Death Insurance: Meaning, Types and the Benefits You'll Receive!

Having a range of financial products is essential to support your financial needs. Beyond savings, you should also consider insurance. There are many insurance options, and one that is highly recommended is death insurance.

No one knows when death will come, so you need to prepare a stable financial situation so that your surviving family will not face shortages. By taking out insurance, your family's finances are better protected even after you are gone.

Meaning and Types of Death Insurance

Many people do not realize how important it is to have insurance, especially during a pandemic like the current one. Financial conditions can suddenly decline sharply. Without financial products such as insurance, it can be difficult to meet your living needs going forward.

So what is death insurance, and what types are there? This financial product, which falls under life insurance, provides coverage for the family members left behind. It also covers all death-related costs, from treatment to burial.

This means the surviving family will not be burdened, since everything is covered by the insurer. To receive this benefit, you must pay premiums in the amount agreed under the contract.

If you want to know the different types of death insurance, see the brief overview below.

1. Whole Life Insurance

If you take out this insurance, you will receive coverage for your whole life, or until a set age, for example 100 years old. This type of insurance can be used to meet urgent needs, such as hospital costs, school funds, and so on.

There are several benefits you can receive by enrolling in this insurance, such as earning a cash value from the premiums you pay. You can use this cash value to pay premiums in the following months.

In addition, this insurance does not lapse if there is no claim from the policyholder. All coverage money will be paid when the contract is declared complete. The premiums for this insurance are lower than other types, such as term and endowment insurance.

1. Unit Link Life Insurance

By enrolling in this insurance, you are not just buying an insurance product, but also making an investment. As a policyholder, you will receive protection along with fairly high investment returns each year.

However, compared with pure investment, the profits you earn are still far lower. That is why, if you are aiming for large returns, it is better to buy an investment rather than rely on insurance alone.

1. Term Life Insurance

The protection provided by this insurance has a set period based on the agreed contract. The contract term can range from 5 to 20 years, with premium payments that remain fixed.

Term insurance offers several benefits, such as the freedom to choose the size of your premium. This means you can adjust your premium payments to your current financial situation. In addition, the coverage amount is quite substantial and can reach billions of rupiah.

If the policyholder dies while the contract is still active, your family will automatically become the heirs and receive the coverage money from the insurance.

1. Endowment Life Insurance

If you want insurance that can also be used as savings, endowment insurance is the right option. You will receive the coverage money when the contract ends, and you can also withdraw the policy within a certain period even before the contract has ended.

This means you do not have to wait for the contract to expire before claiming the policy. If you pass away, the coverage money will still be paid to your family as heirs. The premiums for this insurance are quite high, and can reach millions of rupiah per month.

3 Benefits of Death Insurance

This type of insurance has become one of the financial products in high demand during the pandemic. Besides offering a variety of products with different premium levels, it provides many benefits to policyholders, including the following:

1. Not Burdening the Surviving Family

If you are the family's only breadwinner at home, it is essential to take out insurance. If you were to pass away suddenly, other family members could struggle, whether because they have to cover funeral costs or because there is no longer any source of income for living.

By taking out life insurance, all costs related to the funeral process will be fully covered by the insurer. Meanwhile, the surviving family will receive coverage money from the insurance company.

1. Preparing for Burial Costs

Today, obtaining a burial plot is not easy. Certain fees must be paid to reserve a grave. If the cemetery is privately managed, the required funds will be even higher.

The burial process is not just about laying someone to rest, after which everything is finished. The costs can be considerable, including hospital fees, the purchase of a grave plot, a coffin, and more. There is also an ongoing obligation to pay for grave maintenance.

These high funeral costs will not burden anyone if you already have life insurance. That is the main benefit of this financial product. Your family's financial condition will remain secure because they do not need to spend a single rupiah on funeral expenses.

1. Supporting the Finances of the Surviving Family

Death can come at any time and cannot be predicted. If you pass away someday, it will certainly be very hard on your family. Especially if you are the family's breadwinner, their financial situation could become unstable.

Therefore, while you are still of productive age, start planning your financial management for the next 5 to 20 years so that your finances are not hit by a crisis. By taking out life insurance, the coverage money can be used to stabilize your family's finances.

How to Claim Death Insurance?

Many people assume that insurance cannot be claimed easily. In fact, the process is quite quick as long as the required documents are complete. Here are the steps for making a life insurance claim:

• Notify the insurer that the insured person has passed away. This report should be made as soon as possible because there is a deadline for filing a claim, which is between 30 and 60 days after the insured person's death.
• Prepare the required documents. For example, the death certificate, the original policy, the insured person's identity, the heir's identity, the family card, the death claim form completed by a doctor, and other important documents.
• Data verification carried out by the insurer. This process aims to match the data from the collected documents with the terms of the policy. The verification process takes approximately 14 days.
• Once verification is complete, the insurer will disburse the coverage money to the heir's account.

Death insurance products come in many types. If you are interested in taking out this insurance, make sure to choose a product whose premium matches your financial capacity. Also pay attention to its benefits. The insurance should support the financial goals you want to achieve.