Insurance is an important element of any sound financial plan, and a proper Risk Management plan should cover personal risk (Premature Death, Total Permanent Disability, Dreaded Diseases, Personal Accident and Hospitalisation), property risk (car, house and its contents) as well as liabilities insurance.
Having these insurance policies in place can protect your income, savings, retirement, and peace of mind if uneventful situations were to take place.
Without an insurance policy, the consequences of a tragedy can be much worse, especially with the rising cost of health care that can create a heavy financial burden on your family.
A proper life insurance can be used to pay off mortgages, car loans, and credit card debts, leaving other remaining assets intact for your family in the event of the breadwinner’s premature death.
Life insurance proceeds can also be used to pay for final rite expenses. Better still, life insurance can create an estate for your heirs.
Although insurance is a very important aspect of our lives, yet most people treat it as least important, or even strike it off from their financial budget list.
Spending hard-earned cash on vacations, shopping, movies, expensive data plans and dining is seen as more important than paying for a life insurance premium.
Before signing up for an insurance plan, you should first look at your Net Worth Statement to see how much debts you have incurred. Your insurance must be able to cover the debts so that it will not be passed down to your family in the event of a premature death, disability or critical illness that can result in a loss of income.
Therefore, you should either adjust your cash flow and expenses, or increase your earnings in order to find extra money to maintain the premium payments and excess money for savings.
Even if you have been retrenched, you must not stop paying your insurance premium, or worst surrender the policy. Make sure that your insurance is intact to cover you in this critical moment.
However, should there arise a situation when you are really tight for money, there are a few options that can be taken to make sure the insurance cover stays intact. Let’s have a closer look at them:
Car and Home Insurance
Car insurance premium is mandatory as it is required by the law; so, premium payment is a must.
Same goes for your house fire insurance premium as it is required by bank if your house is still under mortgage.
Life Insurance
You can consider a temporary term, investment-linked, or a whole life non-par insurance policy, which has an affordable premium but comes with big protection to address the problem of huge debts.
If you have an existing traditional whole life policy, you have the option of allowing the policy to exercise auto premium loans (APL) to make sure the protection is not affected due to temporary non-payment of premiums. However, this is only a temporary measure.
You cannot allow APL to exhaust all the accumulated cash values as your policy will then become lapse.
You may wish to convert the policy to an extended term assurance, where there is no further future premiums to be paid, and the sum covered will remain the same until the new revised term of coverage expires. You can even convert the policy to be a paid-up policy with the reduced sum assured.
Health Care Insurance
You’ll never know when you may fall sick or get injured. But you do have options when it happens if you continue to pay your health care insurance premium.
You can lower the premium by considering a standalone health care plan, which has a more affordable premium as compared to packaged plans. But this pretty much depends on your age, gender, health conditions and the coverage amount.
Also, if you are paying a high premium for a bigger coverage, you may want to consider reducing the coverage and get a deductible health care plan with a very low premium.
If you’re planning to do some changes to your existing health care plan, make sure you are aware of the exclusions, waiting period, pre-existing illnesses, as well as other terms and conditions of both the new and the old plan; otherwise you might lose your coverage.
Thus, with the above options, there is no excuse for not paying your insurance premiums.
In any case, before making any of the above decisions, it is best to seek professional advice so that you can make a more informed decision.
The issue of retirement is haunting everyone, especially now with the rise of inflation and interest rates. It is happening not only in Malaysia, but the rest of the world. This makes retirement planning harder and it makes us wonder, what does it take to retire comfortably?
According to Husaini Hussin, chief executive officer of Private Pension Administrator Malaysia (PPA), the reason why most Malaysians are not able to save is because they are poor with financial planning.
“We don’t normally live within our means and do not have a plan for the long term, such as building up our retirement funds,” said Husaini.
To overcome this, we must set aside one third of our monthly salary to have two thirds of our last drawn salary as income replacement in order to have adequate funds upon retirement. This fund will then need to last us throughout our golden years. With Malaysians living on average up to 77 years of age, it is definitely a challenge to have sufficient funds to retire comfortably. Therefore, it is always good to start planning for retirement as soon as possible.
Husaini Hussin
For those who contributed to the Employee Provident Funds (EPF), at least there is something for your retirement. But according to statistics, 6.1 million EPF members have less than RM10,000 in their savings. This amount is not enough to sustain even for a year.
Husaini suggested that all of us start saving for our retirement as early as possible.
“Start with a small amount, then gradually increase the saving once our salary increases. By building a regular saving habit and with the help of compounding growth, it helps to build up our retirement funds,” Husaini remarked.
What About Those with No EPF?
The younger generation these days prefer to have freedom and flexibility, which has given rise to a new generation of freelancers, small-time business owners or e-hailing drivers, with all of them not contributing to EPF, hence there is no retirement fund for them.
So how can they start planning for their retirement?
“It has to start with the right awareness, that they need to begin planning for their retirement as soon as possible,” mentioned Husaini.
It is important to start a saving habit and set aside some money each month and make contributions to a bona-fide scheme such as PRS which is a voluntary long-term saving and investment scheme to help people save for their retirement.
On the issue of scams, Husaini mentions that this is due to greed, negligence, carelessness and naivety. Even though there are a lot of legitimate investments out there, people still fall for scammers, which is now to the tune of billions of Ringgits. Based on Bank Negara Malaysia’s Financial Capability and Inclusion Demand Side Survey 2018 (FCI Survey 2018), most Malaysians are lacking in financial literacy with one out of three Malaysians rate themselves to be low in financial knowledge.
We can avoid scams by educating ourselves and getting credible information by visiting the official websites, such as the Securities Commission Malaysia (SC), Federation of Investment Managers Malaysia (FIMM), Financial Planning Association Malaysia (FPAM) and the likes, before making any investment. Also, we can seek investment advice from a licensed financial planner instead of online gurus with no evidence of qualification.
Malaysians from all walks of life are invited to visit PRS LIVE website, which is a one-stop learning centre on retirement and PRS. There are insights, articles, news and videos available for visitors to read and have a better understanding on retirement planning.
“At PPA, we advocate Private Retirement Schemes (PRS). It was launched by the government in 2012 as a voluntary long-term saving and investment scheme to help Malaysians save more for their retirement. With the regulatory framework developed by the SC, PRS forms the third pillar of Malaysia’s multi pillar pension framework,” added Husaini.
How Do We Cope with the Rising Inflation and Interest Rates?
