Monday, January 1, 2018

6 Fatal Error When buying life insurance

life insurance that is very important. But a lot went wrong when buying life insurance. As a result, the premiums so expensive, the benefits are not optimal. What is the error and how to avoid it ?

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In Indonesia, the number of mobile phone owners far more than the owner of the life insurance. Less 10% of communities had insurance compared to 90% of the community who have a mobile phone.

Protection of the family seems to have not been important in the eyes of many people. Less important with the gadgets.

Lagging far behind neighboring countries, such as Singapore and Malaysia. Very reasonable quality financial literacy Indonesia away from the order, according to a World Bank survey.


Life insurance is the financial foundation of a healthy family.

According to data of the Central Bureau of statistics, 9 out of 10 women in Indonesia gave up the life of his partner. If the disaster against the husband, what will happen against the wife, if no insurance protection.

The BPS survey found that 60% of a wife whose husband died should lower the standard lifestyle.

Many are reluctant to buy life insurance because the insurance considers it expensive and redundant.

These perceptions are totally wrong. A great one.

The origin of choosing the right product, fees or insurance premiums need not be expensive.

For example, you pay Usd 400 thousand a month already can get a hefty protection benefits. The middle class in big cities spending pulsanya the telephone more than Rp 400 thousand a month.

Important, when searching for the best life insurance, choose the most appropriate to your needs.

What are the 5 mistakes when buying life insurance?

#1 Money life Insurance Coverage is too small

How many sum assured (UP) Your life insurance? You remember?

Many do not remember or do not even know. When UP is very important.

UP is the reason to buy life insurance because it is a benefit that is paid the insurance company if the insured (i.e. breadwinner husband or wife) died.

That's the reason, you're buying insurance.

The problem, many assumed that UP life insurance they buy large already, although in reality it is not.

For example sum assured of Rp 200 million. That money you think quite a lot of money at this time because it does not exist in your savings now.

But, the fact is the amount of 200 million is tiny for a life insurance protection. Why?

  • If your family's living expenses now Rp 10 million per month, meaning that only the sum assured sufficient create families left to survive for less than 2 years.
  • every year the cost of living rises following inflation 6 – 7%, so the sum assured that the value of Rp 200 million, within two years the value of the riilnya or purchasing power dropped to Rp 178 million because of the rising prices of goods. Growing years, the purchasing power of money declining coverage.

Therefore the value of the coverage UP is very important. Its value should be adequate.

How to count them easily.

Estimasinya is the value multiplied UP 1% equal to the cost of living per month. So, if the current cost of living 10 million a month, UP to a minimum is USD 1 M.

Value UP should continue to be evaluated in order to increment in accordance with the cost of living and the inflation rates.

#2 Investment Focus, not Protection of the soul

Quite often I see people have life insurance, but the focus on the value of its investments, not on protection.

"How much money I receive if no claim", is a question that often comes up, the actual shows focus on investment.

The magnitude of the protection value of sum assured not too queries. Whether UP would be enough or not to protect the family.

It is indeed correct that investment value is added to the sum assured if the insured dies.

But related investment value, we must remember that

  • The performance of that investment is uncertain, fluctuating depending on market conditions and instruments chosen.
  • In life insurance, unit link investment value much cut to pay for the insurance. Moreover, if you choose the short payment of only 10 years (the term ' leave premium '), then the value of your investment will be deducted to pay for the cost of insurance during your leave of absence premium. That way, the value of the investment is so vanishingly small because many amply cut.
So, while there is value investing that could add to the sum assured, the amount is uncertain. Do not rely on the results of the investment for life insurance protection.

You should focus on the value UP in life insurance. Because UPS guaranteed by insurance companies will be paid when the insured suffered a disaster.

You must make sure the bottom value of the sum assured is large enough to protect the family.

#3 not all Need life insurance at this time

We understand the first purpose of buying life insurance, namely providing benefit (sum assured) to the beneficiary if the primary insured dies.

That is, there are people whose lives depend on You financially, which if you died, they lose their source of income, so it takes the financial protection of life insurance.

In other words, if there is no person whose life depends on you financially, no point had insurance. Because if the insured suffered the disaster died there is no family or person who is the source of his income.

Who for example they need insurance?

Fresh graduate entering a new job, don't have dependents. Single people living alone and no dependents.

For me, if not necessary, why should buy now. Eman – eman his money.

Better money to pay insurance premiums on re-allocate to other more important things. One of them is having a pension fund.

Already have a dependent or not, it doesn't matter, you definitely need the money for retirement. It's the primary needs of us all.

"Ah, later only pension funds, still long cuy...".

Manulife Investor Sentiment survey, according to the Index, the number of communities that Indonesia has a pension fund is still very minimal.

Most have not had, or if already, rely on a pension from work that the number is inadequate compared to the cost of living when the elderly later.

Because it does not have a pension fund, still according to the survey, children relied on retirement community. "A lot of kids, a lot of good fortune".

#4 Wrong Insured in the policy

In a life insurance policy, the insured is a party, that if she died, then the insurance company will pay the sum assured.

Determination of the insured are often wrong.

