Case Study 1

Lesly and Landy are both 28 years old and they are currently staying in Ipoh. They are a newly married couple with a 1year old son. Lesly works as a chemical engineer for a local public listed company and Landy is a full-time housewife. Lesly plans to buy his own house and stay together with his parents after saving enough money for the down payment. Both are looking forward to having another child in the near future. Their current household is RM72,000. Lesly owns a 2014 Proton Satria Neo, while Landy is driving a 2013 Toyota Vios. Both realized that they need good insurance coverage because Lesly is the only one who is working.

Lesly has looked into a few insurance products offered by a well-known insurance company. He is unsure that the four types of life insurance policies below were able to fulfill his requirement. These life insurances are universal insurance, 5-years renewable and convertible term insurance, life insurance paid up at age 65 years old, and ordinary life insurance.

You are required to assist Lesly based on the following questions:

1. Proposed an insurance policy that best meets the needs of Lesly to accumulate education funds for his children. Justify your answer.

(4 marks)

2. Propose the best insurance policy that would best meet the need for protection of Lesly if he is experiencing financial difficulties due to the loss of his job and dies prematurely. Justify your answer.

(4 marks)

3. Based on the four insurance policies that Lesly has researched, recommend an insurance policy that best meets the need to accumulate money for a down payment on a house. Justify your answer.

(4 marks)

4. Assume that, if Lesly tries to meet all his financial needs by purchasing a cash-value life insurance, predict the possible obstacles that he may face. (4 marks)

5. Assume that Lesly decided to obtain the 5-year term policy for the amount of RM350,000 without cash value due to financial difficulties. Identify FOUR (4) basic characteristics of a typical term insurance policy that would help Lesly to accumulate a fund for retirement.

(4 marks)

(Total: 20 marks)