Understanding Types of Death Insurance: What Young People Should Know

The Covid-19 pandemic, which lasted for more than two years, claimed a significant number of lives. According to data compiled by Worldmeters as of Thursday, 9 June 2022, total active cases exceeded 22 million, with more than 6 million deaths (source: Tirto).

Although cases have now declined, people are still encouraged to maintain their health so they do not easily become infected. For example, by keeping things clean and following vaccination programs. There is one more thing worth considering to anticipate risk, especially for the younger generation: buying death insurance.

Why death insurance? How many types of death insurance should you know about? Here is a complete explanation of death insurance, including its benefits and how to make a claim.

What Is Death Insurance?

If death insurance sounds unfamiliar, that is because this type of insurance is another name for life insurance. Broadly speaking, death insurance provides the same benefits: financial security and protection for the family. In addition, death insurance, or life insurance, is regulated under Law No. 40 of 2014 on Insurance.

There is also a death benefit paid to the heirs left behind by the policyholder. They can use it to cover funeral costs, pay hospital bills, or settle outstanding debts.

Types of Death Insurance

Based on the same definition, the number of death insurance types available is the same as life insurance, namely four types, including:

1. Term Life Insurance

As the name suggests, term life insurance provides benefits such as a death benefit for an agreed period, with terms ranging from 5 to 20 years or up to a certain age limit.

The insurance company will pay the sum assured to the heirs named by the policyholder if they pass away while the contract is still in effect.

With affordable premiums, term life insurance suits those whose income is not very high. However, you should also anticipate that premiums tend to rise as you get older and the risk of death increases.

2. Whole Life Insurance

The next type in the list of death insurance options is whole life insurance. Unlike term life insurance, this protection product provides coverage up to age 99 or 100.

Another goal is to encourage the policyholder or customer to actively pay premiums according to the contract.

If you do not want your premiums to be forfeited even if you never file a claim, you may choose whole life insurance. The payout is also larger, given that its premiums are higher.

For this reason, make sure you are able to pay the premiums every month.

3. Endowment Life Insurance

With a term of 5 to 30 years, endowment life insurance offers two functions for its customers: term life insurance and savings. You can pay premiums throughout the coverage period or over a limited payment period. The premium amount is higher because two functions are provided to you.

On the other hand, the benefits of endowment life insurance are commensurate with the premiums the customer is required to pay. When the policyholder passes away, the money disbursed through a claim will be paid to the heirs and can be used as needed.

4. Unit Link Life Insurance

When discussing the popular types of death insurance in Indonesia, unit link life insurance is one that is often mentioned recently.

This is because one of its functions, as an investment instrument, is popular among the wider public, especially the younger generation who want to learn to become
investors.

The premiums you pay for unit link life insurance are used for both protection and investment. However, you should know that the investment returns from this product are not as large as those from other instruments such as stocks or mutual funds, so the profits are modest.

Benefits of Having Death Insurance

Death is a destiny every human will experience, but no one knows when they will leave this world. For this reason, you should prepare various things so that those left behind can live with good financial conditions.

Having death insurance is considered an effective step that is increasingly common among the public. So, aside from knowing how many types of death insurance you can choose from, you can also learn about the benefits of these products, including:

A. Heirs Will Not Be Burdened

Heirs in this context include not only family members, but also people trusted to manage the disbursed insurance funds.

In this way, the funds can be used according to the plan or needs that have been prepared, from debts to medical expenses.

It is better to buy death insurance while you are still young. The premiums paid are more affordable and will not burden your other needs. You could take out death insurance when you are older, but the premiums will be higher.

B. Preparing for Funeral Costs

Did you know that in Jakarta, funeral costs can reach tens to hundreds of millions of rupiah? Not to mention the levies that must be paid periodically.

There are also other costs related to arranging a funeral that can overwhelm a family when they have no plan in place.

Before burdening your loved ones, you should take the initiative to prepare for these costs. Having death insurance is one solution, because its benefits can help heirs arrange a funeral without placing a strain on their finances.

C. Protection Against the Risk of Death from Certain Diseases

Checking how many types of death insurance exist also indirectly helps you find a protection product that covers certain diseases, especially those that cause death. This means medical bills can be paid through insurance.

According to the WHO, there are ten leading causes of death in Indonesia. Some of them are tuberculosis, vascular disorders, diabetes, hypertension, and accidents. So check whether the type of insurance you choose already covers these risks.

How to File a Death Insurance Claim

You will also learn how to file a claim while you are reviewing how many types of death insurance there are. The procedures are generally the same, although there may be differences depending on the cause and the rules of each company.

Below are the general steps for filing a death insurance claim, in this case when the customer or policyholder passes away:

• Report the policyholder's death to the insurance company, no later than 30 to 60 days from the date of the event.
• Prepare the documents required for the claim, such as the form, the policy, the death certificate, identity cards, and others as needed.
• Follow the procedures set by the insurance company. After submitting the documents, wait while they verify the customer's data.
• If the claim is accepted or approved, the insurance company will disburse the sum assured to the heirs.

That is the information about how many types of death insurance there are, their benefits, and how to file a claim. We hope it is helpful to you!