Life insurance is an insurance service that is used to protect against the impact of financial loss or loss of income of a person or family due to the death of a family member (the insured) who was previously the backbone of the family.
In simple terms, life insurance is a type of insurance that aims to cover a person or family against unexpected financial losses due to the death of the insured.
There are different types of life insurance that people should know about. there are four types of life insurance that can be purchased according to need.
Among them are term life insurance, whole life insurance, unit link life insurance, and endowment life insurance.
Types of life insurance and their meaning
Based on an official statement from Lifepal, there are four types of life insurance that you can buy according to your needs, namely:
1. Term life insurance
Term life insurance products are the basic form of life insurance. The protection provided can be arranged according to the desired period, starting from 5 to 30 years for the heirs to get the sum assured when the customer has died.
A good term life insurance is one that offers broad coverage at competitive premiums.
In addition to the sum assured, term life insurance also has additional coverage that is very useful, ranging from permanent disability compensation, premium waivers, to credit coverage. To get it, we need to buy additional insurance (rider) with additional premium costs.
2. Whole life insurance
In contrast to term, this type of whole life insurance offers maximum protection throughout the life of the customer, with the maximum age limit of up to 100 years.
Generally, this policy promises a return of premiums at the end of the insurance period. So, even though we are over 100 years old, the premiums will not be forfeited.
Interestingly, whole life insurance is usually accompanied by a Pension Fund. So, customers can prepare well for old age.
In addition, there is also unit-linked life insurance for customers who at the same time want to invest.
Later, the premiums paid to insurance companies are not all used to pay insurance costs, but are partially invested in various assets, such as stocks, deposits, or bonds. Of course, this is a long term investment.
3. Dwiguna life insurance
This insurance is not too familiar. Endowment insurance is a life insurance product with additional savings benefits.
Part of the customer’s premium will go to the savings account, while the rest is for protection benefits. At the end of the policy period, the heirs will receive cash value in the form of savings and sum assured.
This product is suitable for people who have long-term financial plans, such as raising an education fund, retirement fund, or wedding fund.