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For those who have purchased insurance and investment linked policy from Prudential Assurance Malaysia but are not sure of how is your policy coverage like or what is it consist of, you are always welcome to enquire from me. You can either place your enquiry in my post comment or email me and I'll try my best to assist you.

For those who have not purchased any policy and interested in knowing more, you may enquire from me as well ! Remember, we can never know what will happen in the future, so it is always better to be safe than sorry. =)

Basic of Insurance - Part 2

In insurance business, there are a few words, or jargon often used to describe an element in a policy or contract. Some of them can be easily understood, while some not and are subjected to some terms and condition. The following are some of the most frequently used words in a policy:

1. Insurable Interest

Insurable interest is an important element for a policy to be set up between the insurer (insurance company) and the insured (individual purchasing the policy for insurance protection). Two concepts which normally related to this are the subject matter of insurance and subject matter of the insurance contract.

Subject matter of insurance is defined as any property, potential legal liability, rights, life and limbs insured under a policy. While subject matter of the insurance contract is the legal relationship between a person and a certain subject that matters whereby the person suffers financial loss if the subject matter were exposed to a sudden damage or destruction.

For life insurance contract, insurable interest must exist only at the beginning of the contract. On the other hand, for general insurance contract, the insurable interest must exist at the beginning of the contract and at the time of loss. However, marine insurance is an exception.

2. Utmost Good Faith

Utmost good faith is a practice where the insured has to disclose all the important facts regarding the risk to be insured to his/her insurer. The duty of the insured is to disclose all his/her material facts fully and accurately. By doing so, the insurer can have a better understanding on the risk being insured and may provide better services and advices to the insured.

In the case of breach of utmost good faith, such as non-disclosure of material facts, deliberate concealment of facts, misrepresentation, etc…the aggrieved party can either void the contract, sue for damages, or waive the breach.

3. Indemnity

Indemnity is defined as the concept where the insurer restores the insured to the same financial position as he/she had been immediately before the loss (nothing more, nothing less). The measure of indemnity depends on the nature of insurance and it can be provided in the form of depreciation, cash payment, replacement, repair or reinstatement. General insurance contracts are contract of indemnity, while life and personal accident insurance contract may or may not be contracts of indemnity.

4. Proximate cause

Proximate cause is the dominant cause of loss amongst many causes of losses. Three types of perils (cause of loss) are:

• Insured perils (perils which are covered by a policy)
• Uninsured perils (perils not mentioned in the policy and not covered by the policy unless they occur as a result of an insured peril)
• Excluded perils (perils which have been expressly excluded from the policy)

Always bear in mind that the insurer is NOT LIABLE for uninsured perils and excluded perils. Before purchasing a policy, it is the duty or the insured to make sure that he/she understand and know all the insured perils of the policy to avoid dispute in future.

Recommended Reading – “Secrets of Self-Made Millionaires” by Adam Khoo

Among all the financial and business books I have read, this is one of them I like the most. Well, not to say I don’t like other books or they are not as good, but this is special… well at least for me…haha. =)

Adam Khoo is one of Singapore’s youngest self-made millionaires. He is an entrepreneur, a best-selling author and a peak performance trainer. He is also the CEO of Adam Khoo Learning Technologies Group Pte Ltd, one of Asia’s Largest Public Training Companies and Education Group. Before this he is also the best-selling author of “I Am Gifted, So Are You!”, “How To Multiply Your Child’s Intelligence”, “Clueless in Starting a Business” and “Master Your Mind, Design Your Destiny”. However, this is his first book that I read and it really inspired me.

Basically the content of this book is divided into SEVEN sections:

1. Seven Steps to Financial Abundance
2. Cash Flow Strategies of The Rich
3. How to Massively Increase Your Income
4. Creating Multiple Streams of Income Online
5. Managing Money and Controlling Expenses
6. Building Your Million-Dollar Net Worth and
7. Your Millionaire Master Plan

This book emphasize on how we can actually build our million-dollar net worth starting from scratch using an ultimate asset that all of us possess, which is OUR MIND! Every chapter is full with steps… well not steps, or should I say values that we need to practice in our daily life that can affect our ideas, our decisions and our actions. There are many ideas suggested in the book that we can actually apply practically to get a better control on our own finance, or maybe generate extra income from internet businesses for other beneficial purposes.

This book also emphasize on the importance of investing for individuals in order to survive today and in the future. It explains what are the elements that we need to know before investing and why only some investors make money from the market, while many do not. By using some simple calculations and free tools from the internet, we can actually have a rough idea on how a particular company is doing, how’s its past performance and determine if the stock is overvalued or undervalued at that particular moment.

Frankly I don’t think I can list the whole content of the book here. For those of you who are just starting to build your financial plan, even for those who are already on your way to financial abundance, this is the book I highly recommend to you… who knows you might be able to generate some new ideas from it that worth you millions? =)

p/s: I’m now waiting to get a hold on his new book, “Secrets of Millionaire Investors”…

Basic of Insurance - Part 1

All of us have heard of insurance. Life insurance, car insurance, business insurance, etc... Many of us know it is an important element in our life, yet only few really understand what insurance is all about and have applied the concept of insurance to their own advantage.

So what is insurance? Basically, insurance is an arrangement where individual share his/her loses with a group of people facing the similar risk exposures. How does it work? Let say a group of people facing a particular risk contribute to a “fund” in the form of premium. Of course it is impossible for them being struck by the unfortunate event all at the same time right? This “fund” is created to compensate the unfortunate few as a result of the operation of the specific risks. It is what we call as Pooling of Risk.

Insurance is essentially an economic institution based on the principal of mutuality and co-operation. Nonetheless, the fund created is just sufficient to pay for a maximum of certain claims only. Besides, only certain risks can be insured. The primary function of insurance is to equitably spread the financial losses of the unfortunate few among the many. It is used to reduce the total amount of losses and removes fear and worries. At the same time, it can also be utilized as a mean of saving and sources of capital for investment.