MESHIO.COM

Average price for a wan tan mee is now RM3.80.

2 years back, a friend who started out her wan tan mee stall together with her husband started selling their hand-made noodles at RM2.70.

Almost 40% increment, in 2 years.

Back in 1993, the stalls alongside Lian Seng Garden’s main road, Ah Sau (阿嫂) is only selling it for RM1, with almost the same ingredients.

Almost 380% increment in 15 years, about 25% increment every year.

Government continues to tell her people inflation is at 8.5%.

Here’s a run-through on this new book.

This is a 50-page guide in PDF format on how to plan your risk management using the various types of insurance out there in the market.

Here’s the Table of Contents:

Here are a few excerpts from the book:

The Malaysia Insurance Planning Guide is available for download at USD 4.95. To get your copy now, click on the “Buy Now” button below. You will be directed to a PayPal payment page to make the purchase. Once the payment is through, the PDF ebook will be sent to you via email.

Here’s a recent listing by Forbes: Asia’s 15 Youngest Billionaires.

Name	Net Worth (bil)	Age	Country	Sector	Company
Yang Huiyan	$7.40	26	China	Properties	Country Garden	Link
Wong Kwong Yu	$3.50	39	China	Retail	Gome Appliances	Link
Xiaofeng Peng	$2.50	33	China	Energy	LDK Solar	Link
Malvinder Singh	$2.50	35	India	Pharmaceutical	Ranbaxy Lab	Link
Shivinder Singh	$2.50	33	India	Pharmaceutical	Ranbaxy Lab	Link
Chu Lam Yiu	$1.90	38	HK	Consumer	Huabao Int’l	Link
Vikas Oberoi	$1.70	37	India	Properties	Oberoi Const	Link
Xian Yang	$1.60	34	China	Mining	Hidili Industry	Link
Anurag Dikshit	$1.60	36	India	Internet	Starluck Casino	Link
Robin Yanhong Li	$1.40	39	China	Internet	Baidu.com	Link
Ma Huateng	$1.40	36	China	Internet	Tencent Holdings	Link
Girish Tanti	$1.30	38	India	Energy	Suzlon Energy	Link
Zhang Cheng Fei	$1.30	38	China	Manufacturing	Nine Dragons	Link
Sameer Gehlaut	$1.20	34	India	Financial Services	Indiabulls	Link
Chung Yong-Jin	$1.00	39	S. Korea	Retail	Samsung	Link

Just like the recently wrapped up Beijing Olympics, the list is dominated by the Chinese, followed by India. The one and only entry from South Korea is ranked last in the Top 15 list.

Unfortunately, there’s a total absence of South East Asia entries. Whatever happened to the ASEAN initiative?

To quote the ASEAN Declaration…

The ASEAN Declaration states that the aims and purposes of the Association are:

(1) to accelerate economic growth, social progress and cultural development in the region and

(2) to promote regional peace and stability through abiding respect for justice and the rule of law in the relationship among countries in the region and adherence to the principles of the United Nations Charter

Ahem…look at Myanmar and their practice (or malpractice) of human rights (free registration).

Look at Thailand and their current state of affairs. Manipulated democracy or just pure power-craze?

Philiphines has their own MILF (not the married ones) to take care of.

Let’s not look too far, and zoom back on our own beloved homeland- Malaysia. We are not faring very well either in our political arena, with a potential of the ruling party being toppled this coming 16th September. It can either be viewed as an opportunity for a real change or it could just be a harbinger of chaos, which could just bring the entire nation down to their knees, while the Brits go, “I told you so.”

While ASEAN’s politicians are struggling to redefine their identities, recovering from internal conflicts and struggling with their addiction with power, the 2 major powers of the world is making leaps and bounds ahead of everyone in the game.

Interestingly, our 33-year old MP from Rembau, dubbed the World Richest Unemployed, didn’t manage to squeeze into the list above.

