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Life insurance and EPF

Group Assignment

prepared by AKM

Life Insurance • A life insurance is a contract between you (the insured) and an insurance company agrees to reimburse you or pay you a sum of money at the time policyholder’s death • You are transferring your risk of loss to the insurance company • Pay a relatively small amount of certain amount (insurance premium) in exchange for the insurance company’s promise to reimburse you if you suffer losses • >>> Replaces income lost due to premature death prepared by AKM .

How does it work?? • Investors pool the financial risk associated to death • Everyone pay something to the “pool”. When an insured dies. her or his family receive some of the money from the pot • The amount everyone put in the pot >>> PREMIUM • The size of the premium is depending on profitability you will die • The amount provided by the insurance company >>> FACE AMOUNT • Person designated to receive the Proceeds >>> BENEFICIARY prepared by AKM .

Your age. if the amount they pay out is < than the premium and investment return >>> PROFIT prepared by AKM . statisticians who specialize in estimating the probability of death based on personal characteristics • i. • Losses for the entire group of policyholder is more predictable than one insure individual • Insurance company will invest the premium receive. Lifestyle: Do you exercise? • By predicting the accuracy of number of death will occur in a given population (policyholder).e. insurance company will employ actuaries.Why would insurance company willing to accept the RISK?? • To know your chance of death. Health Condition. they charge a fair premium to each holder.

aging parents.Benefits of Life Insurance • Financial protection for dependents Protect someone who depends on them from financial losses caused by their death • Protection from creditors Nonworking spouse and children of a. single income family • Tax benefits: Estate Tax • Vehicle for savings: Cash Value prepared by AKM .

Basic purposes of Life Insurance • Protect you and your dependents from losing the assets that you’ve acquired. • Shield you and your family from an interruption in your expected earnings TYPES OF LIFE INSURANCE • Term life insurance • Whole life insurance • Endowment policy prepared by AKM .

e.Temporary life insurance • Pays benefits only if you die during the period it covers • If you stop paying premium. usually 1.Term Life Insurance • Protection for a specified period of time. when your children is grown up.5. 10 or 20 years up to age 70 . the insurance stops • Premium for people in their 20s and 30s are less expensive than whole Life – tight budget • Make sense when your needs for it will diminish in the future I. debt is paid off prepared by AKM .

Premium for whole life insurance stays the same throughout your life i.e. if you wan the cash value feature in the insurance but cant afford now and expected to do in the future prepared by AKM .Term Life Insurance • Renewable term: Can continue with another term if you have a renewable option – premium increase upon renewable >>> to reflect your age and chances of mortality • Straight term: policyholders will pays the same premium amount for life • Conversion option: change it for whole life policy at a higher premium and without any medical examination.

Decreasing term for 30 years pair to cover housing loan • Assume your wealth to increase when your children leave home.Term Life Insurance • Decreasing term: premium of the insurance remains constant while face amount is decreasing. not subjected to increases in premium if age increase • i.e. self sufficient >>> need less insurance prepared by AKM . Pair with debt payment. Helps to keep the premium constant.

cash value life policy • A plan which policyholder pay a specific of premium amount as long as you live • Cash value –accumulated refundable value of a insurance policy result from investment earnings on paid premium (Savings Feature) – force saving • Left over from commissions.Whole Life Insurance • Also known as straight life policy. insured has right prepared by AKM to cash value: Nonforfeiture right . sales and administration. and cost of death protection • >>> Insurance Coverage + Return on Investment • If policy canceled prior to death.

Whole Life Insurance • Nonforfeiture right: gives the policyholder’s cash value in-exchange giving up his/ her right to a death benefit • Policyholder can borrow against the policy’s cash value p • If you skip payment. whereas premium for term life insurance increase with each renewal • Explore other savings and investment strategies before you invest the money into a permanent life insurance policy prepared by AKM . the premium amount will be subtracted from the cash value • IF the cash value insufficient >>> policy LAPSE • Annual premium for whole life insurance is higher than term insurance however it remain constant throughout your lifetime.

Endowment Policy • Money is paid to the policyholder (the insured) if he or she alive OR survive end of the endowment policy • >>> MATURITY PROCEED • The insurance company makes this promise in return for the insured’s agreement to pay at a sum of money (premium) periodically • The face value is paid upon the death of the insured • Period typically has a duration of 10 or 20 years • >>> either way. beneficiary will still receive funds prepared by AKM • Used as a way to save for college. retirement for .

Employee Provident Fund (EPF) • EPF is a social security institution which provides retirement benefits for members through management of their savings in an efficient and reliable manner • The EPF also provides a convenient framework for employers to meet their statutory and moral obligations to their employees • The EPF ensures that your savings are secure and receive reasonable dividends. Withdraw at age 50 prepared by AKM . Withdraw at age 55 • Account II: 30% . it GUARANTEES a minimum of 2.5% Dividend annually • Account I: 70% . In fact.

to voluntarily supplement their retirement savings under a well-structured and regulated environment • Each PRS offers a choice of retirement funds from which individuals may choose to invest in based on their own retirement needs.Private Retirement Scheme (PRS) • Private Retirement Scheme (PRS) is a VOLUNTARY long-term investment scheme designed to help individuals accumulate savings for retirement • PRS seek to enhance choices available for all Malaysians. goals and risk appetite prepared by AKM • The fund options under a PRS are intended to . whether employed or selfemployed.

Thank you!!! prepared by AKM .