(Not what your agent told you in that kopitiam chat)

Let’s be honest. Most of us don’t really know how much insurance coverage we need.

We either:

• Buy the cheapest plan just to “have something”, or
• Get talked into a huge plan with a huge premium… and then quietly lapse it a year later 😬

So… how do you strike a balance between being protected and not going broke from premiums?

Let’s break it down.

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🔍 The Purpose of Insurance

First, remember this:
Insurance is not an investment. It’s risk management.

Your goal isn’t to “profit” from it.
It’s to protect your income, your family, and your future lifestyle if something bad happens.

Now let’s walk through how to calculate how much you really need.

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🧮 1. Life Insurance – How Much is Enough?

This is the big one: If you die today, how much would your family need to survive?

Here’s a simple formula to use:

Life Coverage Needed = (Annual Expenses x Years to Replace Income) + Outstanding Debts + Education Needs – Existing Assets

Example:

Let’s say you’re 35, with:

• Annual household expenses: RM60,000
• Young kids (you want to provide for 20 years)
• Mortgage balance: RM300,000
• No investments yet
• EPF: RM100,000

= (RM60,000 x 20) + RM300,000 – RM100,000  
= RM1.1 million

🎯 So you should ideally have RM1.1 million life coverage.

🧠 Most Malaysians are severely underinsured. A report by LIAM showed that average life coverage is only RM100,000–RM150,000, which barely lasts 2–3 years of household expenses.

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💳 2. Critical Illness Coverage – A Must-Have

A cancer diagnosis could knock out your income for years—even if you survive it.

💡 Rule of thumb:

Critical illness coverage = 3 to 5 years of annual expenses

If your household spends RM60,000 a year, aim for:

• RM180,000 to RM300,000 critical illness coverage

🎯 This gives you a safety buffer to focus on treatment and recovery without rushing back to work or burdening family.

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🏥 3. Medical Insurance – Private Hospital Access

You don’t need a RM2 million room in Prince Court.
But you do need protection against high treatment costs.

Here’s the deal:

Private Hospital Procedure	Estimated Cost (KL/Urban)
Heart Bypass (CABG)	RM40,000 – RM80,000
Chemotherapy (6 sessions)	RM20,000 – RM60,000
Dengue with complications (hospital)	RM3,000 – RM8,000

🎯 Choose a medical card with:

• Annual limit of RM100,000 or more
• Lifetime limit RM1 million or more
• Full coverage for room & board RM200-RM400/day

💡 Don’t overspend on deluxe room coverage—use that money to boost critical illness instead.

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👨‍👩‍👧‍👦 4. Personal Accident (Optional but Helpful)

This is like your “bonus layer” of coverage—especially useful for:

• High-risk jobs
• Frequent drivers
• Self-employed people

💡 Coverage is cheap. For RM100,000 accident payout, you might only pay RM100–RM200/year.

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📊 Quick Coverage Reference Table

Type	Coverage Needed	Purpose
Life Insurance	10–20x your annual expenses + debt	Replace income for dependents
Critical Illness	3–5 years of annual expenses	Recovery + time off work
Medical Card	Annual limit RM100k+, lifetime RM1mil+	Hospital bills & treatment
Personal Accident	RM100k–RM500k depending on risk profile	Extra layer of protection

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🧠 But Wait — Don’t Forget This One Thing

Insurance is about affordability, not perfection.

You don’t need to hit ALL the ideal numbers overnight. What’s more important is:

• Start with the most critical ones (medical + life)
• Review and upgrade yearly as your income improves

🚫 Don’t buy a RM600/month policy if it means skimping on groceries or falling behind on loan payments.

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🛠️ Bonus Tip: Do a Yearly Insurance Review

Things change:

• You get married
• You have kids
• You earn more (or less)
• Premiums increase (ugh, yes)

💬 One of the most common mistakes I see with my clients?

“I bought this policy 10 years ago… I think it still covers me enough?”

Don’t guess. Do a simple annual review. Better yet, get help from a financial planner who doesn’t work for an insurance company (like… ahem me).

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📌 TL;DR – How Much Is Enough?

Insurance Type	Target Coverage	Why It Matters
Life Insurance	RM500k–RM2mil+	Protect your family’s future
Critical Illness	RM150k–RM300k+	Income during recovery
Medical Insurance	RM100k/year or more	Private hospital access
Accident Cover	RM100k+	Optional extra layer

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Final Thoughts

Getting the right insurance coverage isn’t about impressing anyone with premium numbers. It’s about peace of mind—knowing that if life throws a curveball, your loved ones won’t be the ones paying for it.

And if you’re still not sure what’s too much or too little?
That’s where a neutral, licensed financial planner comes in. Not an agent chasing sales targets.