KUCHING: Over-insuring themselves in their effort to feel financially secure after the COVID-19 pandemic could strain household budgets and weaken long-term stability, said Dr Lee Chee Loong.
The Taylor’s University senior lecturer said that while insurance is an important safeguard against uncertainty, it must be in line with a person’s income and family responsibilities.
“Insurance is valuable because it protects families from life’s uncertainties, but it should never compromise your financial stability,” he said.
He explained that the 70-20-10 Rule offers a simple framework for balance.
“The rule allocates 70 per cent of income for essentials such as housing, food and utilities, 20 per cent for savings and future goals, and 10 per cent for insurance and protection.”
Lee said that 10 per cent should serve as a protective boundary.
He pointed out that spending far beyond this, especially if it affects savings or daily needs, is a sign to pause and reconsider.
“The rule is simple and flexible. It promotes a healthy balance between meeting present needs, preparing for the future and enjoying life today.
“Over time, it helps people avoid overspending, reduce financial stress and build wealth steadily.”
He compared financial health to physical health, noting that both require balance, discipline and regular check-ups.
“Financial health is not just about having insurance. It is about ensuring all aspects of your life are in harmony, including manageable debt, adequate savings, protection against risks and the capacity to invest for the future,” he explained.
Lee said that when people manage their finances in this way, they gain more than just peace of mind.
“Strong financial health helps individuals handle emergencies, weather economic downturns and make life choices, such as starting a family, changing careers or retiring, without being held back by financial pressure.
“At its heart, sustainable safeguarding means protecting your future without weakening your present.
“Insurance is one tool among many. By following a structured approach like the 70-20-10 Rule, you can keep your finances strong no matter what uncertainties life brings,” he said.
