Diversify - By having the right protection plan, no matter what stage of life you are in, or what you do for a living, insurance can help you along the way to achieve your financial goals and objectives. So, you should consider a plan that suits your needs. For instance, one that can help you achieve your desired investment returns through diversification.
Many have always used insurance as a smarter way for wealth management. They often treat it as a little, set-aside emergency fund which they can access at any time, without taxes or penalty.
However, a properly-planned life insurance policy is more than helping policyholders to save up on taxes. It often has other decent features such as life coverage, guaranteed cash payments, maturity benefits or other protection benefits.
Moreover, these plans provide policyholders with immediate income benefits even in their first year. The incomes may gradually increase every year, depending on the insurance policy. These plans can help you to grow your wealth regardless of market conditions while providing you with life protection.
If growing your wealth in a safer way is your priority, you can consider an insurance plan with an endowment or investment features. Such an insurance plan helps policyholders to generate fixed maturity returns while providing guaranteed benefits such as life coverage or other insurance benefits. A portion of the premium you pay goes towards providing you with insurance protection while the rest of it is invested into a portfolio of selected funds that are well diversified.
Some might want to consider investment-linked protection plan as they are quite flexible. Since a portion of your premium goes into an investment-linked fund, you can adjust your investments strategy and asset class via switching the sub-finds when you change your financial goals at some point in time. You can also adjust your insurance coverage as your needs change over the years.
Preserve - As we are all aware of, we are entering into an environment where the interest rates are at their lowest since the financial crisis in the late 90s. If you are thinking of putting your hard-earned money into traditional deposit tools such as savings accounts and fixed deposits, it is no longer an attractive option as they do not offer better returns or other benefits. Many are considering diversifying their wealth into other available options in the bank which offer guaranteed benefits or additional advantages.
An insurance plan is one of those options. By saving with an insurance plan, the value of your wealth is preserved because you have just done what investment gurus have always advised – diversify and preserve! As the saying goes, “Don’t put all your eggs into one basket”. To better manage our risk and portfolio, we should always diversify our wealth into various financial tools, such as savings account, fixed deposit, investments- unit trust, foreign currency or shares, and of course, a suitable insurance plan. These financial tools will be generating different rates of return, depending on the degree of risk and offer you different level of flexibility in managing them. Managing all your wealth with the same financial tool is like putting all eggs into the same basket- once you drop it, you break them all.
Purchasing an insurance plan is also a more flexible option as you can decide if you want to pay a monthly premium, a pre-determined amount upfront annually or even a one-off payment in advance. Whichever is your preferred method, you have just practiced self-discipline by contributing towards your wealth planning through diversification and preservation.
The value of the policy and benefits can be decided based on your financial needs and types of contribution. For example, you can choose the tenure and nature of the insurance plan based on your financial goals, such as preparation for retirement, setting up an income replacement upon the demise of the breadwinner or setting up a fund for your child’s education.
On top of that, the government has also introduced tax incentives for those who purchase life insurance! Saving with life insurance just gets better as premiums are tax-deductible. For 2020 tax filings, the tax-relief for life insurance is RM7,000, while for medical or education policy, the tax-relief amount is RM3,000 per annum.
Distribute - Insurance plans serve as an essential part of solid financial planning. It provides you and your family with financial protection in case of sickness or death. It also gives you peace of mind, knowing that your loved ones will be taken care of no matter what might happen.
With a solid insurance plan as part of your investment portfolio with your bank, your nominee(s) will receive your insurance payout according to your wishes, in the shortest possible time. This will enable them to continue their daily lives while also allowing a smoother estate transfer to ensure his or her family’s lifestyle is secured.
RHB life protection plans offer a wide range of products to suit all your different needs. Diversify your liquid cash into an insurance plan that can offer guaranteed benefits such as a large protection amount, cash payments, maturity benefits and investment returns. This is favourable compared to just a normal will or trust that will just preserve your wealth instead of growing it. Not forgetting, with insurance nomination, the claims amount can be paid to the nominated person faster as compared to the normal distribution act or will distribution process which may potentially take months or even years.
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