Term Insurance: Basic, Inexpensive and Easy to Understand

What is term life insurance?

Term insurance is basic, inexpensive and easy to understand. It gives you all the coverage you need and none that you don't. Its a good fit for short-term needs or those that have a specific end point. 

This offers insurance protection for a limited period only whereby the money is paid up if you pass away or if you suffer total and permanent disability. Simply choose a term policy duration to meet those needs. That's why it's the best choice for almost everyone. 

As the name implies, a term insurance policy is good for a specific period of time; that can be one year, 10 years, 20 years or even up to 30 years. Given that you generally need life insurance only until you've managed to save up money elsewhere, just pick the term that dovetails with the time you need coverage. If you die during that term, your beneficiaries get a payout, known as the death benefit. If you die after the term expires, there's no payout.

What are the different types of term insurance?

There are two kinds. There's "annual renewable term," which gives you one year of coverage at a time that you renew annually, and "level premium term," which you buy for a specific multiyear period - say, five, 10 or 20 years.

Annual renewable term usually has the lowest annual premium to start, but the premium rises as you age. If your main concern is keeping your initial costs down  for example, because you think your earnings will rise significantly in the future - consider going with annual renewable term.

For example, to help ensure your family will be able to pay a 20-year mortgage, you can choose a 20-year term policy. The policies allow you to choose the length of coverage you need, such as 10, 15, 20, or even 30 years. During this period, called the level-premium period, your premiums are guaranteed not to change. After this period, however, premiums will increase each year until the policy ends (usually at age 95) and may not be guaranteed. 

The pros of term life insurance

Lower Premiums: Term life insurance has the lowest premiums if compared to other types of life insurance – you can get maximum amount of protection for the least amount of premium paid. You could find, for example, an insurance company that offers a term life insurance premium starting from as low as RM 175 per annum (usually you would have to be aged 18 – 45), with a sum insured of up to RM 40,000 (natural death) and RM 80,000 (accidental death) in return for this low premium.

Flexibility of Application: Because of its non-permanent state, insurance companies are generally more flexible in accepting applications for this type of insurance, especially for those who are under 50 years of age and have a good health condition. In fact, most insurance companies do not require a medical examination from applicants for term life insurance.

Flexibility of Policy: Many term policies offer a term-to-permanent insurance privilege.

The cons of term life insurance

Cost Increment: While we mentioned that term insurance can be renewed or changed to a permanent life insurance, this might cost the premium to increase dramatically. This depends on several factors such as the age and the health condition of the policy holder, as well as the policy’s term and conditions.

Age Restrictions: Unlike a permanent life insurance, age matters when it comes to term life insurance. Typically, insurers won’t allow people from the age group of 50 – 55 and above to buy a term life policy.

No Cash Value: As previously stated, term life insurance focuses solely on life coverage and has no investment value, therefore there will be no added cash value in your coverage sum (Cash Value is the amount of money that you will get back if you cancelled your policy).

Sources From:

http://www.freemalaysiatoday.com/category/leisure/2013/09/30/life-insurance-%E2%80%93-term-life-insurance/

http://lifeinsurance.prudential.com/view/page/iliconsumer/30454
http://www.insuranceinfo.com.my/choose_your_cover/secure_your_future/life_insurance.php?intPrefLangID=1

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Keep It Simple, Bank Negara Tells Insurance Firms

To protect consumers, Bank Negara wants the insurance industry to make their policies easier for the public to understand.

The regulatory body has issued product transparency and disclosure guidelines to insurance providers, emphasising the importance of using “plain and intelligible language” in policy documents.

This is to make it easy for consumers to understand their contractual rights and responsibilities, so that they can make informed decisions, a central bank official said.

“Work is already in progress to improve the wording in hospital and surgical insurance policies to ensure that simple words are used to explain and draw attention to important terms and conditions of the policy, including, in particular, the medical conditions covered and those excluded from the policy,” she said.

On the pricing of medical and health insurance products, she said these were determined by the insurance company or takaful operator based on actuarial principles.

Any changes to factors like exposure to anti-selection risk and medical inflation might lead to a review of the premiums, she explained.

“There are, however, safeguards in place. Insurance product pricing requires a qualified actuary of the insurance company to certify the reasonableness of the premium charged.

“This is influenced by economic factors such as medical inflation, mortality and morbidity rate as well as investment performance of the insurer,” she said.

