FINANCIAL PLANNING SEMINAR (THIRD DAY).

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.

FINANCIAL PLANNING SEMINAR (SECOND DAY).

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.

IS IT ALRIGHT IF AN INSURANCE AGENT FILLS OUR APPLICATION FORMS WITHOUT OUR PRESENCE?

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).

FINANCIAL PLANNING SEMINAR (FIRST DAY).

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.

WILL AN INSURED BE COMPENSATED IF HE COMMITS SUICIDE?

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.

WHAT ARE THE FOUR DECISIONS THAT CAN'T BE DELAYED IN FINANCIAL PLANNING?

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.

WHAT IS MY DUTY AS AN INSURANCE PLANNER?

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.