As medical technology and pharmaceutical solutions advance, people are living longer than ever. In Malaysia, the average life expectancy of a Malaysian has continued to rise to 74.7 years in 2016 compared to 72.2 years in 2000.
In 2015, there are 2.8 million senior citizens aged 60 and above in the country. This makes up 9% of the 31 million population, and this number is expected to grow to 15% in 2035.
With people living longer and the cost of healthcare inching up every year, the need for quality insurance that cater to senior needs grow. Meanwhile, until insurance policies are more fine-tuned to senior needs or a more comprehensive senior insurance coverage is developed, many seniors would need to do all they can to preserve their retirement fund for their golden years.
This doesn’t mean seniors should go without insurance, but it does mean being selective in getting the right insurance and finding the right balance in the sum assured with what is currently available. Let’s look at some of the insurance plans that might be needed and how to select the best plan as you grow older.
1. Health insurance
As a person ages, our vulnerability to disease and injury increases, so it’s important to have adequate insurance policies. The first most important step is to identify your needs and understand the options available prior to choosing the right medical insurance.
It is also true that the premium for health insurance goes up according to age, for example at the age 33, the premium for a health insurance policy can be as low as RM2,222 per year while at age 60 the annual premium can go up between RM5,000 to RM12,000.
Here are some of the factors to should consider when shopping for a health insurance plan:
- Maximum coverage age – the higher the better. Currently the maximum age for coverage is at 100 years old.
- Annual and lifetime limits – Higher annual and lifetime limit will help you deal with the increasing medical inflation. Some plans even come without a lifetime limit.
- Premium – It is equally important that you are able to afford and commit to the premium on your retirement income. A thorough analysis of your financial situation or financial check should be done to make sure you can afford the premiums for an extended period of time. One way of bringing down the premium is by opting for co-insurance or deductible charges.
The above are not the only factors one must consider, but they are the three most important ones for a senior. Health insurance is one of the most important insurance plan for seniors, simple because health concerns become more prominent as we age. It is advisable to do some homework when choosing the right plan or speak to a financial advisor to assist in making sound financial decisions.
2. Motor insurance
We live in an era of many technological and medical advances, while access to healthcare information and services is within easy reach. As an ageing society we have never been are more fit, healthy and so much more likely to be mobile and knowledgeable.
We know our limits and how to take care of ourselves. Hence, when it comes to road safety, seniors often regulate themselves to mitigate age-related frailties and avoid situations where they feel uncomfortable, such as driving during the rush hour or at night.
In Malaysia, driving helps us to stay mobile and independent. Losing that mobility can have profound effects on our physical, mental and social wellbeing. Therefore, it is important to ensure that the vehicle you are using is in tip top condition with adequate auto insurance in place.
Here are a couple of things you need to know when you are looking for car insurance:
- No Claim Discount (NCD) – If you have never had an accident on your current car, you are entitled for a NCD, which can be as high as 55% off your policy price.
- Get adequate coverage – Adjust your insured amount based on the balance of your loan and the market value of your vehicle. If you would like to lower your premium, you can lower your insured amount to cover the loan balance.
Motor insurance may be compulsory in Malaysia, but you can still make adjustments to your coverage to ensure you are adequately protected and still pay an affordable premium.
3. Home insurance
Over the long course of your working experience, you’ve likely accumulated a fair bit of assets that you wish to protect. Being retired means you are more likely to be at home. Thus, there is a greater likelihood that you can stop a potential home invasion, fire, or other occurrence from happening, reducing the risk of damage or theft at home.
However, if you are a retired senior citizen who is no longer working, you likely won’t have an income or a huge emergency fund to cover any loss or repairs.
Should unwanted circumstances happen to these assets, having a home insurance will come in handy to help replace your home contents. Here are three types of home insurance available:
- Basic fire policy – Coverage on loss or damage due to fire, lightning or explosion
- House owner policy – Coverage on the content of the home, including injuries to policyholder
- Householder policy – Coverage on loss or damage due to flood or burst pipes, etc.
