What is the value of sum assured RM 1mil after 30 years?

No one can avoid INFLATION which mean our money value will decline overtime. 20 years ago, a roti canai only costs 50 cents. Today, you need to spend RM1.30 for a roti canai.

The biggest impact of inflation is the shrinking of family wealth.

If you have cash in your hands, but no real estates, collectibles, and equity funds that can be appreciated over time, then your money in hand will shrink in the future. This is the power of inflation.

There are 3 ways to avoid inflation affecting family wealth:

1. Borrowing (interest is low, preferably no interest);

2. Consumption (to spend all the money, no inflation can surpass that);

3. Invest in commodities that value-added speed outperforms the inflation rate (such as buying stock funds, etc.);

It is unrealistic to borrow money. For those who naturally love to save money, it is not feasible to consume all the money. The only thing that is feasible is investment.

FACT 1: Insurance can't resist inflation
In the long-term, insurance adopts the equilibrium rate. In this case, inflation is considered. That is, the premiums you pay each year are the same, and will not rise year by year like the price. Otherwise, the money you pay in the 20th year will not be the same as the first payment 20 years ago.

Moreover, even if the insurance company collects the money, due to inflation, "money collected is not worth the money also." Therefore, in actual fact you only move the "same" money to insurance company. If you put it in the bank or at home, it will depreciate.

What's more, the core of insurance is the protection of people. If something goes wrong during the insurance period, you can apply for a claim. If you know what will happen in the future, you don't have to buy insurance at all.


FACT 2: Dividend/Endowment insurance can't actually resist inflation


FACT 3: We can increase the insured amount in the form of “insurance combination” or “multiple insurance” to effectively hedge inflation
The insurance is "GUARANTEED", the ultimate essence lies in the protection, not the financial investment. In insurance, best way to hedge inflation is thru consumption, that is to use minimum amount of money to buy insurance and yet can achieve the maximum protection (insurance) in return.

♥we can increase the amount of insurance through the insurance portfolio, such as medical insurance, critical illness insurance, life insurance and so forth to more comprehensively deal with various risks in the future, can effectively hedge inflation.

♥at the same time, you can consider investment linked insurance which allow you to re-insurance and allow adjustment of sum assured within the guarantee period, multiple allocations to increase the amount of insurance. If you concern on the budget, don't buy any insurance such as dividends and returns. The core of buying insurance is to protect people, not to obtain higher interest rates through insurance companies.