Mistakes to Buy Life Insurance That Many Do

 

 Speaking of insurance, maybe life insurance is insurance that is still less popular than health insurance or unit link insurance. If referring to data owned by the Indonesian Life Insurance Association (AAJI), the number of customers in Indonesia who have life insurance is fairly low. Even so, the insurance industry continues to grow every year.

At least these positive symptoms are a sign that people are slowly starting to become aware of the benefits of life insurance. Because of the increasing age and weight of work, there is also an increased risk of death that may be experienced. Even more so who lives in big cities. Therefore, people are starting to be interested in registering to have life insurance.

Life Insurance

Unfortunately, in buying insurance, some people still make mistakes. The case that occurs people do not understand the applicable insurance provisions. Of course, this is fatal because the benefits you want to get are not in accordance with the expectations of the insured. If this is the case, the use of insurance will be useless. Here are some mistakes that are often made in the purchase of insurance.

 Mistakes to Buy Life Insurance That Many Do

1. Think The Sum Insured Is Enough for Living Needs. Apparently?

This is the benefits that will be obtained from the use of life insurance. That is, it is very important to know well how much money the heirs will receive if at any time there is a risk of death on the insured. Does the sum insured meet the needs of the heirs well or is it far from enough?

Keep in mind it is wrong to think life insurance coverage money will meet the living needs of families left behind in the long term. Fluctuating inflation figures and increasing living needs will affect the value of the sum insured obtained.

For that, it must be known how to calculate life insurance coverage money. There are three formulas used to calculate sum insured: the human life value method, Income Based Value, and Financial Needs Based Value. Choose life insurance whose calculation formula is profitable according to you and your family.

2. Fixated on Investment Value, Not Coverage Value

Many life insurance users are more focused on the investment benefits contained in the insurance products they buy and not on the life protection benefits contained in them. While in investment, the value of the investment can go down and also have a fairly high risk.

If the premium payment is based on the return of the investment, it could be that the value of coverage received is not maximal, especially when the value of the investment decreases significantly. Cases such as the average experienced by customers who buy unit link life insurance.

For that, choose pure life insurance aka insurance without including investment benefits. This is better for those of you who want to feel the benefits of insurance as a whole. About investing you can do by investing money into several instruments. One of them is by using deposits.

3. Interpreting Life Insurance Gives Self-Protection, It Turns out?

Not everyone needs life insurance. Because this insurance has benefits for heirs only, namely those who are in the dependents of the insured. That is, the sum insured is only given to heirs. Yes, the insured who does not receive the sum insured? So, do not buy life insurance if self-protection or sum insured is accepted by yourself that is expected.

4. Misrepresenting the Insured in the Police

The insured in the life insurance policy are those who become the backbone of the family / people who have dependents. That is, if he dies, his family will lose a living. Anyone who works and makes more money in the family must be insured in life insurance. There is no need to buy life insurance for those who are not breadwinners, such as wives, children, or parents who are no longer working.

5. Expect Maximum Profit from Unit Link Life Insurance. Apparently?

Many people start using life insurance because there are investment benefits in it. Of course the insurance they buy is unit link life insurance. They assume that they are investing and get life insurance protection benefits at the same time in the investment.

The assumption is not wrong, but the benefits of insurance and investment are less than optimal. Why? Because when paying insurance premiums, the premium is automatically divided for insurance and investment. It's good to buy pure life insurance so that the maximum benefits of coverage obtained.

6. Buying Riders At The Wrong Time

Buying enough additional insurance is not a problem if it turns out that it is needed. However, what if it turns out that this rider was purchased at the wrong time? The benefits you want to feel are not felt. Redundant, isn't it?

The cost of the rider is quite expensive. So it's very important to consider it carefully. There is no need to buy an un needed rider. For example, critical illness insurance that can only be claimed if the insured disease has been in a critical phase (stage 4).

Buy with a clear purpose.

Life insurance is different from other types of insurance. This product is devoted to helping the heirs of the insured if left behind by the insured. For this reason, life insurance is recommended for those of you who have a family. Especially already having children. After knowing what is a mistake in buying life insurance, set a goal clearly and buy according to that goal.