If we could predict what the future holds for us, life would be much easier. We could plan how to spend, when to save and how much to invest. But the reality is we don’t know what is going to happen in the future.

People often fail to put an insurance plan in place to safeguard their family, assets and income because they think it’s too complicated or perhaps too expensive to implement, whereby 61% of Malaysian respondents in a survey commissioned by HSBC considering an insurance plan say they have not taken it out because they expect or know it to be too expensive. However, it is important to give yourself an emergency cushion and protect what you have built in the case of an emergency or disaster.

The Power of Protection: Confidence in the Future, an independent consumer research study into global needs and trends performed on 12,000 people in 12 countries and territories including Malaysia commissioned by HSBC, provides useful insights into people’s concerns about the future and how they are protecting themselves financially around the world.

Positive about the future, but…

In general, 77% of Malaysian respondents have high expectations for their future quality of life, especially those who actively plan for the future. In fact, 64% of Malaysian respondents expect their future quality of life in 10 years to be excellent or very good.¹

However, the people surveyed still had concerns and worries. Almost two thirds of the Malaysian respondents (64%) worry about their health most, followed by long-term financial security at 58% and quality of life at 41%. There was concern among the people surveyed that long-term poor health would impact many aspects of their lives: 76% view quality of life as the most likely to be impacted followed by the ability to earn a living (70%), family (70%), relationship with partners (65%), overall state of mind (61%) and lifestyle (57%).¹

In addition, 37% of respondents said they could not manage well financially or don’t have anything specific in place if something unforeseen were to happen to them. If something unforeseen were to happen, the people surveyed in Malaysia said they were most likely to be unprepared in relation to providing for their partner (44%), their job, career or business (43%), or their immediate and long-term financial security (43% and 42% respectively). Almost two in five respondents (37%) said they were financially unprepared to meet their health concern. The same proportion (37%) were also unprepared if something unforeseen were to happen to the stability of the country.¹

Respondents (61%) in the Malaysian survey also believed that an insurance plan would be expensive which is why they have not yet taken out a policy. Other barriers that have prevented people from taking out insurance include not knowing how to go about it and concerns about exclusions and pay-outs (42%), because it has not been a priority or they have not needed it yet (28%), or they have been too busy or were leaving it to someone else to arrange (20%).¹

4 FOUR STEPS TO PROTECTING YOUR FUTURE¹

1 Identify your biggest concerns

Review your current insurance plan(s) and determine if you have sufficient coverage if something unexpected should happen. Have your personal circumstances changed recently? For example, did you…

• Get married or enter into a committed relationship?
• Buy a property?
• Start a family?

Identify your major financial concerns and prioritise them based on importance to you and your loved ones and likelihood of it occurring. For example…

• Global financial crisis
• Natural disasters
• Health complications
• Long-term financial security
• Quality of life

2 Know your future aspirations

Think about your aspirations for the future. Seek professional advice to understand what protection you may need. Do you have specific savings goals? For example: children’s education? retirement? Plan for unexpected events including…

• Unemployment
• Accidents
• Sudden/critical illness
• Global financial crisis
• Natural disasters

3 Have an action plan

Explore the options available and take action to bridge the gap. Do not let unexpected events disrupt your plans for your other key wealth needs like your children’s education or your retirement.

4 Review your plan regularly

Review your financial plan regularly so you can make improvements along the way.

Different circumstances, Different Protection needs.

As we go through our life journey, our circumstances may change at different stages. It is important to know your future aspirations, the impact it may have on your financial situation and how you can put a protection plan in place.

Early adulthood (18-30 years old)⁵

Most young adults are just finding their feet at this stage and beginning to realise what financial independence means. While you may have minimal financial commitments and may not have financial dependents, it is still important to plan for the unexpected. One of the major benefits of taking out insurance during your early adulthood are the more affordable premiums because you present a lesser risk to the insurer. Insurance covers worth considering include income protection, personal accident, total and permanent disability and term life.

Your insurance cover should help you:

• Pay your rent in the event you are no longer able to work
• Ensure your household bills are paid and allow you to keep up your nominal lifestyle
• Continue with your savings goals and secure your financial independence

Adulthood (30-55 years old)⁵

This is one of the most important times of your life filled with milestones like marriage, buying your first home and having children.

With these important events come added financial responsibility. In addition to the insurance cover options from early adulthood, you may also want to consider additional protection like mortgage insurance.

Ideally your protection coverage should help you:

• Pay off your mortgage should anything unexpected happen to you
• Continue to pay off household bills
• Continue your long-term savings and investment plans
• Maintain your family’s current lifestyle

Pre-Retirement & Beyond (55+ years old)⁵

With your career winding down, children leaving the nest and mortgages paid off, your financial obligations would have probably changed.

As you look forward to your retirement years, it is important to make sure that your finances are in order. At this stage in life, you probably have some form of protection in place and it is timely to re-evaluate your protection needs and adjust the amount of cover you have accordingly.

At this stage, your insurance cover should help you:

• Protect your assets and pay-off remaining debts like mortage if something should happen to you
• Maintain your cash flow to maintain your lifestyle
• Prepare you for any health issues
• Plan for your retirement
• Assist your children with their finances

Even if you have insurance plans in place, your needs will change as you reach different stages in life.

Planning for the Unexpected

Saving for a rainy day is always a good idea. But sometimes savings alone may not be enough to cover an unexpected event. For example what would happen if you lost your job or became ill and unable to work? Would you have enough savings in place to survive for the foreseeable future? Preparing for all eventualities can provide peace of mind; protection like insurance is a good way to safeguard against unplanned events and can provide your dependents with a lump sum or regular monthly income.²

Even if you have insurance plans in place, your needs will change as you reach different stages in life. For example, you may have more dependents to care for – from your parents, spouse, to your children and grandchildren. Similarly, you may also have personal priorities or aspirations to fulfill such as buying your first home, sending your children abroad for education, securing your healthcare needs, retiring the way you want and more. By leveraging on different insurance plans you can ensure that your dependents and aspirations are well-protected throughout your financial journey.³

Contrary to popular perception, insurance plans are affordable⁴. Insurance premiums are flexible and can be adjusted according to the coverage you need to give you the protection you want. You can choose to start off with a small level of coverage and 5 top it up when you have more disposable income or when your needs evolve.³

If you have any doubt about your insurance plan, it’s best to seek professional advice and regularly review your insurance plan to check if any adjustments are neccesary. HSBC offers a wide range of protection solutions to meet your needs. Through our financial review process, we can better understand your specific protection needs and help you work out a plan that suits you.

Contact your HSBC Relationship Manager or walk into any HSBC Branch for a financial review today.

1 Reproduced with permission from The Power of Protection Confidence in the future (Malaysia report) published in 2016 by HSBC Holdings plc.

2 HSBC UK, Planning for the unexpected?, undated.

3 Kiplinger.com, Guide to buying life insurance at every stage of life, August 2015.

4 LIFE Foundation, Dispelling common life insurance misconceptions, undated.

5 Finder.com.au, Life stages and life insurance as a necessity, undated.