Topics surrounding the insurance business were widely discussed after a video emerged of three women claiming to have an income of IDR 600 million to IDR 1.1 billion per month from insurance.
However, not everyone knows about the insurance business.
“I still don’t understand, what is an insurance business like an insurance agency?” he wrote on his Twitter account.
Then, what is the insurance business and how is it operated and planned?
What is insurance business?
Insurance is an activity that protects a customer against certain risks for which the customer pays an insurance premium as a fee to obtain this protection.
Telisa Aula Falianti, an economist at the University of Indonesia (UI), said the insurance business consists of the activities of insurance agents.
When Compass.com contacted me on Monday (2022.10.17) “In fact, your main job and legal insurance business should be done by a financial institution. ”
“Insurance refers to all institutions and parties involved in the business and carrying out these insurance activities”, he continued.
How do insurance agents work
It is necessary to examine how each company operates the system and how it entered into an agreement with the insurance company for the income of insurance agents, which are said to reach up to 1 billion rupees per month.
“Insurance agents usually get a commission from the insurance company. If the commission rate is high and you have a lot of customers, of course you get a lot,” said Telisa.
Commission fees are generally charged from premium funds collected at a rate stipulated in the SOP, he added.
This means that you cannot take any funds, including not allowing you to take customer funds.
Can’t pay your insurance premium in full?
Economics and Investments Supervisor Anthony Budiawan said premium distribution will depend on the type of insurance product and the company’s contracts.
He gave an example with Jiwasraya.
“For example, Jiwasraya is a whole life insurance business. It is paid upon the policyholder’s death, and the product is a combination of a type of savings and life insurance.” 17/10)/2022).
According to him, life insurance is likely to be combined with savings if there is a company that cannot fully distribute premiums or only distributes 50%.
He added, “Insurance premiums can be refunded, but life insurance premiums must be paid until the person dies, so the full amount cannot be refunded.”
However, in some cases, this fund may be withdrawn in full under the condition of insurance cancellation.
Another option is to take the money in part and the other part to pay annual premiums until the policyholder dies.
According to Telisa, a “hybrid” is an insurance product that often combines savings and insurance.
“Because the products are mixed, it seems like you can’t get 100% of your money because some of them pay a premium up front” said Telisa.
Insurance Selection Tips for Beginners
Cited by (December 10, 2021), Andy Nugroho, a financial planner at Advisors Alliance Group, shares tips on choosing the right insurance for beginners.
1. Buy an insurance policy out of necessity
As Andy said, buy insurance because you really need it, not because you feel bad about marketing or agents providing it.
2. Choose an agent who understands the product
If multiple agents or marketing agents are making offers, select an agent with sufficient qualifications in terms of product knowledge or understanding.
3. Buy insurance according to your needs and financial ability
This is because if your security margin is too small, you won’t be able to protect your customers’ needs, and if it’s too large, you’ll make your customers pay too much for the security they need.
4. Ask for a product illustration
Once you have been offered a product and you know it fits your needs, ask for product artwork and an explanation of how it works.
If you do not understand the description provided or feel that you need clarification on what is in the product description from a more neutral party; if you cannot seek the opinion of someone you believe are knowledgeable about your insurance product or ask a financial planner (e.g. SNS direct message.
5. Ask for a 3-5 year sum assured scheme
When we buy life insurance, we ask for a 3-5 year guarantee or at least 36 times our monthly income.
This is to ensure that at least the heirs have enough time to get their finances back on track, even if we take some risks.
Nonetheless, you should also look at the amount of premiums you will have to pay.
6. Make sure you can afford to pay premiums
Insurance is a long-term contract, so make sure you can pay your premiums by the end of the contract period.
The goal is to be financially unprepared when paying premiums in the future. The share of income for insurance premium payments is approximately 5-10% of monthly income.
7. Ask the agent to explain the benefits of the product
Once we have agreed to purchase the policy and the policy booklet is ready, ask the agent/marketer to re-explain what benefits the policy booklet provides.
8. Conduct a policy review at least once a year
We adjust our needs by anticipating your changing needs and financial situation over time.