A protection gap is the remainder after matching defined needs with distinct, usable resources. A medical annual limit, a mortgage-only benefit and unrestricted life cover cannot all be treated as interchangeable household cash.
Choose the event and separate the cover types
This exercise considers one fictional death-related household funding need. It does not combine death, a critical illness diagnosis and hospitalisation into one event. LIAM and MTA’s MyCoverage calculator separates term coverage, critical illness coverage and annual medical coverage. That distinction helps prevent adding amounts intended for different triggers as if every amount would pay toward the same obligation.
Start a paper inventory with each benefit’s purpose, the relevant person and the supporting document. A large number on a medical card is not a cash asset for a survivor’s groceries. In this example, standalone life cover of MYR200,000 and mortgage-specific cover of MYR150,000 are deliberately separate benefits. Their independence is an assumption of the exercise, not something inferred from a product name or a combined sales illustration.
Background source: LIAM / MTA MyCoverage: separate term, critical illness and annual medical coverage
Build the survivor budget after the mortgage payoff
Assume the family chooses to repay an outstanding MYR250,000 mortgage in full. Its survivor spending is then MYR4,500 a month, explicitly excluding the mortgage instalment after payoff. The figure still includes the household’s ordinary non-mortgage living costs. Assumed continuing net income is MYR2,500 a month, leaving MYR2,000 to fund each month. Over ten years, that is 2,000 × 12 × 10 = MYR240,000.
Add MYR20,000 for a distinct one-off transition budget and MYR60,000 for education costs outside the monthly budget. Total stated need is therefore 240,000 + 250,000 + 20,000 + 60,000 = MYR570,000. These categories do not overlap. Do not add ten years of mortgage instalments after already including the full payoff. All expenses and income are flat nominal amounts; this simple sum uses neither inflation nor discounting and is not a present-value valuation. Future changes require a different scenario.
Subtract only resources that have not been assigned elsewhere
The family has MYR50,000 in liquid savings but keeps MYR20,000 as a separate cash buffer, unavailable for this funding calculation. Eligible savings are therefore MYR30,000. The buffer is an asset retained outside the calculation; the MYR20,000 transition budget is a different planned expense. Identical amounts do not make them the same pot of money.
Assume MYR200,000 standalone life cover is unrestricted for this exercise, while MYR150,000 mortgage-specific cover can only meet the housing debt. The latter reduces the MYR250,000 payoff requirement to MYR100,000. Equivalently, subtract distinct resources of 30,000 + 200,000 + 150,000 = MYR380,000 from total need of MYR570,000, leaving MYR190,000. Use either presentation, not both: once the debt is reduced by MYR150,000, do not subtract that cover again from the remaining obligations. The table keeps the gross need and all three resources visible.
| Funding line | MYR calculation | Treatment in this example |
|---|---|---|
| Ten-year living support | (4,500 − 2,500) × 12 × 10 = 240,000 | Monthly spending excludes mortgage after payoff |
| Mortgage payoff | 250,000 | Full debt included once |
| Transition budget | 20,000 | One-off expense outside monthly costs |
| Education budget | 60,000 | Separate from living and transition costs |
| Total need | 240,000 + 250,000 + 20,000 + 60,000 = 570,000 | Flat nominal sum; no inflation or discounting |
| Eligible savings | 50,000 − 20,000 = 30,000 | Retained cash buffer is unavailable here |
| Standalone life cover | 200,000 | Assumed unrestricted and separate |
| Mortgage-specific cover | 150,000 | Applied only to the housing debt |
| Total counted resources | 30,000 + 200,000 + 150,000 = 380,000 | Each resource counted once |
| Ten-year gap | 570,000 − 380,000 = 190,000 | Illustrative remainder, not a purchase recommendation |
| Fifteen-year gap | 690,000 − 380,000 = 310,000 | Only the support period changes |
| Ten years without mortgage cover | 570,000 − 230,000 = 340,000 | Standalone cover remains MYR200,000 |
Change one assumption and reconcile the difference
Extend the living-cost period from ten to fifteen years while keeping everything else fixed. Living support becomes 2,000 × 12 × 15 = MYR360,000. Total need rises to MYR690,000, and the gap becomes 690,000 − 380,000 = MYR310,000. The increase of MYR120,000 is exactly five more years of MYR24,000 annual support. It is a duration comparison, not an inflation adjustment.
For a separate ten-year scenario, remove the MYR150,000 mortgage-specific cover and retain the full mortgage payoff. Only MYR230,000 of resources remain: MYR30,000 savings and MYR200,000 standalone cover. The gap is 570,000 − 230,000 = MYR340,000. This changes the existence of one benefit, not the survivor spending or loan balance. Neither sensitivity is an instruction to buy that amount of insurance; each exposes what the estimate depends on before anyone assesses a real household.
A funding total does not establish access or payout
The MyCoverage FAQ points readers to policy documents for contractual obligations and to product disclosure material for understanding a product. Ask the insurer or takaful operator for written confirmation of benefits and conditions relevant to the specific contract. The scenario has not validated eligibility, underwriting, exclusions, payout timing, beneficiary arrangements, legal authority or access to any savings account.
Make a separate first-weeks payment map: which bills fall due, who can pay them, and which money is accessible before any claim is resolved? Do not solve a timing shortage merely by writing an eventual benefit into today’s bank balance. Keep the retained MYR20,000 buffer distinct from the long-term funding subtraction. If its actual access is uncertain, record that uncertainty too. These calculations make no recommendation to cancel or replace an existing policy, and do not determine inheritance rights or who is entitled to a payment.
Background source: LIAM / MTA MyCoverage FAQ: contract benefits, limitations and product documents
Use the worksheet to prepare a budget conversation
The downloadable family-protection-gap.csv is a manual worksheet, explicitly not an import file. It has no account connection or sync. Work with a dated copy, label assumptions as unverified until checked, and reconcile your figures against documents held securely elsewhere. Do not enter passwords or sensitive policy records in a public worksheet.
The cashflow planner budgets income and expenses only; it is not an insurance calculator and supplies no quotes, claims service or coverage verification. Use it to check whether the survivor spending categories and continuing net income have been counted consistently. Compare the result with the medical cash-buffer lesson, the income-loss runway and the bills-before-payday guide. Record document locations and responsibilities in a secure family emergency file, then revisit the assumptions when dependants, income or debts change.
Download the worksheet
Put it into practice
Budget the household’s income and expenses, then keep unverified cover and access assumptions on a separate written checklist.
Open the cashflow planner