Did you know that there are also 3 types of traditional insurance products? Then, what are the differences?
Photo by Natalya Zaritskaya on Unsplash
Basic knowledge of the types of life insurance is sometimes confusing. There are still many potential customers who cannot distinguish between traditional and non-traditional insurance. Meanwhile, agents also sometimes only provide modest explanations. As a result, many prospective customers do not really understand the types of insurance. Then actually what types of insurance exist in Indonesia?
Basically, there are two types of life insurance in Indonesia, namely traditional and non-traditional insurance. Traditional insurance itself is still divided into three types. What are they? Check out the explanation below!
1. Term Life Insurance (Futures)
Term insurance provides protection to its customers in a short period of time, which is only 20 years. This type of insurance has the cheapest premiums among other types of traditional insurance, but the sum insured is very large, it can reach billions.
Term life insurance has no cash value. If until the expiration of the insurance contract the customer concerned is still healthy, the contract will still end and the money will not be returned.
Maybe many people think buying this type of insurance will only be a waste of money. However, there's nothing wrong with anticipating unwanted things to happen, right?
2. Whole Life Insurance
This insurance contains the value of savings with a longer protection period, reaching 99 years. Overall insurance is referred to as a refinement of term insurance which has no cash value. In this type of insurance, when the contract is over and the customer is still healthy, the money given will be returned.
This insurance contains the value of savings with a longer protection period, reaching 99 years. Overall insurance is referred to as a refinement of term insurance which has no cash value. In this type of insurance, when the contract is over and the customer is still healthy, the money given will be returned.
However, whole life insurance has a premium that is more expensive because the risk of claims will definitely occur. The cash value of a whole life policy can also be used as collateral for a loan, complete with bonus dividends from the company for policyholders.
In addition, if the policyholder is unable to pay the premium, he can take funds from this cash value. Unfortunately, the interest from the savings invested is much lower than the market interest rate. Savings in whole life insurance provides an interest of only about 4 percent per year and is still deducted by fees and taxes.
3. Endowment Insurance
This insurance is a term insurance product that has multiple benefits. Its nature is like term insurance, but can also be used as savings.
There are various forms of endowment insurance. There are bonuses that appear regularly, for example, 3 years or 5 years. This type of insurance premium is much more expensive than term or comprehensive insurance.
Endowment prestige faded with the emergence of non-traditional insurance in Indonesia. In addition, the frequent giving of bonuses makes the insurance costs even more burdensome for insurance companies.
That was an explanation of the various types of traditional insurance in Indonesia. Then how about non-traditional insurance? Wait for the explanation in the next article!
