Can Premiums Paid for Life Insurance Be Withdrawn?

According to the Indonesian Life Insurance Association (AAJI), life insurance revenue rose to IDR 241.17 trillion in 2021, up from IDR 215.44 trillion the year before. This consistent positive trend in the industry is considered to be one of the contributing factors, including growing public awareness of protecting oneself and the economic recovery after the pandemic (source: Antara News).

Yet many people are still unfamiliar with how to use life insurance. Some even wonder whether life insurance can be withdrawn, largely because of limited education. Most people assume that the premiums they pay will automatically be forfeited once the contract ends and no claim has been made.

If you are among those who feel confused about how life insurance works, you have come to the right place. Let's go through a complete explanation of life insurance and the possibility of the sum assured being withdrawn.

What Types of Life Insurance Are Available?

Here are some types of life insurance you should know about first.

1. Term Life Insurance

Also known as term life insurance, term life insurance runs for a set period, for example 10 to 20 years. The premiums offered for this type are relatively affordable, making it a good fit for policyholders with limited finances.

In addition, term life insurance is a financial product whose sum assured can be recovered before the contract expires, which answers the question of whether life insurance can be withdrawn.

However, there are some drawbacks of term life insurance to anticipate. For example, premiums are not refunded and are forfeited if the policyholder does not fall ill during the contract or dies after the contract has ended.

2. Whole Life Insurance

Whole life insurance, as the name suggests, provides lifelong coverage for policyholders. Most insurance companies generally offer protection for up to 100 years.

So, if you are wondering whether life insurance from this product can be withdrawn, the answer is yes, the money will be returned. Even when the insurance contract ends, the value is paid out and serves as a deposit for the future.

There are also some drawbacks of whole life insurance to be aware of. For instance, the monthly premium is higher. In addition, the insurance interest charged can reach 4% per year (not including tax).

3. Endowment Insurance

When choosing endowment insurance (endowment insurance), you receive two functions, namely as a financial protection product and as savings.

Policyholders make use of this to set aside savings for future funds, children's education, and even funeral insurance.

Moreover, the premium funds can also be withdrawn if the policyholder passes away or before the contract has expired, which fulfills the question of whether life insurance can be withdrawn.

What about the drawbacks? Endowment insurance is a product where claims for withdrawing funds can only be made after a certain period once you become a policyholder. The monthly premium is also higher, given that two benefits are obtained.

4. Unit Link Insurance

Finally, there is unit link insurance, which has recently gained popularity. Why? Because with this product, you can protect yourself and invest at the same time.

Many also recommend unit link insurance for those who want to learn about investing. Then, when you choose this product, benefits such as death benefits and annual investment returns will be received.

Recognizing its drawbacks, unit link insurance has several points to consider. Investment returns are not always significant, the guarantee of investment success is low, and the sum assured is not as large as in other types of life insurance.

Which Type of Life Insurance Lets You Withdraw Your Premiums?

From the four types of life insurance above, we can conclude which product can answer the question of whether life insurance can be withdrawn. Yes, life insurance with return of premium (return of premium).

Unlike pure insurance, which does not return the premiums paid, this type of life insurance allows policyholders to claim their premium funds as soon as the contract ends or if they pass away before the contract expires.

The percentage of premiums returned varies, from 50%, 75%, up to 100%.

By choosing life insurance with return of premium, you will receive benefits such as:

A. Still Benefiting Even Without Making a Claim

As mentioned, policyholders who take out certain types of life insurance still receive the premium funds they pay each month. However, when making a claim, the amount you receive can be many times greater.

For that reason, there's no harm in asking your insurance company whether a life insurance policy can be claimed or not.

B. Getting Protection and Asset Growth at the Same Time

A number of life insurance policies with return of premium offer a premium refund of more than 100%. In other words, policyholders receive not only life protection and other benefits, but also a premium value that grows over time.

This is very beneficial for those who need savings for their later years.

How Do You Make a Life Insurance Claim Get Accepted?

So, are you confident about using life insurance to protect yourself against various risks? Even if you're no longer wondering whether a life insurance policy can be claimed, you should also know that a claim submitted to an insurance company isn't automatically accepted or approved.

There are procedures and requirements that must be followed so the company can process it smoothly. Then, to avoid having your claim rejected, follow these tips:

1. Fill in the Form With Valid Data

Never add to or subtract from the information you enter on the claim form. The insurance company performs a cross-check to verify its accuracy. If there are inconsistencies or dishonest information, the claim will not be paid out, and the next steps will become more difficult.

2. Submit Your Claim Before the Deadline

Your claim has a better chance of being accepted when you report it to the insurance company before the submission deadline. For life insurance specifically, the deadline is 30 to 60 days after the insured person's death. However, the terms may differ, so please check your contract.

3. Check for Grounds for Claim Rejection

Some people ask whether a life insurance policy can be claimed if the insured person died by suicide or as a result of a certain crime. Unfortunately, claims for these reasons will be rejected outright, because the insured person's death was caused by their own actions or by an incident that falls under an excluded category.

That is the information on whether a life insurance policy can be claimed or not. We hope that after reading this article you have a clearer understanding and can make good use of life insurance alongside other products such as funeral and death insurance.

Kamboja gives you funeral protection and funeral services / on demand service for those who are experiencing grief.