Insurance And Saving Differences
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| Insurance And Saving Differences |
Everyone has different financial goals in life.
Important financial goals include savings and insurance. However, there are
still people who do not understand the difference between savings and
insurance. Insurance and savings are two different financial products. The
advantages of the two financial products are the benefits, but the benefits can
be different.
# Definition
By definition, the fundamental difference is obvious.
Saving is a means to save money to be more secure. Simply put, you are
protected by keeping your money in the bank instead of keeping it yourself.
When storing in your own place, there are many risks such as being stolen or
damaged by termites.
Insurance is a product that provides protection, also
known as risk protection. These risks include illness, death, accident,
disability, fire and other property loss. Then, the policyholder receives
benefits in the form of a financial loss claim to protect your money.
# Cost
In terms of costs, we are free to budget how much we
want to save in the bank. When opening a savings account, customers only pay an
administrative fee which is deducted every month. Each bank has a policy of
setting different administrative fees depending on the type of deposit.
As for insurance companies, customers must pay
premiums periodically to insurance companies. By paying a premium, customers
use a relatively inexpensive way to prevent future risks.
This insurance premium consists of various costs such
as insurance premiums, mutual funds, closing fees, fund management fees,
transfer fees, and administrative costs.
# Impact on Risk
Both insurance and savings have their own risks. Even
if a person has savings, they are still at great risk of loss. For example, if
someone falls ill or has an accident, they must use their savings to cover the
loss.
It's different if you have insurance, such as the term
for an umbrella before it rains. Money deposited every month, you can claim
when something happens to you.
# Asset Impact
In the case of Classic Insurance and Pure Insurance,
the customer's assets will not increase. In fact, traditional insurance reduces
the customer's wealth because a premium must be paid to keep the membership
valid.
Meanwhile, saving money for savings increases wealth.
Just a small asset reduction for the monthly admin fee.
# Investment Risk
Given that the potential for developing money from a
savings account is very small, the risk for someone who has a savings account
is relatively low. Banks usually offer a profit sharing of around 4% to 5% for
savings account products (deposits).
On the other hand, when using an investment-based
(also known as unit-linked) insurance product, a portion of the premium paid is
designated as the investment value.
This value is more likely to be lost. However, at the
same time, the potential for growth is high, above inflation of 5% to 6% per
year.
# Deposit Fund Owner
The ownership status of the deposited installment
funds differs between savings and insurance. In insurance, the premium
deposited by the customer belongs to the insurer wholly. As for savings, the
ownership status is different. When saving, the funds you deposit become yours.
The customer only keeps the funds in the bank and does not transfer the ownership
of the funds to the bank.
# Contingent Contract
The customer makes a contract between the insurance
company and himself when buying insurance. One of the principles governing
insurance is a contingency contract. Several principles apply to contingency
contracts, namely that one party may receive something more valuable than what
the other party is giving. And the insurance company prepares the contract and
the other party, namely the customer, must accept or reject the entire
contract.
Given this principle, it is not surprising that
insurers pay out large profits only if certain risks are covered by the policy.
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