Besides health insurance, another insurance product you should have is life insurance. This insurance covers financial losses due to the risk of death.
According to the Indonesian Life Insurance Association (AAJI), life insurance is a protection program that transfers the economic risk of the death or survival of an insured person.
By analogy, life insurance is often likened to an umbrella at home, a life jacket on a ship, or an airplane. It's essential because it's useful at certain times, but often overlooked when circumstances are safe.
Therefore, life insurance is highly reliable, especially when unexpected situations arise. You need life insurance to ensure your financial needs are not disrupted by risks to your breadwinner during your productive years, or to prepare for a happy and prosperous old age.
Life insurance is a written protection contract called a policy. The policy contains a contract between the life insurance company and the policyholder.
The life insurance company is obligated to pay a predetermined amount of money to a designated beneficiary (usually the beneficiary) in the event of death or if the insured is still alive at the end of the policy period (according to the coverage period).
In return for the transfer of risk, the policyholder has an obligation to the life insurance company, which is called premium payment.
Here are the benefits of having life insurance:
1. Reduces the burden of death costs
Death can come at any time, even at the most unexpected times. In this case, it inevitably requires significant costs.
These death costs will be borne by the surviving family members. If they don't have money or emergency savings, they will be scrambling to find loans or rely solely on donations from relatives and neighbors.
Life insurance will be very useful in times like these. Even if the coverage amount isn't enough to cover the death costs, at least the compensation from the life insurance company will be very helpful.
The burden on the family will be lessened and easier to handle. In some circumstances, the insurance money can even be enough to cover all these costs.
2. Addressing Death Costs
In addition to death costs, your family members must also prepare for funeral costs. It's well known that funeral costs in Jakarta and other major cities are quite expensive.
Funeral costs generally vary depending on the burial location. The size of the plot and the location of the grave chosen will also affect the amount of these costs.
In addition to the costs mentioned above, there are other funeral expenses that the family must cover, including obtaining a death certificate. If unprepared, these costs can become a burden on the family and deplete their savings.
In practice, not all life insurance policies cover funeral expenses; some only provide a limited amount of compensation. This information should be clarified from the outset to avoid any misunderstandings.
3. Helping the Family Financially
Having life insurance also provides a sum assured or compensation to the bereaved family. This fund can be used to continue their lives after the death of the breadwinner or breadwinner.
The loss of a loved one can be devastating for the family. This hardship can worsen if economic conditions deteriorate in the future.
However, with life insurance, the family can receive a sum assured. This money can be used to continue the family's life, such as starting a business or other activities.
Life Insurance as an Investment for the Future
Life insurance can be used as an investment for the future. It provides both life protection and cash value in the event of your death.
If you die, the full sum insured will be paid even if you've just applied for life insurance and paid the premium, meaning the contract is still in effect.
Make sure you choose the right and best life insurance product for your needs and financial capabilities so you can pay your premiums on time. Your policy will remain active, allowing you to receive the maximum benefits.
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