Fictional scenario: A father in Cyberjaya has a medical card and employer benefits. He assumes his insurance needs are taken care of. While putting together the family budget, he realises one thing isn't clear: if illness stopped him from working, where would the money for the home loan and the children's expenses come from?
A medical card may help pay for treatment. But help with hospital bills doesn't necessarily provide money for all of the family's expenses. The difference between what you need and what's available is what needs checking.
Put simply, a protection gap is the financial need that insurance, savings and other resources don't yet cover when something happens.
It isn't one number that's the same for every family. What you need during a hospital stay is different from what you need if you can't work, or if a breadwinner dies. The resources you can use are different in each case too.
So don't just add up all your policy benefits. First check when each benefit can be paid, to whom, and on what conditions.
Check your personal medical card and employer benefits. What are the limits? Which hospitals are on the panel? Is there a deductible, a co-payment or treatment you'd pay for yourself?
Cashless admission is still subject to approval and the policy's terms. It doesn't mean every item on the bill is paid. The medical card claims guide explains what to check before and after an admission.
Bills and loan repayments may continue even if you have to cut your working hours or take time off. List the savings you can use, your employment benefits and the relevant policy benefits.
Critical illness coverage usually pays a lump sum when a diagnosis meets the policy's definition and stage of the illness. It doesn't pay for every illness or every time you're off work. Check the eligibility in your documents.
If a spouse, children or parents depend on you, check which expenses would still need to be paid. Count outstanding debts, daily needs and long-term support.
Then check the death benefit, savings and other resources that may be available. Also understand who can make a claim and which documents are needed. A large amount on paper doesn't tell you when and how the money can be used.
Use your current spending records. Separate fixed commitments, such as the home loan, groceries, utilities, transport and childcare, from spending you could cut back.
Note who depends on your income. If your spouse also works, check how much of the spending they could cover, without assuming all of their income is available.
Get the benefit schedule for your personal policies, the list of riders and your employer benefit information. For policies with a fund or cash value, use the latest statement.
For each benefit, note the following:
| Item | Question to check |
|---|---|
| What's covered | Hospital treatment, critical illness, disability or death? |
| Amount and limits | How much can be paid, and is there an annual limit or other condition? |
| Term | When does coverage start and end? |
| Eligibility | Which definitions, waiting periods and exclusions apply? |
| How it's paid | Paid to the hospital, reimbursed, or paid to an eligible recipient? |
| Continuity | What happens if you change jobs or stop paying the premium? |
Savings you can withdraw now are different from policy benefits that are only paid after a claim is approved. Don't assume both are available on the same day.
Likewise, a death benefit can't be treated as a source for expenses while you're alive and recovering. Money meant for hospital bills may not be available for the home loan.
Avoid counting the same resource twice. If savings are already set aside for treatment bills, they may not still be there for all your daily expenses.
A fictional example to explain the method, not a savings target or recommended amount of insurance: a family chooses to assess six months of fixed expenses. Their monthly spending is RM4,000 and the savings they can use come to RM12,000. In this simple calculation, no other resources are counted.
| Calculation in the example | Amount |
|---|---|
| Fixed monthly spending | RM4,000 |
| Period chosen for the exercise | 6 months |
| Total need: RM4,000 × 6 | RM24,000 |
| Savings that can be used | RM12,000 |
| Shortfall in the example: RM24,000 − RM12,000 | RM12,000 |
This example only shows how to set out the calculation. It doesn't say the family needs to buy RM12,000 of insurance, or that every family should use six months. Treatment costs, changes to the spouse's income and long-term needs aren't included.
If there are relevant policy benefits, check their conditions and payment timing before counting them as a resource. Use the spending and period that fit your own situation.
A shortfall isn't necessarily solved by a new policy alone. You may need to add to your savings, review your spending, understand your employer benefits, or reassess the amount and term of your insurance.
If you want to add coverage, ask for an illustration based on your situation. Check the cost now and in the future, the exclusions and the underwriting conditions. The right option is one you can keep up.
More dependants. A new child or your parents' needs can add to the expenses that rely on your income.
Debts and commitments change. A new home or a joint loan can change what your family would have to carry if something happened.
Your job changes. Employer benefits follow the group plan's terms and your employment. Confirm when the benefits end if you leave. A personal life policy can continue when you change jobs, as long as the premiums are paid and the policy conditions are met.
Policy benefits or charges change. Check the insurer's notices and your latest statement. Don't assume the original documents always reflect where things stand now.
A change in your life doesn't necessarily mean an old policy is no longer useful. A review helps decide whether it needs to change or still fits.
EPF is part of your family's financial position, but don't assume the whole balance can be withdrawn for any need at any time. Check the withdrawal eligibility and process before including it in your calculation.
EPF nomination is also separate from insurance nomination. Understand the nominee's role and the rules that apply to your situation. See the official EPF nomination information and the legacy planning guide for what to check.
Yes. A policy may meet one need but not another. For example, a medical card helps pay for hospital treatment, while daily expenses when your income is affected need another source.
Don't rely on a single multiple without understanding the assumptions behind the calculation. Start with your dependants' needs, how long they'd need support, your debts and your existing resources. The right amount is different for every family.
No. The decision depends on the type of shortfall, your budget and the resources you already have. A review might confirm that your existing coverage is enough, or point to a different step that fits better.
When your family, job, debts or income change. Also review if you get a notice about premiums, charges or whether the policy can continue, or if you're no longer clear about the benefits you have.
Prepare a summary of your policies, fixed spending, outstanding debts and dependants. We help you understand the benefits you have and identify what isn't clear yet. The next decision is made based on your needs and what you can afford.
To read your documents with more confidence, use the policy illustration guide. If you're comparing protection structures, read term life or whole life. You can also start with the protection checklist.
This guide is for general education, not a personal financial assessment or recommendation. All scenarios and example figures are fictional and explain how to carry out a review. They are not LIAM research findings, quotations or recommended amounts of coverage. Benefits and claims are subject to policy conditions and the insurer's assessment.
Ready for a review? DM 'REVIEW' on WhatsApp and we will sit with your existing policies in plain numbers.
This page is for general educational purposes and does not constitute financial or legal advice. Figures are indicative starting points; actual premiums depend on age, health, gender, smoker status, occupation class, and underwriting assessment. Jonathan Tey, registered life insurance agent (LIAM PP06/00685393). Policies are issued by the licensed insurer named in your quotation and policy documents.