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Know the 4 Types of Life Insurance, Definition and Benefits

Currently, there are various types of life insurance offered to the public, both by banks and insurance companies.

Each life insurance has a certain period and different benefits, so before buying a life insurance policy, you should first understand the insurance product to be chosen.

Life insurance is a contract agreement between the policyholder (insured) and the insurance company (insurer), in which the insurance company will make payments based on the death or life of the insured.

The value of the benefits provided, the amount has been determined and/or is based on the results of fund management.

Life insurance will protect the insured from the impact of unexpected financial losses, such as sudden death, total permanent disability, or unproductive circumstances that result in the loss of a source of income.

Types of life insurance

Reporting to the official website of the Financial Services Authority (OJK), there are several types of life insurance such as term life insurance, whole life insurance, dual-purpose life insurance, and unit link insurance.

1. Term Life Insurance

All term life insurance products provide coverage for a certain time, which is referred to as the policy period.

The benefits of a term life insurance policy can be paid only if under the following conditions:

The insured dies within a predetermined period The policy is still valid when the insured dies

If the policyholder is still alive until the end of the specified period, the policy will give the policyholder the right to continue life insurance coverage.

When the policyholder does not continue, the policy will end and the insurance company is not obliged to provide further coverage.

The types of term life insurance coverage are as follows:

a. Term life insurance with fixed coverage, which provides the same amount of death benefits over the term of the policy.

b. Term life insurance with a decreased sum insured, which provides death benefits with a decreased value over the coverage period. The benefit of this policy begins with a set value, then decreases for coverage according to the method described in the policy.

c. Term life insurance with an increased sum insured, which provides death benefits at a value and will increase by a certain percentage in the established intervals over the term of the policy.

2. Whole Life Insurance

Whole life insurance has two characteristics, namely providing whole life coverage to the insured as long as the policy is still valid, as well as insurance coverage containing elements of savings.

Some types of life insurance coverage for life, as follows:

a. Traditional whole life insurance, which provides for whole life coverage at a fixed premium rate and does not increase as the insured ages.

b. Last-survivor life insurance, provides policy benefits that are paid only after the two insured policies have died. This life insurance premium is only paid until the first insured dies or the premium can be paid until the second insured dies.

This type of insurance is designed primarily to provide coverage to married couples who wish to have funds to pay the inheritance tax imposed after death.

c. Combined whole life insurance, has the same features and benefits as whole life insurance for individuals but this insurance covers two lives in the same policy.

After the death of one of the insured, the death benefit in the policy will be paid to the surviving insured and the policy coverage ends.

3. Unit link insurance

Unit-linked insurance combines insurance benefits with investments. Generally, this insurance is organized by life insurance companies.

The premiums paid will be allocated into two separate management mechanisms, namely basic premium management for protection purposes and investment premium management.

By purchasing this life insurance product, an insured can get the benefits of insurance protection as well as returns on investment.

4. Dual-purpose life insurance

Dual-purpose life insurance provides certain benefits such as the insured living until the end of the coverage period or dying during the coverage period.

Each dual-purpose life insurance policy has a due date, which is the date of payment of the sum insured by the insurance company to the policyholder if the insured is still alive.

The due date will be reached at the end of a predetermined period, or when the insured reaches the set age.

Well, the above has been reviewed regarding several types of life insurance. In addition to understanding the types, before buying a life insurance policy, make sure that the assurance provider company has been registered and supervised by the OJK.


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