We can do this by reassessing our spending habits and to clearly define our “needs” and “wants”. If inflation is making it difficult to stay within budget, take a moment to reassess your cash flow.
With the rise in interest rates, this will cause our spending to reduce and hopefully it can help us to save. But there is so much that we can do to reduce our expenditure, perhaps it is time that we earn additional income by getting a second job.
Other than saving regularly towards our retirement funds, we should also set aside some sum towards an emergency fund. We can then dip into when we need access to cash during a crunch period. Studies have shown that people having access to an emergency fund would not touch their retirement savings.
In order to achieve a happy retirement, we need to have the mindset of ‘saving before spending’. Allocate a certain amount of savings before deducting your expenses for the month.
“This ensures we will always set aside a sum for our retirement savings, rather than to wait until the end of the month to see if we have anything left to save after all expenses,” Husaini mentioned.
Because chances are, we might not have anything left to save if we did not allocate ahead. Another consideration is to save now and indulge later.
Start saving for the life you want with as low as RM100 to enrol in PRS via PPA’s PRS Online service today and stand to enjoy more PRS treats during the #ISaveinPRS Treats Contest period until 20 December 2022. For more information, visit https://www.ppa.my/isaveinprstreatscontest/
The quick answer is No. Why? Because if you buy travel insurance, you won’t be getting any returns once it expires, and therefore, not worth investing into.
Travel insurance, like any other insurance products, is meant for risk management. Generally, there are four ways to deal with risks:
Risk Acceptance;
Risk Avoidance;
Risk Reduction (Control); and
Risk Transfer
Risk acceptance simply means we accept that risks exist, and deal with the consequences on our own. It’s about being aware of the possibility that risks will arise from certain events in our lives, and not choosing to deal with it until it actually happens. And when it does, we are confident of shouldering it on our own.
Risk avoidance is about being aware of the existence of certain risks and taking necessary steps to avoid it. One classic example of avoiding risk is when people decide to keep their money in bank deposits instead of investing it because they want to avoid the risk of capital loss.
Risk Reduction or control is about taking calculated risks, instead of avoiding it altogether. It’s about taking reasonable measures to minimise losses or reduce the chances of a certain event from happening.
For instance, the cash deposit “investors” above may now decide to take 10% of their savings and invest in fixed income instruments, which is a safer bet; hence taking calculated risks.
Risk transfer might be the preferred approach for most people, because we are able to transfer the risk to a third-party. Therefore, we don’t “buy” insurance products to make a profit, but to transfer the risk of financial losses to a third-party called insurance company
Coming back to travel insurance, most of the time, we are willing to spend a substantial amount on hotels, transport, food and sight-seeing, but are very reluctant to pay for a travel insurance. This is Risk Acceptance at play.
Travel insurance covers us throughout a travel period to a specified destination country from a specified origin country.
These days, we can buy travel insurance together with flight tickets as most flight operators conveniently include a subscription for travel insurance into the purchasing process.
Sometimes, we would knowingly uncheck the travel insurance option because we want to save some money.
If we can splurge big bucks on a flight ticket, why not pay a little more (less than RM50) for travel insurance? If you decide otherwise, wait till you see the medical expenses in a foreign country!
Covered Area
Make sure you provide the correct destination because travel insurance is categorised based on a geographical area; unlike life or health insurance where it is based on your occupation, health and medical history.
Usually, countries are clustered into:
Area 1: Australia, Brunei, Cambodia, China (excluding Mongolia, Nepal & Tibet), Hong Kong, Macau, India, Indonesia, Japan, South Korea, Laos, Myanmar (Burma), New Zealand, Pakistan, Philippines, Singapore, Sri Lanka, Taiwan, Thailand, and Vietnam only.
Area 2: Overseas EXCLUDING USA, Canada, Iran, Syria, Belarus, Cuba, Democratic Republic of Congo, North Korea, Somalia, Sudan, South Sudan and Zimbabwe.
Area 3: Overseas EXCLUDING Iran, Syria, Belarus and Cuba.
Benefits
A comprehensive and reasonable travel insurance package should provide coverage for the following:
Personal accident
Medical expenses (sickness and accident)
Emergency medical repatriation and evacuation
Loss of personal items such as phone, passport, money etc.
Travel inconvenience such as flight delay or cancellation, missing baggage, etc.
Hijacking of flight
Smart Way to Buy Travel Insurance
Annual Insurance
If you are a frequent traveller, you may want to consider buying annual travel insurance, instead of buying one for each trip.
Basically, travel insurance is priced for the number of days one spends in a foreign country. If you travel at least 8 times a year for say 1-5 days, you can probably save a little by taking up an annual travel insurance product. Besides, the coverage is slightly better for an annual package.
More importantly, you do not have to repeat the process of buying travel insurance each time before your departure.
Family Package
Some insurers provide family packages, where premiums are cheaper with a slight discount. This is only suitable if you’re travelling with your spouse and child, as it does not cover your parents, in-laws and siblings.
However, if you’re travelling as a couple, it’s better to stick with individual insurance, as a family package may be slightly more expensive.
Direct Purchase from Insurer
This means we buy directly from an insurance company, instead of going through their distributors, namely flight operators, insurance agents, and banks.
When we buy through a distributor, the cost is higher since we will be paying the premium rate printed on the marketing material or brochures. However, if we purchase directly from an insurance company, the premium can be 25% cheaper.
Certain insurance companies have made it easier for us to directly purchase from a user-friendly website. You can complete the process within 10 minutes, and even nominate beneficiaries.
I had once bought travel insurance from an insurance company’s website when I was inside a taxi on the way to airport, just two hours before my flight. That is how we can fully utilise technology to help us.
Let’s not give excuses like “it’s expensive”, “I do not know how to buy”, or “I have forgotten to buy travel insurance” any more.
The world is getting dangerous as we speak, with act-of-war, illnesses, and tragedies. Our country may be safe and protected from natural disasters or disease, but when we leave home soil and set foot in other countries, nothing is certain!
About the author
Kevin Neoh is a NextGen Money Coach who works with people to help them transform their relationship with money to improve their lives with the money they have. Kevin can be contacted at kevin@nextgenadvisors.my and www.kevinneoh.my.
On the topic of retirement planning, there are a lot of things that comes into mind. Savings, investment and retirement funds are just some of the issues that we need to face. How much do we need to save every month? Where to invest? Is RM1 million enough to retire?
Smart Investor spoke to Ismitz Matthew De Alwis, executive director & chief executive officer, Kenanga Investors Berhad to get more insights on this issue.