IpohChai.com shares with us how and when accidents chooses victims…

Just a few days ago, a very serious accident happen at my workplace involving a chargeman who are working at a main electrical switch. He was trying to measure the main power line current with a probe meter. You know, the main power line to that switch has a current of 800 Ampere flowing into the factory!

I’m not sure if he has place the probe at the wrong line or the meter was not set correctly but within split seconds, the chargeman was toasted.

He got jolted by the main power line current. Most part of his body was burned severely and his hair too was mostly burned off! It was only less than one second that he transform from a white into a black person!

He didn’t passed out but was stunned seriously and his colleagues who are working nearby helped him to get to the guard house for ambulance. And that fellow could still asking for a stick of cigarettes from the guard, haven’t got enough smoke perhaps.

Yes, there are many other types of accidents in the workplace.

Most of us who are working in the comfort of an air-conditioned office would normally think we have nothing to fear. Unergonomic workplaces can also pose serious damages in the long run if you are not observant enough.

Many of you might not have heard of Aeron chairs. The ergonomic awareness level in Malaysia needs a little more boost. The Malaysian Labour Law should start introducing some basic ergonomic acts that can help protect the workforce should their employers ignored the importance of an ergonomic workplace.

Also, it’s important that you are, at the very least, covered by your Employer with a personal accident insurance, with the claim proceeds going to your dependants. You never know, as patriotic as you are the company, a half-dead employee remains a non-productive liability.

There are health and medical hazards that can be reduced, if not totally eliminated in the workplace. But there also those that you cannot predict. Accident only catches you unprepared, and it doesn’t matter how rich or poor you are, which God you give your prayers to or whether if you have ever donated to a charity before. It comes in the most unexpected moments, and your only consolation is that it could have been worse.

The only way you can reduce the impact of an accident is most likely through financial means. I have yet to come across any products or services that can reduce the emotional loss of a loved one. And psychiatrist cost money too!

Although it’s good to be optimistic about life, but one should always be prepared about the uncertainties that comes with it.

An endowment insurance policy is structured more like a savings account than an insurance policy and to help us easily understand the endowment policy, we can basically dissect the endowment policy into 2 main components- Savings and Insurance.

What’s an Endowment Policy and How does it Works?

(1) The Savings Component
For most endowment policies in the market, you can opt to save for a period of 12 years, 15 years, 18 years, 21 years, 24 years, 27 years or 30 years. For instance, if you choose a 21-year endowment policy, your savings will mature 21 years later and the policy will be considered void. At the end of the 21 year period, you shall receive a big fat cheque from the Insurance Company.

Most endowment policies allows you to make regular withdrawal, which is usually every 3 years once. Like any whole-life policies, you can also apply for policy loan. Regular withdrawal can affect the outcome of your savings, since every withdrawal you made will reduce the total cash amount in the policy.

(2) The Insurance Component
The insurance component is also pretty straighforward. In the event of a Death or Total Permanent Disability (TPD), you will be paid the Insured Amount. However, if you are diagnosed with Critical Illness, the premium of the endowment policy will continue to be paid by the Insurance Company, of course, until you kick the bucket.

In the case of the father setting up the endowment policy for his kid, the insurance component would work slightly differently. If the kid kicks the bucket first or suffer from TPD, the same thing applies- the Insured Amount stated in the Endowment Policy will be paid out, in this case, to the father. If child is diagnosed with Critial Illness, the Company will continue to sponsor the policy. Let’s say if the Father kicked the bucket first, suffer from TPD or diagnosed with Critical Illness, the Company will sponsor the kid until the policy matures.

For the scenarios shown above, you should refer to the Insurance Companies’ respective riders that is attachable to the endowment policy and understand the terms and conditions to fully take advantage of the policy.

Why an Endowment Policy?

So, after going through the mechanics of how an endowment plan works, what’s the purpose of getting one?

