Tag Archives: insurance

6 financial habits you should have to retire early

1. Value your money

Every single dollar represents the hard work, time and energy you put in your work and every single one of them has the potential to grow. If you want to retire early, value your money when you are making purchase decision. You have exchange your time for your money, and since your time is finite on this world, wouldn’t it make sense to make good use of them?

(Facts: 1 dollar a day invested into an investment vehicle with 10% return will give you 1 million dollars in 56 years).

 

2. Control

Take control on every cents that flow in and out from you. Do some extra steps every time you are making a purchase.

i. Compare price between sellers offering the good you are looking for.

ii. Ask for discount.

iii. Check your receipt, make sure it is correct.

iv. Balance your income and expense, know where did your money go to every month.

v. Evaluate your expense at the end of the month and look for improvement can be made to your expense.

 

3. Save

Obviously, if you don’t have any saving, you can’t retire in any modern society since it takes certain amount of money nowadays to get the goods and services needed to live our life. So, are you at least trying very hard to save 10% of your pay check if you are on low income and 30-50% of your income if you are on higher income? Cut down the number of credit card you are holding helps in this aspect, just keep one credit card with you and cut the rest. There is some statistic shows that this action alone can helps to cut your spending down up to 30% in the next 12 months.

 

4. Invest

With the inflation at the rate it is at now, it make sense for us to invest our money in investment vehicle that produces the money needed during our retirement period. Index fund, stock, property, insurance policy are just tip of the iceberg in them market of financial product. As always, we should be familiar ourselves with the product we are going to invest our money with before making any move.

With internet, there are abundant of information available free online for us to do our research. Interaction with other people with the same mindset or made the investment before us helps us understand more about what are the return and risk involved in the investment vehicle we interested. Bottom line, do your home work before throwing in your money.

 

5. Earn

The most valuable thing we can invest in is ourselves. Points mentioned above are important when manage out personal finance but all those come from one starting point, you. Increase you earning power is much more important and definitely helps in speed up your early retirement. As mentioned here, how fast can you retire depends on how many percents of your income can you save each money. And I believed you will agree with me that it is easier to save 80% of 10K than 80% of 3K.

So, explore ways to build more income streams, strengthen your professional ability and earn more from your daily job are definitely ways to consider here.

 

6. Protection

In our journey to earn our capital to fund our retirement, we need to get ourselves covered against various risks that are outside our control. Illness, accident and hospitalization are few major risks we need to take into consideration. Take some time to read about which policy should you take up to transfer those risk to insurance without burning your pocket every year, over the years.

Be careful with every policy your adviser recommended to you, take the time to research the policy and make sure it fit your needs.

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How I buy medical insurance

I am buying medical insurance for my parent and having a lot of discussion with my sister about which policy should we buy and which company should we buy the policy from.

We met a few financial adviser after done our own research and filter down to medical insurance from two companies. Both policies are medical insurance with deductible option, and the premium of these policies is lower than  medical insurance that cover medical charges from the first dollar.

One of the reason we chosen the plan is because we have saved up certain amount of money and I think we can bear minimum level of risk. Going forward my plan will be increase the amount of deductible in the policy and can better manage the policy premium.

For younger people, I think can choose the combination of term life insurance, personal accident insurance and medical insurance to have adequate coverage. Quickly build a pool of saving is much more important because it give you more flexibility and freedom in handling many personal life issue.

 

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3 Things I Learnt When I Was Researching Medical Insurance

Over the past week, I was busy researching medical insurance for my family. It was a tedious project because there are so many companies offering so many different policies. Contacting the insurance company and study the information provided pose a big challenge to me since I am not in the financial industry. There is something I learnt during the process that I like to share with you all here.

1. Deductible

Deductible is a fixed amount of money you must pay out of your own pocket before you can claim from the medical insurance. That means you take up some risks onto yourself and not pass it all to the insurance company. The incentive for you to do this is lower premium for the medical insurance (sometimes much lower).

2. Co-insurance

Similar to deductible, co-insurance is a percentage of medical bill you need to bear when claiming from insurance company, it could be 10%, 20% depend on the plan you choose. As expected, higher percentage of co-insurance offer lower premium for the insurance policy

3. Cashless VS non cashless

In Malaysia, there are 2 type of medical claim, namely cashless and non-cashless. In the cashless option, you are given a medical card and you probably have no need to pay cash out of pocket if any medical condition/emergency come up. In the non-cashless option, you will have to fork out the money first to pay the bill and then claim them from the insurance company.

Cashless option is not only an option of convenience because it actually helps you to manage your personal finance in a more flexible manner because you do not have to keep a certain amount of money (after co-insurance and deductible) to handle medical condition or emergency. This convenience and flexibility also costs you money, with cashless option came higher premium.

Summary

Although you can enjoy lower premium by taking up the risks and lock up certain amount of money (to handle deductible, co-insurance and non cashless option), but you need to consider how much risk can you take. Things you need to consider here:

– Your current saving

– Your parent health condition

– The long-term cost of the insurance policy

– The long term expected return if you invest your saved premium

Everyone situation is different, and you have to decide for yourself which factor affect you more.

For example, if your parent is healthy and you have a pile of saving, maybe you can consider a higher deductible, co-insurance percentage or even non-cashless option. Another person who just starting to build his saving might need to consider other option instead of the suggestion above.

All being said, the first thing to do before taking up insurance policy would be does some research. There are so many insurance companies around and they all offered different policy. A simple Google search return me with more than 10 companies offering medical insurance and they are all different in price and benefits. I think it will never be a perfect policy but a most suitable policy for your current situation. There is nothing wrong to compare price and benefits offered by various insurance companies in the market now because this is your money and health we are talking about here.

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