Unit Linked Insurance Plans, So Far in Indonesia

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.

Takaful, an Introduction

Brief Explanation

Takaful means a scheme based on brotherhood, solidarity and mutual assistance which provides for mutual financial aid and assistance to the participants in case of need whereby the participants mutually agree to contribute for that purpose (Takaful Act 1984, article 2), for short it is an Islamic Insurance, which still bring sharia principles within which are the main differences with the conventional insurance. It’s been practiced for about 1400 years, historians believe that Muslim of Mecca and Medina has started a kind of mutual insurance, and it developed again with trade between Arabs and Asians which require a great time and length that increase the risk of robbery and loss.

The Complicated Problems of Insurance

The Problems

Insurance industry is one of the business way that initially supposed to be one of the most prospective industry in Indonesia since the country have large people population. However, in the process of the industry, there are many problems which has been attached. Start from the market structure problems, until the customers’ ones.

Oversupply

There are over supply phenomenon between insurance producer and the consumers. Whereas, Indonesia with the population until 220 million people should be an affluent market to grow. So, what’s the problem? The affluent market has convoked may players to play within. So, the players is too many, and they just become minor companies so that they get difficulties to expand their operations. As we know, the market leader here only have 12,08% market share.