Source From: http://www.thestar.com.my/News/Nation/2014/04/20/Keep-it-simple-Bank-Negara-tells-insurance-firms/

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Why You May Be Losing Hair?

Healthy Hair, Start with Healthy Lifestyle

As everyone are concerned to take care of skin and to maintain the best to look beautiful, but sometimes they forget hair scalp also need special care to ensure hair stays healthy and beautiful. According to hair expert who is also a member of the International Academy of Dermatology (IACD), Dr. Thanaruch Thanakorn.

According to him, if the scalp treatment is ignored, possibility for someone easily suffer from dandruff and various hair problems like hair loss, branched or hair damage. Many people end without knowing or realize that the scalp needs between men and women are totally different. For male hair scalp generally more vulnerable and under pressure while exposed to pollution and heat. Compare to women are more prone to the problem of chemicals from hair dyes and tense.

Studies show that men hair scalp are more oily scalp than women because the areas of the zone are more weaker. Although if women more exposed to chemical pollution their hair scalp produce less oily rather than men because the skin immune system of women  more stronger.

Causes of Hair Loss

#Stress

Stress is one of the most common causes of unusual hair loss. Hectic lifestyles can reduce a lot of energy out of us and increase our stress levels. Numerous studies hold stress responsible for many health problems ranging from smaller ones like a headache to life-threatening disease like a heart attack. True, a good percentage of people who shed a bit of extra hair are susceptible to a lot of stress, but that doesn't necessarily mean that stress is the only factor responsible for baldness. 

#Junk Food

Most junk foods contain artificial ingredients to enhance their colors and flavors. Monosodium glutamate, or MSG, is one of the primary substances used to enhance the flavor of processed foods. It’s mostly because junk food hardly gives your body any nutrients. Living on junk food could lead to nutritional deficiencies, which may contribute to baldness. People having eating disorders are also more likely to suffer from extensive hair loss.

#Frequent Use of Chemical Product

Excessive use of hair styling tools like strengtheners and curling iron or hair products like gels, mousse, sprays, colours, etc can damage the hair shaft and prolonged usage can hamper its growth. Tight ponytails, wrong combs, parting your hair, can further make the condition worse.

#Pregnancy 

Pregnancy is the one example of the type of physical stress that can cause hair loss (that and hormones). Pregnancy-related hair loss is seen more commonly after your baby has been delivered rather than actually during pregnancy.

#Family history

If family history become the main reason causes your hair loss. So nothing much you can do. You can only reduce your chances of losing a lot of hair by following a proper diet, taking supplements and live in healthy lifestyle. The important is avoiding things that could contribute to accelerating hair loss.

What is DHT (Dihydrotestosterone)?

DHT, which stands for Dihydrotestosterone (5α-Dihydrotestosterone), is a male sex hormone, an androgen. 5α-reductase, an enzyme, synthesizes DHT in the adrenal glands, hair follicles, testes and prostate. Male and female adults can lose hair as a consequence of changes in the metabolism of androgen in the body - men more commonly than women. DHT plays a major role in hair loss.

The most important part of the hair follicle is the dermal papilla (papilla of hair), which is responsible for the growth of hair. The dermal papilla cells divide and differentiate to form new hair follicles. The papilla is in direct contact with the skin's blood capillaries, from which it gets its essential nutrients for proper hair follicle growth. The dermal papilla has a large number of androgen receptors (more in males than females).

When DHT gets to the dermal papilla, it undermines the absorption of vital nutrients required for healthy hair follicles. Hair follicles have resting and growing phases - without proper nutrition, their resting stages get longer while their growing phases get shorter.

Hormones are cyclical. Testosterone levels in some men drop by 10 percent each decade after thirty. Women's hormone levels decline as menopause approaches and drop sharply during menopause and beyond. The cyclic nature of both our hair and hormones is one reason hair loss can increase in the short term even when you are experiencing a long-term slowdown of hair loss (and a long-term increase in hair growth) while on a treatment that controls hair loss.

Since hormones operate in the healthiest manner when they are in a delicate balance, the androgens, as male hormones are called, do not need to be raised to trigger a problem. Their counterpart female hormones, when lowered, give an edge to these androgens, such as DHT. Such an imbalance can also cause problems, including hair loss.

How to Get a Healthy Scalp?

You are what you eat 

Your hair is literally or highly affected by what you eat. Avoid eating food that can prevent hair loss. Eat more nutritious and healthy food like fresh fruit and vegetables, sufficient protein and carbohydrates, and drink more plenty of water because it give a body all the nutrients it needs to stay healthy.

