Do Not Overlook This Important Part Of Your Financial Planning

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Do you have zero emergency funds despite working for more than a year? Are you crossing your fingers and hope nothing derails your finances?

Well, you are not alone.

A survey by Debt Management and Counselling Agency (AKPK) revealed that:

• Only 24% of respondents could survive for up to three months with their own savings
• 52% will face difficulties raising even RM1,000 for emergencies
• One out of five Malaysians did not manage to save money for six months prior to the survey

It is evident that many are still unaware of the need to cultivate healthy and mindful savings and spending habits. Do you check all these items for your finances?

Checklist for a financially secured future 

	1. Save before you spend Do you budget according to the 50/20/30 rule? Divide your take-home pay into needs (50%), wants (30%) and savings (20%).
	2. Automate your monthly payments Have you automated your student loan repayment, credit card repayment, insurance payment, as well as telco charges?
	3. Track your spending Do you use budgeting apps and spending trackers which are accessible for free on your smartphone?
	4. Build up a credit history and keep it healthy Have you been maintaining a healthy credit score right from the start so that you do not have to huff and puff to improve it when you apply for loans or credit cards later?

Despite acing all the items listed above, not having insurance coverage can wipe out your savings and financial plans within a blink of an eye in the event of critical illness.

Do youths need critical illness insurance?

According to Bank Negara Malaysia, only 41% of Malaysians are insured. The younger generation are often under the impression that they do not need insurance coverage because they are young and healthy. This couldn’t be further from the truth.

Firstly, critical illnesses are not just for the elderly anymore. Young people are being diagnosed with critical illness globally. In Malaysia, the critical illnesses with high chances of occurrence and re-occurrence are heart attack, stroke and cancer.

A 13-year old boy from Lukut died from a heart attack in 2008, and it has been recently reported that heart attacks are becoming common among 27- and 37-year-olds in the country.

Malaysia has also seen stroke survivors in their 20s and 30s in the country. Adding to this worrying situation is the escalating cost of treatments for critical illnesses.

The costs for the top 3 common critical illness in Malaysia are:

Critical illness	Cost of treatment (RM)
Heart attack	10,000 to 30,000
Stroke	35,000 to 75,000
Cancer	18,000 to 300,000

What’s worse, according to Mercer Marsh Benefits, the medical cost in Malaysia is increasing at an alarming rate of 13.4% in 2019 compared to a global average of 9.7%.

The question is: Do you have that amount of money if struck with this unfortunate event?

For most people, the answer is likely no, which is why having a critical illness coverage would provide you with financial and mental relief during hard times.

Medical vs. critical illness insurance: What’s the difference?

Many might feel that the medical insurance offered by their employers is adequate to keep them covered and hence, there is no need for critical care insurance. On the contrary, they are two widely different schemes.

For example, let’s say that Person A is covered by a basic medical insurance plan while Person B is covered by a critical illness insurance plan. Let’s look at how Person A and Person B will be impacted by their insurance choices.

	Person A (with basic medical insurance)	Person B (with critical illness insurance)
What does it cover?	Cost of treatment, medication and hospitalisation (subject to annual and lifetime limits).	Pays out a lump sum when diagnosed with critical illnesses that are covered by the provider or has total and permanent disability or dies.
How to utilise the payout?	Person A does not have to pay his hospitalization bills if he gets treatment at a panel hospital. Alternatively, he can be reimbursed by his insurer within a stipulated time. It is important to note that his payout is restricted to either hospitalisation or the cost of treatment.	Person B can use the lump sum pay out for any expenses such as follow-up medical costs which includes alternative treatment, supplements, consultations and even financial support to the family.
Maximum coverage	He is covered until he is 100 years old.	The average maximum coverage that Person B is able to obtain is usually until 85 years old.

^{Sources:
https://www.liam.org.my/pdf/CIDefinitions-Eng-Revised-Mar2016-final.pdf
http://www.piam.org.my/consumer/general-insurance-products/personal-lines/medical-health/
https://www.imoney.my/medical-insurance}

Critical illnesses such as cancer or stroke are oftentimes debilitating, and they are conditions that require a longer time for treatment and recovery. What this means is you may lose your job, which means loss of income, or you may have to go through alternative treatment and/or therapy and rehabilitation. All of these are typically not covered by a basic medical insurance plan as shown in the table above.

Evidently, basic medical insurance and critical illness coverage are different and one cannot replace the other but rather complement the other. You may need to re-evaluate your protection plans to ensure there are no gaps.

Critical illness insurance gives you a lump sum payout for your recovery period before you can return to work and help cover the cost of any additional special equipment or additional nursing and physiotherapy needed to adjust to your lifestyle after surviving the illness.

Choosing the most suitable critical illness insurance provider

Despite the availability of various critical illness insurance out there, you need to be frank and clear about your needs and wants when you choose one for yourself. For instance, Prudential’s PRUMy Critical Care goes beyond the typical offerings in the market.

Prudential’s PRUMy Critical Care offers:

• PRUWith You as the basic plan and Total Multi Crisis Care as the main critical illness rider which protects you from an entry age as early as 14 weeks of gestational period up to age 100.
• Additional Special Benefit coverage on Diabetic Related Conditions and Joint Related Conditions.
• Comprehensive critical illness coverage that allows multiple claims up to 400% of rider sum assured.
• Early to late stage critical illness coverage.
• Covers up to 160 conditions compared to the typical coverage that only covers 45 illnesses.
• Covers re-diagnosis of cancer, heart attack and stroke where most plans do not.

Dealing with recurring critical illness will be financially taxing, emotionally draining and physically exhausting. With support from your critical illness insurance, you will be able to focus on what matters most – your journey towards recovery.