Ask Harvin #5: Should you get disability insurance?

Published 01 Apr 2022

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By Fi Life Team
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What Can Be Even Worse Than Dying?

The financial consequences of the death of a breadwinner of the family can be devastating. Nothing can be worse right? Or can it?

There’s one more thing worse than the death of a breadwinner, at least in financial terms. That’s the total and permanent disability (TPD) of the breadwinner. Not only will their family lose their source of income, but the family now needs extra funds for the care of their former breadwinner.

This brings me to this week’s question:
Should you get disability coverage?

My answer is yes, most definitely.

Even if you do not have people who depend on you for financial support, you should still get disability insurance so that you have cash reserves to organise the care of yourself. You certainly do not want to burden your retired parents or your siblings, who might have families of their own, with the expenses of caring for you.

Expenses for the care of a totally disabled individual can mount up. First, medical expenses, including regular check-ups and possibly physiotherapy. Second, special apparatus or even household renovations to take the disabled person’s needs (e.g. creating a room downstairs as the disability prevents them from climbing stairs). Thirdly, the cost of a caregiver to help with basic functions of life e.g. going to the toilet, bathing, eating.

When should you get disability coverage?

If you don’t have one already, please get one now, matter what your age. Accidents do not wait for a certain age, so as soon as you’re an adult, please get disability coverage.

What types of disability coverage are there?

The most important disability you should cover is one that renders you incapable of looking after yourself or working. This disability is known as total and permanent disability (TPD).

Most TPD insurance in Malaysia pays out a lump sum when you suffer TPD. It will be up to you to manage the proceeds once you have received it. But I have seen TPD policies that pay a regular annual or monthly amount, however, this regular payout method seems to be more prevalent in Singapore.

How much TPD sum assured should I insure for?

If you have people who depend on you for financial support, they would lose you as a source of income should you suffer TPD. So first, calculate how much money your family needs if you no longer can provide for them. The method for calculating this is the same as calculating how much life insurance that you need, see my previous article on this.

Secondly, you need to also add the amount that you need to put aside to ensure that you can organise care for yourself, including cost of caregivers, medical expenses, check-ups and your own living expenses.

Ideally, the TPD sum assured is even more than the life sum assured, but getting a higher amount can be difficult. Most insurance companies limit the TPD sum assured to the life sum assured. If so, then make sure that the life sum assured will cover both the financial support for your dependants as well as yourself.

Stay safe everyone.

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Yours truly,
Harvin Sidhu

Certified PCEIA, CEILI and TBE

Editor’s Note: Fi Life packages TPD insurance together with life insurance. You can get up to RM1 million cover for TPD, if you buy life insurance for the same amount. Please note though if you claim for TPD, you cannot claim again in the event of subsequent death.