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Planning ahead to offset future losses
Female artist Ersa Mayori said in a recent interview that her mother was the main reason she decided to get life insurance
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emale artist Ersa Mayori said in a recent interview that her mother was the main reason she decided to get life insurance.
'Back then, I was afraid that if something happened to me, my mother -who had been diagnosed with blood cancer- would no longer be able to finance her treatment. By having a life insurance policy, I could rest assured that her treatment could go on even without my presence,' she said of her late mother.
Ersa, as quoted by jurnas.com, added that she was not waiting until something bad happened to her or her family, immediately insuring her husband and two kids.
Different people have different reasons. The latest research suggests that more couples have decided to delay their marriage or are not having children for reasons such as pursuing their careers. Others have children much later in life than was previously usual.
'My kids would go to school with their father and say to their friends that he was their grandfather, because he's in his late 50s and the boys are still in elementary school,' giggled Lisa Theresia, a mother of twins who manages a boarding house in Pasar Baru, Central Jakarta.
'We decided to purchase life insurance coverage. If something happened to us while our kids were still very young, they wouldn't need to bear the burden of arranging the burial procession and the expenses. We've got it covered.'
More and more people are embracing the idea of insuring their life. Data released by the Indonesian Life Insurance Association (AAJI) reveal that the number of insured individuals during the first quarter of this year increased 16.6 percent, from 8.97 million last year to 10.42 million.
Life insurance premiums are also expected to grow between 10 to 11 percent until the end of this year, up 5.11 percent as reported in the second quarter.
'Following the recent presidential election, the county's political stability has given people trust in life insurance. Unit link products are still the darling of the insurance market,' AAJI head Hendrisman Rahim said.
Infobank Research Bureau director Karnoto Mohamad added that increased purchasing power was another key factor contributing to the growth of insurance products.
'This year's trend suggests that people's incomes are going up. Not just the middle income families, but also those with already high incomes, will start to see life insurance products as an opportunity to invest,' he said, adding that the 10 percent growth was in contrast with the growth of general insurance products.
'General insurance products grew 18 percent last year. I don't think the growth will be that significant this year,' he said, adding that this year's growth prediction for general insurance could reach 15 percent at best.
With the Asean Free Trade Area 2015 (AFTA) lurking round the corner, Indonesia's low insurance penetration, at a mere 5 percent, offers lucrative opportunities for insurance companies.
Hendrisman said AAJI recorded a whopping 75.8 percent increase in life insurance investment to Rp 20.78 trillion in the second quarter of this year, from Rp 11.82 trillion over the same period last year.
Yet there are reasons why insurance penetration in the country has remained so low throughout the years ' one of which is the lack of awareness of the importance of having life insurance coverage. Another is the difficulty some people have experienced in claims processes.
'I had a bad experience with a major insurance player. When my mother died three years ago, two agents immediately came to our house with the intention of settling her life insurance policy. They surprised me by converting the fund into another insurance product that could be claimed after five years. I mean, we were in need of the fund to arrange for the burial procession and everything, but repeated visits to the insurance branch office were futile, with no claim ever granted,' Andri Subekti, a thirty-year-old office worker said, adding that companies like that gave insurance a bad name.
So what steps should you take before choosing a life insurance product?
Here are some important tips to help you out.
Learn from experience, especially the experience of others. Not everyone has had a bad experience in the claims process. There are many who have had successful claims. It is also important that you read the insurance policy carefully, especially on the items that will smooth your claims in case an unfavorable event happens.
Do not fall for the lure of persistent marketing officers. Keep in mind that the best insurance products are those offered as a payment package by the company you're working for, and if they do not have the specific products you need, do ask whether dealing with the same provider via your company could work.
In terms of life insurance, an insurance company with the support of Global Assistance and Network, with powerful networks throughout the globe, especially countries with the highest insurance penetration in the world such as Japan, the US and Canada, should be considered, especially if you travel a lot. You never know what will happen to you.
Last but not least, choose the right insurance agent. Because no matter how credible an insurance company is, the role of an agent is crucial in bridging you with the insurance company. An agent can help you smooth your claim in times of emergency and help you complete all the necessary forms.
