Does buying life insurance include one of your 2018 financial resolutions? If your current position is as the main breadwinner in the family, you should have a life insurance as a family financial risk management strategy.
Having a life insurance can help you anticipate the financial risks that can arise from the death of the breadwinner and because of other calamities that make the family income tap undisturbed. However, to buy life insurance also needs its own accuracy so as not to get trapped in the purchase of inappropriate products. Often a person buys life insurance, it does not fit the needs so that when disbursed, financial risks are avoided still occur and shake the family's financial health.
For example the value of insurance money is very small, not as expected. Or most of the premiums or fees paid per month turn out to be big enough for some reason from the insurance company. If you are planning to buy life insurance, consider the following four major research mistakes to avoid buying one:
1. Not knowing the need for money coverage Many people simply buy life insurance without first calculating how much money needs actual coverage he needs.
As a result, when there is a risk, the sum assured is not sufficient to cover the financial needs of the family. Know in advance how much money your life insurance needs so you can find the right product. How to know the needs of life insurance money you can calculate with the approach of Human Life Value, with the formula of the multiplication between the current income value plus risk free rate.
For example, your current income is Rp 10 million per month and your dependents can be independent for another 20 years. Assume a risk free rate of 5.2 percent. Therefore, the life insurance coverage is Rp 10 million x 12 months x (110 percent + 5.2 percent) x 20 years = Rp 1.42 billion.
After knowing the money needs of insurance, you just look for life insurance products with the value of Sum Insured (UP) for it. You can weigh the term life product or pure term life insurance which the price of the premium is still reasonable with the value of the UP is large enough.
2.Purpose insurance as an investment About insurance, one thing you need to keep in mind is that insurance is a cost. Insurance is not an investment where you can expect big returns someday.
Conversely, insurance is a cost because in principle insurance is a scheme of transfer of risk to a third party of insurance companies. The insurance company will pay a certain amount of compensation or sum insured when there is a risk to the insured or the policyholder.
The policyholder is required to pay the premium as the cost of transferring the risk to the insurance company. Life insurance can not prevent death. However, life insurance can alleviate the financial burden of family members left behind when the breadwinner dies.
One consider insurance as an investment product can lead you to choose life insurance products that are less precise. Like buying life insurance combined with investment. As a result the premium is quite expensive, while the sum assured is relatively small. So be smart in choosing the best.
3. Set the insured in the policy In insurance, the insured is he who is assumed the risk of his soul by the insurance company.
Thus, when the insured dies, then the insurance company will pay a sum of money that is entitled to be given to the appointed heirs. Who ideally becomes the insured in life insurance products? In accordance with the purpose of purchasing the financial risk management of the family, the insured life insurance should be those who have economic value or the party that became the source of family income.
For example, husband, wife, or both. If husband and wife work together, the insured should be the party with the greatest income because the financial risk is also greatest for the family if he suddenly dies.
4.do not know buying supportive insurance Usually when you buy life insurance, insurance agents will offer also complementary insurance or rider. Do not just add extra insurance before calculating first what your needs.
Additional insurance also means additional costs, then it is wise in adding the types of riders. If necessary, for life insurance you can consider adding it with a waiver of premium or premium waiver.
These riders are useful to anticipate the risk of incompetence which results in you being unable to pay regular premiums. For example because of an accident that makes you lose your job, you will be exempt from life insurance premium payment.
Paying insurance premiums adds to the financial burden. Yes, many people think so. But, the question is, is it so?
Had we been blessed with the ability to see what would happen in life in the future, the opinions above are one hundred percent true. Because, we can avoid something bad that can befall. Especially the two most valuable things: our lives and our health.
Unfortunately, no one can predict the disaster. And the more annoying, the disaster will certainly affect our financial plan, can even devastate it!
That is a strong reason for us to have insurance. In essence, the losses caused by unfortunate need not be borne alone.
Your Insurance Protected Risk
Undeniably, Indonesia still can not be said to be free from security threats. Especially in big cities, crime rates are still high. But, even though Indonesia is called the safest country in the world, disaster can still come without roughly and indiscriminately.
the importance of insurance
We do not know what disaster will befall us. Nothing wrong to keep watch (criminality / Seconds)
Here are some expensive risks that threaten us all:
1. Road accidents
2. Experiencing acute health problems
3. Can not work because of permanent disability
4. Loss of property (due to theft, fire, etc.)
5. Loss of income due to the efficiency of the company
6. Accidents at work or at home
7. Be a victim of business scams or credit cards
8. And so on
Unimaginable how many risks that can shake our financial condition. The risk threatens who we are, whether the businessman, the worker, the RT chairman, even the president.
The insurance company will assess the threatening risks and reimbursement guarantees of your work. People who work offshore are certainly more at risk than office workers. The higher the risk, the greater the guarantee of reimbursement in case of disaster.
Protection against Risk vs. Insurance Premium
The greater the risk insured, the greater the insurance premium to be paid. So, do not think that you can be an insurance participant anywhere, which is the cheapest premium.
If you are the backbone of the family, of course the risk of your life is greater. That's why we can not just "just take insurance" by paying the cheapest premium. More important is the accuracy of the insurance program with our needs.
Suppose you are 30 years old, have a family, and pay an insurance premium of Rp 500,000 per month. If at any time you have an accident that resulted in permanent disability, you may expect to add a nominal premium because currently only get a replacement Rp 200.000.000 due to the accident.
By paying a premium, for example, Rp 1,000,000 per month, you can get up to four times the reimbursement. Imagine the benefits for you and your family.
the importance of insurance
Calculate how much coverage you can pay through premium payments. (risk illustration / Verotech Solution)
Examples of cases of the above accidents are not engineering, but real happening in the lives around us. Because of stingy premium pay, then led to the failure of the plan to buy a home or difficulty educating children.
Not just health and life. The risk of losing property is also the case. So stingy premium pay, lost car no one joined to replace because there is no insurance. As a result, you have to buy a car again. It will be different if we already follow the insurance program.
Stingy premiums come from the mindset who feel that insurance is just more spending that can be 'saved'. In fact, not infrequently also people assume, "pay insurance is the same as inviting disaster itself."
Is Your Insurance Sufficient?
With the above case examples, do not be stingy anymore. Or maybe it is enough to be registered as a participant of the Health Insurance Provider (BPJS) Program or employment?
The company you work with may already have an employee insurance program. These insurance programs may have provided some protection, but are limited in providing financial security for you and your family. Moreover, Indonesia's monetary condition is still strongly influenced by other countries, so the prices of basic commodities are often uncertain.
It's time to reconsider insurance. Try to make a simulation like the example case above. How much risk do you have and how much you can afford to risk it alone?
It is time you take off the common sense that insurance means paying for something that is not needed. It's a big mistake if you think that insurance only adds to your spending.
the importance of insurance
Insurance does not make pockets. It's the same thing
just with the nube but the allocation is different (not any money / Shutterstock)
Because, once again, we all run the risk that we can not predict when it comes. Insurance helps minimize that risk, so your financial future and family is more secure. What is needed then is to set up expenditure items so as not to be broken.
As the saying goes, prevention is better than cure. Instead of getting into financial trouble after being struck down by having no insurance, we better prevent that problem.
