Unit-linked insurance is a type of insurance that combines permanent insurance (whole life) with investment products. With these advantages, making many consumers interested in buying unit-linked products rather than traditional insurance products that only focus on selling protection.

One of the unit link products in Indonesia is PRULink Investor Account. This insurance from Prudential Indonesia links life protection as well as investment. “PRUlink Asuransi sekaligus Investasi“. This insurance company gives flexibility to the customer to choose investments based on the risk profile.

Unit Link Insurance Investment Risk

But the combination of investment and protection in one product such as that offered by the unit link is also not risk free. Because, the same as other investment products, unit links also have the risk of impairment in investment. Here are some risks that might occur.

1) Market Risk

Risks caused by macroeconomic conditions that are less conducive so that the price of investment instruments has decreased and consequently the value of units owned by the Policy Holder can be reduced.

2) Liquidity Risk

Risks that can occur if investment assets cannot be immediately converted into cash or at an appropriate price, for example when extreme market conditions occur or when all Policy Holders make a withdrawal (surrender) simultaneously.

3) Economic Risks and Political Change (Domestic and International)

Risks associated with changes in economic conditions, political policies, laws and government regulations relating to the world of investment and business both at home and abroad.

4) Credit Risk

Risks related to Prudential Indonesia’s ability to pay obligations to its customers. Prudential Indonesia continues to maintain its performance to exceed the minimum capital adequacy determined by the Government.

5) Risk of Failure to Pay

Risks that can occur if a third party that issues an investment instrument defaults or is unable to meet its obligations to pay the principal debt, interest and / or dividends.

6) Exchange Rate Risk

Risks that can occur if an investment is made in a different currency from the currency used for payment of premiums and benefits, given the exchange rate can fluctuate with the market

7) Operational Risk

Risks arising from inadequate / failed internal processes, or from employee behavior and operational systems, or from external events that can affect the company’s operational activities.


Unit Link Insurance Investment Risk


Kang Andre

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