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Insurance is a term used to refer to an action, system, or business where financial protection (or financial compensation) for the soul, property, health and so forth get a replacement from unpredictable events that can occur such as death, loss , damage or illness, which involves paying premiums regularly within a certain period of time instead of a policy that guarantees such protection.

The term “insured” usually refers to everything that gets protection.

Basic Insurance Principles

In the insurance world there are 6 basic principles that must be met, namely:

• Insurable interest, namely the right to insure, arising from a financial relationship, between the insured and the insured and legally recognized.

• Utmost good faith, which is an action to disclose accurately and completely, all material (material fact) facts about something that will be insured whether requested or not. The meaning is: the insurer must honestly explain clearly everything about the extent of the terms / conditions of insurance and the insured must also provide clear and correct information on the object or interest insured.

• Proximate cause, which is an active, efficient cause that causes a chain of events that results in an effect without the intervention of one who starts and actively from new and independent sources.

• Indemnity, which is a mechanism by which the insurer provides financial compensation in an effort to place the insured in the financial position he had just before the loss occurred (KUHD article 252, 253 and affirmed in article 278).

• Subrogation, namely the transfer of claim rights from the insured to the insurer after the claim is paid.

• Contribution, which is the right of the guarantor to invite other guarantor who both bear, but do not have the same obligation to the insured to participate in providing indemnity.

Type of Insurance

1. Life Insurance

This type of insurance is known to provide financial benefits to the insured for his death. The payment system for this type of life insurance varies. There are insurance companies that provide payment after death and others can allow the insured to claim funds before his death.

Life insurance can be purchased for self-interest and on behalf of the insured alone or purchased for the benefit of a third person. Even life insurance is also known to be bought in other people’s lives. As an illustration, suppose a husband can buy life insurance that will provide benefits to him after the wife’s death. Parents can also insure themselves against the child’s death.

2. Health Insurance

This type of insurance is also quite well known by the people of Indonesia. Health insurance is an insurance product that handles the health problems of the insured because of an illness and covers the cost of the treatment process. Generally, the cause of the insured’s illness which can be borne by the insurance company is injury, disability, illness, until death due to accident.

Health insurance is also known to be bought for the benefit of the insured or the interests of a third person. Private health insurance companies such as Prudential, Allianz, AIA, Cigna, and Manulife are among the big names that provide a variety of insurance products to suit the needs of the Indonesian people and are widespread throughout the world.

3. Vehicle Insurance

The most popular vehicle insurance in Indonesia is a type of car insurance that focuses on injury coverage to other people or against damage to other people’s vehicles caused by the insured. This insurance can also pay for the loss or damage to the insured motor vehicle.

Vehicle insurance is one of the general insurance products. This type of insurance had become a boom when the riots broke out in May 1998 because the incident made people’s interest in protection ownership for private vehicles increase dramatically.

The financial site has partnered with well-known insurance companies in Indonesia so you as a customer can compare the best car insurance products with low rates.

4. Education insurance

Dizziness with children’s education costs? This type of insurance will help you overcome. Education insurance is the best alternative and a solution to ensure a better life, especially in children’s education assets. The cost of the premium that must be paid by the insured to the insurance company varies according to the level of education to be obtained later. Understanding the importance of using education insurance for children is now a matter of concern for parents. The high cost of education and other conditions that exacerbate the economy such as the weakening of our currency against the US dollar affect the cost of education for children later. Realizing that this clearly will burden parents, it is not uncommon for parents now to choose to have education insurance. So, education insurance can be classified as the types of priority insurance too, right? You will certainly be helped in taking care of the child’s future.

5. Travel insurance

Maybe for those of you who often travel or travel are familiar with this type of insurance. The various types of insurance also create a variety of protection for travelers. Overall, the function of travel insurance is not much different from the ordinary insurance function as a form of protection for customers with a short period of time that is for the premium buyer to travel until returning home. Benefits and protection that will be gained from having travel insurance include obtaining protection and coverage for accidents that affect premium buyers, personal accident benefits, dependents for emergency medical expenses, repatriation of bodies, medical evacuation, to protection of luggage that has a risk of being lost. or damaged.

6. Business insurance

For those of you who have a business field, this type of insurance is important to consider. In addition to the types of insurance that involve individual protection, insurance that protects businesses is also needed. Business insurance is a protection service against damage, loss and loss in a large amount that may occur in one’s business. This insurance provides compensation for damage caused by fire, explosion, earthquake, lightning, flood, hurricane, rain, collision, until riots. Insurance companies usually offer a variety of benefits from business insurance such as protection of employees as business assets, investment and business protection, comprehensive life insurance for all employees, to health insurance protection packages for employees.

