How To Choose Your Insurance

 

in the first part, we already discussed about the importance of life insurance. Including the difference in life insurance and unit link.

In this second part, shelled surrounding the charges imposed for the unit link, which of course is different from regular insurance.

First, please be aware that despite the sweeteners mentioned above, there are fees charged to clients, namely administrative costs, the cost of managing the investment and acquisition costs, those costs are additional expenses excluding cost of insurance (cost of mortalita magnitude depending on gender, age and the amount of money Insured, policy holder health conditions also affect the magnitude of this cost), here is an explanation of costs on the unit links:

1. administrative expenses

Based on the data that we receive the range administrsi cost is Rp 20.000,-to Rp 30,000,-per month or $ 240,000,-up to $ 360,000 per year. These costs will continue to be charged during the validity period of insurance.

2. allocation of the cost of the premium

The insurance company charge you this in advance before and any funds into the investment portion. These fees are generally of 5% of the funds invested and there was also a method using bid-offer price of incoming funds will be divided by the selling price (offer price) as well as the funds out or withdrawn by the customer will be multiplied by the purchase price (bid price). The difference of the bid-offer price usually by 5% (generally calculated from the offer price). For customers who want to withdraw its investments from link units that use the methods of the bid-offer price absolute must calculate the rate of growth that is taking place since those funds coming in, minus the difference between bid-offer price.

3. the premium Allocation Charges (Special Unit Regular Links)

In addition to the above costs, the cost of other premium allocation is still charged in the first 5 years with a range of up to 100% of the premiums paid after cut insurance costs at the beginning of the first year, the range of this cost will be down periodically to 0% at the beginning of the year to 6 times the policy is running.

However there is a small portion of the product unit links in Indonesia who allocate investment in the first year by 20% to 100% of base premium in the first year. At first glance it looks interesting, but after research proved extraordinary expenses charged to the customer, not least as an illustration of a prospective customer would pay a basic premium that much greater if the prospective customer buying the product link units are starting to allocate investments since the first year compared to link units that do not allocate their investment in the first year (see table 1).

4. Investment Management Fees

Insurance companies also charge the management of Investments by investment manager whose magnitude varies between 0.5% to 3% per year and are already accounted for in the price of the unit. The level of this fee depends on the type of investment that is chosen by the customer (fixed income mutual fund, stock or a mixture), the magnitude of the funds managed, as well as the desired profit by life insurance companies.

5. Unit cost single premium Links

On a single premium payment or single premium (i.e. payment of the premium is only a one time payment and there is no obligation in the following year but if you want to add a portion of investment are allowed), this type of policy also imposes costs such as the cost of acquisition of the fixed amount is typically 5% of the total single premium and/or the funds in the Top Up (added), administrative fee to cover the cost of the initial range of $ 240,000 policiesup to Rp 300.000,-usually worn in the first year. The guaranteed sum assured is equal to 150% of your initial investment, if no withdrawals at a later date by the customer. However, if withdrawal occurs later, the sum assured will be reduced.

In line with the length of time the investment, if the growth of investment funds have exceeded the sum assured if there is a risk of death, the benefits obtained by the beneficiary of the investment grade. Conversely, if the value of the investment turned out to be smaller than the sum assured then heirs obtained benefit is equal to sum assured, with a note if the development investment value is not smaller than the costs which have been mentioned above.

Non Unit Link Combination With Mutual Funds

Let us examine more about traditional term life insurance product with this type of YRT (Yearly Renewable Term) that have a high sum assured however with a relatively very low premiums. The cost of the insurance is the insurance fee is charged to cover the cost of mortalita, the magnitude of the variable (depending on age, gender, health factors and the sum assured) is paid periodically in the form of premiums as well as certain increased every year, in line with the increase of the age of the customer.

Even so, the relatively small and its increase in dikombina