There are still many people who do not understand

The amount of insurance premiums that must be paid each month to be one of the reasons most people decide to buy insurance or not. There are still many people who do not understand how to calculate the sum assured based on the premiums paid, especially life insurance long term.

Especially for the calculation of life insurance UP should be clear, because of the risk that there will be very large. For example, a father with two children who have a monthly income of 5 million and became the backbone of the family had an accident that caused the death of how the bereaved family to survive financially? This is where life insurance functions replace the income of the deceased.

Thus, life insurance actually is really needed everyone, especially for the backbone of the family, because we never know the misfortune that will befall. However, the burden of insurance premiums often the main reason for not purchasing life insurance.

According to financial planners, so that you are not burdened with the premium paid, premium installments should not disrupt cash flow and savings required to fund education. Miscalculation is what sometimes makes a lot of customers stop in the middle of the road during the contract period.

Sound financial calculation is to allocate 10% of income to pay the mortgage premiums. Of the various types of insurance, life insurance and health insurance should be a top priority in choosing insurance.

Know the Sum Insured Counting Method
If already understand how to set aside revenue to pay the premium installments, then you have to count the UP because it relates to the amount of the premium to be paid every month. Calculating UP also became the benchmark for choosing a life insurance product that is right for you.

There are various ways calculating UP, each method produces different figures. Therefore, the method of calculation should be adjusted to the needs and financial capabilities. Although, the amount of UP is not the only determinant of the amount of installment premiums. The following will explain how to calculate the UP.


Based Income Replacement
Income Replacement Based (IRB) is the method used to calculate a person's income until he retired. For example, Mr. X had revenue of Rp 5 million per month and 35 years old. If Mr. X wants to retire at the age of 55 years, staying productive past 20 years.

This method calculates the UP Mr. X as follows: Rp 5 million x 12 (months) x 20 (years) the results obtained Rp 1.2 billion. So when Mr. X died value assumptions for the bereaved family every month is Rp 5 million. Coverage provided the money expected to be exhausted in 20 years. This method is suitable for people of retirement soon.

Human Live Based Value
This method calculates a person's income until retirement but taking into account the results of investment instruments, which have minimal risk. For example, when Mr. X died, UP placed his family at risk free instruments, such as deposits or Indonesian Retail Bonds (ORI). Thus, the heirs receive not only UP, but also the result of the investment.

Income Value Based
IVB method used to determine how much value UP when placed on deposit or buy ORI to get the return of income of the insured. How to calculate, by dividing the annual income by the risk free rate.

Illustration of the calculation is similar to the first assumption, namely Rp 5 million x 12 (months): risk free rate of 5.2%. The results of the simulation calculation amounted to USD 1.150 billion. This method is recommended if the value of the risk free rate is quite high and the family is able to manage the UP with a good investment.

Survival Value Based
Survival Value Based (SVB) calculates revenues during a productive period until retirement plus debts and emergency funds for families. How to calculate it could use the IRB method, HLBV, or IVB plus debts and emergency funds. This method is suitable for families that have a large debt.

Family Needs Based
This method is a very complete way. This method takes into account the needs of the family after the insured dies. So is it calculated not by counting the number of insured earnings, but the needs of the bereaved family. The reason for personal expenses the insured is no longer there.

Of the various methods of calculating the UP, you select the most appropriate to the needs of the family. Compare the results with those offered a wide range of life insurance products. Choose a life insurance with a minimum insurance premiums, but UP is close to the needs of your family.