Regularly exercise

The combination between physical activity and nutrition is to generate better health. Nutrients are carried to the hair in the blood and regular exercise helps to maintain good circulation.

Avoid unnecessary stress 

Obviously stress can damages all of your body and is not exception for your hair. But at the certain point, stress starts causing major damage to your health, your mood, your productivity and your quality of life. Loss of hair can be one of your body signals that you are in stress or stress overload.

Taking supplements

Taking supplement that are specifically formulated to promote healthy scalp and hair. Look for a formula made for hair, skin, and nails that has biotin, vitamins B, C, E and  Iron. Multiple vitamins, including biotin, have been promoted for hair growth.

Sources From:

http://www.hmetro.com.my/myMetro/articles/Penjagaankulitkepalamustahak//Article/article_print http://www.americanhairloss.org/women_hair_loss/causes_of_hair_loss.asp http://www.medicalnewstoday.com/articles/68082.php http://www.health.com/health/gallery/0,,20727114_3,00.html http://www.allure.com/beauty-trends/blogs/daily-beauty-reporter/2013/06/7-ways-to-get-a-healthy-scalp-and-longer-hair.html

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Join Us For Health Talk by Dr Juan (Spine Care) & Free Spine Evaluation By Tags Specialists Center

Open To Public!!

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Free Spine Evaluation By Tags Specialists Center and Health Talk (Spine Care) by Dr Samuel John Hunter

We are at easicircle please to inform. This is an open invitation to invite the general public to come join us on Saturday, 19th April 2014 and get to know about easicircle, our community portal. Don't miss out on this exciting event.

Date: Saturday, 19 April 2014 (Next Week) 

Time: 12:30pm - 5:00pm

Venue:  Pool Side, Level 5, Binjai Residency, No 1 Lorong Binjai, Kuala Lumpur, 50450

Tentative Program

12.30pm - 1.15pm : 

Registration / View vendor products and spine evaluation

1.30pm - 2.30pm :

Health Talk Regarding Spine Care by Dr Samuel John Hunter

2.35pm - 2.50pm :

 Update by CEO

3.00pm - 3.45pm : 

Ecc Presentation

3.50pm - 5.00pm :  

Light refreshment and view vendor products

For More Information Please Visit Our Facebook www.facebook.com/easicircle

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Tips For Consumers On Buying Life Insurance

Mr. Tan Kin Lian started work in 1966 and qualified as a Fellow of the Institute of Actuaries in 1975. 

He joined NTUC Income, Singapore in 1977 as the general manager/chief executive officer. During this stewardship, the assets of the cooperative increased from $28 million to $17 billion and became a leading life and general insurance co-operative.

Mr. Tan is now the President of the Financial Services Consumer Association (FISCA), a non-profit organization formed to educate the public on financial planning. He has published a few books on life insurance and financial planning. He also lectures as an adjunct professor in a university in Singapore.

Chapter 1 - Introduction

I have received many requests from consumers to give my views on the life insurance policies that they have bought previously or are being recommended to them now. They are mostly whole life or investment-linked policies that are intended to provide insurance protection and as a form of savings for the future.

I wish to present the results of my analysis in this book. They represent the policies that are now sold in the market in Singapore. I have removed the name of the consumer and the insurance agent from the benefit illustrations.

The focus on my analysis is on the amount of the accumulated premium that is taken away from the consumer. Most of these products offer a modest amount of insurance protection which, in my view, should take away 10% of the premium. The remainder is invested to earn an investment yield that should be returned to the consumer. The insurance company can take away another 10% for the investment service. It is fair for the insurance company to take away a total of 20% of the accumulated premium over a period of 25 years. This is my benchmark for a life insurance policy that is fairly priced to the consumer.

If the life policy does provide a large amount or wider scope of coverage, it may be justified for the deducted proportion to be higher than 20%. But this is likely to be not a commonly situation.

It is important for the consumer to pay a fair price for a life insurance policy. For most consumers, the life insurance policy represents the biggest financial commitment after the mortgage payment on your home. They should study the cost and benefit analysis carefully before making this commitment.

Chapter 2 - Structure of a life insurance policy

A life insurance policy performs two functions

Insurance protection for premature death, disability or medical expenses

Savings for the future

The consumer has to pay a premium that reflect the actual cost or value of the benefits provided by the policy and also a loading that is taken away by the insurance company to pay the commission to the agent, the expenses of running the operation and to give a profit to the shareholders.