Advantages of Insurance Companies

Insurance companies also benefit from investment. This is obtained from the investment premium received until they have to pay the claim. This money is called “float”
Insurers can get profit or loss from float price changes and also interest rates or dividends in float. In the United States, property losses and deaths recorded by insurance companies were US $ 142.3 billion in the five years ended 2003. But total profits in the same period were US $ 68.4 billion, as a result of the float.

Insurance Refusal

Some people consider insurance to be a form of betting that applies during the policy period. The insurance company bet that the buyer’s property will not be lost when the buyer pays the money. The difference in fees paid to insurance companies against the amount they can receive if an accident occurs is almost the same as if someone bet on horse racing (for example, 10 to 1). For this reason, some religious groups including the Amish avoid insurance and depend on the support received by their community when disaster occurs. In communities where close and supportive relationships where people can help each other to rebuild lost property, this plan can work. Most people cannot effectively support the system as above and this system will not work for big risks.

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34 Replies to “Why Is Term Insurance Better Than Whole Life Insurance? | My Insurances Info”

  1. This is incorrect, at least for Northwestern Mutual. If you have a Whole Life policy and the insured dies with a death benefit of $15,000 and a cash value of $5,000, the beneficiary will be paid the full death benefit and cash value of the policy for a total of $20,000. "Paid-up" means that the policies premiums have been paid in full. This most commonly occurs with 65-Life policies which is a policy that is set up for the payer to stop making payments once the insured is 65 years old. Even though the premiums are paid, the cash value will still grow with the market's dividends every year, hence growing the total death benefit every year BECAUSE the cash value is included with the death benefit when the insured dies on whole life policies. Source: I work for Northwestern Mutual.

  2. Dave Ramsey has a PHD on all subjects..  Knows everything. what people don't know is that he himself owns several cash value insurance policies.  how do you figure both bill gates and warren buffet each own a $100,000,000 cash value policy. $100 million cash value policies.  Ramsey makes a living off ignorant people that refuse to thing for themselves and do their own du diligence.  for these people is easier to call a show and ask " what should I do?"

  3. What he forgets is that, yes, WL is more costly, but it WILL pay out when you die. I would rather lose some of the cash value and have my family be paid the pay out than pay 10, 15, 20+ years for the term and die after it lapses, then my family gets NOTHING when I die after the term lapses. He is extremely biased because whole life is something he does not sell, so why would he recommend it? Also, term vs WL is on a needs basis. Also, a good insurance agent would be advising his client to be utilizing the cash value in the policy so they don't lose it. It still makes better returns than most other investments AND has much less risk with the returns. I sell both WL AND term, it just depends on what my clients needs are. DR is plain out saying "NO TO WL" without getting to know the needs of the individual and wants to just sell whatever he sells.

  4. You Borrow against the agreement on the death benefit… so it’s not stupid. You can borrow on the policy as is— although you have removed the value of the investment. Dave Ramsey also is making fouls also. You never pay more into a policy than the death benefit, period!! He is such a sycophant!

  5. Thank you for saving me from a horrrrible investment Mr. Ramsey! I'm 19 and am diving head first into financial freedom and had convinced myself whole life was better. A school teacher had told me you get cheaper premiums if you take out your life insurance when your younger and keep it you whole life but this benefit would not outway the huge premium price difference between term and whole life insurance. Thanks for all your knowledge!

  6. Here we go, folks! In Canada, the money made in any life policy that builds cash value is creditor protected! Invest the rest? Very very few are like me who "invests the rest". The best policy for young healthy folks is a policy that gets paid off sooner this way its filed away and done! Affordability is term. If you have any type of money building policies you MUST meet with your agent to review the policy and investments. Don't depend on the sales agent, it's our responsibility to monitor our policies.
    I personally have a return of premium term policy. After the 20 yeras I get 99.9% of all of my premiums I paid! How is that folks!

  7. The problem with this conversation or the way most people buy either term or whole life insurance is that they don't view it as the tool that it is. Period. Dave talks about the reason middle class people are staying poor is because of products like whole life?

    Stop comparing a whole life policy to an investment…that's not what it is. It is a guaranteed storage vehicle for your money. Similar to a bank account. The reality is, a whole life insurance policy is not good for everyone. The other reality is that there is a reason whole life has a bad rap…most agents don't understand it.