An endowment policy works great as a passive retirement fund. Since the policy does not actively invest in shares and equities, the returns from an endowment policy is somewhat predictable. For business owners who doesn’t contribute to KWSP, the endowment plan is a great substitute.

An endowment policy is also usually used to structure a child’s education fund, since it gives basic protection to the kid and most importantly, the policy allows waiver of premium should anything happens to the Payor.

Also, you can use an endowment plan to distribute your estate or to setup a trust fund. Compared to tangible assets like properties or jewelleries, the endowment plan is much more transparent and hassle-free.

Create Now Save Later or Save Now Create Later?
The underlying concept of an endowment policy is to create now and save later. This basically means that the moment you start an endowment policy, the amount of wealth is created on the first day itself. Say if you are thinking of saving RM 300,000 for 30 years, the endowment policy would create the RM 300,000 in paper value. If any misfortunate incident (either through Death, TPD or Critical Illness) should stop your contribution to this policy, the RM 300,000 will be paid out. That’s the “Create Now” phase. Hence, “Save Later” means you have the option of contributing to the policy regularly.

A typical example of “Save Now and Create Later” strategy is a normal savings account, whereby contributions is made now and the results is seen years later. You don’t get compensated if anything goes wrong in the wealth creation journey, since there’s no insurance componenet involved.

The Downside
Nothing good comes without drawbacks. An endowment policy should be setup with the appropriate contribution amount. Unlike a savings account, you are unlikely to be refunded in full if you decide to terminate the policy in the first 10 to 15 years of the policy.

Unlike an investment funds, the endowment policy lacks liquidity and aggressiveness. This means you should not expect double digit annual returns from your endowment policy.

And that wraps up the Endowment Insurance for this section. If you have any questions, do post it in the comments below.

In the next section, I am going to be covering on Whole-life Insurance.

Centennial Max Plan is Great Eastern’s latest Investment-linked plan, and it’s the first plan that offers 100% Capital Protection. The investment period is 5 years.

What this means is that if you invest RM 50,000, it would still at least be RM 50,000 five years later when the fund matures.

The fund manager for this fund is BNP Paribas, which adopts the BNP Paribas Spectrum Long/Short Style strategy. Generally, the strategy is to buy expected outperformers and to sell expected underperformers simultaneously. Hence, one can expect the Portfolio Turnover Ratio to be quite high.

The potential return in 5 years, generated using historical data ranging from January 1999 to April 2008 is projected at 57.56% (excluding potential currency returns) or 74.21% (including potential currency returns).

The minimum investment is RM 20,000 and maximum is RM 1 million per account. Included in this investment-linked plan is Death and Total Permanent Disability, without any insurance charges. Other than no insurance charges, there are also no fund management and policy charge. The initial service charge of 5% applies.

Centennial Max Plan is open for investment between 27th May 2008 till 26th June 2008. So hurry up!

Press Releases

Via Business Times…

GREAT Eastern Life (Malaysia) Bhd expects RM100 million in sales for its latest single premium investment-linked product.

The new plan, Centennial Max, invests in a close-ended capital protected investment-linked fund and matures at the end of five years.

It can see an average return of 74.2 per cent or a high of 160.7 per cent over five years, based on backtesting results.

“The plan will provide capital protection and generate high returns in a time of market volatility as it invests in structured products,” chief executive officer Koh Yaw Hui said at the product launch in Kuala Lumpur yesterday.

The structured products include two components which are ringgit-denominated financial instruments, such as money market instruments, and a euro-denominated option on a portfolio of indices and defensive assets such as a zero coupon bond.

The latter component refers to the BNP Paribas SPECTRUM Long/Short Style Excess Return Index.

“We chose this index because amidst market uncertainty driven by high crude oil prices and rising food prices, it employs a ‘market neutral’ strategy,” said Alan Tan, vice- president for equity investment.

This strategy captures returns and capitalises on up and down markets.