Take the case of an insurance policy that provides protection only. If the average cost of the claim is $100 a year, it would be fair for the insurance company to charge $200 a year, as they need the loading to cover their expenses. In a competitive market, they may reduce the loading and charge only $150.

The loading for the investment portion should be lower and should be comparable to the fee that is levied by the manager of an investment fund or unit trust. The total fees should not exceed 10% of the invested sum.

As a larger proportion of the premium is intended for investment, a fair amount that is taken away should be 20% of the premiums that is paid. This is to cover the insurance protection and the investment service.This leaves 80% of the accumulated premium to be returned to the consumer.

If the actual cost of the benefit is $240 a month, you should pay a monthly premium of $300. If you are paying a monthly premium of $400 to $500, you are paying too much. The problem is - the consumer does not know the actual value of the benefit.

A good way for the consumer to know if the premium is fairly priced is to look at the amount that is deducted from the accumulated premium. This is shown as the "effect of deduction" in the benefit illustration that has to be provided with the life insurance policy. This amount has to be compared with the "value of the accumulated premium". If the deduction is more than 20% over 25 years, it is likely to be too expensive.

For example, if you pay $500 monthly over a period of 30 years and the investment yield is 5% per annum, the value of the accumulated premium is $418,000. If the cash value of policy is $250,000, the amount that is deducted is $168,000.This represents a deduction of 40%.

If you find a policy that deducts only 20%, you will be able to get a higher cash value of $334,000 at the end of 30 years. The difference is $84,000 over 25 years. It is a lot of money.

The amount that is deducted could even be higher. I have seen some benefit illustrations that show a deduction of 50% or more at the end of 25 years. This type of policy gives a very poor payout to the consumer.

The benchmark of 20% for 25 years applies to most typical policies. If a policy is specially designed to have a high proportion of the premium that goes to the insurance protection, it is justified to have a higher deduction. But most policies that are sold in the market are intended to provide a modest protection and to have a larger proportion of the premium that is intended for investment. For these policies, the benchmark of 20% is applicable.

Chapter 3 - Buy Term Insurance and Invest the Difference

The consumer has the option to buy a term insurance policy to provide the insurance protection and to invest the savings in a low cost investment fund. By adopting this approach, the consumer is likely to pay less than 20% of the value of accumulated premium.

The consumer is even likely to earn a higher yield on the amount that is invested, compared to the yield earned by the insurance company.

The consumer needs only to buy a term insurance for 20 or 25 years. For a young consumer, the cost of this coverage is extremely low. It is possible for a consumer to buy a term insurance of $300,000 and pay an annual premium of less than $300. This premium is fixed for the duration of the policy.

If the consumer wishes to be covered for an earlier payout on the occurrence of a critical illness, the premium will be slightly higher. It is important that the insurance be taken for a period not exceeding 25 years or for a shorter period, if the policy is taken at an age above 40 years.

The consumer can invest the savings in a low cost investment fund. An example of this type of fund is an investment fund that is invested to mirror a stock market index and is traded in the stock exchange. A few of such exchange traded funds are available at a management fee of 0.3% per annum. Over a period of 30 years, this is likely to take away only 6% of the accumulated amount.

Some consumers are worried about the risk of investing in the stock market. The risk is actually quite small, if they follow the following rules of diversification:

a) Invest in a large, professionally managed fund as it offers diversification. You will not be badly affected if some investments go bad, as the impact is small and is compensated by other good investments.

b) Choose a low cost fund, where the fund manager takes only a small fee. If you choose an indexed fund, you enjoy diversification and pay a fee of only 0.3% per annum.

c) Invest for the long term, i.e. 10 years or longer. The fund will do badly in some year but will do well in other year. Over the long term, you can get an average rate of return.

d) Invest 80% of your savings in a fund that is largely or fully in equity, as equity gives a higher return over the long term. You have already reduced your risk through diversification and averaging out the good and bad years.

e) You can keep 20% of your savings in a money market fund or in short term assets. The return may be lower, but you can withdraw the savings at any time to meet emergency needs, without having to pay a penalty or suffer a capital loss.

f) Avoid trading in the market. There is a high transaction cost involved in buying and selling your investments. Most investors are not able to read the market well to achieve a trading gain that can offset the cost. Their financial adviser is also unable to read the market well, in most cases.

Published by easicircle with permission from Mr. Tan Kin Lian.

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