Why Young Malaysians Should Buy Insurance First Before Investing

Table of Contents

If you’re a young Malaysian just starting your financial journey, you might be eager to dive into investing. While investing is a fantastic way to build wealth, it’s crucial to establish a solid foundation first. That’s where insurance comes in. Let’s explore why buying insurance should be your first step before diving into the world of investments.

1. Financial Protection: Your Safety Net

Life is unpredictable, and unexpected events like accidents, illnesses, or disabilities can have a significant financial impact. Insurance acts as a safety net, protecting you and your family from financial hardships.

  • Health Insurance: Covers medical expenses, ensuring you don’t drain your savings or go into debt over hospital bills.
  • Critical Illness: Acts as a powerful Income Replacement tool in case of serious illnesses like cancer, heart attack, kidney failure, etc strike and deeply impact your income-earning capability.
  • Life Insurance: Provides financial support to your loved ones in case of your untimely death, helping them maintain their standard of living.
  • Disability Insurance: Replaces a portion of your income if you’re unable to work due to a disability, ensuring you can still meet your financial obligations.

Example: Peter, a 25-year-old engineer, buys health and life insurance. A year later, he is diagnosed with a chronic illness requiring expensive treatment. His health insurance covers the medical bills, saving him from depleting his savings and going into debt.

2. Peace of Mind: Focus on Your Goals

Having insurance gives you peace of mind knowing that you’re protected against life’s uncertainties. This security allows you to focus on your career, personal growth, and investment goals without constantly worrying about potential financial setbacks.

Example: Sarah, a 28-year-old graphic designer, has both health and life insurance. When she decides to invest in a new business venture, she does so with confidence, knowing that her insurance policies will cover any unexpected health issues or accidents.

3. Building a Strong Financial Foundation

Before you start investing, it’s essential to have a strong financial foundation. Insurance ensures that your financial base is secure, allowing you to take calculated risks in your investments.

  • Debt Protection: Life insurance can cover outstanding debts, such as student loans or car loans, preventing your family from inheriting your financial burdens.
  • Income Replacement: Disability or Critical Illness insurance ensures you can continue to cover living expenses if you’re unable to work, protecting your long-term financial stability.

4. Cost-Effective in the Long Run

Buying insurance at a young age can be more cost-effective. Premiums are generally lower when you’re younger and healthier, allowing you to lock in a lower rate for the duration of your policy.

If a 25-year-old buys a 20-year term life insurance policy.  The premiums are significantly lower than they would be if he waited until he was 35. This affordability allows us to allocate more of our budget toward investments while still maintaining adequate coverage.

5. Complementary to Investments

Insurance and investments complement each other in a well-rounded financial plan. While insurance provides protection, investments offer growth opportunities. By securing insurance first, you ensure that your investment gains aren’t wiped out by unexpected expenses.

Conclusion

For young Malaysians, buying insurance before investing is a crucial step in building a secure and prosperous financial future. Insurance provides a safety net, peace of mind, and a strong financial foundation, enabling you to pursue your investment goals confidently. By securing affordable premiums at a younger age, you can protect your financial well-being and ensure that your investment gains are safeguarded against life’s uncertainties.

Remember, a solid financial plan isn’t just about growing wealth—it’s also about protecting it. So, before you dive into investments, make sure you’ve got the right insurance coverage in place. Your future self will thank you for it.

Table of Contents

Scroll to Top