It also provides diversification as it invests in a basket of eight indices comprising of four American and four European indices.

Tan said the life insurer will be adopting a cautious investment strategy for now as local market uncertainty continues due to inflation pressure and the local political climate.

The Centennial Max plan, which targets the financially mature market, sees a minimum investment of RM20,000.

The plan includes insurance coverage on death and total permanent disability during investment period.

It offers protection up to 125 per cent of the capital.

Offer period is till June 26.

Via
The Star Online…

KUALA LUMPUR: Great Eastern Life Assurance (M) Bhd plans to unveil at least two more products this year following the launch yesterday of its Centennial Max Plan, said chief executive officer Koh Yaw Hui.

The insurer would be “exploring an annuity plan and also enhance our already very strong medical plan,� he told reporters after the launch.

Koh said Great Eastern was targeting new business premium growth of 10% to 15% this year.

As at end-2007, total premiums were slightly over RM800mil.

The Centennial Max Plan is a single premium investment-linked product that is close-ended and capital protected.

The product has a maturity of five years and provides life as well as total permanent disability coverage up to 125% of the initial investment.

Based on historical back testing, the plan aims to give an average return of 74.2% upon maturity, but could potentially hit a maximum of 160.74% return over five years.

The minimum achieved in back testing was a return of 26.47% over five years.

Koh said Great Eastern was confident of hitting its sales target of RM100mil for the new plan.

The minimum investment for the plan is RM20,000. The offer period is one month.

On whether there would be other similar single-premium products from Great Eastern, Koh said this depended on market response.

The plan is open to anyone aged from one year up to 70 years on their next birthday.

The investment-linked product employs an active “market neutral� strategy in investing to capture returns in both bull and bear markets, with the reference index being the BNP Paribas - SPECTRUM Long/Short Style Excess Return Index.

It’s indeed a tough decision to make. To ensure the premium is not too taxing on the policyholders, the insurance company would have to strike off the hospitals that are eating up too much claims. This decision is totally understandable, our private hospitals are notorious for their profiteering acts and would not hesitate to squeeze as much as possible from patients who visit them with a medical card.

It’s not surprising that medical claims eats up the highest portion of an insurance company’s profit margin. Unless of course, the insurance companies start setting up their own healthcare institutions. At least this way, they can control the cost.

There’s also a limit to how strict an insurance company’s underwriting department can get. If they become too strict, they would probably have to turn down 50% of their potential clients including people like me who eat nasi lemak for lunch and dinner. And this will hurt the economy of scale. You need big numbers for the law of probability to work.

Effective Tuesday, ING Insurance policy holders who seek treatment at eight private hospitals in the Klang Valley need to pay first, before claiming from the insurance company.

This follows failed discussions between ING and the hospitals which form the Joint Inter-Hospital Healthcare Committee (JHIC), over the past three months.

The JHIC which has been holding discussions with ING’s top management and mediated by Bank Negara, failed to reach an agreement on the new terms and conditions set by ING’s new Healthcare Service Panel Agreement (HSPA).

Since January, representatives from Pantai Medical Centre, Gleneagles Intan Medical Centre, Sunway Hospital, Assunta Hospital, Ampang Puteri Hospital, Tawakal Hospital, Prince Court Medical Centre and Damansara Specialist Centre had been holding discussions with the ING team.

JHIC chairman Dr Steven Chow said: “The failure to agree to terms in ING HSPA will likely see the insurer strike off over 600 doctors from these hospitals.

Source: Bernama

If our government hospitals are being run more efficiently, we can definitely reduce our dependency on these profit-minded private healtcare institutions.

This is another coverage that you should already have in your risk management portfolio. Let’s face it, after the probability of meeting with an accident, the next most possible misfortunate event would be landing up in the hospital and having to stay overnight for observations. Your stay in the hospital could be due to an unknown cause, accident-related and probably common symptoms such as dengue or appendix removal, but rest assure it’s going to cost you money. If you are admitted to a private hospital, it’s going to cost you LOTS of money.

