This figure is an increase from the insurance penetration rate in Indonesia at the end of 2020 which reached 2.92%.
Although this figure is growing, but when compared with the rest of Indonesian society, then only a few people who have insurance, including health insurance.
Does this indicate a doubt for many people to have health insurance, because they are afraid of losing if the premium money paid is in vain because they have never been sick? If the answer is “yes,” is this assumption justified?
Health insurance is the most basic insurance or can be said to be an insurance that is an initial priority to have. Because this insurance will cover the cost of outpatient and inpatient treatment.
But for some people, the insurance premium is not a small nominal. Paying insurance premiums on a regular basis can certainly interfere with financial conditions when expenses are large enough.
This is reinforced by the absence of an ideal amount related to insurance premiums. Everyone has different financial risks, the more complete the insurance benefits, the higher the premium to be paid.
That’s what ultimately fosters the mindset around the futility of insurance premiums paid because they never get sick.
Here’s Why Insurance Premiums Aren’t a Wasted Expense
Is it better not to have insurance? Before making a decision, it’s good to know the following things about insurance.
Insurance Protects Our Property
Let’s take an analogy, we are an entrepreneur who owns a shop located on the side of the road. Our shophouse is rented by several tenants who end up contributing significantly to our passive income.
In order to ensure the security of tenants in the shop, we also hire security services to guard for 24 hours.
The question that arises is, when tenants feel safe because there is never an intruder, thief, robber, and so forth, are we in vain because we pay for security services? Of course not.
Without security services, maybe we ourselves have to work to maintain security in the shop. We will also lose time and energy to maintain the safety of our tenants.
Insurance works on the same principle as security services in the above cases.
The financial risk of all disasters that we experience in the form of illness, accident, damage or loss of assets, death, and other losses will be transferred to the insurance company. For that, we have to pay regular premiums to insurance companies.
Having insurance is the same as setting aside money for risk management. Instead of having to spend huge funds or lose property when disaster comes, it is better to pay a fee that is not too high just in case.
Moreover, a survey from Mercers Marsh Benefits showed that the increase in medical costs in Indonesia in 2019 reached 10%.
Why did this happen? This increase in medical costs is even higher when the COVID-19 pandemic hits. Based on data from the Global Medical Trends Survey 2021 issued by Willis Towers Watson, last October 2020, the increase in medical costs in Indonesia in 2021 is estimated to reach 12%.
Let us examine what happened in 2020 when COVID-19 became a pandemic that claimed many people. Medical costs will certainly continue to rise over time, given the development of technology, the emergence of new diseases, and so forth.
The next question that arises is, does our income or investment returns also experience growth of 10% or more every year?
If not, then it is advisable for us to transfer this financial risk to the insurance company, so that our financial burden when this problem arises will not be swollen.
Nothing Is Wasted In Insurance
But basically, “there is nothing in vain” in insurance. There is only the ownership of insurance that is not appropriate for policyholders or beneficiaries.
A person can become overinsured, when they pay too high a premium for a benefit that is too large and less needed.
Or, they can also be underinsured (less protected), when the insurance benefits they have are not able to bear the financial risks they experience.
Regardless of being overinsured or underinsured, they will equally benefit when calamities arise unexpectedly.
However, know that insurance is actually a cost or expense that must be paid regularly. So it would be nice for us to get protection in accordance with what is needed, by paying affordable dues.
Is it Smart To Buy Insurance With Premium Refund Feature?
Not a few insurance products that provide gimmicks such as premium refunds if there is no claim (no claim bonus) or investment cash value.
This, of course, will be a sweetener to hook customers who are not familiar or skeptical about health insurance ownership.
But know that insurance with premium or investment return features certainly has higher premium contributions than insurance in the form of pure protection.
For those who buy insurance with an investment package, the premium paid will certainly be divided into two, namely for protection and investment.
And we must also know that all forms of risk from investment in insurance products that are associated with investment (PAYDI) or unit links, will be fully borne by the customer. The Insurance Company cannot guarantee the return on the investment.
However, the cash value in PAYDI can be useful to pay insurance premiums in the future when we are retired and have no income, so that our insurance policy remains active and can provide protection for longer. In addition, the cash value in PAYDI can also be used to achieve other financial goals.
If we already understand about the benefits and facts about insurance with the benefits of no claim bonus and PAYDI, and the benefits are in accordance with our needs, then buying both types of insurance is the right choice.