Unit Linked Insurance Plans (ULIP) is a life insurance policy that combines insurance and investment. It means that if you buy the policy you get both the protection and the investment. Supposed if you pay Rp 1,000,000 per month, your money will be allocated into two accounts, the premium account and investment account, let’s say the allocation is 70:30, so the Rp 700,000 allocated to pay the premium and Rp 300,000 to pay the investment.
Development in Indonesia
Despite ULIP have developed in UK since 1957, it came to Indonesia at 1998. Marked by introduction of two products, ZurichLink by Prudential (at that time was Prudential Banc Bali) and Pro Invest by Manulife. After that, more and more insurance companies began to marketed ULIP, as shown in table 1.
| Year | Number of Companies |
|---|---|
| 1998 | 2 |
| 1999 | 3 |
| 2000 | 10 |
| 2001 | 14 |
| 2002 | 16 |
| 2003 | 17 |
| 2004 | 17 |
| 2005 | 21 |
| 2006 | 24 |
| 2007 | 25 |
| 2008 | 25 |
Table 1 : Number of Insurance Company that Sell ULIP in Indonesia
It shows that time after time there are more and more insurance companies in Indonesia saw ULIP as a profitable product. The evidence is also could be seen at the growth of premium income by ULIP which is shown at table 2.
| Year | Premiums of New Business | Growth |
|---|---|---|
| 2002 | Rp 684.3 Billion | |
| 2003 | Rp 1.50 Trillion | 120% |
| 2004 | Rp 2.75 Trillion | 80% |
| 2005 | Rp 8.83 Trillion | 220% |
Table 2 : Premium Growth of ULIP in Indonesia
But this growth is not free from threat, ULIP’s existence used to be a controversy because YLKAI (Indonesian Insurance Consumer Foundation) criticized that ULIP has broke insurance principles because there’s a transfer of risk that should be accounted to the company into the consumer. ULIP would be not exist anymore if there’s no meetings between YLKAI and ULIP’s marketers. There’s a misunderstanding that the consumers just accounted for the investment risks, not the insurance risk which is still accounted by insurance company.
Untill now there are about 150 ULIP products in Indonesia, with different specification, equity fund, fixed income fund or mixed. Sharia policy is also available, the consumer could choose that match with their needs.
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Anton Hermansyah
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