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Uzone.id – Our grandparents always said, “it’s better to have an umbrella before the rain falls.” They were right. Life throws curveballs, and just like being prepared for a downpour, it’s important to be ready for the unexpected.
This time, we will focus on discussing the importance of having life insurance. Even if you are not married, as a single individual, it is still essential to have life insurance.
Life insurance is a contractual agreement between you as the policyholder or insured and the insurance company as the guarantor.
The insurance company will pay a nominal amount of money if there is a risk of death to the insurance policyholder.
You as the insured are obliged to pay a premium which will later be useful to provide compensation for the risk of your death.
In other words, life insurance is a type of insurance that aims to protect the public against unexpected financial losses caused by the death of the insured.
“Those who have dependents or those who support other people, whoever they are, whatever age they are, when they have dependents or support other people, then they need life insurance,” said the financial planner (financial planner) from Financial Consulting, Eko Endarto.
He continued, “Understanding of the need for protection is very minimal. So you have to understand it properly. Many people think, if I pay, I will lose because I don’t get a return. Remember, insurance provides protection or protection, not return. When there is no protection, the risk is especially for those left behind. This means that when someone who has economic value in the family disappears, the family’s economy also disappears.”
Types of Life Insurance
There are several types of life insurance products, each of which has different benefits. This type of life insurance aims to serve various needs, abilities, and purchasing power of the community. Please consider the following types of life insurance:
1. Dual Purpose Life Insurance (Endowment Insurance)
This type of endowment life insurance or endowment insurance, as the name suggests, is insurance that has two benefits, namely term life insurance and also savings.
This means that you as a policyholder can get the cash value of the insurance premium that you have paid in the form of insurance money if the insured dies within a certain period by the relevant insurance policy policy and can also withdraw the insurance policy within a certain period. a certain time before the contract ends.
This type of life insurance is recommended for those of you who want to guarantee the availability of funds for your children’s education, want to have funds for unexpected needs in the future, and want to have a larger retirement fund.
The advantages of this type of life insurance are:
- As explained above, you can claim this life insurance policy before the contract ends, for example, to fund your child’s education. However, withdrawal of these funds can only be done once within several years according to the agreement that has been made.
- If, for example, you as the insured are still alive until the validity period ends, you will get all the insurance money.
While the weaknesses are:
- Because this type of life insurance has two benefits, namely combining the benefits of term life insurance with whole life insurance, the premium is quite large, it can reach millions of rupiah per month.
2. Term Life Insurance
The function of term life insurance is to protect the insured for a certain period only. This life insurance usually offers contracts for 5, 10, or 20 years, with fixed and calculated premiums.
You are advised to choose this type of life insurance if you prioritize your family’s future, especially your child’s education. Suitable for those of you who need large insurance costs but have limited financial capabilities.
If you choose this life insurance, some of the benefits are:
- You as a policy holder have the freedom to determine the premium amount according to your abilities.
- The insurance money you can get as a policyholder can reach billions of rupiah. This means that if the insured dies while the contract is still active, the insured’s family will receive a large amount of insurance money.
Meanwhile, the disadvantages of this type of life insurance are:
- The insured can lose the premium money that has been paid or the premium will be forfeited after the contract is completed if they do not experience health problems or die until the contract is completed.
3. Unit Link Life Insurance
This type of unit-link life insurance combines the benefits of insurance with investment and is most often offered by insurance agents.
If you are interested in investing but don’t understand the investment and want to ensure that your life still gets the benefits of protection from death, you can choose this type of life insurance.
The advantages of this type of life insurance are:
- As a policyholder, you not only get guaranteed protection but also a return on investment with quite high interest every year.
The disadvantages are:
- Investment returns are less significant when compared to pure investments such as stocks, money markets, or mutual funds. If you are looking for big profits from investments, you should not rely on unit-link life insurance.
- The insurance money that will be obtained is relatively low, especially if the investment fails or only produces small profits.
4. Whole Life Insurance
This type of life insurance or whole life insurance provides lifelong protection, although insurance companies usually limit protection benefits to only 100 years.
This life insurance is recommended for those of you who have no dependents and want more benefits than just death compensation, 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:
- Policyholders can get the cash value of the premiums they have paid.
- If you as the insured cannot pay regular premium installments, you can use the cash value of the premium already paid to pay the next premium.
- The insurance premium you have paid will not be forfeited if there is no claim.
- When the contract ends, the insurance money will be paid in full.
While the weaknesses are:
- The premium is greater than the premium for term life insurance, and can even reach more than double. The reason for this high premium is that the life expectancy of Indonesians is only 65 years for men and 70 years for women, so the possibility of an insurance claim before the protection period ends is higher.
- The cash value of the total premium paid is not too large because the interest on this insurance is usually only 4% per year, and this figure has not been deducted by tax.
