You May Need More Life Insurance Than You Think

It often seems like the only people that don't buy life insurance are the ones who actually need it most. It's depressing when I meet with a widow or widower and learn of their terrible financial position due to the loss of a loved one. I had the pleasure of serving on the board of a local non-profit which provides grief support for those who have lost a loved one, so I have unique perspective in this area beyond just life insurance. The financial challenges of losing a loved one for young people and older people are similar yet different. Similar because it ultimately boils down to cash flow, but the cash flow covers different needs. Younger peoples have children to provide for and also tend to have more debt. But retirees can also run into trouble if they haven't saved well enough. That's because the smaller of their Social Security benefits will go away. If you depend on both partners' Social Security, it can be costly and painful to lose the smaller of the two.

How to Estimate Your Life Insurance Needs

 

So how much insurance is needed? For most families, I use three simple factors: debt, education, and income replacement.

The debt is simple. Just add up your mortgage, credit cards, and other debts. Some mortgage with Mortgage Reducing Term Assurance (MRTA) are forgiven upon death, but privately funded loans will still need to be paid back. I think it is important to have all the debt settled to improve cash flow and eliminate the emotional toll debt can leave us with when someone passes away. The emotional distress on a family after a loss is hard enough.

For education, figure approximately 30,000 per year per child for local college's tuition and living expenses in 2013. I like to see college 100% funded through life insurance, the education of your children is the foundation of your legacy!

Income replacement is a bit misleading because I don't really care how much you make, rather it's how much you spend. We need at least five years of support, but 10 years is optimal. If you have young children, don't forget that social security will chip in until they're age 18 if you have earned enough, nor until they reach age 25.

As an example, let's look at a family of four with a 300,000 mortgage and two young children. The husband makes 100,000 annually and the wife stays at home with kids, their cost of living is 3,000 per month after taxes. This family has 300,000 in debt and are estimating 240,000 in education funding (30,000 x 4 years = 120,000 per child). So the income replacement needed is 360,000 or 3,000 per month for ten years.

The total life insurance coverage that the husband needs is 900,000. Even though the wife is not working, the potential life insurance need for her would be about 540,000. Even though the household income is not tied to her, we still want to have the mortgage and education taken care of in the event of premature death.

My philosophy for life insurance coverage is to keep it simple and load up on a large amount of insurance at the lowest price possible with a high-quality carrier. In general, most people are under-insured. Please consider your needs by following my formula illustrated above: debt, education, and income replacement. You will be surprised how inexpensive it is to fully protect your family!

6 Simple Steps to Become Financially Stable

BUY LIFE INSURANCE

If there is someone in your home who relies on your income, then you need to buy life insurance. Sometimes even young, single people take out a small life insurance policy so their parents aren't burdened if something happens to them. If you have children, this is an absolute must and non-negotiable. Financial experts recommend that you take your yearly income and multiply it by 7-10 to find out how much insurance coverage you need. I also recommend term life insurance not whole life insurance as it's much more affordable. If you've avoided purchasing life insurance because you don't know where to start or what to buy, contact a certified life practitioner to do a proper financial analysis for yourself just like a doctor who will do the necessary diagnosis before prescribing medicine. They will simplify the process by giving you a range of financial needs all at once and help you find the coverage you need at a price you can afford. 

START AN EMERGENCY FUND

An emergency fund is the more important step to take when you want to make your way to financial independence. Starting with small savings is ideal but eventually this emergency fund should be 3-6 months of expenses. The reason an emergency fund is so important is because you can't get ahead when paying off your debt or investing if you're constantly using your daily cash flow to put out fires. If your car breaks down or you loss your smart phone, an emergency fund will allow you to fix those problems without affecting your monthly budget.

INCREASE YOUR RETIREMENT SAVINGS

If you work from 8-5 job, go right to your HR department and increase your retirement savings by at least 1 percent. Chances are, you won't even notice that 1 percent. If you get a raise or have an exciting work bonus, increase your retirement savings even more. Making your retirement savings a priority will not only make you feel secure about your future but it will give you a nice cushion just in case you decide to change careers or want to retire sooner than expected.

LEARN MORE ABOUT INVESTING

Even the most seasoned investor can always learn more. And, for all the beginners out there, investing is not as difficult as it seems. What makes investing challenging at first is that it's like a different language. There are so many terms like index, funds, bonds, mutual funds and more so it can be hard to understand at first, much like your first foreign language class. Eventually, though, the more you read, the more you will understand. Buy some investing books to read that helps you learn about investing by investing your spare change.

MAKE A WILL

That's a lot of people in Malaysia don't have a will. However, making a will is a very selfless act that you can do for your family. It makes things much easier after you've passed away because you have a very specific directive on how you want your estate to be handled. If you don't have a significant amount of assets, creating a will can actually be quite simple and you can do it yourself. If you have a lot of assets or any other complicating factors, look up an estate planner today and make an appointment. Again, it's one of those things that takes time and energy, but it's truly a gift to your family in the long run.

START A CHILD EDUCATION FUND

Lastly, if you have children, start an education fund for them. College prices are skyrocketing and student loan debt is out of control. In order to give your children the gift of graduating debt free, it's important to start as early as possible. If you don't have children but you want to go back to school, starting an education fund is also a good idea. After all, if you're going back to school to enhance your skills or advance your career, it's far better to go completely debt free.

