After discussing the types of insurance (Read: Types of Insurance in Indonesia), we will discuss non-traditional insurance, namely Unit Link. We will also discuss the differences between Unit Link and Pure Insurance.

Unit Link

According to the chairman of IFPC (Independent Financial Planner Club) Aidil Akbar Madjid, Unit Link Insurance is a type of insurance that combines permanent insurance (whole life) with investment products. Or in other words, unit link insurance is an insurance package that contains protection and investment. The way it works is that the premium we pay is partly allocated for protection and partly for investment in mutual funds. Policyholders will be asked to choose where their investment will be placed, whether in the money market unit link, fixed income unit link, mixed income unit link, or stock fund unit link.

Notepolicy is a contract or agreement issued by an insurance party to the insured which is the basis for paying compensation to the insured from the loss he experienced. This policy contains all the provisions that guarantee any losses incurred by the insurance company until the data is clearly covered.

The advantage of this unit link is that we can insure as well as invest. In addition, we can invest periodically either monthly or annually because investment payments are billed together with premium payments. With these advantages, it does not mean this unit link has no risk. One of the risks is a decrease in investment value.

Tips on choosing a Unit Link product according to Devi from Manulife Financial:

  1. Choose the type of unit link that suits our personal profile,
  2. Choose unit link products from healthy, large, and trusted insurance companies. Learn the company's track record, in paying customer claims whether easy or difficult,
  3. Learn about unit link products made by Agents. Also make sure the Agent has a license or certificate as a unit link selling agent issued by the Indonesian Life Insurance Association (AAJI),
  4. Look at the cost components imposed by unit-linked issuer insurance companies.

Types of Unit Link according to Mohammad B. Teguh (financial planner from Quantum Magna Financial), namely:

  1. Cash Fund Unit Link (Unit Link Pasar Uang)
    In general, this type of unit-linked issuer insurance company places a 100% investment portfolio on money market instruments, such as time deposits, SBIs, and short-term debt instruments or bonds. If we are classified as a conservative investor and do not dare to take big risks, this type of unit link product can be an option, because in addition to being short-term, the risk is lowest. Usually the time period is less than 12 months.
  2. Fixed Income Unit Link (Unit Link Pendapatan Tetap)
    Typically, the composition of customer investment funds will be focused at least 80% in bond instruments. If we want to benefit at an optimal interest rate but still prioritize a stable and consistent income, we might consider taking this type of unit link. This Unit Link is a short-term financial plan, less than 12 months or medium 1-3 years.
  3. Managed Unit Link (Unit Link Pendapatan Campuran)
    which usually puts the portfolio in stocks and bonds with a certain composition. Many people are of the opinion, this type of unit link is suitable for customers who want to obtain adequate income as well as long-term investment growth opportunities. The time period is 1-3 years.
  4. Equity Unit Link (Unit Link Dana Saham)
    which places the customer's funds in shares of at least 80%. If we want to get the maximum investment benefit, we can consider this unit link. The condition is, we must dare to take high risks. Therefore, the investment value that we incubate in this type of unit link is very dependent on the movement of the stock index. For this type of Unit Link, suitable for you who have a long-term financial plan, which is more than 5 years.

The conclusion is that this unit link investment has in common with mutual fund investment. Some insurance companies in Indonesia work closely with investment management companies to help manage funds.

Difference between Unit Link Insurance and Pure Insurance

Here are the advantages and disadvantages of pure insurance and unit link insurance.

Types Insurance Advantages Deficiency
Pure Insurance - Cheaper premiums - Lost funds no claims
- Bound for a minimum period of 1 year - Fixed premiums, do not increase the amount
Unit Link Insurance - Funds can be disbursed - Premium is more expensive
- If there are no claims, the return is high from the return on investment - There is a possibility of a failed investment, and money will be reduced or lost
  - Waiting a long time to be able to withdraw profits

Here are the benefits of pure insurance and unit link insurance.

No Benefits
Pure Insurance Unit Link Insurance
1 You will feel safe against health risks, because by paying a monthly premium then you will immediately be protected from almost all diseases and accidents. The money is purely to cover your health costs later. Paying one premium already gets the investment and protection functions at once. You don't need to take care of your own investment because the insurance company will arrange everything.
2 Provides protection against financial losses caused by the risk of uncertainty for planning happy old age. Unit Link offers a variety of additional insurance, such as health insurance, critical illness, smallpox, and others. That way, you as a customer need not bother looking for yourself additional insurance.
3 - You don't need to bother processing, finding, and managing investment. A wide selection of investment instruments has been provided by unit link insurance. All you have to do is choose what suits your risk profile. Monthly investment development monitoring reports will be sent to policyholders.


The conclusion is pure insurance and unit link insurance both have the benefit of providing health protection. But each has a different risk. Choose insurance according to your needs.


ReadDifference between Health and Life Insurance, Difference between Sharia and Conventional Insurance