So, what exactly is covered under this category of insurance?

For start, the core coverage would be the Standard Room & Board (R&B) package, not unlike a hotel room package. The packages usually is categorized as follow:

(i) Room & Board RM 100

(ii) Room & Board RM 150

(iii) Room & Board RM 200

(iv) Room & Board RM 300

Room & Board RM 200 means that the coverage entitles you to stay in wardroom package of RM 200. However, you can still request the hospital to upgrade your room to a better package, but there would be terms and conditions applied according to respective insurance companies.

The Annual & Lifetime Limits is tied to the R&B. Generally, the following R&B packages will have the following Annual & Lifetime Limits:

(i) Room & Board RM 100: RM 60,000 (Annual) and RM 200,000 (Lifetime)

(ii) Room & Board RM 150: RM 90,000 (Annual) and RM 300,000 (Lifetime)

(iii) Room & Board RM 200: RM 120,000 (Annual) and RM 400,000 (Lifetime)

(iv) Room & Board RM 300: RM 180,000 (Annual) and RM 600,000 (Lifetime)

You should refer to your policy’s actual schedule of benefits to find out the exact figures. The annual & lifetime limits are deducted as you make claims.

Co-insurance is a commonly used phrase in medical insurance packages. It simply means that you as the policyholder need to pay a certain percentage from the total claims made. If your policy did not mention anything on co-insurance, it would usually mean that the fee is 100% borne by the Company.

For instance, you are hospitalized for 3 days, and used up a total of RM 6,780.24. Assume that the co-insurance of your medical package is 10%, capped at RM 500, you will need to fork out:

RM 6,780.24 x 10% = RM 678.02

Since the co-insurance is capped at RM 500, you will only need to fork out RM 500, instead of RM 678.02.

Here are some other important elements in the medical coverage that you should be concerned about:

(i) Pre-hospitalization and Post-hospitalization claims, where you need to find out how many days of pre-hospitalization and post-hospitalization is claimable.

(ii) Limits payable for outpatient treatments; for Accident, Cancer and Kidney Dialysis respectively

(iii) Room & Board and Intensive Care Units (ICU) with coverage usually upto 90 days.

Prosthetics, equipments and accessories such as wheel chairs or artificial teeth used during your stay in the hospital are usually not claimable. In most instances, government tax and service tax imposed in your bill are not claimable either.

Handy tips for Medical Insurance Policy:

(i) You should always keep the Original Receipt to ensure a speedy claim.

(ii) Declare all your health and medical track records when you are applying to ensure that you will not have problem with your claims later on. Ask your parents about any hereditary diseases that you might have inherited.

(iii) Always keep your Medical Card by your side, together with your girlfriend/boyfriend photo.

(iv) You will probably need to foot a deposit even if you have a valid Medical Card, so it’s best to have a credit card to avoid any problems with the profit-oriented health institutions.

(v) Go for the best possible medical insurance package you can afford, as it is easier to downgrade your package than it is to upgrade. Nonetheless, as long as you have a good health record, upgrading should not be a problem, except that you most likely have to pay for the medical check-ups yourself.

To conclude, due to the high possibility of you landing in a hospital, a medical insurance plan should be in your priority especially when you’re shopping for your first insurance policy.

Until banks or private hospitals are ready to provide medical loans which you can pay by installments, it’s a good idea to ensure your entire family is protected at least with a minimal amount.

In the next section, I will talk about the importance of Critical Illnesses Coverage, and why it is important in your risk management strategy. Unlike the medical plan coverage mentioned here, a Critical Illnesses Coverage is where all the common big tickets illnesses are covered.

When it comes to managing personal risk, there’s a very similar analogy which I like to use- Home Security. There are a few facts that we need to know when it comes to setting up a burglar-proof home security system.

