Keep in mind, insurance products sold by banks are not banking products and it is very important to understand them from the beginning. Various complaints still often arise due to misconceptions related to bancassurance so it is important to have a proper understanding of the product. Therefore, there are some things that you must understand related to the purchase of life insurance in the bank as described below.
Banks sell life insurance. Of course this is not a new story. From year to year, banks have cooperated with insurance companies and produced bancassurance products. Banks have a considerable opportunity in selling the product. Because banks can directly offer it to customers who come to their office.
1. Non-Savings Insurance and Non Banking Products
It is too often misunderstood that most insurance users from banks / bancassurance assume that the product is a banking product. Insurance is not a savings product or any other type of banking products. Therefore, you must understand it from the beginning.
Do not assume that all products sold in the bank are banking products. Basically, the officer who sells insurance at the bank is an insurance company officer and not a bank officer. Most insurance products sold in banks are unit linked insurance that has an investment function in it.
As per its function, insurance certainly has a certain amount of risk. For example, suffered losses from the erosion of insurance funds that have been planted because the funds are also investment funds. Unlike savings deposits or deposits that have a guarantee from the Deposit Insurance Corporation, the amount of funds deposited into it will remain or even increase due to the effect of the interest that accompanies the fund.
2. Funds Can not Be Withdrawn
In banking products such as savings, it is possible to withdraw funds whenever you want. Something similar does not happen in insurance. Because there is no fund withdrawal system in the product. Insurance premiums that you have paid will not necessarily be withdrawn at will. Although it can, the amount is very small because the premium payment will be used for some of the following interests:
- Paid a number of commission agents and insurance companies whose numbers even become the largest portion during the first five years.
- Pay for insurance coverage. The magnitude of this cost will increase with age.
- Become an investment fund (usually this happens in unit link insurance). A number of these investment results that you can enjoy later. However, if the investment returns bad, your funds will not be able to return.
3. Investment Insurance (Link Unit) Has A Number Of Risks In It
As with any type of investment, investment insurance also has a number of risks in it. Get this right from the beginning. Because this is the most complained of some users of insurance. In investment, the term always applies: the greater the potential for profits, the greater the risk and the smaller the profit, the less the risk is to be borne. If you buy this investment insurance, be sure to understand which instruments you will choose. Understand also the risks that are in it so you can calculate it well.
4. No Free Premiums in Insurance
Insurance salespeople will usually say that their customers can benefit from free premiums after a few years as users of their products. Of course this explanation is less precise, given the amount of premiums are still paid properly. It's just that the funds allocated for these purposes are a number of investment advantages that have been owned so far.
Then, if the investment can be profitable, it can also be a loss. What if it turns out the investment is losing and not producing?
- In a loss condition, the customer will not be able to withdraw the premium he paid (no money back guarantee).
- If no more funds are available to pay the customer's premium, the customer still has to make the payment even though it has been said that he will get a free premium after several years.
5. Do not Buy Through Phone
Insurance is different from other products that you can order and buy over the phone with ease. In the insurance, there are a number of provisions that must be understood wisely, especially related to the issue of insurance policies. This requires proper understanding so that you are not harmed by the purchase of the product. Because this will also affect your finances in a long period of time. Therefore, you need to think carefully before finally making a decision.
6. Do not Buy in a Rush
Buying insurance products will require a considerable amount of money. In addition, this expenditure item will also be in your finances for a considerable period of time. So it's important to consider it carefully. Also do a comparison of insurance products with other products so that the purchase really suits your needs.