Ultimately, if you want to get in better financial shape right now, it is possible if you start with a plan. Doing so will not only allow you to become more financially stable, but it will help you become more confident with your finances.

USM Venture Aspirant Programme

The insurance industry is one of the most competitive industries in the country. With increasing awareness on the importance of life insurance and a low current penetration rate in Malaysia, there is a great need for highly knowledgeable insurance agents. In order for agencies to remain competitive today, the most important goals are to recruit more agents and grow sales profitably. A research found that an increase in the number and quality of new agents leads to a corresponding increase in sales. This is not only increases both new and renewal premiums, but boosts agent retention as well. To build a profitable agency, managers look for best practices to run their business more efficiently and effectively. They agreed that more training courses were needed to recruit more agents which would in turn generate more sales. Therefore, obtaining the right skills to recruit the right people at the right time is crucial. In order to grow sustainable and profitable business, new leaders are needed to recruit the current generation of new agents. With management initiative and efforts by Great Eastern Life, USM Venture Aspirant Programme is purposely launched for a leader aspirant journey exclusively to develope the best in class leaders in Great Eastern Life.

USM Venture is an in-house programme in Great Eastern Life, exclusively designed for agents who aspire for Unit Sales Manager promotion within two years. It's objective is to expand the sources of income for agents to become a strong and resilient leader to accelerate their promotion opportunity in two years.

USM Venture aims to build new leader's talent and introduces best practice recruitment competencies to agents who aspire to promote to Unit Sales Manager position. Participants will be armed with practical tools and practical skills in recruitment. There is a follow up follow through system on a platform for coaching and performance tracking of the key responsibilities areas in the leadership key competencies, guided by a panel of coaches over a period of 1 to 2 years to achieve Unit Sales Manager promotion. Your promotion is our priority, in two years and you will never be the same again.

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Team Building

Team building can perform an ability to identify and motivate individuals to form a team that stays together, works together, and achieves together. The objective of the team building for one organisation is to get to know everyone and feel connected to each other and toward the vision and mission. In line with data from Google, teams are driven by three positive motivators: play, purpose, and potential that allow candidates to find fun in their work (play), give them a clear mission (purpose), and help each team member learn and develop by giving them a good coach (potential). These are exactly the motivators we think about when it comes to team building activities in the agency.

1. Play

Yes, team building programs should be fun, but it's not just about playing a game or take some beers during happy hour together. For the purpose to feel play at work, the motive must be fueled by the work itself, not the distraction. We think about important skills related to the job, and plan activities accordingly. If creative problem solving is a big part of the work, we might take the team off site for an event like Escape the Room. Candidates have great stories to talk about after these outings. They also work together better after having fun together outside of the office, and they carry that back to their jobs. Another idea is recommends bonding over creating and eating meals together. Sounds like a delicious activity!
 

 

2. Purpose

Naturally we always understand at work to proves how important it is for candidates to have higher purpose in their work. We always relate the team's work and outing activities to our agency's mission or values. In the agency, for example, we regularly invite candidates to share their own stories purpose to join, a tradition that reminds us why we do what we do. This related strongly to our mission of helping candidates professional growth and achieve their career dreams, a great thing to bond over as a team.

 

 

3. Potential

Potential is the idea that the work we do eventually drives us to our future goals. Internal training and learning opportunities can also be ways to unite teams across the organisation. Usually company always led a program where we met up with others in our Great Eastern Life's group and designed our ideal agencies, everything from the vision, mission and core values to the office environment to the types of perks offered. It mixed us with others in the company beyond our functional teams and helped us find a different type of tribe we could bond with. Plus, it continues to be a growth opportunity as we talk about our types with our co-candidates both formally and informally to learn about each other's similarities and differences in how we learn and work in a respectful way.

 
Play, purpose, and potential not only drivers of work, but also drivers of team building that give us a "why" beyond just sharing a drink. It's helped us to make sure we enjoy working together, find purpose in what we do, and keep developing our skills getting together beyond just enjoying each others.

Supremacy Incentive Trips

Achieving Supremacy Awards is the most significant milestone in my journey with Great Eastern Life. It has given me experiences and memories that I will treasure forever. The Supremacy trips is an opportunity that should not be missed for every year. The whole experiences was significantly memorable and it was a joy to be part of it. I will definitely strive harder to ensure that I achieves the Supremacy trips every year! With my hard work and patient, I managed to complete the requirements and qualified for the Supremacy trips for six consecutive years since 2011. During the trips, is time for me to sit back and relax as enjoy the acknowledgement for my whole year efforts.

The Supremacy trips was more than just another overseas trip, it provided the opportunity to meet and learn from other qualifiers. Great Eastern Life choose the best airline, the finest accommodation, the tastiest meals and also threw an amazing gala dinner made the experience something could never or would want to forget. Everything from the luxurious five star treatment, it showed me that this career can be very rewarding if you are willing to work hard. By doing this, I learnt that when one's desire is strong enough, any goal or dream can be turned into reality. For great work, you will enjoy great rewards. You could be the proud recipient of incentive trips that will take you to the four corners of the world.