6. Insurance/ Takaful Planning
Objective
- To have sufficient insurance
Purpose
- To protect you from life‘s uncertainties, total permanent disability and critical illness
Principle
- Sufficient insurance coverage = Total available resources for insurance > total insurance needs.
- To allocate at least 5% to 10% of total income for insurance premium.
- Priority of coverage : 10x annual income for death and total permanent disability; and 4x annual income for critical illness.
How to achieve?
Consider Investing:
- Insurance products, unit trusts, PRS, money market instruments, shares, property investments and EPF self-contribution
- Avoid risky assets if risk tolerance is low and time horizon is shorter.
Timeframe
- Short-term goal is to have sufficient insurance coverage within a year.
