TheJakartaPost
Please Update your browser
Your browser is out of date, and may not be compatible with our website. A list of the most popular web browsers can be found below.
Just click on the icons to get to the download page.
Dealing with possible insurance problems
It is advisable for would-be policy holders or those with life coverage to have thorough knowledge about insurance issues so that they wonât be in a disadvantageous position when an insurance-related concern arises
Change Size
It is advisable for would-be policy holders or those with life coverage to have thorough knowledge about insurance issues so that they won't be in a disadvantageous position when an insurance-related concern arises.
With their highly persuasive skills, many life insurance agents may succeed in convincing prospective and doubtful policyholders to decide to get life insurance coverage.
Life insurance is the most exciting insurance product in Indonesia. To date, the number of individual policyholders in Indonesia stands at over 10 million and is expected to continue to grow at a double digit rate annually, according to a report released by the Indonesian Life Insurance Agency (AAJI).
However, the insurance agents' success does not always go hand-in-hand with pleasing tales from policyholders or consumers. Without attempting to point the finger at who should be blamed when an insurance-related issue arises, it is crucial for prospective policyholders or those who already have a policy to understand several issues related to life insurance so as to find a win-win solution to the problem.
Following are several issues that prospective policyholders should know about:
The claims process
Insurance claims cover everything from hospitalization benefits at your local hospital to death benefits on life insurance policies.
'In 2013 alone, our company paid out Rp 1.7 trillion claims, paid to more than 280,000 life insurance policyholders,' said a life insurance manager.
While many claims are processed and paid as per the policyholder's expectations, there have also been cases spotted in social media and forums where policyholders were left confused by the process.
One policyholder who prefers to remain anonymous recalled her experience.
'My daughter was hospitalized for one day to get her tonsils removed, so I contacted my agent for claims advice. The agent told me that it was not covered,' she said.
'It seems my agent was not quite up to speed with the terms of my policy and mistakenly advised me that one-day surgery was not covered.'
Luckily her friend had taken up a policy with the same insurer and advised her to seek advice from a more senior agent.
'Later I was referred to another agent by my friend and found out that it was covered, and now the claim has been approved,' the 42 -year-old mother said happily.
'Insurance company claims processes are designed to service claim requests but at the same time also to protect the company from fraud,' said a life insurance practitioner.
'So before signing up for a policy, policyholders need to understand the claims process and learn the various ways they can monitor the progress of the claims process.'
Most major insurers have already incorporated emergency features in the claims process that are not understood by many policyholders.
'I dealt with a case once where the policyholders were not aware that in the case that the policyholder is not in a condition to sign the claim form, he is able to ask for his beneficiary to sign for the claim instead,' he advised.
Unit linked
Reports indicate that investment-linked life insurance products, known as 'unit-linked', continue to attract customers thanks partly to the investment link to the plan.
'Unit-linked premiums account for more than 60 percent of total life insurance premiums, growing strongly, outpacing the life insurance segment as a whole,' said Bogy Suyatno, a senior agency manager with one of the largest life insurers.
'Policyholders perceive that a unit-linked insurance plan acts just like a savings vehicle, but also has the benefits of an insurance contract.'
Certified Financial Planner Dwi Handoko advised, 'Policyholders need to also understand why he or she purchases units along with its inherited characteristics, just like an investor purchases units in a mutual fund.'
Experts agree that like all investments, although mutual funds are designed with risk management features through diversification, it's never possible to diversify away all risk.
'Economic turbulence may affect the mutual fund performance, especially for high growth funds based on equity investments,' Dwi explained.
What would be his advice to policyholders?
'In the short term, the unit-linked policyholders that have selected this fund may experience loss. If this happens, it would be unwise to sell or withdraw the fund,' he said.
'In fact it would be advisable to purchase more units to average down the unit cost to take advantage of the later upswing.'
Premium holiday
Financial constraints may leave a policyholder unable to pay premiums on a regular basis like he or she used to.
In that circumstance, the policyholder can choose to suspend premium payments, according to seasoned life insurance professional Hendro Hadi.
'This feature is called 'premium holiday',' he said.
He explained further, 'Premiums are paid from the accumulated cash value within the policy during this payment cessation period.'
'Premium holidays are allowed for all in-force regular premium policies,' he said.
'First, there must be positive units in all the funds of the policy and there must be minimum payments for 24 months,' he explained.
'Although this is a useful feature, policyholders need to be aware that when the cash value has been exhausted, the policy is subject to lapse for non-payment of premiums,' he advised.
The importance of honesty Experts advise that when it comes to life insurance, honesty is the best policy.
'Don't be tempted to be economical with the facts when applying for life cover in an endeavor to reduce the cost of your premiums,' said Bogy.
'If, for example, you were seriously unwell in the past, or are presently receiving medical therapy, or you are a heavy smoker, you should declare this when submitting your application.'
'Honesty is a crucial matter as this will have an effect on the claim that policyholders make.'
'By hiding the truth regarding your medical record, you may have the expected greater premium. But if your insurer later finds out the truth after your death, your policy will be invalidated and won't be paid out,' he warned. (Achmad Istamar)
