The Risk of Delaying Having Insurance

The Risk of Delaying Having Insurance

The occurrence of the COVID-19 pandemic, which has claimed many lives and caused a slump for the global economy, has more or less encouraged increased awareness of the importance of insurance. Since the pandemic hit, the awareness of the Indonesian people to have insurance has increased.

The Manulife Asia Care survey last November 2020 showed that in the Asian region there was an increasing interest in buying new insurance products, from 62% to 71%, since the last survey in May 2020. In three dollars, data from the Financial Services Authority (OJK) as quoted by Investors Daily in July 2021 also showed that Life Insurance Premiums throughout semester I-2021 grew 18.35% compared to the same period in 2020.

Despite this growth, public awareness of having insurance still needs to be encouraged. This is because the level of ownership or penetration of insurance is still low in the country. According to OJK, as quoted by Bisnis Indonesia, the insurance penetration rate in June 2021 only reached 3.11%.

Many people may already understand the importance of having insurance to manage their financial risks. However, many are still doubtful or choose to procrastinate having it. In fact, the longer we delay having insurance, it's the same as letting the risk happen to finances and the future.


Some Risks of Loss Delaying Insurance

Many cases occur when someone just thinks about buying insurance when the thing they fear has happened in front of their eyes. If this is the case, of course, it is difficult to find insurance that is willing to bear the risk of this loss.

So, in order to be more confident in deciding to have insurance, let's look at 4 losses that we will experience if we delay having insurance:


1. Premium Prices Get Higher With Age

To be able to get insurance protection, we are required to pay a premium to the insurance company that acts as the risk taker. The premium amount is determined based on the risk analysis of the Insured. Several things that become risk assessment variables include the age of the Insured and health conditions. The older the age of the insured, generally the insurance premiums will be higher because the risk is considered to be greater than the young insured. Likewise regarding health conditions that can be seen based on medical records, the Insured's lifestyle whether smoking or not, and so on.

The age variable also determines the premiums in long-term insurance policies such as life insurance. For example, we buy life insurance at the age of 29 years with a sum insured of IDR 1.1 billion and a protection period of 20 years. So for the next 20 years, we will be charged a premium per year, let's say it's around Rp3.08 million. On the other hand, if we apply for life insurance at the age of 35 years with a similar coverage value and protection period, we can be sure that the premium charged will also be higher.

One of the term life insurance products that we can consider is the Term Saving Protection from Manulife. This product provides a death benefit in the form of 100% UP which is given if the Insured dies during the coverage period. In addition, Term Saving Protection also provides benefits in the form of 200% UP if the Insured dies due to an accident. There is also a final contract benefit in the form of a 100% return of premiums if the insured lives until the end of the coverage period.


2. Unmanaged Finances

Insurance is actually a mechanism to transfer or transfer risk from us to the insurance company. As a risk transfer service, the insurance company gets premium income paid by the policy owner. By having insurance, we limit the risk of loss to a certain number that is more certain. An easy example, we buy health insurance that has a yearly limit or a maximum annual benefit limit of Rp. 200 million.

To get the insurance benefits, we have to pay a premium of Rp. 1 million per month. Thus, we limit the risk of spending due to illness to a maximum of Rp. 12 million for a year to get a benefit of Rp. 200 million. So, if one day we need maintenance costs that cost up to Rp. 100 million, the insurance will pay for it.

The opposite will apply if we do not have insurance at all. With the same case, which is an illness that costs up to Rp. 100 million, then we have to pay 100% of the expenses ourselves. So, let's immediately have insurance so that we can manage the risk of losses that can interfere with financial health.


3. Opening the Risk of Stuck in Expensive Debt

Insurance is very useful to help us anticipate events that require large funds. Illness events that require the best medical care, accidents that eliminate the ability to work, to death events that stop the source of income for the bereaved family, and so on. If we have insurance, these risks are transferred to the insurance company (or shared if the context is sharia insurance products). By transferring that risk, we do not bear it alone. There are cases of illness, like the example above, we don't need to pay up to Rp. 100 million for treatment costs from our own pocket because insurance is the one who covers it.

What happens if you don't have insurance? So, what happens when a person's finances are unable to bear the costs themselves? There are many cases like this that end up dragging someone into a costly debt trap. When personal finances can't afford it, people often turn to looking for debt so they can still get the care they need. The problem is, in urgent conditions such as illness, the need for funds is also demanded to be quickly available. Finally, many are forced to borrow from expensive loans because they can be obtained quickly.

If that's the case, personal financial conditions can get even worse. Taking expensive debts if not calculated carefully, risks dragging our finances into complicated problems and even bankruptcy.


4. Not Optimal Investment Done

Investing is one of the best ways to increase asset value and help achieve certain financial goals. Investments can provide benefits that help the accumulation of wealth more quickly. Along with that, investment also has a risk that is proportional to the opportunity for profit. When we invest without having any insurance protection, it becomes many times more risky.

The picture is like this. We routinely invest in mutual funds or stocks for a financial purpose, amounting to IDR 2 million per month. Well, one day there was an illness where we needed a large amount of treatment. Because we don't have health insurance, our income and savings are depleted to cover the hospital costs. As a result, the routine investment fund allocation of Rp 2 million per month is also sucked up by hospital costs. As a result, financial goals are threatened with failure because investment capital does not exist.

The opposite happens if there is insurance, when there is an incident of illness, the insurance will cover the treatment costs so that we can still do the allocation of routine investment funds of Rp. 2 million. That way, financial goals do not need to be disturbed by unexpected expenses because there is insurance that covers them.

By understanding the four risks of delaying insurance, it seems that there is no longer any reason for us to ignore them. Come on, immediately complete your protection needs by having the right insurance!

Posting Komentar