Ismitz Matthew De Alwis
Smart Investor: It is reported that 75% of Malaysians don’t even have savings of RM1,000. Why do you think most of us are not able to save?
Ismitz Matthew De Alwis: With rising inflation and poor personal financial habits, most Malaysians would not be able to survive for more than three months if they were to unexpectedly lose their main source of income. Although the Employees Provident Fund (EPF) and Private Retirement Schemes (PRS) withdrawal policies were relaxed to assist those significantly impacted by recent events, this has led to many depleting their retirement savings faster than planned.
I believe that it all eventually boils down to their personal finance fundamentals. Many forget that the process of building up sufficient retirement funds is not brief, but a lifelong journey.
Everyone seems to be talking about that magic RM1 million. It is achievable and will it be enough to retire comfortably?
Everyone begins their journey from a different starting line and the decisions we make along the way will affect our destination in the end. RM1 million may seem a big amount for some, but a drop in the pool for others.
Investors should focus on saving for a sufficient amount that is achievable and enough to retire (according to their desired lifestyle) without worry. The major factor is to plan early for their retirement.
6.1 million EPF members have less than RM10,000 in their savings, it doesn’t look too good. What can these people do to ensure they can retire well and not continue working until old age?
Make it a habit to review and evaluate your financial portfolio periodically and make the necessary changes when needed. This can reduce the chances of panicking and making rash decisions when difficult situations present themselves. I tend to link retirement planning towards building a well-rounded ship.
By actively evaluating their portfolios, they can ensure that their ship is well-fuelled and constructed with high-quality materials, to protect their growing cargo from rough waters and strong winds.
The younger generation these days seems to like working as a freelancer, running their own small business or becoming an e-hailing driver but with no EPF, how can they start planning for their retirement?
Proper research and planning are required before diving into any form of investment as there exists many products and options which all serve the same purpose: providing additional income. They can then set aside this additional income and park it under voluntary long-term saving schemes.
For example, here in Kenanga Investors, we offer OnePRS by Kenanga as a voluntary retirement scheme to assist investors to supplement their current savings for their golden years. With an increasing life expectancy and the rising costs of living, many are finding that their retirement funds are not enough to solve any potential financial difficulties during their retirement.
What are some of the investment vehicles that you would suggest for retirement planning?
There are usually two main factors when it comes to discussing preference, an investor’s investment horizon and risk tolerance. When planning for retirement, investors can opt for short, mid or long-term investment periods, while their risk tolerance depends on the person itself. Investors who are willing to take on higher amounts of risk to achieve higher returns or growth are categorised as growth or aggressive investors.
Moderate risk investors are those that are in-between and are willing to take some percentage of losses to achieve a steady growth rate. Also, low-risk or conservative investors are those that do not participate in high-risk investments, they often seek a steady stream of income with very low risk.
There is no one-size-fits-all option for retirement planning, as there exists a wide variety of investment products in the market that cater to various risk tolerance and investment goals. Some examples of these are unit trusts, real estate, bonds, deposits, stock trading, and exchange-traded funds. In short, be sure to first determine your risk tolerance and retirement goal before committing to any investment vehicles.
There will be an increase of senior citizens in Malaysia as the life expectancy of Malaysians increases. Undoubtedly, decreasing fertility rates and increasing life expectancy is fast forwarding Malaysia to the status of an ageing society.
Based on the Department of Statistics Malaysia, the total population of the country was recorded at 32.4 million in 2020, with a total 2.2 million of the population or 7.4% aged 65 years old and above. The World Bank defines a country as ‘ageing’ when the percentage of people aged 65+ is above 7%, thus, categorising Malaysia as one of the ‘ageing’ nations.
The 2020 report by the World Bank, titled: A Silver Lining: Productive and Inclusive Aging for Malaysia, estimated that Malaysia will be an ‘aged’ nation by 2044 and ‘super-aged’ nation by 2056 with at least 14% and 20% of the population aged 65 and above respectively.
Whether it is for ourselves or for our parents, are we prepared for aged care?
Dr Carol Yip
Responding to Smart Investor, Aged Care Group Sdn Bhd (ACG) chief executive officer, Dr Carol Yip says that many are still struggling and worry if there will be enough money to retire, especially when medical costs continue to rise.
“Have you ever spoken to your parents or your family members about this? Most of us have not talked about or planned on retirement with our parents or families,” Dr Carol points out.
She notes that it will be difficult when adults in their 40s and 50s need to take care of their aged parents’ medical and living expenses, in addition to what they may have to spend on their own medical and living expenses. The situation may worsen with sibling rivalry and unwillingness to share the financial burden of caring for aged parents.
Increasing Needs for Aged Care Service
Group chief executive officer of Seterra Group of Companies, Rashidi Yahaya said that more and more people are now looking for aged care for their parents. Seterra is a Syariah-compliant aged care company located in Bukit Damansara, with the goal to revolutionise the standard of Islamic aged care in Malaysia by setting a new world class standards in aged healthcare facilities.
“Inevitably parents will grow old. When they are no longer mobile or become bedridden, their children will find themselves inadequately ready to provide the necessary care,” he informs.
He explains that there is also a shift in the thinking of the elder community today. They do not want to burden their children when they grow old, and can accept living out their older age in a place that can fulfill both their medical/physical and spiritual needs.
Society at large has moved away from traditional family values where the elderly are mostly at home under the care of their family members, shares Angela Francis, a project coordinator for Ipoh-based Ozanam Retirement Village (ORV).
“Hence, it is becoming more necessary for people nowadays to start planning on how to secure and support themselves in their twilight years,” she says.
ORV provides an essential community living environment for seniors. It is an initiative by The National Society of St Vincent De Paul (SSVP) and the Titular Roman Catholic Bishop of Penang where Angela is the vice president of SSVP.
There are some critical perspectives regarding retirement living and aged care. In the old days, the responsibility to care for the parents lies on the children. Even today, some are still stuck with this perspective.
“You are not neglecting your duty as a son or daughter by sending your mother or father to a home as these homes could perhaps take even better care of them for you,” Rashidi explains. “We still have a duty to provide emotional, physical and spiritual support to the best of our ability.”
“For Muslims especially, there are special considerations and concerns. These concerns need to be balanced with providing the best aged care for our parents according to our means and the seeking of Husnul Khotimah, of finding peace and contentment in their final years,” he points out.
Are There Enough?
As Malaysia moves closer towards becoming a ‘super-aged’ country in less than 35 years, are there enough aged care facilities that can cope with the demands?
