The rise of unit-linked insurance business today marks a shift in market penetration of life insurance products to the traditional life insurance products of modern life insurance that promises better ROI and be able to donate a significant premium growth.
It is also not free from the influence that consumers have started to rationally in determining and deciding the type of products they would buy insurance. The above statement is no exaggeration intended for a mechanism in deciding what products will be purchased and why should these products be purchased.
Life insurance business is a business in services, which form the resulting product is not a form of goods but services and activities are abstract or "intangible". Services sold in the form of guarantees of protection for consumers (customers), which deals with life and life in a certain period or for life. That is what is meant by the term "life assurance", which should not be interpreted literally as "life insurance", but "guarantees relating to life", within which the relevant amount of money and time.
Guarantees in life insurance ranges from less than one year to lifetime, and the guarantee will be depleted gradually consumed in line with the passage of time. In the bond contained a promise of a life insurance company to give compensation in the form of a sum of money if the insured suffered such events: death, disability, pain and reach old age. The implicit guarantee to provide an assurance to its customers on trouble, uncertainty about lost revenues due to the occurrence of these events.
In this first article, will discuss several types of life insurance products marketed by life insurance companies in Indonesia as well as recognize the benefits offered by any of the products of life insurance. Life insurance products offered in the market basically consists of three forms, namely Term Insurance, Whole Life Insurance and Endowment Insurance, where these products are categorized as traditional products. While life insurance products traditionally developed by attaching the instrument-the instrument of investment in it and the transparency of both the consolidated statements of costs and benefits to be obtained by the insured later, categorized as modern insurance products, such as unit-linked insurance products.
WHAT KIND OF LIFE INSURANCE PRODUCTS
Many types of life insurance products offered by life insurance companies, which is basically a combined Endowment Insurance with Term Life Insurance and Whole Life Insurance. For example, Endowment Insurance with the benefits passed away 2 times or greater than the benefits due. There is also a life insurance product that provides death benefits in the form of sum assured plus all the premiums have been paid. Return of premium benefit when the insured dies at any time, this is a Whole Life Insurance product. Endowment Insurance products in which payment of insurance benefits provided by either an annual or monthly periodical called the anticipated Endowment.
Great benefits provided periodically be varied for example by increasing every year by 2%, 5%, 10% or more. Other types of Endowment Insurance products are often found in the market, including:
• Scholarship Fund. This product is Endowment Insurance products are associated with school fees, usually known as the Insurance Scholarship, the School Fee and others.
• Gradual Fund. This product is also shaped exactly Pure Endowment Insurance Endowment Insurance, where if the insured is alive at the end of a given year during the period of insurance, insurance benefits will be paid a certain percentage of the sum assured.
MODERN LIFE INSURANCE PRODUCTS.
The availability of various forms of instruments of money market securities, bonds and various savings programs, however, has a direct impact on life insurance products, namely reducing the attractiveness of cash value life insurance policy traditional. Consumers more and more attracted to the trade by using a faster instrument profitable. State and tendencies compel insurance companies to create or design a life insurance products by combining the advantages of life insurance cash value (ie the nature of forced savings, etc.), and a wide selection of products that provide higher profits. This product is at the time of the creation is called universal life insurance.
In the process, many companies issued a type of life insurance insurance life insurance policy with the product or the same type along with the advantages of each policy. The names of these products is also changing, for example challenger, complete life, solution and so on to attract prospective customers to buy its products. The names of life insurance products are in principle based on universal life product. In Indonesia today has been around a few names of universal life insurance products, namely PRUlink (PT Prudential Life Assurance), Zlink (PT Zurich Life), AJBN Link (PT Asuransi Jiwa Binadaya Nusaindah) and still there are insurance products with nama'Link 'behind the name of the product. Until now similar products are still made by some life insurance companies in Indonesia, which certainly will add to the treasury of universal life product name in Indonesia.
IDENTIFYING CHARACTERISTICS OF TRADITIONAL LIFE INSURANCE PRODUCTS AND MODERN LIFE INSURANCE PRODUCTS.
As described in the previous section, the development of life insurance products can be classified according to its period, ie traditional life insurance products and insurance products of modern life. The characteristics of traditional life insurance products are:
• Large coverage premiums and money fixed (constant) since the commencement of insurance until the expiration of insurance.
• predetermined premium payment schedule, for example, every year, six months, three months or monthly.
• Since the contract began in cash value policy can already be known.
• The composition of costs, mortality tables and interest rates are not specified and not known by the prospective policyholder.
• Large interest rate enjoyed by the policyholder is constant throughout the insurance contract.
As for the modern life insurance products have the following characteristics:
• Composition of the premium specified separately between pure insurance premiums, fees and interest rates.
• All the details are known by the prospective policyholder.
• The payment of insurance premiums and the amount of money can be fickle, and do not have a fixed schedule, because modern life insurance products allows the addition of premium at any time.
• This product requires the administration of a far more complicated than traditional life insurance products, therefore this product has the premium for a fairly large investment and should be managed professionally.
• Prospective policyholders may decide where the money (premium) are invested, such as stocks, bonds, money market deposits, time deposits and so forth.
• cash value of this policy is determined by the performance of the investment committee of life insurance companies that manage, so that policyholders do not know exactly how much cash value he would receive if lapse.
• The form of life insurance Whole Life Insurance usually with added some riders, such as personal accident and total pemanent and disability.
The characteristics outlined above, gives a better picture in identifying insurance products that are categorized as traditional and modern. Of course, every product has a plus minus when viewed from each of the characteristics mentioned above. The decision to determine which products are most appropriate insurance to be purchased, into a comprehensive consideration for prospective insured other than as a goal the protection of applicants itself. Consideration might be the return result will be a major preference in deciding to purchase these insurance products. In the next article will discuss the major benefits of buying a life insurance product.
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