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4 Types of Life Insurance Available in Indonesia

Artikel diperbarui pada 2 April 2023.

There are various types of life insurance offered to the public, either by banks or insurance companies. Each life insurance has different terms and benefits.

Before buying a policy, it is better to understand in advance regarding the service product that you will choose. The value of the benefits provided has been determined based on the results of fund management.

This type of insurance will protect depending on the impact of unexpected losses. Such as sudden death, disability, or unproductive state.

Know What is Life Insurance?

Life insurance is a product that provides a guarantee in the form of money or compensation and there are several types of life insurance depending on the risk such as the customer has died, is permanently disabled, has an accident and others.

Because of its many roles, this service is also different and the product is important to have. Especially for people who act as the backbone of the family.

The benefits of this service basically cannot be felt directly but to the heirs. Therefore, in order to anticipate the occurrence of risk, it is important to have it so that life is guaranteed.

The benefits are for the provision of compensation when the insured party dies with an amount of 100% and the provision of total disability compensation up to 100%.

Types of Life Insurance that Need to Be Known

There are several types of life insurance services to support your various needs in the future, here is an explanation of the types.

1. Term Life Insurance

All products of this type of service provide coverage for a certain period of time, commonly referred to as the policy term.

The benefits of this term life insurance policy can be paid out only under certain conditions such as the death of the insured and the maturity period has been set.

This policy is still valid when the insured has passed away. If the policyholder is still alive until the end of the specified period.

Then the life insurance policy will give the policyholder the right to continue the life insurance service coverage. When the policyholder does not continue, the policy will end and the company will not provide coverage.

There are also types of term life coverage such as fixed coverage. This service provides death benefits in the same amount capacity during the policy term.

There are also term services with decreasing money coverage. This provides a decreasing death benefit during the policy term.

The policy benefit starts with a predetermined value and then decreases during the term of the insured service according to the method described in the policy.

Term life insurance with increasing sum insured. This type provides the death benefit in one value and will increase by a certain percentage in the policy term interval.

2. Lifetime Service

Total or whole life insurance has two characteristics, namely the provision of lifetime coverage to the insured as long as the policy is still in force.

As well as service closure and contains an element of savings. The most common type of life insurance coverage is traditional whole life coverage.

This service offers lifetime coverage with a fixed premium rate that does not increase as the insured ages. Last survivor life insurance provides policy benefits that are only payable upon the death of the second insured in the policy.

Premiums for this type of life insurance are only paid until the death of the first insured, or premiums can be paid until the death of the second insured.

This type is mainly designed to provide coverage to married couples who want funds to pay inheritance tax after death.

While combined life insurance has the same features and benefits as individual life insurance, it covers two lives under the same policy.

Upon the death of the insured, the death benefit under the policy is paid to the surviving insured and the coverage ends.

3. Unit Link

Unit-linked life insurance, like other unit-linked insurance products, is a product that has combined the benefits of protection from various risks and investment benefits.

Because it combines 2 financial products at once, the premium paid by the customer is divided in a certain proportion for benefits and joint investment.

With this more complete way of working, the unit-linked type can be replaced if the customer never makes a protection claim. If the premium cannot be paid in one day.

Then the customer can also divert some of his investment funds for repayment. Of course, the benefits of investing can be fully enjoyed by the client without having to worry about managing the capital.

Apart from that, the benefits of investment are not optimally utilized, as the cost of this type of life insurance must be reduced. In addition, the risk of loss from investments can also affect the insurance balance sheet.

4. Multipurpose

Offers protection benefits coupled with savings. Like the previous type of service, a portion of the premium for this product is split between the savings account and the rest is allocated for insurance protection benefits.

If you choose this type, you will benefit from the ease of withdrawing funds before the guarantee period ends.

In addition, if the customer is still alive at the end of the coverage period, the entire sum insured can be returned. With these benefits, the endowment type is suitable for clients with long-term and major financial goals.

Such as education costs and retirement costs. But for the cons, the nominal premium for this type of life insurance tends to be high and can even reach millions of rupiah every month.