“Elderly people have multi-types of illness and will need a qualified multi-disciplinary team of trained staff.”
“We don’t have enough purpose-built licensed aged care facilities with professional managers and trained staff to provide quality care according to the define-specific old age illness like dementia, Parkinson’s disease, stroke, kidney failure, cancer, heart problems and frailty – just to name the common problems,” says Dr Carol.
Rashidi agrees with Dr Carol that the facilities for aged care needs are not enough, noting that the aged care sector is very under-served, especially for Muslims. That is why Seterra is pioneering a structured approach to retirement and elderly care for Muslims.
Rashidi Yahaya
“We sincerely hope there will be more Muslim players in the industry. New standards of caregiving and infrastructure, nutritious halal food and food for the spirit are needed to ensure a dignified ageing experience, and adequate medical care are just some of the factors that needs to be put in place,” he says.
In Malaysia, developers are already noticing the potential of this market segment and have invested in building retirement villages to cater to the anticipated growing market. In the last ten years, residential property developers have begun developing aged people-friendly residences. However, this is still not enough.
Current townships have more residential apartments, commercial buildings and shopping malls as compared to aged care related facilities which is not the main attraction for buyers. But the awareness is increasing. Will an aged care friendly ecosystem in the residential building be a game-changer?
“There’s no statistic to back the claim that it will be a game-changer. But I’ve worked with developers to build aged care facilities in their township development. It’s satisfying to see that most residents can easily get the help they need anytime as the aged care operates 24/7 in such development,” Dr Carol informs.
According to her, in Singapore, every township development or common area is required to have childcare and senior citizen centers among other community facilities. It is for the convenience of those who are staying in that particular housing area.
She strongly recommends that the elderly live their old age in a neighbourhood familiar to them. Even better if it is within the same neighbourhood that is within a 5 to 10 km radius, and there is a licensed aged care facility for them.
“We need to start engaging the stakeholders that are building smart cities for sustainable living. It would be to encourage them to include aged care support infrastructure, facilities and support services.
“The government has access to all the data and surveys from MyCensus; as well as health and medical conditions of Malaysians via public hospitals and clinics from the Ministry of Health. They should be able to predict the ageing needs based on that data. That’s where all the data comes in for a better projection, planning and execution,” she notes.
Lack of professional caregivers, affordable care, elderly-friendly accommodation and other related problems would require urgent attention before the silver tsunami overwhelms the country.
Is Aged Care Exclusive?
Who has access to aged care? Is aged care only exclusive to those in the wealth hierarchy (aka the one who can afford it)? Dr Carol insists that aged care should be inclusive to help those, and all in need.
“We have low-cost airlines, low-cost hotels, so the same should go for aged care. We need low-cost aged care facilities with proper care for the elderly. There is a need for more affordable aged care that people in need can access,” Dr Carol explains.
Aged care should be inclusive but are they affordable especially to those in B40 or M40?
“Today, I don’t think that the B40 segment can afford aged care, while the M40 can only afford to provide aged care amongst the family if the family comes together to take care of each other and their aged parents,” Dr Carol shares.
According to her, it has to be a shared effort and shared financial responsibility depending on how each adult child plans their retirement. If the M40 does not have family, they will need help from the community such as friends and neighbours.
She emphasises on the government’s role in providing support and incentives to make aged care affordable by categorising the population data by area or township, enforcing and implementing a continuum of care services that are easily accessible.
Non-Governmental Organisations (NGOs) have been playing an active role in many segments, especially in helping those in need.
Angela Francis
“As part of an NGO that serves the weakest and marginalised within society, we regularly encounter many of the elderlies who are abandoned and left to fend for themselves,” Angela says.
She adds that the growing need to provide care, better living standards and security to this vulnerable group in society has inspired and driven them towards the development and management of ORV.
“We want an eco-friendly environment. Hence ORV is being built in Taiping, Perak – a land surrounded by lush green foliage to harness the tranquility and peacefulness from nature,” she says.
“We would also want to ensure that we are giving the opportunity to the right target group, namely the elderly, to reside in the retirement village,” Angela explains adding that the majority of those using their services are in their 60s and 70s.
Islamic Aged Care
Aged care is needed across the board. It should be inclusive without any label, be it from a religious point of view or race.
“Out of the 1,400 aged care homes in Malaysia, none are registered as an ‘Islamic Aged Care’ home,” Rashidi informs.
On the hesitance of aged care in Malaysia especially for the Muslim community, Rashidi comments: “If one cannot take care of one’s parents because they are bedridden or seriously ill, it is the children’s responsibility to seek solutions to care for them. Letting others take care of their parents does not mean they are neglecting their duty. They are still providing for them to the best of their ability.”
The Muslim mindset about aged care or retirement homes needs to change. They must see that it is a natural progression of their own life and of their parents to undergo a new phase – to seek spiritual fulfillment, to handle all worldly issues and to have a dignified and peaceful ending with the best of care.
With the world evolving, aged care is not as typical as we think. The way we view things needs to change and come from different perspectives.
Placing your parents in an aged care facility does not mean you are abandoning your elderly parents. However, it must be followed by strict compliance as enshrined in the Quran and the Hadiths. “You still owe a very heavy duty to them and keeping your parents happy and fulfilled is still your responsibility which you cannot abdicate to a Rumah Orang Tua,” he emphasises.
Never Too Late to Start
Have we planned on how to survive our golden years? If you are to retire, how much money do you need? Would it be sufficient to cover for the rainy days?
RM2,500 per month looks to be sufficient for retirement. But depending on one’s lifestyle during retirement, it may not be enough. “With rising inflation, this amount will not be sufficient,” says Angela.
Sadly, according to the Employees Provident Funds (EPF), around 6.1 million contributors aged below 55 or 50% of total contributors only have RM10,000 or less, which means this group of contributors may only have RM42 per month to live for another 20 years after retirement.
“It is estimated that 39.2% of our population have ZERO savings for aged care (World Bank calculations based on the Department of Statistics Malaysia, EPF and KWAP). In addition to that, almost 50% of the ageing population in Malaysia falls into the B40 category. At Seterra, it is our objective to cater to all walks of society regardless of their faith, beliefs and ethnicity,” Rashidi informs.
According to a survey on ageing conducted by Ipsos in 2018: when asked what’s the worst thing about growing old is, globally 30% of those polled responded that they personally worry about not having enough money to live on in their later years,
So, how can we prepare for our ageing needs? It is never too late to start planning for your retirement. The rising cost of living, medical expenses and inflation should be factored into our retirement planning.
