Protect Your Belongings with a Householder Policy

A householder policy, like a homeowner policy, covers loss or damage to your contents or movable possessions caused by the following perils:

Fire, lightning, and explosion caused by gas for domestic purposes

Aircraft

explosion (other than gas used for domestic purposes)

Road vehicles or animals

Bursting or overflowing of water tanks or pipes

Electrical Installations

Windstorm, tempest, earthquake, volcanic eruption, and flood

Theft with violent forcible entry or exit

Loss of rental

Liability to third parties for accidents in your property

Compensation for the death of the insured.

You may wish to cover the following perils which are excluded in a standard policy:

Subsidence and landslip

Riot, strike, and malicious damage

Please ensure that the sum insured is adequate. You should decide on the basis of compensation for your householder policy, whether it is on reinstatement or the replacement value. You will be compensated with the value of a brand new item under a reinstatement basis but on the depreciated value of the item lost under a replacement basis. Do extend selected coverage to perils excluded in a standard policy.

To facilitate claim in case of a fire or other perils, keep your bills and receipts together with photographs of all household items in a safe place. I would suggest that you back up your documents in the cloud using a cloud storage provider such as Google Drive or iCloud. If you keep your documents at home and save them in your hard drive, laptop or iPad, in the event of a fire, they may be destroyed and you cannot produce documentary evidence to substantiate your claim. According to an article, Top 20 reasons your insurance claims get rejected, At the claims stage, some insurers want proof of purchase, such as an invoice. Be aware that the onus is on you to prove your loss,” he says. Jooste advises that you take photographs of each item in your home and save them to a disc or external hard drive.

Conclusion: 

Cover your home and its contents with a house owner policy and householder policy respectively. Make sure the sum insured is adequate; get an extension to cover perils excluded in a standard policy and include such expenses like the removal of debris after a fire.  

Is Your Home Adequately Insured?

After taking up a house owner policy for your house, you think you are fully covered in the event of a fire? I must say that most likely it is not. There are three aspects of a house owner policy to consider if you want to be fully covered:

·         Sum insured

·         Additional perils

·         Other expenses

Sum insured:

You should insure your property on a reinstatement basis instead of indemnity because coverage on reinstatement is the actual cost to rebuild your house after a fire. You do not want to insure the actual price you previously paid which is insufficient now due to inflation. You have to find out from a reputable building contractor the cost involved to rebuild a similar house that you are occupying excluding the cost of land. If you do not insure fully you will be compensated proportionately.

As an example, the cost to rebuild a similar house of yours is $200,000 and the sum insured of your houseowner policy is only $150,000 you are deemed to be self-insuring the difference. During a fire, say, you suffer a loss of $10,000, you will be paid:

Sum insured $150000 x Loss $10000/Rebuilding cost $200,000 =$7,500  

Additional perils

A normal house owner policy will cover your building, including its fixtures and fittings, garages, walls, gated, and fences. The main perils covered are:

·         Fire, lightning, and explosion caused by the gas used for domestic purposes.

·         Aircraft damage

·         Explosion (other than gas used for domestic purposes)

·         Road vehicles or animals

·         Bursting or overflowing of water tanks or pipes,

·         Electrical installations

·         Windstorm, tempest, earthquake, volcanic eruption, and flood

·         Theft with violent/forcible entry or exit

·         Loss of rental

·         Liabilities to third parties for accidents in your property

You need to extend the coverage of the house owner policy to include the following:

·         Riot, Strike & Malicious Damage

·         Subsidence and landslip

These are excluded from a normal house owner policy, In case of damages caused by, say, riot, strike, and malicious damage your houseowner policy is not enforceable.

Other expenses

After a fire, you have to think of the additional cost involved in removing debris. To rebuild your house will also involve architects, surveyors, and consulting engineers’ fees. These are not in your standard houseowner policy. Therefore the sum insured for your houseowner policy you have to add these expenses.  

Conclusion:

You should take up both houseowner and householder policies to obtain a comprehensive cover for your home and its contents. However, you have to make sure that the sum insured is sufficient. Find out what perils are excluded in the policy that you need to extend coverage.  

10 Benefits of a Life Insurance Policy

A life policy is a valuable document. It is more than an instrument to compensate for the loss of life of the insured or earning power because of an accident or illness. You can wisely consider the following benefits:

1.      A form of savings and investment: You develop a regular saving habit. Wealth building starts with savings accumulated over time.   

2.      Tax-deductible: Life insurance premium is usually a tax-deductible item. In Malaysia there is a personal tax relief of RM6000; however, this amount is inclusive of your share of contributions to Employees provident fund.  

3.      A source of cash: As time passes by, your policy builds up a reserve of a fund and you can withdraw its cash value in case there is an urgent need for cash.

4.      A pledge for a loan: You can also pledge your policy and apply for a loan. As it is a loan you will have to pay interest for the loan amount.   

5.      A source of fund for the next-of-kin: Perhaps it is your aim to create wealth for your immediate family. A life policy is usually for this purpose.

6.      Funeral expenses: Upon the maturity of the policy or the untimely demise of the insured, part of the policy proceeds will pay for the deceased’s funeral expenses.  It is a wise move to avoid your immediate family to shoulder such cash outflow. 

7.      Settlement of outstanding debt such as a mortgage or personal loan: Upon the premature death of the insured, the proceeds of the policy can be used to settle the deceased’s credit card and personal debt. An MRTA policy will be conveniently used to settle outstanding housing loans in the name of the insured.  

8.      Children’s education: It is yet another wise move to purchase a policy and save for your children‘s future education. The maturity date will coincide when your child enters university.     

9.      Retirement fund: An insurance policy is also a good source of a retirement fund. You can time the maturity date of the policy to match the commencement of your retirement.

10.  Financial support of your family: To avoid financial strain to your immediate family an insurance policy will be a source of a fund when you are the only breadwinner upon your untimely departure as a result of an accident or terminal illnesses.   

There are many types of life policies:

Term Life Insurance: When the policy expires it has no cash value, but it offers maximum protection with minimum cost for a stated period. A death benefit will be paid when the insured dies or suffers total and permanent disability while the policy is still active.  This type of policy is to replace your earning power and create a source of fund for yourself or your immediate family    

Whole Life Policy: This form of policy is to create wealth for your next-of-kin because you are paying the premium for your whole life until you pass away or are permanently disabled.

Endowment policy: The policy offers protection as well as savings for a specific period and for a specific purpose. The fund may be needed for your marriage or a down-payment for your house.

Investment-linked insurance: It offers protection and a chance to invest by participating in units in a fund managed by the life insurance company. The value of your fund goes up or down subject to market forces.

Child education policy: As the name implies it is a policy to cater to your child’s education.  

Medical and health: It has no cash value, but it is an essential expense item.  Medical and health insurance is designed to cover the cost of private medical treatment, which can be very costly, especially with hospitalization and surgery. MHI also ensures that you won't have to worry about the cost of seeking treatment during emergencies. In addition, MHI also provides you with an income stream while you undergo treatment.

Retirement Annuity: It is to ensure that you can depend upon a steady source of income during your retirement. Bear in mind that the income payments you receive will depend on the amount you pay to purchase the annuity, your age when you purchase the annuity, and your gender.

Mortgage reducing term assurance: It is a policy to cover the repayment of an outstanding property loan to the financial institution in the event of untimely death, disability, or critical illness of the borrower.

Conclusion:

You will consider and purchase suitable policies to suit your requirements.