First, we do not know which door or window the burglars will break in from. If we really have something they really want, they might even dig a tunnel right into your safe. In this sense, it’s very similar to the risk you are exposed to everyday; you never know when you’ll be stepping in front of an oncoming truck.

A good home security system takes into account every potential break-in channels. Every doors and windows in the entire building that might give the burglar an entry into the house is protected, leaving nothing to chance.

So, if a good security system keeps your windows and doors from burglar infiltrations, what should your insurance policies do to ensure your personal risk is well taken care of? In the next few posts of this series, I would share with you the strategy which you can use. It’s by no means a definitive approach, but rather it should serve as a general guideline in your insurance planning strategy.

Let’s start with one of the most important insurance policy that you should already have by now: The Personal Accident Insurance Policy.

One of the most important coverage you should have is Personal Accidental Coverage. Not only because it’s one of the most affordable coverage, the possibility of you claiming from a personal accidental policy is much higher than say, natural death or a critical illness claim. Personal Accidental coverage protects you from accidental risk, which means any injury or death caused by accident, you can make a claim, for example, losing a leg or accidentally cutting off a finger while preparing your dinner. This is not to be mistaken with Total Permanent Disability (TPD), whereby the term TPD usually is defined as:

(a) becomes total and permanent and such that the Life Assured is incapable of ever engaging in any work, occupation or profession in the future to earn or obtain any wages, remuneration or profit; or

(b) is deemed to be caused by any of the following:

(i) total and irrecoverable loss of sight of both eyes; or
(ii) loss of use of two limbs at or above the wrist or ankle; or
(iii) total and irrecoverable loss of sight of one eye and loss of use of one limb at or above the wrist or ankle.

(c) Or by unable to fulfil any 3 of the following activities:-
i) Transfer
ii) Mobility
iii) Continence
iv) Dressing
v) Bathing/Washing
vi) Eating

From the definitions above, you can see that it’s not that easy to comply with TPD’s requirements. If you happen to lost only one leg in a fatal accident, your TPD policy will payout literally RM 0.00 sen. And the odds of getting into an accident are in comparison, very much higher than any other risk that we might encounter every day. And there’s one more reason why you must have a Personal Accident benefit in your risk management portfolio- it’s dirt cheap, and the insurance charges rate is the same from cradle to grave (there’s a entry limit though, which is usually around 60 years old).
 
Here’s a typical Personal Accident rate.

Source: Mitsui Sumitomo Insurance (Malaysia) Bhd

As, you can see from the rates above, a RM 300,000 Personal Accident coverage with Weekly Benefit cost only about RM 405 a year, that’s RM 33.75 per month, and it’s renewable at the same rate as long as you can afford it. So you should look up into your dusty policy documents to check if you have a Personal Accident Coverage either attached as a rider or as a stand-alone plan. Consider checking with the company you are working for to see if they’ve a Group Personal Accident Coverage for staff. Companies should also have given you PERKESO benefits, but the limit for PERKESO is capped to a monthly salary of RM 3,000 as at the time of this writing. To check the benefits covered under PERKSO, go to www.perkeso.gov.my

For a 30 years-old working adult, I would suggest a minimum of RM 500,000 Personal Accidental Coverage. If you are married, consider getting a Family Accidental Coverage for your spouse and your children since it’s generally cheaper this way.

Some credit cards even give free Personal Accidental coverage for a year at no cost at all!

Get a Personal Accident Coverage Quote!

Name NRIC (e.g. 880483-14-2432) Contact Email (e.g. yowchuan@gmail.com) Nature of Work (e.g. Rocket Scientist) Commencement Coverage (RM) 50,000100,000150,000200,000250,000300,000400,000500,000750,0001,000,000 Include Weekly Benefit

In the next post, I’ll cover the next type of insurance that you should consider to be part of your fundamental risk management strategy- Medical & Hospitalization Insurance.