Types of Life Insurance You Need to Know

This time we will specifically discuss life insurance. Do you know what life insurance is?
Life insurance is an agreement between you as a policy holder or an insured with an insurance company as a guarantor where the insurance company will pay a nominal amount of money if there is a risk of death for the insurance policy holder.
You as an insured must pay a premium that will be useful to compensate for the risk of your death.

Types of Life Insurance You Need to Know
Types of Life Insurance You Need to Know


In other words, life insurance is a type of insurance that aims to cover people from unexpected financial losses, which are caused by the insured dies.
Similar to the ownership of health insurance, this life insurance can be purchased for personal gain and on behalf of the insured itself or purchased for the benefit of a third person. For example, a husband can buy life insurance with his wife as an insured, or parents can also buy life insurance with their children as insured.

There are several types of life insurance, but before discussing about the type of life insurance, it's a good idea to know in advance some of the reasons that make life insurance so important to you.
Why Need to Buy Life Insurance?

Main Reasons Why You Must Have Life Insurance


1. As Protection Against Loss of Income for Families
Nobody knows what will happen tomorrow, including you. To anticipate the possibility of being hit by an accident and leaving the family you get forever, you need to buy a life insurance policy so that your family can get the sum insured to live after you leave.

2. As a Protection for the Risk of Death Due to the Main Causes of Death
Based on a survey conducted by the World Health Organization (WHO) in 2002, the 10 main causes of death in Indonesia were coronary heart disease, tuberculosis, vascular abnormalities, respiratory diseases, newborn diseases, lung disease, traffic accidents, diabetes, high blood. , and diarrhea.
These diseases are quite common, so it is important for you to have protection against the risk of contracting this disease and dying.

3. One Way to Store or Save Preparation
Savings in life insurance is the best alternative choice for your long-term needs because the nature of regular premium payments, mandatory, and not easily taken at any time.

Types of Life Insurance


There are several types of life insurance products which of course each has different benefits. These types of life insurance aim to serve a variety of needs, abilities, and purchasing power. Please see what the following types of life insurance are:

1. Term Life Insurance
Term life insurance or the term life insurance functions to provide protection to the insured for a certain period of time. This life insurance usually offers contracts for 5, 10, or 20 years, with fixed and relatively inexpensive premiums.
You are advised to choose this type of life insurance if you prioritize your family's future, especially children'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 ability.
• The sum insured that you can get as a policy holder can reach billions of rupiah. That is, if the insured dies when the contract period is still active, the insured family will get a substantial sum of money.
Meanwhile the disadvantages of this type of life insurance are:
• The insured can lose the premium that has been paid or the premium is forfeited after the contract is completed if it does not experience health problems or dies until the end of the contract period.

2. Lifetime Life Insurance (Whole Life Insurance)
Lifetime insurance or lifetime insurance provides lifetime protection, although insurance companies usually limit the benefits of protection to only 100 years.
Life insurance is recommended for those of you who have no dependents and want benefits that are more than death benefits, or you are interested in the idea of ​​long-term savings.

So, if you want life protection and savings for emergency needs such as paying for hospital bills, you can consider buying this type of life insurance policy.

The advantages of this type of life insurance are:
• Policyholders can obtain cash value from premiums paid.
• If you as an insured cannot pay premium installments regularly, you can use the cash value of the premium paid to pay the next premium.
• The insurance premium you pay will not expire if there is no claim.
• When the contract expires, the sum insured will be given in full.

While the disadvantages are:
• The premium is greater than the long-term life insurance premium, it can even more than double. The reason for the high premium is because the life expectancy of Indonesian people 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 premiums paid is not too large because the interest for this insurance is usually only 4% per year, and this figure has not been deducted by tax.

3. Endowment insurance
Type of endowment insurance or life insurance as the name suggests is insurance which has two benefits, namely as a term of life insurance and savings.
This means that you as a policy holder can obtain cash value from insurance premiums that you have paid in the form of insurance money if the insured dies within a certain period of time in accordance with insurance policy and can also withdraw policy insurance at a certain time before the contract expires.

This type of life insurance is recommended for those of you who want to better ensure the availability of educational 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 to finance your child's education. However, withdrawal of these funds can only be done once in a period of several years according to the agreement that has been made.
• If for example you as an insured are still alive when the period ends, you will get all the sum insured.
While the disadvantages are:
• Because this type of life insurance has two benefits, such as combining the benefits of term life insurance with life insurance for life, so the premium is quite large, can reach millions of rupiah per month.

4. Unit Link Life Insurance
This unit link insurance combines the benefits of insurance with investment, and is most often offered by insurance agents. If you are interested in investing, but do not understand about investment and want to keep ensuring your soul 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:
• You as a policy holder not only get guaranteed protection but also return investment with a high enough interest each year.
While the disadvantages are:
• Investment returns are less significant than pure investments such as stocks, money markets, or mutual funds. If you are looking for a large profit from investment, you do not have to rely on unit link life insurance.
• The sum insured will be low, especially if the investment fails or only produces small profits.

Confused about looking for the best and cheapest health insurance? Look at the solution!

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Research Before Buying
Research Before Buying


Research Before Buying
You have to remember that before you buy a life insurance policy, you are advised to find as much information as possible and compare offers from several insurance companies relating to the protection offered and the amount of premiums you have to pay, and adjust it to your ability.

Other Post : 14 Life Insurance Benefits You Need To Know, Why You Need It

Choose a life insurance company or health insurance from various well-known private insurance companies such as Prudential, BNI Life, AIA, Cigna, Allianz, or Sinarmas.
Also consider the amount 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 careful planning according to your needs before choosing the life insurance product that you are going to buy, so that the protection benefits that you get from insurance products are optimal. Remember, the careful principle before buying also applies to life insurance products so you don't feel disadvantaged.

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