The need for protection has become one of the requirements for healthy personal finance insurance. While it’s still early in the year, this is the right time for you to complete your family’s protection needs by buying an insurance policy. Now, you can buy insurance easily, because there are many companies that offer a variety of insurance products ranging from life insurance, health insurance, loss insurance, and so on. How to buy it is getting easier with the development of internet technology.
However, not a few people are surprised when they find an insurance policy that they want to buy, how come, the premiums are expensive. Are you also experiencing the same thing? Basically, the premium or price of an insurance policy is determined by many factors. So that you can estimate how much funds need to be allocated to buy an insurance policy, it’s a good idea to first understand the determinants of high or low insurance premiums below:
Insured age The age of the insured or the party whose financial risk is borne by the health insurance company, greatly determines the premium price of an insurance product, especially life insurance and health insurance. The younger the age of the insured when buying an insurance policy, the more likely it is that the insurance premium he has to pay is also cheaper. Even in some insurance companies, the prospective insured under the age of 30 is not required to have a medical test first to get policy protection. On the other hand, the older the insured, the greater the risk transferred to the insurance company. This causes insurance companies to charge higher premiums.
On the other hand, the older the insured is when he signs the insurance policy contract, the more expensive the premium he will have to pay. As an illustration, Person A buys term life insurance at the age of 30 years with a sum insured of IDR 1 billion with protection for 20 years. To get it, A only needs to pay a premium of IDR 3.5 million per year. At the same time, B, who is 42 years old, buys term life insurance with the same coverage and contract, he has to pay a premium of IDR 7 million per year.
So, don’t delay getting insurance anymore. If you really need insurance, do it immediately. Because delaying it will only make the premium cost more expensive as you age.
Medical history
Insurance companies generally require a medical test first on prospective insurance policy buyers before signing a contract of coverage. In addition, when filling out an insurance policy application, you will definitely be asked to honestly write down your personal medical history and even your parents’ medical history.
Why do insurance companies want to know your medical history in detail? This is because the medical history data will be one of the bases for them in determining the premium price for your insurance policy. However, health is one of the important factors that affects a person’s risk of death.
If you have a bad medical history, for example, have had a serious illness such as diabetes or hypertension, your insurance premiums may be expensive. On the other hand, if you are rarely sick and have no history of serious illness, the insurance policy may be cheaper.
In addition to being asked to write a medical history, you are usually also asked to write down data whether you are an active smoker or not. Most insurance companies see that a smoker has a greater health risk than a non-smoker. High health risks also affect the level of risk of death. Not surprisingly, health insurance policies or life insurance have higher premiums if the insured is an active smoker.
Type of work
The fourth factor that affects whether or not insurance premiums are expensive is the type of work of the insured. This is because the type of work is also considered to have a small contribution to the risk of death. For example, if you work in a field with a high enough risk of accident and death, such as work in an oil or gas mine, airline crew, airplane pilots, construction workers, and even journalists, the premiums are usually quite expensive. So, do not be surprised when the price of your insurance premium is expensive when the profession you are currently running is included in the risky category for the insurance company.
Sum insured
The bigger the sum insured you need, the more likely the premium you have to pay will be more expensive. The sum insured of IDR 1 billion compared to the sum insured of IDR 5 billion will clearly affect the level of premium that must be paid by the policyholder.
Therefore, be wise in calculating the need for the value of your insurance coverage. Calculate carefully and adjust to the needs and future inflation rates. If you have trouble calculating it yourself, you can consult a financial advisor.
Insurance contracts or insurance coverage periods are available in various options. Starting from the shortest such as travel insurance to whole life insurance such as whole life insurance . The longer the period of insurance protection, generally the premium price will also be more expensive. Choosing a five-year or 20-year protection contract will clearly make a difference in the premium burden that will be paid later.
So that the premium you pay is efficient, calculate carefully how long you actually need insurance coverage. Especially for life insurance, for example, you can use the assumption of the age of the youngest child. For example, your youngest child is currently only five years old and is likely to be independent in 20 years, so you only need to buy life insurance with a maximum protection period of 20 years.
Insurance type
There are many types of life insurance and health insurance. There is term life insurance or term life insurance, there is also a form of whole life insurance , there is also a unit link that combines the functions of protection and investment.
Term life insurance may charge a lower premium than unit link . This is because unit link insurance requires premium payments for two functions, namely protection and investment. The same is true if you buy insurance that combines protection functions as well as savings.