Guidelines for Buying Life Insurance and Mutual Funds – Priyadi’s Place

Posted on 37 views

After making 3 writings about premiums ([1](https://priyadi.net/archives/2007/06/10/iuran-unit-link-vs-mutual fund/), [two](https://priyadi.net/archives/2007/08/31/tips-buy-premium-life/), [three](https://priyadi.net/archives/2007/10/18/hitung-calculate-premi-unit-link-vs-separate/)), I often receive poly questions about how to buy life insurance and mutual funds. As a certificate for those who ask similar things in the future, the ways I just write in the *post* this time.

**First**, determine first whether we need life insurance dues. If we have dependents and/or debts that are not covered by credit insurance, then we need life insurance contributions. If it is not, then we do not need a life premium.

**Second**, calculate how much money the life insurance contribution is needed. For this term the answer can be bhineka depending on the calculation technique performed. But to shorten the time we use the simplest way only:

* Find an understanding of the grand family production per year if the word insured is globally deceased.* Multiply using 10 to receive the desired sum insured.

As a model of expenditure per year if the global death insured is Rp 50 million / year, then the sum insured we will buy is Rp 500 million. The amount should be sufficient to cover the risk of loss of income from the insured for 20 years using the assumption of a net investment development of 9%.

**Third**, it’s time to find a suitable product. The product we are looking for is ‘term life coverage contribution’. The features:

* Has no investment element.* The protection period is short, generally five or 10 years, but some are 1, two, 3 & 20 years.* The amount of premium is relatively mini, to be a comparison, 30-year-old men who do not smoke will be subject to coverage dues of approximately Rp 300 thousand / year for every Rp 100 million in sum insured.

Look for news about the products we want in some insurance companies using how to go to the private premium company concerned. However, generally, customers have never been offered term life products, but other products that have an investment element. For that ask specifically: “I want to find news of term life products (or term life insurance) with a period of five years or less using a sum insured of Rp so much. As a matter of fact, I am so many years old.”

To avoid mistakenly buying products, here is a list of some term life insurance contribution products based on several premium companies in Indonesia:

* [Allianz SmartLife](http://www.allianz.co.id/AZLIFE/Indonesian/Products/Life+Insurance/New+Life+Insurance+Coverage+Indonesia.htm)* [AXA Mandiri Jiwa Sejahtera](http://www.bankmandiri.co.id/article/666616327528.asp?article_id=666616327528)* Bumiputera [True Partner](http://www.bumiputera.com/content_sil_asper_001.php?id=AK08danamp;id_menu=tiga)* Commonwealth Life [Danatra Siaga](http://www.commlife.co.id/Produk/PerlindunganJiwa/DanatraSiaga/tabid/96/language/id-US/default.aspx) & [Danatra Siaga 1](http://www.commlife.co.id/Produk/PerlindunganJiwa/DanatraSiaga1/tabid/97/language/id-US/default.aspx)* [Manulife ProActive & ProActive Plus](http://www.manulife.co.id/Individual_Insurance/individual_all.htm)* [Sun Life Term Life](http://www.sunlife.co.id/product.asp?fl3nc=1danamp;param=c3VpZD0wMDAyMDAwMDAwMzE%3d)* [Takaful Falah](http://www.takaful.com/index.php/produk/action/view/frmProdukId/11/produk/Asuransi+Takaful+Keluarga/)

**Fourth**, compare several insurance products to receive the most profitable products. Unlike unit links or other insurance that contain investment elements, it is not at all difficult to compare several term life products.

Some of the selection criteria to consider are:

* Clause *guaranteed renewability*. This clause ensures that customers can extend the protection of the completion of the contract ending unconditionally at all with insurance increases, for example, stated in the policy. With this clause, premium companies do not have the right to decide on protection if for example the customer suffers from severe pain. Avoid products that do not have this clause.* The price of coverage dues, the lower the more profitable it will be. But do not be too fixated in the price of insurance in the first time you enter the coverage dues. Compare the price of insurance for the following years. Prioritize the evaluation of the price of coverage dues in the first 10-15 years.* The current period of protection, the lower the better. Take the term life premium using a coverage period of 5 years or smaller. If possible take a coverage period of 1 year, or better known as YRT / ART (*yearly / annual renewable term*). Because of the *guaranteed renewability* clause, it is not a problem if the customer will later reach into life insurance dues for 20 years for example.* Additional protection (*rider*). But it is not necessary to take health benefits because it is likely that we will need health premiums longer than life insurance dues. Health benefits should be taken separately if needed.

**Fifth**, after dropping the choice, we can buy the product of our choice. The premium company will do a [*underwriting]](http://en.wikipedia.org/wiki/Underwriting) process that may involve things like health checks and so on.

After getting the policy check carefully whether the policy is in sync using what we want.

**First**, determine the type of mutual fund that we will buy. The type of mutual fund we buy is mainly influenced based on how long we need the money we currently invest in mutual funds. Everyone’s taste is bhineka, but for beginners I can give the following advice:

* Under one year: [money market mutual fund](http://en.wikipedia.org/wiki/Money_market_fund)* Between one to 3 years: [fixed income mutual fund](http://en.wikipedia.org/wiki/Fixed_income)* Between 3 to six years: mixed mutual funds* Six years or more: [stock mutual fund](http://en.wikipedia.org/wiki/Stock_fund) or [index mutual fund](http://en.wikipedia.org/wiki/Index_fund)

**Second**, to buy mutual funds, just go to a mutual fund seller, for example to a mutual fund selling agent or investment manager company.

The most famous mutual fund selling agent these days is probably the [Commonwealth Bank](http://www.commbank.co.id). Mutual fund purchases at the Commonwealth Bank can be done easily over the Internet. Commonwealth Bank sells dozens of mutual fund products from a wide variety of fund managers. To open an account at the Commonwealth Bank, a fund of Rp 2 million is required.

Another alternative is [Bank Mandiri] (http://www.bankmandiri.co.id/article/312380304425.asp?article_id=312380304425). Bank Mandiri also sells dozens of mutual funds that can be purchased through *customer service* at almost every branch.

Some mutual fund products can also be purchased exclusively to their investment managers without going through a mutual fund agent. Examples are [Manulife](http://www.reksadana-manulife.com/), [Trimegah](http://www.trimegah.com/), [PNM](http://www.pnmim.com) and [Danareksa](http://www.danareksa.com/home/).

Consider the mutual fund products to be purchased according to the following criteria:

* Historical investment development data* Purchase fee* Cost of sales* Cost of investment management services* Minimum fee of first deposit* Minimum fee for subsequent deposits* Other data listed in the prospectus of the mutual fund concerned

Too complicated? For beginners who want to invest for the long term or who do not want to be bothered with investment matters, I exclusively recommend index mutual funds. Index mutual funds are subsets according to passively managed stock mutual funds so that the cost of investment management services becomes minimal. Usually, in the long run, the performance of index mutual funds will beat conventional stock mutual funds. Unfortunately, index mutual funds in Indonesia at this time are ‘rare species’. The only well-known index product of this time is the [Danareksa Sharia Index] (http://danareksa-dinar.interactive.web.id/) which can be purchased through the Commonwealth Bank or the Danareksa Investment Center.

Hurry Up! Proof Visit

Leave a Reply

Your email address will not be published.

4 × 3 =