Both provide
investment and protection benefits, which one should we choose: Unit-linked
insurance or dual-purpose insurance? Before deciding what insurance is right
for you, consider the following simple explanation.

As the namesuggests, Endowment insurance does offer two uses. First, dual-purposeinsurance provides life protection. Second, this insurance is like savingmoney. That is, one has to pay a premium every month during the agreed period.

For example,Budi takes dual-purpose insurance with a cash value of IDR 1 billion for 30years. This means that Budi has to pay a premium for 30 years. If there is arisk of death for Budi, the heirs will receive a benefit of Rp. 1 billion.

What ifthere is no risk to Budi? In the 31st year, Budi will still receive lifebenefits or non-disaster benefits with the same value, which is IDR 1 billion.This means that dual-purpose insurance provides a guarantee or guarantee topremium holders to obtain cash benefits that have been agreed upon at thebeginning.

So what'sthe difference with unit link insurance? Unit link insurance is insurance withan investment in it. The premiums we pay will be invested into investmentinstruments according to what we want. The goal is to get maximum returns.

For example,Budi chooses unit link insurance with the same period, which is 30 years. Itcould be that the cash benefit obtained is greater than IDR 1 billion or it maybe smaller, depending on the chosen investment portfolio.

Here, premiumholders have the accessibility to choose their investment instrument, whetherin mutual funds, money market, stock market, bonds, or even a mixture of theseinstruments. That is, it is the premium holder who bears the risk of theunit-linked investment.

 

ThingsYou Need to Know About Dual Purpose Insurance

Aspreviously explained, dual-purpose insurance has two main functions, namelylife protection and also as savings. Because it offers two long-term benefits,dual-purpose insurance is suitable when the policyholder is of productive age.

Withbenefits that can be felt in the range of 10 years or 15 years into the future,customers can choose dual use to plan for the future, such as for educationfunds, old age funds when retiring, or protection funds for families if theinsured dies.

In terms ofits purpose as an education fund, even though it is intended for children, itis better that the policy holder remains on behalf of the parents. Because ifsomething unexpected happens to the parents, the child can still continue hiseducation with the cash value obtained from the Dwiguna Insurance.

 

How UnitLink Insurance Works

Talkingabout unit link insurance, many people misunderstand about unit link. Manyconsider that unit link insurance is an investment. As a result, they alwaysthink they will get high returns from the deposited funds. In fact, investingin unit links has a specific purpose. What is it and how do unit links work?

So far, weoften recognize two types of life insurance, namely pure or traditionalinsurance, and unit link or dual-purpose insurance. These two insurances havedifferent characteristics and purposes.

Pure lifeinsurance is generally in the form of health protection for bothhospitalization and protection for certain diseases. Usually, this insurancehas a term, ranging from 5 to 20 years.

Unit linkinsurance is suitable for those who want to be protected when there is a riskof death during their productive age. Thus, the Sum Assured (UP) provided willbenefit the family as a substitute for income lost due to death.

Meanwhile,dual-purpose or unit-linked insurance is life insurance plus investment. Thisinsurance in addition to providing health protection along with UP, alsoprovides cash value benefits.

The cashvalue given is the result of the development of funds from the investmentmanager appointed by the insurance company. Like other investments, theinvestment value in unit links is quite volatile so it has risks.

 

2Important Things About Unit Link Insurance

To find outwhether the investment provided by Unit Link Insurance meets our expectations,first understand the following two things:

Understandthe Type of Funds in Unit Link

Often peopleexpect to get high returns from invested premiums. However, the resultsobtained are highly dependent on two things. First, the type of fund or mutualfund that is deposited from a premium. Second, the condition of the capitalmarket in the country.

The thing toremember, unit link insurance is not the same as investing in the stockexchange or the like. This is because this type of insurance is more for futureplanning efforts and protecting families from risk.

Theinsurance company will allocate the customer's premium to the fund portfolio inaccordance with the customer's risk profile as an investor. If the customer isan investor with an aggressive risk profile, then the appropriate mutual fundis the stock market or equity fund.

However, ifthe customer is an investor with a low risk profile, he or she can ask theinsurance company to allocate premiums to a fixed income fund or a balancedmutual fund. However, the returns obtained are not as high as those of equityfunds.

 

Investmentas a hedge of rising healthcare costs

What shouldalso be realized is that investment in unit links is also associated withhealth costs, which continue to increase from time to time. According to theWillis Towers Watson survey, the average increase in health costs in Indonesiareaches 10-11 percent per year. This increase exceeds the national averageinflation which is perched at the 3% figure.

Of course,customers can calculate how much health costs will be in the next 10 years ifthe increase is 10% per year. If this year the operating cost is Rp. 20million, in the next 10 years, the cost may increase by Rp. 35 million.

That is whyinsurance premiums on unit links are static or do not increase, unless thecustomer changes the type of plan. On the other hand, for non-unit-linkedinsurance, the premium value will be updated annually following marketconditions and the policyholder's medical history.

Customersmay want to look at Asuransi MiSmart Insurance Solution (MiSSION) from ManulifeIndonesia. In addition to the customer being able to benefit from reimbursementof hospital expenses according to the bill obtained from additional insurancethat can be purchased together with basic insurance, customers will also get50% of the annual basic premium at the end of the 10th policy year and 700% ofthe annual basic premium at the end of the policy year. the 25th policy year,as well as the optimal UP that can be adjusted to the needs.

So far, haveyou thought about the benefits of investing in unit link insurance anddual-purpose insurance?