Not long ago, a close friend of mine shared a heartbreaking story.
Her uncle, a hardworking businessman in Penang, had always provided well for his family. He had a life insurance policy worth RM1 million, and when he passed away suddenly, everyone thought, “At least his children are secure.”
But what happened next shocked the whole family.
The Fast-Vanishing Inheritance
The RM1 million payout went straight to his eldest son, because he was the named nominee. At 22, the son wasn’t financially savvy.
Within six months, the money was gone.
- Part of it went into a risky investment scheme recommended by a friend.
- Another chunk disappeared into a new car, gadgets, and “helping friends.”
- The rest was drained by day-to-day expenses, because no one taught him how to stretch the money for the long term.
The uncle’s younger daughter, still in school, never saw a cent of the insurance money that was meant to support her.
The intention of the father — to protect both children — never materialised.
What Went Wrong?
The mistake wasn’t buying insurance. The mistake was not putting it into a proper structure.
If you simply nominate someone as your insurance beneficiary, the money is paid directly to them in one lump sum. For a young adult, or someone without financial discipline, this can be dangerous.
This is where an Insurance Trust comes in.
How an Insurance Trust Could Have Changed Everything
If the father had placed his policy into an Insurance Trust, things would have worked differently:
- The RM1 million would go into the trust, not directly into the son’s bank account.
- A trustee would manage the money responsibly.
- The father could have set clear instructions:
- Monthly allowance for living expenses.
- School fees covered until graduation.
- A lump sum released only when each child turned 25.
Instead of vanishing in 6 months, that RM1 million could have stretched over 10–15 years, supporting both children through school, university, and into adulthood.
Why This Matters to Families
Many families assume that just having insurance is enough. But without proper planning:
- Children may misuse the money.
- Relatives may argue over “who deserves what.”
An Insurance Trust is not just about “holding money.” It’s about making sure your love lasts longer than your life.
The Takeaway
Every parent works hard to leave something behind. But money alone doesn’t guarantee security — structure does.
So ask yourself:
- If my insurance pays out tomorrow, will my children be protected for years… or only for months?
- Do I want to leave them money, or a plan?
With an Insurance Trust, you can make sure your legacy supports your loved ones exactly the way you intended.
For further details, you may make an appointment with our legal advisor here:
https://calendly.com/finex-and-co-legacy-advisory/tea-talk-with-legal-expert