“Age is just a number. Choosing to work part-time during retirement can maintain a good mental health and earn an income,” says Dr Carol.
She also suggests the need to increase the retirement age to 65 and beyond, so that people can continue working for as long as they can. “It’s not that bad. It helps you to be physically, mentally and socially active.”
As for the younger generation, here’s a piece of advice from Dr Carol.
“Save more money than what is required by EPF. This is because when you retire, you may need your savings to help your aged parents, especially when your parents’ retirement income is insufficient to take care of their health and medical care. Get ready before the storm,” she advises.
When it comes to retirement planning, investment is one of the tools that can help us to achieve our goals. The famous quote by Benjamin Franklin rings true;
If you fail to plan, you are planning to fail!
Recently Smart Investor spoke to Isnaliyah Sarwadi, director, business development of PMB Analytics Sdn Bhd (PMBA) which is a subsidiary of Pelaburan Mara Berhad, to get her views on the topic at hand.
According to her, there are many investment vehicles to support our retirement planning, but the two vehicles that she believes could warrant the achievement of the goal are through unit trust and property investment.
Unit Trust and Property
Unit trust investment is one of the most common investment vehicles in Malaysia. It is easily accessible by everyone and it also has a very low entry barrier. You can start investing in unit trust from as low as RM100, which makes it affordable for everyone. It can also be used as a tool to invest regularly each month.
One must emphasize asset allocation and diversification strategies to benefit the most from unit trust investment. With just a small amount of money, you can already be exposed to global markets such as the United States, ASEAN, China and the rest of the world. Just ensure that it matches your investment objectives, investment horizon and risk tolerance level.
Secondly, there is property investment. With the right selection of property especially the right location, it can save you time and money to access to your work place. On top of that, price of a good property will always grow over a long period of time. When it appreciates in value, instead of selling it to buy bigger property (an upgrade of lifestyle), one may lower or maintain the lifestyle by buying two properties to accommodate two purposes (accommodation and investment).
Hopefully, when you combine these two investment vehicles, you will enjoy strong financial standing when you retire. These investments can also be liquidated and used for other purposes such as for your children’s education or to start off a new business.
Another tip by her is the new age comes with the latest technology. You must equip yourself with new skills as well. If you start saving early, over time, you will have money to start great things in life as the savings will enable you to start small businesses (become an entrepreneur). Immediately, the money will provide you with working capital or a deposit to buy machinery or vehicles for transportation to start the business. In addition, it will provide you money for upskilling since you will need to attend courses of your preference, for example, culinary, bakery, saloon, sewing, massage technique, writing technique, etc.
Why Aren’t We Able to Retire Well?
The reason that some of us are not able to retire well is caused by the low awareness of personal financial planning. We tend to spend more than what we earn, which then causes us to borrow in order to carry on with our lives.
The credit card debt trap which can be a very vicious cycle. Once you are trapped as you are only able to pay the minimum amount each month, it will be very difficult to get out of it. It can snowball to a huge amount over a period of time.
It all boils down into a mismatch of lifestyle against income. Ever heard of the quote, “We buy things we don’t need with money we don’t have to impress people we don’t like.”
We also tend to fall prey to “ponzi” schemes and scammers out there. We are easily blinded by the promise of getting rich instantly and receiving extraordinary monthly returns.
Tackling the Rising Inflation and Interest Rates
Finally, we have to deal with the issue of rising inflation and interest rates. Here are some tips that Isnaliyah is kind enough to share with us. To help us weather the storm, we should do the following:
Prudent management of cash flows and personal budgeting requires you to choose wisely between needs and wants
Structure your retirement portfolio well. The investment horizon is for the long term and should the market tumble, don’t panic and don’t abruptly restructure your existing portfolio.
Invest in upskilling so that you can look for additional income streams if the need arises.
Retirement planning is something that we should not take for granted. As the years pass so quickly, especially these days, we will be staring at the day we retire very soon.
If we do not take action, we may have to work until our golden age. So do not delay; start to plan for your retirement now.
The death of your loved ones is a terrible event, but it can’t be avoided and it’s a reality that we have to face. If you are married, it is your hope and wish that you and your spouse will get to grow old together.
But if it is fated that he or she passes away prematurely while we are not ready, here are 5 things that you should know.
1. Can I claim alimony (nafkah) for maintenance of myself or for my kids from my late husband’s estate?
It is a man’s obligation to provide for his wife and kids while he was still alive. But once he passes away, you can only demand for alimony from his estate are those that are overdue only while he was still alive.
Any claim of the unpaid alimony can be filed in the Shariah Court. You will then need to present the court order to the estate’s Executor/Administrator for the purpose of payment.
2. I have access to my husband’s bank account. Can I withdraw the money inside and use it to carry on with my life?
All the wealth of the deceased is considered as inheritance. The priority is to pay off all debts and for the expenses for giving out the inheritance. If there is balance, then it will be distributed to the next of kin.
If a family member needs the money to carry on living before the above is taken care of, then it requires the approval from all the heirs before it can be used. The amount that can be taken is the one allowed for her share of Faraid entitlement out of the total estate.
If it exceeds her share, then she needs to repay it or get consent from all heirs to allow it to be used.
3. My husband puts my name as the nominee for his Employee’s Provident Fund (EPF)/Tabung Haji/Takaful, can I use the money for my own benefit?
A nominee for his EPF does not make you the beneficiary. A nominee can only act as Executor/Trustee for the money and it can’t be used for your own benefit. Instead, it must be used for the administrative part of the estate and if there are any balance left, then it must be distributed according to the Syariah law inheritance to the respective heirs.
If an Executor/Administrator for the deceased’s estate have been appointed, it is better to surrender the money to ensure the transparency in administration and distribution of the estate, as well as to avoid conflicts.
Whereas a nominee for his Tabung Haji or Takaful depends on the type of nomination. If it being named on the basis of Hibah, then you can receive the money as beneficiary. But if the nominee is on the basis of Executor/Trustee, then you need to act in accordance of a nominee for EPF as mentioned above.
4. What are the steps to get a bigger portion from my share of Faraid?
Husband or wife of the deceased can make a claim for Matrimonial Asset (Harta Sepencarian) in the Shariah Court for the wealth that was acquired while you are both married. Through these claims, you are able to get a portion from the Matrimonial Asset that is decided by the Shariah Court as well as the portion based on Faraid.
5. What should I do if I was appointed as a trustee for my children’s estate who is still a minor?
All immovable property that is inherited by under-aged children needs to be registered under your name as a trustee.