For example, children are defined as insured; the wife did not work as the insured.

Both children or the wife who does not work does not have financial risk create family because if they suffered a disaster there is no source of revenue that is lost. Because they do not provide earnings in the family.

The insured is a party which is the create a source of income of the family. Can husband and wife, as long as they can provide revenue.

Ideally have two life insurance for both the husband and wife are the same – the same work.

If the salary of his wife, which he should have been more used to have insurance. Not a husband.

Select the greatest income because he had the greatest financial risk

#5 not yet need to Link units

Am I opposed to link units? Not at all.

Unit – the Link is one product that has benefits for the community.

But, based on obervasi includes paying attention to the questions as well as comments on the blog, I found many people who have insurance plus investment, that investment-linked, even though they are actually not yet in need of this type of insurance.

Why are these people not yet in need of Unit links? There are two conditions.

First, they're actively investing, for example gold, mutual funds or property. They will be more efficient (cheaper) buying investments directly rather than through intermediaries.

In units – links, investment is done through intermediaries, namely insurance companies, which by implication there is an additional fee for the services of an intermediary.

Take for example, the cost of top-up.

On link units, generally, top up are subject to a 5% fee, whenever doing so. That means putting 1 million dollars, which will be true – true invested only Rp 950 thousand, for rp 50 thousand deposited to top up as the cost of insurance.

Free top up fees if invested directly (without via insurance), for example through the sale of mutual funds Online.

For example in IPOTFUND, an Online mutual fund supermarket, top up fee is free. The customer can buy and sell mutual funds is easy and free of charge for each counterparty.

Therefore, I suggest to those who already have an investment better continue his investment. Rather than take the via intermediaries, there are additional fees that will reduce your investment funds.

What if I need insurance? Is it not very convenient got insurance products and investment.

If there are already investing, while only need insurance, you can buy pure insurance no frills investment.

Premium pure insurance (term life) cheaper high-value coverage. You'll get the benefits of a more optimal.

Secondly, young people still single (no family dependents or parents) who already have life insurance unit-link with monthly premiums is large enough (against their salaries), whereas they actually have not need insurance because There are no families who are financially dependent on their income.

I asked them, "Why buy insurance?" they said, "we need investment. This insurance is only a bonus. "

So they need insurance but not the actual investment.

If not necessary, why should buy.

Because this product is no ongkosnya, there is a premium to be paid each month.

Wouldn't it be nice, premium was direalokasi to investing all (100%) compared to most investment and partly to insurance.

Imagine, every month you pay Usd 500 thousand to pay insurance premiums plus investment.

Money USD 500 thousand were partly used to pay insurance premiums and the rest for investment. Where the results of the investment is greater than USD 500 thousand were invested at once (there is nothing to pay insurance premiums). Of course, that 100% of investments, not shared with pay insurance premiums.

#6 Buy the extra Insurance was not Understood

Rider or supplemental insurance a lot purchased by the customer.

But when asked, do understand the benefits of the rider, the answer is no. Take an extra insurance that there is a cost because you pay premiums more expensive.

So, you should know before you decide to buy it.

I have come across a few things, among others:

First, take the rider health insurance but from already existing office facilities of private health insurance which is pretty good. The reason, among others, could get the fresh money from double-claim or can go up to a more expensive class of rooms when inpatient care.

Buy a rider there costhim (not free), i.e. the premiums are more expensive and the value of life insurance coverage is smaller (because of the truncated portion of the premium to pay for the cost of the rider).

So make sure you need the rider recently bought it.

If ridernya has not been needed, we recommend that you do not need to be taken. His money is better allocated to improve the life insurance coverage or money to add to investments outside insurance.

Second, take the critical illness insurance rider, with the hope that when the knock on wood are stricken with serious pain medication costs are covered by insurance. Assuming you buy critical illness insurance is this is the same kind of health insurance that provide reimbursement of medical expenses.

In fact, critical illness insurance doesn't work that way.

Critical illness insurance replace after the insured was diagnosed with the disease at a critical level. Critical definitions can be viewed at polis.

For example, renal failure, which recently replaced if both kidneys are problematic. New cancer tumor or replaced if it is malignant level entrance.

So after a severe or critical critical illness insurance pays the new sum assured. Critical illness insurance does not replace medical expenses like health insurance.

Does it still need to take critical illness insurance rider? Probably yes. Maybe not. The premiums are obviously not cheap.

But most importantly, prior to taking a first, understand correctly understanding the rider. Don't get disappointed when a new incident saw it being replaced by the insurance company does not comply with expectations when buying used to be.

Conclusion

You should have a life insurance first, recently got a gadget or the latest smartphone. Because insurance is a testament to your love of family. Gadget or smartphone is not.

Insurance premiums are perceived is expensive. The reality is not. Starting with Rp 400rb a month, you can get life insurance protection with UP quite high.

As long as, you can choose the right insurance. One way is to not do the 5 fatal error I describe above.

Immediately buy insurance for security and peace of your family.

Read the other important thing is to buy a cheap life insurance; Check How The Life Insurance Premiums; Need No life insurance and investment.