Talking about insurance, maybe life insurance is the insurance that is still less popular than health insurance or unit-linked insurance. If you refer to the data held by the Life Insurance Association in my country, the total number of customers who have life insurance is fairly low. Even so, the insurance industry continues to grow every year.
At least this positive symptom is a sign that people are slowly becoming aware of the benefits of life insurance. Due to increasing age and heavy work, the risk of death that may be experienced also increases. Especially those who live in big cities. Because of that, people began to be interested in registering themselves to have life insurance.
Unfortunately, in buying insurance, some people still make mistakes. In cases that occur people do not understand the applicable insurance provisions. Of course, this has fatal consequences because the benefits to be obtained are not in accordance with the expectations of the insured. If you have this, the use of insurance will be in vain. The following are some of the mistakes that are often made in purchasing insurance.
Thinking that the sum assured is sufficient for the necessities of life. the Fact is?
These are the benefits you will get from using life insurance. That is, it is very important to know exactly how much sum insured the heirs will receive if at any time there is a risk of death on the insured. Is the sum insured adequately sufficient for the heirs or is it far from sufficient?
It is necessary to know that it is wrong to think that the life insurance coverage will provide for the living needs of the family left behind in the long term. The fluctuating inflation rate and the increase in the necessities of life will affect the value of the sum insured earned.
For that, it must be known how to calculate life insurance coverage. There are three formulas used to calculate the sum insured: human life value method, Income-Based Value, and Financial Needs-Based Value. Choose life insurance whose calculation formula is profitable according to you and your family.
Fixed in Investment Value, Not Insured Value
Many life insurance users are more focused on the investment benefits contained in the insurance product they buy and not on the life protection benefits contained in it. Meanwhile, in investing, the investment value may decrease and also has a high enough risk.
If the premium payment is based on the investment return, it is possible that the sum insured received is not optimal, especially when the investment value has decreased significantly. Such cases are mostly experienced by customers who buy unit-linked life insurance.
For that, choose pure life insurance, aka insurance without including investment benefits. This is better for those of you who want to experience the benefits of insurance as a whole. Regarding investment, you can do it by investing money in several instruments. One of them is by using deposits.
Interpreting the Life Insurance Provides Self Protection, the Fact is?
Not everyone needs life insurance. Because this insurance has benefited only the heirs, namely those who are under the responsibility of the insured. This means that the sum insured is only given to the heirs. Really, the insured who did not receive the sum insured? So, do not buy life insurance if self-protection or the sum insured is received by yourself as expected.
Misrepresenting the Insured in the Policy
The insured in a life insurance policy are those who are the backbone of the family/person who has dependents. This means that if he dies, his family will lose a provider. Anyone who works and makes more money in the family must be covered by life insurance. There is no need to buy life insurance for those who are not breadwinners, such as wives, children, or parents who are not working.
Expect the Maximum Profit from Unit Linked Life Insurance. The Fact is?
Many people start using life insurance because there are benefits of investing in it. It is certain that the insurance they buy is unit-linked life insurance. They assume that they are investing and get the benefits of life insurance protection as well as in that investment.
The assumption is not wrong, but the benefits of insurance and investment are not maximal. Why? Because when paying insurance premiums, the premiums are automatically divided into insurance and investment. It’s good to buy pure life insurance so that the maximum coverage benefits you get.
Buying a Rider at a Bad Time
Buying a fair amount of additional insurance isn’t a problem if it turns out it’s really needed. However, what if this rider was bought at the wrong time? The benefits that you want to feel are not felt. Redundant, right?
The cost of the rider is quite expensive. So it is very important to consider it carefully. There is no need to buy a rider that you don’t need. For example, critical illness insurance can only be claimed if the insured person is already in a critical phase (stage 4).
Buy with a Clear Purpose
Life insurance is different from other types of insurance. This product is devoted to helping the insured’s heirs if the insured is left behind. For that, life insurance is recommended for those of you who are married. Especially already having children. After knowing what went wrong in buying life insurance, set clear goals and buy according to those goals.
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