For cash, it is best that you open a trust account for the children to be transparent. You need to ensure that the money will be managed and used for the welfare of the children. A trustee must be meticulous and make records or keep receipts on its usage and it must be used for the benefit of the children.
A Huge Burden
In managing the estate of someone who has passed away, the main objective is to ensure that the debt and expenses needs to be administered first, before the distribution can be made of what is left. Therefore, estate planning is very important, not only to ensure that the estate is managed well, but also to ensure the well-being of heirs is taken care of.
About the Author
The article is written by Ms Rahimah Binti Sazali, Assistant Manager, Estate Management Department of as-Salihin Trustee Berhad. as-Salihin offers full-fledged Islamic Estate Planning products and services such as Wasiat writing, declaration of Hibah, jointly acquired asset agreement, takaful trust and living trust.
For many Malaysians approaching retirement or already retired, one of their biggest fears is having a massive hole blown through their nest-egg which they have painstakingly built up over the decades to see them through their golden years.
For many people, the situation becomes even more tenuous as their retirement funds are barely sufficient to provide a comfortable level of living or last till end of life.
Two of the major risk factors that can reduce individual retirement savings are health and income shocks, says Mohd Sedek Jantan, head of Investment & Financial Planning / Investment Unit at UOB Kay Hian Wealth Advisors Sdn Bhd.
Health shocks are defined as unpredictable illnesses that diminish health status, he says. “Individuals facing health shocks are often affected by significant out-of-pocket (OOP) healthcare expenditures incurred to obtain healthcare and the income loss from an inability to work.
“The OOP spending has particularly serious effects on poor households, who tend to spend more on healthcare as a share of their income compared to their richer counterparts,” he says.
On the other hand, income shocks are referenced by how many significant drops in income a person has suffered over their working career, says Mohd Sedek.
“For example, the current Covid-19 pandemic has caused the unemployment of large numbers of people, while others are facing pay cuts. The income shock during the pandemic is more severe among young adults.
“Income shocks are strongly associated with an expected spending reduction and, at a certain level, the individual will liquidate their savings in order to put food on the table.”
Mitigating Against The Risk Factors
Mohd Sedek says like other expenses in retirement, planning can make a difference in managing such risks. He says healthcare costs influence retirement income planning, and as such, the impact of rising healthcare costs should be a priority consideration.
“The most economical way to absorb the health shock is by changing lifestyle,” he adds.
He says research studies on people’s behaviour have shown a causal relationship between unhealthy lifestyles and healthcare expenditure, where individuals who practise unhealthy lifestyles need more healthcare services, forcing them to spend more on healthcare expenditure.
Taking steps to improve health can reduce annual medical expenses, he adds. In the case of Malaysia, hypertension stands as an important area of worry for economic evaluations because of the wide range of issues involved for the individual and for society.
“It is one of the most expensive diseases as far as treatment is concerned, as it generates higher healthcare expenses than those produced by individuals with normal blood pressure.”
However, he notes there is a reduction in total direct costs of the hypertension population if each patient’s blood pressure becomes controlled.
“This reduction in direct costs can be achieved by changing lifestyle habits, for example: reducing dietary sodium intake, decreasing body weight, quitting smoking, and reducing alcohol intake. In addition, anti-hypertensive medications can lower the risk of cardiovascular mortality in hypertensive individuals,” he adds.
High Cost Of Medical Insurance
R. Sathia, co-founder and CEO of GFlex40, a Malaysian insurance technology company, concurs the highest risk factors that would lead to reduction of wealth for a majority of Malaysians are health issues, either for themselves or their closest family members.
“As it has been well researched, the cost of medical insurance in Malaysia is among the highest in Asia and continues to rise,” he adds.
He points out that Malaysia also suffers from among the highest obesity rates in Asia. “The risk factors increase chances of individuals falling ill, and when combined with the cost of healthcare can quickly result in depletion of any savings that have been built by individuals,” he adds.
To reduce the risk of this happening, Sathia says that apart from investing in maintaining one’s own health by way of exercise, diets, etc, another supplementary and important mitigant would be investment in the appropriate health or medical insurance plans.
“By procuring such a plan early in life, individuals can ensure they are covered for unforeseen circumstances later in life,” he advises.
For the individual there is little they can do to prevent the rising healthcare cost across the board in the market. “However, on a personal level, everyone can work towards limiting their exposure to such costs by living a healthy lifestyle from early in their life,” he says, adding this would include proper healthy diets and exercise.
Sathia notes that exercise is a particularly interesting topic when it comes to health/medical insurance.
“More and more insurance and Takaful companies are investing in health and exercise related insurances that track the lifestyle and exercise habits of customers through the use of electronic gadgets and apps.
“By availing oneself to such an insurance early and leading a healthy lifestyle, not only would the average person be able to improve on their overall health but they can also potentially reduce their own premiums as a result of their healthy lifestyle.
He also says there have been efforts across the world to factor in lifestyles and exercise behaviours through electronic monitoring as inputs in pricing health and medical insurance by technology driven insurance companies.
“These efforts coupled with efforts to optimise operations of third party administrators and hospitals would eventually be able to lead to a reduction of pricing,” he adds.
Wealth Protection Measures
So, whatcan we do to prevent rising healthcare costs from eroding our retirement nest-egg?
UOB Kay Hian Wealth Advisors’ Mohd Sedek says reviewing one’s current insurance plan is vital to ensure it does not eat up the retirement saving.
“As healthcare costs continue rising, it is important for each individual to have life and medical insurance. According to the Employee Benefit Research Institute (EBRI), healthcare expenses are the second largest component, and these expenses steadily increase with age.”
Further, it is important for the policyholder to review their insurance policy from time to time, to ensure having adequate protection for the future and safeguard the income-earning abilities.
Sound financial advice also plays an important role when it comes to retirement planning.
“Individuals, regardless of their income level, should engage with a certified financial planner to ensure the retirement saving is not just sufficient but also sustainable, to hedge it against healthcare cost,” advises Mohd Sedek.
A financial adviser, he says, will review the individual’s overall financial situation and address the solution based on their needs. From the analysis, the financial planner will help the individual to address the challenges by:
Estimating their expected out-of-pocket healthcare expenses, such as insurance premiums;
Creating contingency plans for unexpected expenses such as long-term care; and
Working closely with the client to help protect their wealth by integrating healthcare costs into the overall retirement plan.
