So, whole life insurance policies. Similar to the ownership of health insurance, this life insurance can be purchased for self-interest and on behalf of the insured alone or purchased for the benefit of a third person. For example, a husband can buy life insurance with the wife as the insured, or parents can also buy life insurance with their children as the insured. There are several types of life insurance, but before discussing these types of life insurance, you should know in advance some of the reasons that make life insurance is so important to you.
Why Need to Buy Life Insurance?
The Main Reason Why Must Have Life Insurance
1. For the Protection of Loss of Income for Families
No one knows what will happen tomorrow, including you. To anticipate your chances of getting caught and leaving your family for life forever, you need to buy a life insurance policy so that your family can earn life insurance money after you leave.
2. As Protection of the Risks of Death Due to the Causes of Major Causes of Death
Based on a survey conducted by the World Health Organization (WHO) in 2002, 10 major causes of death in Indonesia are coronary heart disease, tuberculosis, vascular abnormalities, respiratory diseases, newborn disease, lung disease, traffic accidents, diabetes, blood high, and diarrhea. These diseases are fairly common, so it is important for you to have protection against the risk of contracting those diseases and dying.
3. One of the ways of saving or preparing for retirement
Saving in life insurance is the best alternative choice for your long-term needs due to the nature of regular, obligatory, and not-so-convenient premium payments.
Types of Life Insurance
Types of Term Life Insurance Policies You Need To Know
There are several types of life insurance products which of course each has different benefits. These types of life insurance aim to serve the various needs, abilities, and purchasing power. Compare life insurance types by see what types of life insurance follows:
1. Term Life Insurance (Term Life Insurance)
Term life insurance or term life insurance is its function to provide protection to the insured within a certain period of time. This life insurance usually offers a contract for 5, 10, or 20 years, with a fixed and cheap premium.
You are recommended to choose this type of life insurance if you are prioritizing your family's future, especially children's education. Suitable for those of you who have a need for large insurance costs but have limited financial ability.
If you choose this life insurance, some of the benefits are:
- You as a policyholder get the freedom to determine the amount of premium in accordance with your ability.
- Sum assured that you can get as policyholder can reach billions of rupiah. That is, if the insured dies while the contract is still active, then the insured family will get a considerable sum assured.
Meanwhile, the shortcomings of this type of life insurance are:
- The insured can lose the paid premium money or the charred premium once the contract is completed if no health problems or death until the contract is completed.
2. Life Insurance for Life (Whole Life Insurance)
Life insurance lifetime or whole life insurance provides lifelong protection, although insurance companies usually limit the benefits of protection up to only 100 years.
This life insurance is recommended for those of you who do not have dependents and want benefits beyond death benefit, or you are interested in the idea of long-term savings. So if you want life protection as well as savings for emergency needs such as paying hospital bills, you can consider buying this type of life insurance policy.
The advantages of this type of life insurance are:
- The policyholder is possible to get the cash value of the paid premium.
- If you as an insured cannot pay premium installments on a regular basis, you can use the cash value of the paid premium to pay the next premium.
- The insurance premium you have paid will not be forfeited if there is no claim.
- When the contract expires, the sum insured will be given entirely.
While the shortcomings are:
- The premium is bigger than the term life insurance premium, can even reach more than doubled. The reason for this high premium is because the life expectancy of Indonesians is only 65 years for men and 70 years for women, so the possibility of insurance claims before the protection period ends higher.
- The cash value of the total premium paid is not too great because the interest for this insurance is usually only 4% per year, and this figure has not been tax deducted.
3. Endowment Life Insurance (Endowment Insurance)
This type of term life insurance or endowment insurance is in accordance with its name is an insurance that has two benefits, namely as life insurance futures as well as savings. This means that you as the policyholder can get the cash value from the insurance premium you have paid in the form of sum assured if the insured dies within a certain period in accordance with the policy of the insurance policy concerned and also can draw the insurance policy within a certain time before the contract expires.
This type of life insurance is recommended for those who are more eager to ensure the availability of education funds for children, want to have funds for unexpected needs in the future and want to have a larger pension fund.
The advantages of this type of life insurance are:
- As explained above, you can claim this life insurance policy before the contract expires, for example for your child's education fund. However, the withdrawal of funds can only be done once in a period of several years in accordance with the agreement that has been made.
- If for example, you as the insured are still alive when the time period expires, you will get the entire sum insured.
While the shortcomings are:
- Because this type of life insurance has two benefits, which are like combining life insurance benefits with life insurance, so the premium is big enough, can reach millions of rupiah per month.
4. Unit Link Life Insurance
This unit-link life insurance combines insurance benefits with investments and is most often offered by insurance agents. If you are interested in investing but do not understand about investing and want to keep your souls in benefit of death protection, you can choose this type of life insurance.
The advantages of this type of life insurance are:
- You as the policyholder not only get protection guarantee but also return on investment with high enough interest every year.
While the disadvantages are:
- The returns from investments are less significant when compared to pure investments such as stocks, money markets, or mutual funds. If you are looking for a big profit from investing, you should not rely on unit link life insurance.
- The sum assured to be earned is low, especially if the investment fails or only produces a small profit.
Thorough Before Buying
With that various types of insurance. You need to remember that before you buy a life insurance policy, you are advised to seek as much information as possible and compare offers from several insurance companies related to the protection offered and the amount of premium you have to pay and adjust to your ability. Choose a life insurance company or health insurance from leading private insurance companies such as Prudential, AIA, Cigna, Allianz, etc. Consider also the number of your dependents and what funding needs will appear in the future in choosing this type of life insurance. The point is you need to do a careful planning in accordance with the needs before choosing a life insurance product that you will buy so that the benefits of protection you get from the insurance product is optimal. Remember, the meticulous principle before buying also applies to life insurance products so you do not feel disadvantaged.
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