Know the Types of Traditional Life Insurance
Know the types of insurance . in Indonesia, this type of insurance is divided into two major types, traditional insurance and non- traditional insurance . Traditional insurance is divided into three types. Termlife insurance , whole life , and endowment .
Termlife insurance (futures)
Term insurance only provides protection within a certain period of time only. The protection could be as short as a plane ride from Jakarta to Semarang for less than two hours or for 20 years. Characteristically, there is a time limit of insurance protection. In addition, if there is no risk, insurance money is not refunded or burned.
This type of insurance has the cheapest premium among other insurance. Insurance money can be large, reaching billions with a premium that is not too drain the contents of the bag. Term life insurance does not have a cash value. If at the end of the insurance contract the insured is still healthy walafiat, the contract expires and no money given to the insured.
Many people do not like this product because no money is returned when the contract expires and the customer is healthy. Strange indeed, there are people who are not grateful for being blessed with health and long life. Actually this type of term life insurance can be analogous to hiring a security guard for one night to keep the house with plentiful possessions. If there was no turning on that night, would we be able to withdraw the guard's salary the following morning? Should not we be grateful because our house is safe?
Because of the large sum assured, to buy this type of insurance premium is not too easy. Most insurance companies that sell this type of insurance require customers to undergo a medical examination first before buying a policy with a say of Rp 2 billion.
If not pass the examination, customers are not allowed to buy this type of insurance. Or maybe the sum insured is lowered to smaller.
Whole life insurance
This insurance contains savings value. The protection period was longer, up to 99 years. This insurance is referred to as a refinement of term life insurance that has no cash value. You certainly remember that if there is no risk of death, in the end of futures contract the customer does not get anything?
Well, to satisfy customers who complain about term insurance, on whole life insurance , when the contract expires and the insured is still healthy walafiat, there is a cash value given. The risk is that the premium paid is more expensive because the risk of claims is certain. Rarely have a healthy person until the age of 99 years right? In Indonesia, the life expectancy of men is 65 years and women are 70 years old.
The cash value of the whole life policy can be used as loan collateral and there is a dividend bonus from the company for the whole life policy holder . In addition, if you can not pay the premium, the policyholder can collect funds from this cash value. This feature is not available on term life insurance.
The next question, how much money will I get when the insurance period ends? Usually insurance agents provide illustrations at the age of a few tens of years will be out of fund of a few hundred million. Again, do not be dazzled by the illustrations that show millions of figures. That number looks great at the moment, while inflation continues to erode the value of money and in time, a few decades from now, the amount of funding is not really that big.
The reason, the fund was only developed with a yield of only 4 percent per year. Much lower than the interest rate on the market. Yields of that size are still not deducted by fees and taxes.
On the other hand, real inflation rate reached 12 percent. So the whole life insurance cash value will be eroded inflation and the value is not as big as when illustration is presented to the prospective customer. Could be, when the policy matures, this cash value becomes very small.
The premium cost to be paid for coverage of Rp 1 billion for example, will be much greater when compared with the premium cost to be paid if you buy term insurance. How the difference, can be seen in the article on the calculation of insurance premiums.
Endowment insurance (dual purpose)
This type is like term insurance as well as savings.
This product is very popular before the product unit link appears. The forms of endowment insurance vary. In addition to having a cash value, there are also funds issued in futures before the insurance contract expires. These funds come out periodically for example once every 3 or 5 years. For example, such as educational insurance funds when the child is 5 years old for the kindergarten entrance fee, 7 years for the entrance fee of elementary school and so on.
Unfortunately, this endowment insurance premium is much more expensive than the term insurance premium and whole life .
Later, this type of endowment insurance property faded along with the emergence of unitlink products . In addition, because royal give a bonus, endowment insurance costs actually incriminating the insurance company.
Termlife insurance (futures)
Term insurance only provides protection within a certain period of time only. The protection could be as short as a plane ride from Jakarta to Semarang for less than two hours or for 20 years. Characteristically, there is a time limit of insurance protection. In addition, if there is no risk, insurance money is not refunded or burned.
This type of insurance has the cheapest premium among other insurance. Insurance money can be large, reaching billions with a premium that is not too drain the contents of the bag. Term life insurance does not have a cash value. If at the end of the insurance contract the insured is still healthy walafiat, the contract expires and no money given to the insured.
Many people do not like this product because no money is returned when the contract expires and the customer is healthy. Strange indeed, there are people who are not grateful for being blessed with health and long life. Actually this type of term life insurance can be analogous to hiring a security guard for one night to keep the house with plentiful possessions. If there was no turning on that night, would we be able to withdraw the guard's salary the following morning? Should not we be grateful because our house is safe?
Because of the large sum assured, to buy this type of insurance premium is not too easy. Most insurance companies that sell this type of insurance require customers to undergo a medical examination first before buying a policy with a say of Rp 2 billion.
If not pass the examination, customers are not allowed to buy this type of insurance. Or maybe the sum insured is lowered to smaller.
Whole life insurance
This insurance contains savings value. The protection period was longer, up to 99 years. This insurance is referred to as a refinement of term life insurance that has no cash value. You certainly remember that if there is no risk of death, in the end of futures contract the customer does not get anything?
Well, to satisfy customers who complain about term insurance, on whole life insurance , when the contract expires and the insured is still healthy walafiat, there is a cash value given. The risk is that the premium paid is more expensive because the risk of claims is certain. Rarely have a healthy person until the age of 99 years right? In Indonesia, the life expectancy of men is 65 years and women are 70 years old.
The cash value of the whole life policy can be used as loan collateral and there is a dividend bonus from the company for the whole life policy holder . In addition, if you can not pay the premium, the policyholder can collect funds from this cash value. This feature is not available on term life insurance.
The next question, how much money will I get when the insurance period ends? Usually insurance agents provide illustrations at the age of a few tens of years will be out of fund of a few hundred million. Again, do not be dazzled by the illustrations that show millions of figures. That number looks great at the moment, while inflation continues to erode the value of money and in time, a few decades from now, the amount of funding is not really that big.
The reason, the fund was only developed with a yield of only 4 percent per year. Much lower than the interest rate on the market. Yields of that size are still not deducted by fees and taxes.
On the other hand, real inflation rate reached 12 percent. So the whole life insurance cash value will be eroded inflation and the value is not as big as when illustration is presented to the prospective customer. Could be, when the policy matures, this cash value becomes very small.
The premium cost to be paid for coverage of Rp 1 billion for example, will be much greater when compared with the premium cost to be paid if you buy term insurance. How the difference, can be seen in the article on the calculation of insurance premiums.
Endowment insurance (dual purpose)
This type is like term insurance as well as savings.
This product is very popular before the product unit link appears. The forms of endowment insurance vary. In addition to having a cash value, there are also funds issued in futures before the insurance contract expires. These funds come out periodically for example once every 3 or 5 years. For example, such as educational insurance funds when the child is 5 years old for the kindergarten entrance fee, 7 years for the entrance fee of elementary school and so on.
Unfortunately, this endowment insurance premium is much more expensive than the term insurance premium and whole life .
Later, this type of endowment insurance property faded along with the emergence of unitlink products . In addition, because royal give a bonus, endowment insurance costs actually incriminating the insurance company.
