 4, 5, 6, 7, 13, 29 and 36 is 60 days. For the other 27 critical illnesses, the waiting period is 30 days. For a male or female cancer, the waiting period is 120 days.


For some of the insurance products offered by AIA Berhad and other insurance companies, there is a waiting period. A waiting period is a duration within which certain illnesses are not covered. In other words, an insured is fully protected only after the waiting period. It is important for the insurance companies to prevent misrepresentation and fraud by some of the consumers when applying for insurance plans like medical card and 36 critical illnesses.

For medical card called ExcelCare Plus or ECP from AIA Berhad, waiting period can be divided into three:
  1. Hospitalization or surgery due to illnesses or out-patient treatment for kidney dialysis within the first 30 days after the issuance or reinstatement of ECP contract.
  2. Out-patient treatment for cancer within the first 60 days after the issuance or reinstatement of ECP contract.
  3. Treatment or surgery for tonsils, adenoids, hernia or a disease peculiar to the female generative organs within the first 120 days after the issuance or reinstatement of ECP contract.

In sum, an insured is fully protected by his medical card only after 120 days after the issuance or reinstatement of ECP contract. All the three cases above will only be covered after 30 days, 60 days and 120 days respectively.

36 critical illnesses can be covered by many types of insurance plans from AIA Berhad. Waiting period for 27 critical illnesses is 30 days. For the other 9 critical illnesses, the waiting period is 60 days. For details, please read my post titled A LIST OF 36 CRITICAL ILLNESSES. (January 6, 2009).


Every consumer is entitled to a 'cooling off period' or 'free-look period' of 15 days from receipt of his policy contract to review the suitability of the newly purchased Medical and Health Insurance product. If he returns the policy contract to the insurance company during this period, the full premiums would be refunded to him after deducting all the expenses incurred by the insurance company for the medical examination in relation to his application for a Medical and Health Insurance product.

In other words, if a consumer thinks that the newly purchased Medical and Health Insurance product is not relevant to him, he still has 15 days from the date he receives his policy contract to get back his money after deducting all the expenses incurred by the insurance company.