He adds there are a number of insurance types and riders that can help to hedge the rise in healthcare costs, such as investment-linked products, medical card, critical illness coverage and specific elderly insurance.
In addition, the financial planner can explain the cost–benefit for each insurance plan, creating trust funds and other advanced planning strategies.
Risk Management Needed To Absorb Income Shocks
To mitigate against income shocks, individuals should do planning that includes matching up income streams, including guaranteed income, to fund recurring healthcare expenses such as insurance premiums.
Individuals may also plan on maintaining an emergency health savings fund for non-recurring health expenses, says Mohd Sedek Jantan, head of Investment & Financial Planning / Investment Unit at UOB Kay Hian Wealth Advisors Sdn Bhd.
Also, delaying withdrawal from the EPF can create a larger monthly benefit. “Hence, personal budgeting is important to achieve a clearer vision of personal finances so you can begin to plan your spending and saving and take control of your money.
“In short, budgeting helps you to ensure you have the right amount of money at the right time.”
And when doing budgeting, both regular events and extremely uncertain events must be dealt with. It is advisable for individuals to set aside at least six to nine months of living expenses in a money market account, one that offers liquidity and the safety of the principal.
“An emergency savings fund should be established so you don’t have to consider tapping your retirement savings,” he adds.
Dealing With The Medical Insurance Conundrum
If they can afford it, it is prudent for senior citizens to have medical insurance as it can help offset the medical expenses that they’ll incur as they age.
However, the flipside is that medical insurance premiums increase dramatically as we grow older, ironically at a time when we are no longer generating income.
So, is there a way out of this predicament?
Mohd Sedek Jantan, head of Investment & Financial Planning / Investment Unit at UOB Kay Hian Wealth Advisors Sdn Bhd, notes that age is one of the prime elements in the health insurance premium calculation because it impacts the medical support a policyholder may require.
It is significant to understand that an elderly insured individual will possess medical conditions quite different from those of a young or adult insured individual, he says.
“Typically, the premium amount increases on average about 5% to 8% for every year of age; it can be as low as 5% annually if you’re in your 40s, and as high as 12% annually if you are over age 50,” he says, adding that high-risk health status also has the potential to greatly increase costs.
As such, Sedek says it is advisable to buy health insurance “at a young age to avoid high insurance premiums”, as the policyholder is able to lock in lower premiums and reduce the total amount they will spend on life insurance over the course of a lifetime.
Advancement in technology is changing the way care is delivered; allowing elderly consumers to apply self-directed care, while availing healthcare professionals access to information essential to the healing cycle in an instant. Furthermore, technology allows for aged care businesses to answer consumer demand in areas that were previously difficult to access.
Frost & Sullivan stated (Major Trends & Attractions In The Global Aged Care Market, 2015), that increased use of technology in the aged care market not only has economic benefits, but enables the ageing populace to enjoy better quality of life. Consumers and care workers alike would have a smoother journey in the care experience when care is delivered to where and when it is needed.
Ageing populations around the world are rapidly growing and aged care businesses need to capitalise on this technological boon to succeed in the future. Hence, increasing attention is being given towards developing new technologies that will help capture quality data.
Taking stock of the local environment, let’s look into three key areas in healthcare that technology progress will enhance and propel news levels of consumer demand and quality service.
Living at Home Longer and Safer
For elderly people to live longer in their homes, wearable devices – such as smart bands, intelligent insoles, and so on – and smart home technologies are being developed in order to support them through improved remote monitoring.
Sensors will regularly track the individual’s health readings and feed data into a central monitor point for the overseeing healthcare professional to keep track in real-time and provide feedback/support from distant locations. In the event a possible fall or mishap occurs, an immediately response could be mobilised.
With the development of the Internet of Things (IOT), technologies that integrate various devices together have become increasingly sophisticated, to the point where sensors can alert a central monitoring system of a possible mishap if a resident of a home has not left a particular room for an unusual amount of time.
Lost and Found
Alzheimer’s Disease International reported that the number of dementia cases in Malaysia were estimated to double every 20 years. That is one new dementia case in every three seconds. Depending on the stage of the disease, persons with dementia may require 24-hour supervision.
In these cases, wearable technology is invaluable. Apart from tracking vital signs and providing reminders for the wearer to take their medication, some wearable devices incorporate GPS to track children and seniors alike, or detect if a user has been immobile for a prolonged period – in this case, it will call for emergency services or pre-set contacts numbers.
Assisted Daily Living
In Frost & Sullivan’s report, competition in robotics development is expected to grow intensively between 2020 – 2030. There are many benefits robotics could bring to aged care.
Robots can provide help with daily living activities such as cleaning and cooking, as well as assistance with exercise and transferring (for example: from chair to bed). They can also be companions, analyse emotional well-being and act to mitigate feelings of loneliness amongst the elderly.
In Japan, senior care robots are already being piloted. Therefore, we can expect to see more sophisticated robots in the future that could help elderly people do more and achieve better quality of life.
Technology Enhancing Care Quality
Melinda U, General Manager of Managedcare Sdn Bhd, says the ability to access and analyse well-documented information is crucial to making sound decisions for the best possible health outcomes, not only when care is needed but also for prevention.
“These technologies give empowerment to individuals by helping them to self-manage their health and to take action when alerted about a potential crisis early. For medical and healthcare professionals, it enables them to provide more timely interventions and efficient support.”
Integrating new technology into the aged care industry will create smoother processes in care delivery, provide better insights and establish superior customer care. Naturally, consumers will seek out businesses that can effectively showcase their ability to provide the best care to their clients.
Currently, there are many gaps within Malaysia’s care delivery process and aged care ecosystem in terms of efficiency and cost of care. Despite being in its infancy, Malaysia’s aged care industry is in a unique position to integrate and grow these technologies alongside its developing ecosystem.
“These technologies could cover the gap in service delivery, but they aren’t mainstream in Malaysia yet. There is still a lot of research and development going on in this area. However, Managedcare recognises its potential to complement our mission in making care more easily accessible and we are exploring these options” says Melinda.
Most people, especially family breadwinners, have life insurance policies. They assume that on their passing or if they are permanently disabled, the policy will pay out the sum insured that will take care of the financial needs of his family.
However, depending on the circumstances, things may not pan out as the policy holder intends. The following story about Sam highlights the different scenarios that may lead to unintended consequences, and offers the solutions to deal with it.
Question:
Hi, I’m Sam and I’m 43 years old. I’m happily married to Jenny, a 40-year old housewife and together, we are blessed with two children namely, Jim and Gina aged 6 and 3.