    Always think about what the agenda is of the people who are telling you anything. I am an entrepreneur and biz owner. My whole life policy is the best financial tool I have. I can't sell you anything.

    Dave owns a term life insurance company and he has financial partners that he gets paid on when you buy into his philosophy…hmmmmm….

    He always tries to keep the conversation very emotional. He does a good job of skirting around the details. I am going to get with my agent and have him do a video that I can share with everyone to give a real, detailed, technical understanding of each. That way you can make an educated, non emotional decision. I will work on having the video up shortly.

  8. I am doing research trying to find out which is the smartest way to buy life insurance…… I am a 3O y/o F with a 5 year old son and 30 year old M spouse (not married) & we co-own a house. I'm so confused, why would say a 30 year old like myself buy term life insurance and pay into it all these years when you know the chances of you dying within the 10-30 years you have the insurance are slim to none, then when Im 60 it closes and then my premiums go up in order to buy whole at that point. Can someone PLEASE explain to me why I wouldn't just buy Whole now? (other than obviously its more expensive monthly & premium wise, but wont that price equal what id be paying later anyway if I chose term and id still be covered without the inflated price or is there another catch Im missing? if anyone can take a few minutes and tell me their thoughts Id greatly appreciate it. Im new to the world of finances and have very little experience.

  9. I used to work in a call center for an insurance company. Day in and day out, we get phone calls saying, my father/mother paid thousands a year for this policy for decades and now they die and we only got 20 grand???

    Hated that job, worse than Walmart.

  10. Whole life and indexed universal life is what helped people in the Great Depression. It also helped people take money out of their policy when their business was not doing as well. Or that slow time of the year. I have an indexed universal life policy because I am building cash value. The IRS considers an index universal life policy a investment if you add more money than your premium.. If you add more money to an indexed universal life policy the IRS considers a modified endowment contract. MEC! I also have a long-term care policy tied to the life insurance policy. With long-term care policies on their own if you need it the money's there for you, but if you are healthy and don't need it you lose the money!! With an index universal life and whole life policy that are tied to long-term care policies if you don't use long-term care policy the cash value is still in the policy. Plus when you're older and you need cash you can withdraw cash from an index universal life policy without paying tax on it. These policies are not needed for people like Dave who's worth 40 million dollars. But for the average person that is almost living hand-to-mouth this is the best investment they can make for themselves and their family.

  11. By far the worst advice I've ever heard! Dave Ramsey very disappointed that you're telling people to cancel their whole life or universal and get term only! Every person's situation is different! You need to evaluate every person's financial situation and show them the right tools for their specific need! As a financial consultant, this is by far the most narrow-minded video I have ever seen. People, please do not cancel your policies just because Dave Ramsey says its bad! Life happens and you don't know what the future holds with the right tools and guidance you can achieve financial freedom! A great advisor educates their clients on all the various products, and its the client who can then choose what's the best option for his/her situation!

  12. Look, for most adults whole life is robbery. But there's still a possibility for any kid to not become most adults. I am so grateful to my parents for getting me whole life insurance when I was a baby. I'm chronically ill and disabled, and there's no way I could afford life insurance at current rates, especially not the amount I have. It isn't significant to some people, but if I can pay $150 a year to ensure that if I die when I'm 50 with kids they're not gonna be in debt burying me… it's a real relief to not have that hanging over me.

  13. Anybody heard of Bank on Yourself..its where you use a whole life insurance a pretty much a savings account and when. you want to buy a car or something you borrow the money from this account and pay yourself back the interest instead of paying a bank or credit company..any thought?

  14. This guy is a complete and utter scam artist. Don’t believe a word this guy says. Not even sure he is a licensed advisor. Everybody’s situation is different there is a need for term and there is a need for permanent insurance. Work with a good financial advisor or insurance specialist that can look at your specific situation and needs and make your decision then. Sure term is cheaper and is great for temporary needs to be covered like mortgage and income when children are under 18. However wealthy investors use permanent insurance as a tax sheltered way to pass money on to loved ones. As long as you don’t “mec” by over funding it it will be tax free to pass on wealth. It’s called a rich mans roth. These so called experts are hurting the industry and lining their own pockets with half truth advice without knowing the full story. Any good advisor will never make a blanket statement in regards to financial tools and or products. Watch out for this guy and the Suze Oremans of the world. Term is great and has its place and so does permanent ie whole variable universal.

  15. The interest is put back into your policy like a 401k loan. And you can pass on large estate without tax implications. You called her stupid so she feels bad about her wise decision. So lame Dave.

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