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7 Insurance Costs To Be Paid


Having insurance means that you have provided financial protection for yourself and your family. The coverage benefits that you will get will be comparable to the insurance costs that you have to pay regularly every month.

the cost of health insurance will be different from the cost of car insurance and also the taxes that must be paid.

The cost of insurance that is commonly known is the insurance premium. Premium is the obligation of the policyholder in the form of regular monthly payments to the insurance company within a certain period of time and in accordance with the agreement written in the insurance policy.

Reporting from Lifepal (4/6/21), there are several other insurance costs that are the responsibility of the policyholder in addition to premiums, including acquisition costs, insurance costs, administration, policy revocation, and redemption costs, costs of diverting investment funds for unit link insurance, investment fund management fees for unit-linked insurance and taxes.

Insurance Costs To Be Paid

Along with the times, the needs of life are increasingly diverse and complex, especially for those who are already married. What is now a priority is no longer just clothing, food, and shelter, but also health funds, children’s education funds, mortgage repayments, and retirement savings.

In order to manage it properly, we must have good financial planning, one of which is by having insurance that provides protection benefits from financial risks that may occur in the future.

But unfortunately, there are still many people who do not really understand how insurance products work. The level of insurance literacy in Indonesia is still low which according to the Indonesian Financial Services Authority (OJK) is stuck at 19% in the 2016-2019 period.

This is what causes frequent misunderstandings between customer expectations and the agreed terms of the insurance policy.

Why do we have to understand the insurance policy well?

Before deciding to buy a particular insurance product, it is important for customers to wisely understand the function of an insurance policy so that misunderstandings do not occur in the future.

When a customer decides to buy an insurance product, the insurance company gives a certain period of time (free look period) for the customer to study in detail all the terms and conditions in the insurance policy. It is expected that customers can understand the entire contents of the insurance policy and get optimal benefits.

Insurance Costs To Be Paid

Misunderstandings that often occur in society, such as assuming that it is a loss to have insurance because it is not used (actually being protected is a ‘privilege’ to feel safe and calm) or what also often occurs is the assumption that every claim submitted must be accepted.

In fact, if examined further, the insurance policy, which is a deed of agreement between the insurance company and the policyholder, contains a risk transfer agreement as well as terms and conditions of protection, which can be used as a guideline in filing claims. for coverage.

Then related to the function of the insurance policy, we can understand it from two different perspectives, namely from the insured (customer/prospective customer) and the insurer (insurance company):

The function of the insurance policy for the insured

  • Is written proof of the insurer’s guarantee against various risks that may occur to the insured, where the terms and conditions of coverage are stated in the policy.
  • Become proof of premium payment given to the insurance company as the insurer.

The function of the insurance policy for the insurer

  • Become proof or receipt of insurance premiums paid by the insured.
  • Is written proof of guarantee given to the insured to pay compensation that may be experienced by the insured.
  • Become the most authentic evidence to reject claims submitted by the insured, if the cause of the loss does not meet the requirements of the policy owned.

Insurance costs that you have to pay

For more details, the following is an explanation of the costs contained in Prudential Indonesia insurance:

  1. Acquisition Costs

Acquisition costs include costs for health checks, procurement of policies and printing of documents, field fees, postal and telecommunications costs, as well as remuneration for employees and marketing personnel.

The nominal amount of the acquisition fee depends on the insurance product and the insurance company itself. The contribution is based on periodic premiums of varying amounts, which are generally 70 percent for the first and second years. In the third to fifth years by 20 percent. Then in the sixth year and so on for 0 percent or free.

  1. Insurance Costs

Insurance costs are sourced from the periodic premium unit balance, if the balance runs out then the insurance fee can be taken from the Top-Up Premium Unit Balance. This insurance fee will be paid regularly as long as your insurance policy is still active.

The amount of the insurance fee depends on the age, gender, medical history of the policyholder, smoking status or not, and the amount of the sum insured.

  1. Administrative Fees

The amount of administrative fees varies and depends on how the policyholder chooses the frequency of payments. The premium payment frequency is divided into four, namely annually (12 months), semi-annually (6 months), quarterly (3 months), and monthly.

Thus, the details of administration fees charged to policyholders include an annual frequency of IDR 10,000 per month. Semester frequency Rp 20,000 per month, quarterly Rp 27,500 per month, and monthly frequency Rp 35,000 per month.

All administration fees will be deducted from the Balance of Regular Premium Units. If the balance runs out, it will be deducted from the Premium Top-Up Unit Balance.

If you use E-Transaction facilities such as E-Policy, E-Transaction Statement, and how to pay premiums using a Savings Account Auto debit or Credit Card Auto debit, you will be exempt from administration fees.

  1. Policy Withdrawal and Redemption Fees

Policy Withdrawal and Redemption Fees are fees charged when a policyholder withdraws the Balance of Periodic Premium Units or Redemption (Surrender) of the policy within a certain period of time. The formula that applies to Prudential Indonesia is that the amount charged is equal to a certain percentage of the regular premium unit balance.

The percentage depends on the policy year. The first year is 75 percent of withdrawal fees and redemption fees while the second year of the policy is 30 percent. Meanwhile, for the third year and so on, a 0 percent withdrawal and redemption fee is charged.

So, if the Redemption (Surrender) is made in the past policy period, a Redemption fee will be charged, the amount of which follows the end of the policy year or the policy lapse.

  1. Investment Fund Switching Fees

With Prudential Indonesia’s unit link insurance, you will be free of charge to transfer investment funds or transfer a maximum of 5 transactions each year. Then in the same year, if there are follow-up transactions, an investment fund transfer fee of IDR 100,000 per transaction will be charged.

  1. Investment Fund Management Fee

Represents unit link insurance costs used by insurance companies to manage joint investment funds with Custodian Banks and securities. The amount of the investment fund management fee ranges from 0.75 percent to 2 percent of the managed fund.

  1. Taxes

The tax policy imposed for the revocation or redemption of said policy has been written and is in accordance with the applicable tax regulations and/or amendments thereto written and stipulated by the Government.

This is an explanation of insurance costs that must be paid on time by the insurer to get benefits when claiming insurance. You should read the terms and conditions before signing a contract with an insurance company.

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