As I write, I wish to continue to provide for my family’s living expenses and pay for Jim and Gina’s tertiary education fees if I pass on prematurely. In view of this, I intend to buy a new life insurance policy where the sum assured is RM1 mil and nominate Jenny to be the sole beneficiary of my new policy.
With that being said, I have a few concerns. My question is: ‘Who would receive and manage the RM1 mil in sum assured if:
I become comatose or mentally disabled?
After my passing, my wife passes on before my children reach adulthood? Or,
I pass on simultaneously with my wife due to an accident?
Answer:
In Sam’s case, having a life insurance policy or a handful of them is a good start. The sum assured is helpful to his loved ones if he passes on prematurely as the money will be paid to his wife Jenny in a couple of weeks after Sam’s passing.
It is unlike Sam’s estate which may consist of cash, shares, and properties which will be frozen upon his death. It could take 1-5 years to unlock Sam’s estate and have them distributed to his beneficiaries, depending on his testacy status.
Here, I’ll list down possibilities of how his sum assured of RM1 mil could be received and used in the three scenarios above. More importantly, I’ll share a simple solution that Sam could use to be assured that his life insurance policy will be able to serve his intended objective.
For a start, most, if not all, life insurance policies will cover both death and total permanent disability (TPD). If Sam becomes comatose or mentally disabled due to an accident, his insurer will pay out the RM1 mil in sum assured to him.
But, is this RM1 mil collected helpful to his loved ones?
Well, it depends on the type of bank account his RM1 mil will be deposited into. First, if the RM1 mil is transferred into Sam’s personal savings account by his life insurer, who can have the access to his RM1 mil if Sam is the only person who has the username and password to his bank account?
Thus, his RM1 mil will be stuck and is of no immediate help to his family members.
Second, if the RM1 mil is banked into Sam’s joint account with Jenny, she will have full access to the money. So, is this problem solved? Well, I don’t think so because Jenny could be prone to mismanaging the money.
This could be due to a variety of factors ranging from overspending, to being conned by swindlers and failures in business ventures and investments. But then, Sam could place great confidence in Jenny’s ability to manage his finances.
If that’s the case, will it solve the issue? In a way, the answer is yes but it’s only if Jenny remains alive on planet earth. If not, this would lead us to:
It is possible for Jenny to pass on before their children reach adulthood, and this is after Sam’s demise. In this scenario, Jenny’s balance sum from the RM1 mil given would form a part of her estate and be distributed based on her testacy status.
If she has a written will, the balance sum would then be distributed to her beneficiaries accordingly by her executor.
Otherwise, without a will, the sum shall be allocated based on the ratio of ⅔ to Jim and Gina and the remaining ⅓ to Jenny’s surviving parents as mentioned in the Distribution Act 1958. If Jenny has no surviving parents, then, the sum shall be allocated to her children in full.
Here is a question. How will Jim and Gina collect their sum allocated, if they are below 18 years old?
The answer: Jim and Gina must have a trustee to help them collect the money and manage it on their behalf until they reach, at least, 18 years old.
This leads us to another question: ‘Who shall be their trustee?’
Will it be one of Jim and Gina’s uncles or aunties from either their paternal or maternal side or both? This could potentially result in conflict and strife among Jim and Gina’s relatives, which leads to more financial uncertainties to them.
The RM1 mil in sum assured will form part of Sam’s estate. Thus, the sum is to be distributed based on Sam’s testacy status, which is similar to what we had discussed above in Scenario 2. But here, it is common for a husband like Sam to have elected Jenny to be the sole executor of his will.
Hence, in the absence of a written will or a will without an appointed substitute executor, the question of ‘Who shall be their trustee?’ remains. The siblings’ relatives (both paternal and maternal) may contest to be their trustee, which can result in financial uncertainties for both Jim and Gina as mentioned earlier.
First, the RM1 mil in sum assured shall be kept with Sam’s insurer for a period of 12 months until a trustee to Jim and Gina has been appointed.
Let’s say, Jim and Gina’s relatives could not come into consensus on who should be their trustee after 12 months of their parents’ passing. In this case, the RM1 mil in sum assured will then be transferred from Sam’s insurer to a public trustee, namely Amanahraya Trustees Bhd.
The money shall be kept until Jim and Gina reach 18 years old, the age when both of them are eligible to receive their rightful inheritance. However, this would lead to three common issues for both Jim and Gina as listed below:
Who shall fund Jim and Gina’s daily living expenses before they hit 18?
Would Jim and Gina be aware of their inheritance when they hit 18?
If they do, how will they manage their inheritance after receiving theirs?
Hence, having a life insurance policy alone is insufficient to offer assurance that the money provided for will eventually fulfill Sam’s intended purposes. As such, what then is his solution?
The answer is for Sam to set up an insurance trust.
So, what is it?
For a start, it is the use of both a life insurance policy and a trust to manage the sum assured based on Sam’s intentions upon occurrence of events stipulated in his trust document. Here is how it works;
a. Sam buys a life insurance policy where his sum assured is RM1 mil.
b. He assigns his policy to his trust instead of nominating Jenny as a beneficiary.
c. Then, Sam may elect Jenny, Jim and Gina to be beneficiaries of his trust.
d. Sam may dictate how and when the RM1 mil would be distributed to his beneficiaries. For instance, he may instruct the trustee to distribute the sum in the event of his passing on or him becoming permanently disabled according to the following proportions:
First, if Sam becomes permanently disabled, his insurer will pay RM1 mil to his trustee. Thus, the sum will not be stuck in his personal savings account.
Second, the trustee is to manage the sum based on Sam’s intentions with professionalism and integrity. Thus, the trustee is not permitted to use the sum to invest in stocks, real estate, or new business ventures if it is not instructed by Sam beforehand. This helps to reduce the risk of his funds being mismanaged.
Third, if Jenny passes on prematurely, Sam may include one additional clause in his trust where it allows his trustee to distribute the money directly to both Jim and Gina. As such, this would assure Sam that his children will be taken care of financially if he and his wife pass on prematurely.
Perhaps your situation is uniquely different and thus requires assistance from a qualified estate planner.
About the author
Jocelline Chee is the founder of WG Legacy, a leading professional estate planning firm. You can download a Strategy Report at wglegacy.com/report to find out how she preserved her family’s financial future via a combination of insurance, will and trust and how you can do the same for your loved ones too.
Kevin Neoh is a NextGen Money Coach who works with people to help them transform their relationship with money to improve their lives with the money they have. Kevin can be contacted at 
