Many people
already understand the importance of having insurance to support healthy
personal finances. However, this awareness has not been followed by the
ownership of insurance in accordance with the needs of the family. This can be
seen from the still small ratio of the amount of funds in the insurance
industry to gross domestic product (GDP) or the insurance penetration rate.

TheFinancial Services Authority (OJK) noted that until 2020, the penetration ofthe insurance industry in Indonesia is still below 4%, below Singapore, whichis already in the 6%-7% range. Even for life insurance products, thepenetration rate is getting smaller at only 1.1% because it was affected by theCOVID-19 pandemic which triggered an economic recession.

Often doubtsabout having personal insurance are caused by confusion about where to start incompleting the protection needs. If you are currently still in the stage ofconsidering buying insurance as needed, you should not delay it anymore.

Insurance isone of the main foundations of a healthy finance. Delaying insurance cantrigger financial exposure to risk of loss that you can actually manage andminimize.

Why NeedInsurance?

Often peopledelay insurance because they feel they have sufficient savings to anticipate anemergency that requires financial support. But, how sufficient is the cashsavings to cover large unexpected expenses, such as during a sudden illness?

Cash as anemergency fund is very important. However, its value is relatively limited. Forexample, if you are married and have children, the recommended emergency fundis at least 6-12 times the value of your regular monthly expenses. There islimited value in this. For example, you have an emergency fund of IDR 70million, which is equivalent to 7 times the value of your monthly expenses.When an unexpected event occurs where the main breadwinner of the family diesfor good, will the funds be sufficient to provide for the life of the familyleft behind?

Emergencyfunds have nominal limitations. The emergency fund plays more of a role as asecurity blanket to support the fulfillment of emergency needs only. However,to help you anticipate greater unexpected financial needs, it takes more thanjust an emergency fund. Insurance can be the main safety net that plays a rolein protecting your finances from greater financial risks.

An easyexample, a family breadwinner has term life insurance with a Sum Assured (UP)of IDR 1 billion and for that he only needs to pay a relatively small premium.When the main breadwinner suddenly dies, the Sum Assured (UP) can be disbursedand become provisions for the life of the family left behind.

Likewisewith health insurance. For example, a person pays a monthly premium of acertain amount of rupiah to get health protection with an annual benefit valueof Rp. 200 million. When he falls ill that requires treatment costs, he doesnot need to spend money for these purposes because the insurance covers it. Sowith insurance, the risks of large financial expenditures can be moremanageable.

 

LifeInsurance and Health Insurance, Two Important Protections

There aremany financial risks that can occur and disrupt a person's financial stability.Starting from a car that suddenly broke down and needed repairs, a house thatsuddenly flooded unexpectedly, to the incident of a family member getting sickand the worst, the death of the breadwinner of the family. Which of thesefinancial risks should be a priority to be managed?

As an importantstep in building healthy personal finances, you should focus on the two maininsurances that need to be met, namely health insurance and life insurance.

 

1. HealthInsurance

Health costsare getting more expensive from year to year. A survey conducted by WillisTowers Watson, a global risk management consulting firm, revealed that theaverage increase in health costs in various countries in the last 3 years,namely the 2017-2019 period, reached 10-11% per year.

As anillustration is the cost of hospitalization in the hospital. About 10 yearsago, for just IDR 600,000 per night you could get a private treatment room withone bedroom. Nowadays, it's hard to get a one bedroom treatment room at thatmuch cost.

That is, theincrease in the cost of medical care is a fact that is difficult to ignore. Asan anticipatory measure and for peace of mind, you can take advantage of healthinsurance as protection for health costs. That way, you don't have to worryabout whether the savings you have are sufficient to cover rising medical costsin the future.

Not onlythat, with personal health insurance, you can access health services morequickly and comfortably. Almost all current health insurance uses a cashlesssystem, so you just need to show your insurance card when you visit a healthfacility and get the treatment you need right away. No need to prepare cash inadvance for expenses.

For healthinsurance, you can consider MiUltimate HealthCare from Manulife Indonesia. Thisbest health insurance has several advantages:

• First, reimbursement of hospital costs according to the bill.With this feature, you don't need to prepare any funds to cover medical costsbecause the insurance will pay for it as long as the annual limit has not beenexceeded.
• Second, the benefits of 1 or 2 bed inpatient rooms in thehospital.
• Third, the cost of rooms abroad. This health insuranceprovides benefits for hospitalization costs up to 3 times the plan you chooseif you are hospitalized abroad.
• Fourth, there is an additional annual benefit limit featureif you as the insured suffer from a critical illness such as cancer, kidneyfailure and so on.

2. LifeInsurance

Lifeinsurance is a sign of your love for your loved ones. On a day-to-day basis,you may play the role of the breadwinner of the family where the well-being ofyour family and children depends a lot on your existence. What would happen ifyou as the breadwinner of the family suddenly died? Families who have beenfinancially dependent on you will not only experience the loss of their belovedfigure but will also face financial challenges as the income that has been usedto cover their daily needs has stopped.

You canminimize this incident by having life insurance. Life insurance protects youreconomic value as the breadwinner. So, when one day you die, the income that isthe foundation of the family does not just stop. The reason is, insurance willdisburse a sum of Sum Insured (UP) which can be used by the bereaved family tocontinue living.

There aremany life insurance options that you can choose according to your needs.Manulife Indonesia has several life insurance products ranging from term lifeinsurance such as Term Saving Protection. There is also life insurance thatprovides maximum protection, such as Manulife Essential Assurance, and lifeinsurance in accordance with sharia principles that provides protection as wellas investment such as MiSmart Insurance Solution Syariah (MiSSION Syariah).

With theright health insurance and life insurance, you can achieve a more stable andprosperous finances. So, let's have insurance.