There are various types of insurance, but few people know about the type of endowment insurance or what is often referred to as endowment insurance. Curious about what an endowment is? Let's see the full discussion in this article:
What is Endowment Insurance?
A general explanation of endowment insurance or endowment insurance is a type of insurance that combines life insurance with the benefits of accumulated funds.
The point is that in addition to providing protection in the form of life insurance, this insurance provides benefits that can be disbursed if the participant dies. The disbursed funds will be given to the heirs concerned.
In short, if you enroll yourself in endowment insurance, then you have to pay premiums regularly until the agreed time limit. Like 10 or 20 years. You can also use the age limit as a measure, for example 50 years.
Even if the participant concerned is unable to pay the premium due to an accident, there is no need to worry because the premium will be paid by the insurance company. That's why this insurance is often referred to as endowment insurance, which means it has 2 benefits, namely life insurance and also as savings funds.
Endowment Insurance Benefits
Having 3 main benefits, here we provide what are the benefits of endowment insurance:
1. Fund Accumulation
The premiums paid every month will accumulate automatically. If it has reached the specified time, the customer can take the previously accumulated funds.
2. Compensation When Died
Compensation money will also be given to the family of the policyholder if at any time the policyholder dies.
3. Lifetime Benefits
The premium you pay every month will not be forfeited in the endowment insurance product type. The accumulated premium funds will be given back at the end of the contract period.
Example of Endowment Insurance Benefit Simulation
Many people use this insurance to fund their children's education, so if something happens to their parents, their children can still get the best education.
For example, with a premium of 5 million/year, the customer will receive a sum assured of 300 million in the 20th year.
The sum assured (UP) from education insurance can be programmed according to the needs and level of education that will be taken by the child. For example, 15% of the total sum insured can be disbursed in the 10th year or when the child enters junior high school. Then 25% again in the 13th year or when the child enters high school, and 60% in the 16th year when the child enters college.
Usually the insurance company will provide a minimum period of time for disbursement of the sum assured.
Types of Endowment Insurance
1. Dual-purpose Education Insurance
Dwiguna means two benefits, exactly the same as the benefits we receive in endowment insurance. The first benefit is the protection benefit and the second benefit is the investment benefit.
The disbursement of funds will be carried out in stages, adjusted to the level of education of our children later. Very suitable for parents who want to prepare education funds for their children.
2. Retirement Insurance
Given the long validity period of the endowment policy, this insurance is very suitable for those who want to prepare for retirement.
There are two benefits that you can get, coverage benefits and investment benefits.
If the insured dies before the end of the policy, the bereaved family will receive a dependent money
On the other hand, if the insured is still alive until the end of the policy, the insured can enjoy the investment benefits of the endowment policy.
Why do we choose endowment insurance?
Endowment insurance can be very useful to prepare for the education costs of our children later. If you use endowment insurance products, then you can avoid the risk of increasingly expensive education costs in the future. Of course you don't want your child's education to be neglected because of the cost?
What is the difference between Endowment Insurance and Unit Link?
Many people ask what is the difference between endowment insurance and unit link, here are the differences between endowment and unit link:
1. Different Goals
The purpose of endowment insurance is to secure funds for a certain period, therefore endowment insurance is closely related to education insurance.
While the unit link has a purpose for investment. So that unit link insurance is closely related to life insurance.
2. Sum Insured
The sum insured provided by endowment insurance is relatively small when compared to unit link insurance.
Advantages of endowment insurance
- We will be forced to be disciplined in saving
- Funds that can be disbursed for heirs
- Has a function as life insurance that can protect the financial condition of participants
Lack of endowment insurance
- The results of savings obtained are often lost by inflation
- Premium price is more expensive
- Funds can only be disbursed if there are special conditions
Education endowment insurance disbursement period
Here we take the case if the use of endowment insurance is used for education costs. Here is the phase where you can withdraw your insurance, divided into 4 phases, namely:
1. Elementary School (SD)
The funds that can be disbursed are as much as 20% of the total sum insured, you can withdraw these funds after entering the 6th year of payment.
2. Junior High School (SMP)
The amount of funds that can be disbursed is the same, namely 20% of the total sum insured, you can withdraw these funds after entering the 12th year of premium payments.
3. High School (SMA)
The funds that can be disbursed are as much as 20% and you can make a disbursement in the 15th year of premium payments.
4. Lecture
For the college phase, the funds that can be disbursed are as much as 40% of the sum insured, considering that college requires a lot of funds. You can withdraw this fund in the 18th year of premium payment.
Many costs are needed for the future, ranging from daily costs, treatment, education, and even investment. Make sure you are armed with various insurance options to support your future.
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