Insurance vs Unit Link

Insurance products basically are a primarily financial protection based. According Wikipedia, mentioned that the Insurance is defined as the equitable transfer of the risk of a loss, from one entity to another, in exchange for a premium, and can be thought of as a guaranteed known and small loss to prevent a large, possibly devastating loss. Although in the next development, insurance products are become into benefits investment tool in addition of essentially self-protection or protection form. Various insurance products offered to anyone who feels in need. There are insurance that choose to invest, self-protection, or a mix of both.

There is insurance that provides self protection. There is life insurance that provides variety facilities of product protection ranging from at ill to die. Combination of both, there is insurance products that called unit linked which will allocate customer’s funds not only guarantee protection for themselves, but also for investment.

Both unit-linked and full-protection insurance each has its own characteristics tailored to the customer profile. You are free to choose what insurance to have, what type, and which insurance company. Of course, first you must identify your personal financial profile, and your financial goals.

For those of you who want to manage your funds for investment, do not buy a unit-linked insurance products. Likewise for those of you who want the life protection product, unit linked insurance is not an ideal choice. Because basically unit linked insurance is not ideal for those who want to focus the management of the funds for investment or protection. Although the unit linked has some advantages, but the investment value has less than maximum. This may be due to the cost component is larger than other investment products.

So for those of you who want to focus on investment to not select the unit-linked as a mainstay product, but choose the investment products that give high return results despite the high risk that is also high. For example, stocks mutual fund. In accordance with the principle of investment, high risk high return, stock mutual funds are an ideal choice for those who want to focus more on investment product.

Conversely, if you want to focus on the protection, select the investment products that only focus on the life insurance service that will provide insurance protection for the premium holder more maximum.
Another weakness of the unit linked is the allocation of funds. If the customer is less carefully manage the allocation of funds for the portion of the amount of insurance, customers investment fund allocation can be putted more for protection that should be less required, or vice versa.

However, in addition to the weaknesses, the unit-linked also still has some advantages. For example, the management of all investment units is not by the customers themselves, but by the selected investment manager of customer. Customers only need to issue a monthly installment of insurance that the amount has been previously selected. So the customer does not need to be bothered with the managing investment funds. In addition, unit link products are also suitable for those with access difficulties to invest through mutual funds.

So, as has been previously explained that in choosing a product or type of insurance should be tailored to the risk profile, financial goals, and characteristics of your investment. Are you already sure of what investment product you want?

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