Dennis Chin, Wealth Management Advisor from Harveston Wealth Management Sdn Bhd was asked his advice on how to keep one’s accumulated wealth safe particularly with insurance. Dennis’ focus is on business continuation and succession planning, employee retirement and retention and estate planning for the business owners.  This is his advice: 

A typical scenario of the 40’s age group, say, a married couple with young children or without children, should have a certain level of work experience while earning a decent income. This level of income should enable one to start some investment to accumulate wealth.

However, in order to preserve the wealth that has been accumulated, it is important to revisit wealth protection planning such as life insurance that one may have bought at an earlier age. Insufficient insurance coverage might utilise the existing accumulated wealth for medical expenses. Therefore, it is time to engage a licensed financial adviser to perform a policy evaluation on the existing protection plan.

Policy Evaluation

Policy evaluation has to be carried out from two different aspects; the efficacy and the efficiency. In terms of efficacy, you examine your existing insurance plans to see if the coverage is still relevant. Our priorities in life change as we move on from stage to stage, for example – when you move from being single to getting married to being married with children.  In terms of the efficiency of your policy, we must ask whether or not the benefits of the insurance we bought many years ago still covers us.

After you have reaffirmed the priority and objectives based on your needs, then a goal is derived. You then allocate your resources for the coverage required. Generally, the type of insurance needed will be as follows:

  • Healthcare Planning

Hospitalisation and surgical cost: Ensure the coverage limit is adequate. It is essential to revisit your existing plan as the latest plans often offer a higher coverage limit with some increase in premium.

Critical Illnesses: Critical plans have improved in recent years. For example, you can now claim a certain percentage for early stage of cancer.

An investment-linked plan with choice of riders enable tailor-made benefits based on your needs that are within your budget for premiums.

  • Family Income Protection Planning

Providing financial resources to a family in the absence of a sole bread winner: Insurance companies have developed new investment-linked plans that provide large sums assured at affordable premiums. These plans cover life and total and permanent disability.

  • Credit Protection Planning

In the event that a sole bread winner passes away while still having a mortgage, then it is important to provide some form of shelter so that dependents do not have to pay for the house loan if anything happens.

For higher income group where they may have accumulated substantial family wealth and intend to have it distributed to their children, they should carry out wealth preservation planning through writing a Will and trust to ensure the wealth reaches their intended beneficiaries the right way and at the right time.

Dennis Chin