What Are the Types of Life Insurance?

Often we as consumers just nod listened insurance agents who offer their products. Most agents offer the products it sells, The problem is not the products we need. consumers often do not understand and do not really understand what exactly insurance products he needed.

Basic knowledge about the types of life insurance that sometimes create confusion. There are still many consumers who can not distinguish between traditional products with non-traditional products. While the explanation of the agents also sparingly only, not really meet the thirst of curiosity of the customers. Instead, customers also need more ask and have knowledge about insurance.

About the types of insurance, type of insurance is divided into two major types, traditional insurance and nontraditional insurance.
Traditional insurance is divided into 3 types.

1. Insurance Termlife (futures)
2. whole life
3. and endowment

It is better to take a moment to understand further the kinds of insurance.

A. Traditional insurance

1. TERMLIFE INSURANCE

   Term insurance provides protection only within a limited period only. The protection can be very short, less than two hours or as long as 20 years. Typically, there is a time limit of insurance protection. In addition, if there is no risk, the insurance money is not returned or forfeited.
   
   This type of insurance has the cheapest premiums on the insurance. Money coverage can be large, reaching billions with a relatively low premium. Type of term life insurance has no cash value. So, if at the time of expiry of the contract of insurance the insured is still hale and hearty, while the contract expires so no money is given to the insured.
   
   Many people do not like this product because no money is returned when the contract expires if the customer is still in good health. Strange indeed, there are people who are not grateful for having blessed with health and longevity. Actually the type of term life insurance is could be analogous to hiring a security guard for one night to keep the home with abundant possessions. If a theft does not happen that night, if we can pull back the salaries of security guards the next morning? Should not we be grateful for our homes safe?
   
   Due to a large the sum assured, to buy this kind of insurance premium is not too easy. Most insurance companies that sell this type of insurance requires customers to undergo a medical examination before such a policy with coverage of $ 2 billion.
   
   If it does not pass inspection, customers are not allowed to purchase this type of insurance. Or it may be reduced to the sum assured less.
   
   The insurance premium is much smaller than the premium to be paid if you buy unit-linked products. Many financial planners recommend that if you buy this type of insurance product should be accompanied by buying mutual funds. Because, when the insurance period ends and the healthy insured no the sum assured ??given.
   
   So that when combined with the mutual fund, insurance fund at the end of the development of the mutual fund investment was plenty. The combination of term insurance and mutual funds, will result in a much higher investment than buying units link. By paying the same premium, the sum assured is also much greater.
   
   One thing that is needed is the discipline to save money every month in a mutual fund each month in order to obtain maximum benefit and results

2. WHOLE LIFE INSURANCE

   This insurance contains the value of savings. The period of protection any longer, up to 99 years. This insurance is called a refinement term life insurance that has no cash value. still remember that in the lifeterm insurance that if there is no risk of death, at the end of the contract term insurance customers do not get anything?
   
   Well, to satisfy customers who yammer about term insurance, so in whole life insurance, when the contract expires and the insured is still hale and hearty, there is cash value given. The risk, the premium paid is more expensive because of the risk of inevitable claims. There is rarely a healthy person up to the age of 99 years right?
   
   Cash value of whole life policy can be used as collateral for loans, and there is a bonus dividend of the company for the whole life policy holders. Moreover, if it can not pay the premiums, the policyholder may withdraw funds from the cash value of this. This feature does not exist on the type of term life insurance.
   
   Next question, how much money will I get when the insurance period ends later? Usually insurance agents illustrated by the age of a few tens of years the funds will come out a few hundred million. remember, do not be happy first by the illustrations that show the number of millions. That figure looks great at the moment, while inflation continues to erode the value of money and in time comes, a few decades from now, as much as it really is not that big.
   
   The reason, it was just developed a yield of 4 percent per year. Much lower than the interest rates on the market. Yields of it still has not cut costs and taxes.
   
   On the other hand, the real inflation rate reached 12 percent. So the whole life insurance cash value will be eroded by inflation, and the value is not as illustrations presented to prospective clients. It may be that, when the policy matures, the cash value becomes very small.
   
   Cost of the premium to be paid to obtain coverage of Rp 1 billion, for example, will be far greater than the cost of the premium to be paid if you buy term insurance. How is it different, it can be seen in the literature on the calculation of insurance premiums.

3. ENDOWMENT INSURANCE

   This type is like as term-insurance also as savings.
   
   This product is very popular before the advent of unit-linked products. the forms of endowment insurance is very diverse. In addition to having a cash value, there is also a periodically funds expended prior to the insurance contract expires. These funds out periodically eg 3 years or 5 years. For example, as the issuing insurance fund education when the child was 5 years old for kindergarten entry fee, for elementary school and beyond.
   
   Unfortunately, endowment insurance premiums are much more expensive than term insurance premiums and also whole life insurance.
   
   Lately, these endowment type insurance prestige faded with the rise of unitlink products. Moreover, because the always give bonuses, the cost of endowment insurance was be burden the insurance companies.

B.NON-TRADITIONAL INSURANCE

The type of Non-traditional Insurance is only one : link unit.

Unit linked insurance is with two pockets, pouches for protection and pouches for investment . The premiums are paid partly used to pay for protection and some are placed in mutual funds in the form of unit-linked.

Policyholders will be asked to choose where to put their investments, whether in equity funds, mixed funds, fixed income funds, or money market.

Unit linked closely linked to the capital market. This product is quite complex and not easily understood. Unfortunately, many insurance agents are less explain exactly subject product. When the stock market goes down, the value of the unit will also link down. So often projections that given was missed from reality.

In some insurance companies that sell unit-linked products, others do not give details on the performance of the link units from month to month. unit link placed on any stock, many customers do not find out about this. Indeed, there are some insurance companies that includes the performance of the unit link on his site that can be easily accessed by its customers.

If you compare placing funds the same with a portion that is placed in unit-linked, meaning is reduced by the cost of premiums, by being placed directly in mutual funds, then the result will be much greater if they are placed in mutual funds.

Most insurance companies invest your fund entirely on unit-linked products in year five. For the first year to fifth, only some of which are placed in the unit link. Such as 0 percent in the first year, for the first year out of funds to pay the cost of acquisition or agent bonus. The second year of the investment share rose to 20 percent, to 40 percent in the third year and fourth year of the new 80 percent in the fifth year to 100 per cent is placed on the unit link.

Cost of the premium to be paid also large compared to the traditional type of insurance premiums. Protection value only slightly, at most, approximately USD 250 million. If you are calculating your insurance needs and the the sum assured of Rp 250 million is inadequate, consider taking other types of insurance.

The problem is, if you need the protection of Rp 1 billion to pay the premium unit link is very high. Do not get because it has not been able to afford unit-linked premiums that offered by agent then lowering the sum assured so you are having underinsure.

Policyholders should really pay attention to and study the product carefully and absorb the information so that not mistake to bought. It issued a large amount of money, got pertanggungan which is less than the investment needs and get results that are not optimal.

The positive of unit-linked insurance is you can discipline to invest on a regular basis, either monthly or yearly investment because payments are charged together with the payment of premiums.

Well, after knowing the types of insurance, choose one that best fits your financial goals. The first, Calculate insurance needs, and then define the product.