If you already have homeowner insurance, you should also reassess the current value of your home and your possessions to see whether you need to increase your insurance to cover their replacement costs. On the other hand, if you are considering downsizing your lifestyle, you should get your insurance in sync with your scaled back lifestyle to lower down the premium.
Also, if you are living in an old house, it makes sense to get basic fire and householder policies, due to the older wiring and piping.
4. Life insurance
For seniors, life insurance can be a bit tricky. Not only do policies get more expensive as you get older, they are also harder to qualify for. While finding the right coverage can be a little more difficult, seniors do have several life insurance options to choose from.
It is always pertinent to ensure that you assess your insurance over time and its possible that your circumstances have likely changed. This is a good time to re-evaluate your life insurance and determine if you still need as much coverage as you did when you were younger with more obligations. Here are some things to consider:
- Is your spouse alive?
- Has your home been paid off?
- Are your children financially independent?
- What other financial assets do you have in addition to life insurance?
- Do you have high current debts/loans that would be a struggle for your surviving family to pay off after you’ve passed on?
The purpose of life insurance is to act as an income replacement for your loved ones when you are no longer around to contribute financially. For retirees who have saved a retirement fund and whose children have grown up and are able to support themselves financially, a life insurance policy would be unnecessary.
However, if you have outstanding debts such as mortgage payments, credit card bills, personal/business loans or you simply wish to cover your funeral and death expenses, a life insurance will help in ensuring that your family will not be tied up with possible ‘loose ends’ after you are gone. This is helpful if you leave behind an elderly spouse who is dependent on your retirement income.
When it comes to life insurance, it is important for you to weigh the pros and cons before deciding on getting a policy. If your finances allow, it is always good to have some form of protection for your loved ones.
5. Long-term care
Long-term care insurance is not the same as health insurance. It provides coverage for an elderly who require assistance from home health care, assisted living, skilled nursing, or other services.
In Malaysia, we do not have long-term care insurance in the market. However, if you are worried about financing long-term care in your sunset years, the next best thing is to set up a living trust.
CareTRUSTTM is the only care-specific living trust available in Malaysia at the moment. It works similarly to a retirement fund, where you save an amount of money to grow, and when the need arises, the money will be used to fund your continuum care.
This living trust does not just help with the financial aspect of it, it also comes with a trustee who will be assigned to only act on your instructions to pay for your care needs, and a Care Manager, who will coordinate a variety of care services that you may require.
This will help you and your family avoid dispute and stress when you no longer able to execute your preferred care.
Though having insurance coverage is good, having too much coverage that is not required is a waste of resources and money.
To ensure your retirement fund or retirement income can outlive your life span, you will need to be creative and proactive in managing your money. This means deciding on what is necessary and what is not, and also mitigating financial risk that you will not be able to cushion.
Hence, if you need financial assistance or wish to know more about CareTRUSTTM , you could visit www.managedcare.com.my or call +603 2142 7166 for a consultation.
The bottom line
Getting yourself insured provides you with a form of protection against the tides of uncertainty and possible risk. Having the foresight to plan and insure against an unexpected circumstance could make all the difference between an enriched living or a lifetime of regret. Doing your research on the different types of insurance that matches your needs can be challenging. However, the peace of mind from having all of your bases covered is definitely worth it.
Aged Care Group (ACG) is an organisation engaged in the business of elevating and providing aged care services in Malaysia. ACG is driven with a strong vision to advocate innovation and transformation in ageing by offering continuum care as a premium choice for enriched living. We operate in an ecosystem that provides integrated care services and products through meaningful partnerships with individuals, government, organisations and corporations. ACG seeks to be the forerunner in all things related to aged care, building on the years of knowledge and experience of its shared holders and management team. A detailed profile of who we are can be obtained at www.agedcare.com.my.