Monday, August 10, 2009

Where does Insurance fit in MalPF ?

This site has avoided talking about insurance long enough, lets face it and see why.

It was hinted before that insurance is originated from gambling but with a good deed instead of a bad one. It was started from greed wanting more money out of less money and eventually evolved into a need base statistical payout.

Despite its history or industry evilness, at personal level, one can use insurance to immediately secure his future asset. Especially when the unexpected and uncontrollable events happen. This is useful when you have a goal to achieve in life.

The summarized concept of insurance can be found here, basically it says buying insurance as protection is good ( this will work for most people ) and selling insurnace for income is even better ( this may only work for some people only).
However, in 21st century, insurance is NO longer JUST about protection. Today's insurance is ALL ABOUT portfolio. And A personally built portfolio is the solution to all your personal finance needs.

Insurance is the OLDEST and MAIN personal finance tool
that helps you manage your personal finance portfolio,

unlike others who are mainly focusing on specific products. This is further supported by industry practice where insurance agents do NOT usually promote Term Insurance.

So the reason insurance cann't even make it to the MeM wealth pyramid is because

insurance itself can be the whole pyramid itself,
NOT just a part of it.

By now you probably already know that it costs
. ZERO to save money in Fix Deposit,
. 1-2% to invest in stocks and
. 2-6% to buy mutual funds

In insurance, you are paying 10% to 40% for the services you obtained. After all, "profesionals" working in insurance companies are "looking after" your whole Portfolio, not just selling you a product like the other 3 mentioned above.

In short, if you are LAZY and has NO interest to learn about personal finance, then just buy some insurances. You do nothing else and just hope the insurance will take care of everything for you. Thats what they "should do" for what you paid for anyway.

So ? Is that it ! After going one big round after one whole year during this anniversary, all this blog is about is to ask people to buy insurance ? ( what a buster ! isn't it ? )

Well, the answer was already given. If you are Lazy and has NO interest to learn, then its a YES to you. Else keep reading and see if there are more to it.

Other related insurance topics:

Do you like or hate insurance ?


Anonymous said...

interesting article there...and it links back to your older posts like "MeM" etc...nice :) hope to see continuation of comparisons of different layers of the pyramids :)

Anonymous said...


Could you please analyze the pros and cons of the recently launched Prudential PruHealth insurance plan ?

Michael Tsen said...

yes, MeM is interesting because Money Earns Money is the key in successful personal finance portfolio :)

TheCurious said...

Hi Michael,

Recently I've been "offered" a scheme of PROTECTION UPGRADE with no medical underwriting, whereby with an additional RM25 monthly premium, I'll get an additional coverage of RM50,000.00 on Death or Total & Permanent Disability.

Could you pleas kindly advise it this "offer" is worth taking ?

FYI, it is an investment-link policy.

Michael Tsen said...

you may want to send me full details for me to make some fair comments. For now, $300 a year to protect 50k means you get paid $166.67 sum assured for every $1 premium. While I mentioned before that we can get $300 ratio for similar kind of protection. So this is an option that you don't have to rush into immediately.

TheCurious said...


Thanks for responding. Btw, what other "details" that you need?

FYI, the said insurace company is Great Eastern.

Michael Tsen said...

GE hasn't had impressive link products for quite a while now, so perhaps thats why adding extra coverage should give more benefits back to the insured. However, GE has successfully changed its big and slow image, surprisingly some new changes finally make them catch up with the industry trend.

details needed would be your own personal finance profile, and if you really need this 'extra' benefit ....

james said...

Bro. Can't find your email on your blog. Thought of meeting up with you over cuppa of coffee to discuss or share ideas on some online insurance project....
From a fellow blogger...