The occurrence of the COVID-19
pandemic, which has claimed many lives and caused a slump for the global
economy, has more or less encouraged increased awareness of the importance of
insurance. Since the pandemic hit, the awareness of the Indonesian people to
have insurance has increased.

The Manulife Asia Care survey lastNovember 2020 showed that in the Asian region there was an increasing interestin buying new insurance products, from 62% to 71%, since the last survey in May2020. In three dollars, data from the Financial Services Authority (OJK) asquoted by Investors Daily in July 2021 also showed that Life Insurance Premiumsthroughout semester I-2021 grew 18.35% compared to the same period in 2020.

Despite this growth, public awarenessof having insurance still needs to be encouraged. This is because the level ofownership or penetration of insurance is still low in the country. According toOJK, as quoted by Bisnis Indonesia, the insurance penetration rate in June 2021only reached 3.11%.

Many people may already understand theimportance of having insurance to manage their financial risks. However, manyare still doubtful or choose to procrastinate having it. In fact, the longer wedelay having insurance, it's the same as letting the risk happen to financesand the future.

 

Some Risks ofLoss Delaying Insurance

Many cases occur when someone justthinks about buying insurance when the thing they fear has happened in front oftheir eyes. If this is the case, of course, it is difficult to find insurancethat is willing to bear the risk of this loss.

So, in order to be more confident indeciding to have insurance, let's look at 4 losses that we will experience ifwe delay having insurance:

 

1. Premium PricesGet Higher With Age

To be able to get insuranceprotection, we are required to pay a premium to the insurance company that actsas the risk taker. The premium amount is determined based on the risk analysisof the Insured. Several things that become risk assessment variables includethe age of the Insured and health conditions. The older the age of the insured,generally the insurance premiums will be higher because the risk is consideredto be greater than the young insured. Likewise regarding health conditions thatcan be seen based on medical records, the Insured's lifestyle whether smokingor not, and so on.

The age variable also determines thepremiums in long-term insurance policies such as life insurance. For example,we buy life insurance at the age of 29 years with a sum insured of IDR 1.1billion and a protection period of 20 years. So for the next 20 years, we willbe charged a premium per year, let's say it's around Rp3.08 million. On theother hand, if we apply for life insurance at the age of 35 years with a similarcoverage value and protection period, we can be sure that the premium chargedwill also be higher.

One of the term life insuranceproducts that we can consider is the Term Saving Protection from Manulife. Thisproduct provides a death benefit in the form of 100% UP which is given if theInsured dies during the coverage period. In addition, Term Saving Protectionalso provides benefits in the form of 200% UP if the Insured dies due to anaccident. There is also a final contract benefit in the form of a 100% returnof premiums if the insured lives until the end of the coverage period.

 

2. UnmanagedFinances

Insurance is actually a mechanism totransfer or transfer risk from us to the insurance company. As a risk transferservice, the insurance company gets premium income paid by the policy owner. Byhaving insurance, we limit the risk of loss to a certain number that is morecertain. An easy example, we buy health insurance that has a yearly limit or amaximum annual benefit limit of Rp. 200 million.

To get the insurance benefits, we haveto pay a premium of Rp. 1 million per month. Thus, we limit the risk ofspending due to illness to a maximum of Rp. 12 million for a year to get abenefit of Rp. 200 million. So, if one day we need maintenance costs that costup to Rp. 100 million, the insurance will pay for it.

The opposite will apply if we do nothave insurance at all. With the same case, which is an illness that costs up toRp. 100 million, then we have to pay 100% of the expenses ourselves. So, let'simmediately have insurance so that we can manage the risk of losses that caninterfere with financial health.

 

3. Opening theRisk of Stuck in Expensive Debt

Insurance is very useful to help usanticipate events that require large funds. Illness events that require thebest medical care, accidents that eliminate the ability to work, to deathevents that stop the source of income for the bereaved family, and so on. If wehave insurance, these risks are transferred to the insurance company (or sharedif the context is sharia insurance products). By transferring that risk, we donot bear it alone. There are cases of illness, like the example above, we don'tneed to pay up to Rp. 100 million for treatment costs from our own pocketbecause insurance is the one who covers it.

What happens if you don't haveinsurance? So, what happens when a person's finances are unable to bear thecosts themselves? There are many cases like this that end up dragging someoneinto a costly debt trap. When personal finances can't afford it, people oftenturn to looking for debt so they can still get the care they need. The problemis, in urgent conditions such as illness, the need for funds is also demandedto be quickly available. Finally, many are forced to borrow from expensive loansbecause they can be obtained quickly.

If that's the case, personal financialconditions can get even worse. Taking expensive debts if not calculatedcarefully, risks dragging our finances into complicated problems and evenbankruptcy.

 

4. Not OptimalInvestment Done

Investing is one of the best ways toincrease asset value and help achieve certain financial goals. Investments canprovide benefits that help the accumulation of wealth more quickly. Along withthat, investment also has a risk that is proportional to the opportunity forprofit. When we invest without having any insurance protection, it becomes manytimes more risky.

The picture is like this. We routinelyinvest in mutual funds or stocks for a financial purpose, amounting to IDR 2million per month. Well, one day there was an illness where we needed a largeamount of treatment. Because we don't have health insurance, our income andsavings are depleted to cover the hospital costs. As a result, the routineinvestment fund allocation of Rp 2 million per month is also sucked up byhospital costs. As a result, financial goals are threatened with failurebecause investment capital does not exist.

The opposite happens if there isinsurance, when there is an incident of illness, the insurance will cover thetreatment costs so that we can still do the allocation of routine investmentfunds of Rp. 2 million. That way, financial goals do not need to be disturbedby unexpected expenses because there is insurance that covers them.

By understanding the four risks ofdelaying insurance, it seems that there is no longer any reason for us toignore them. Come on, immediately complete your protection needs by having theright insurance!