Credit Life Insurance in Indonesia

This case study seeks to understand the performance of a credit life product introduced by Allianz in Indonesia. The product, named Payung Kelaurga, seeks to pay off a family member’s outstanding debt, including formal and informal loans, in the event of his death. It is distributed through MFIs and grants each MFI the flexibility to choose from a variety of benefits to match the needs of its own client base. Evaluation of the product was conducted on the basis of the Client Math methodology. Key findings include:

• Community-based death funds play a crucial role for both insured and uninsured households in covering the costs of burial and related ceremonies;
• Loan forgiveness component of the product may have offered greater value to clients than the cash payout;
• Cash payouts were most commonly used to supplement other financing for the funeral rather than investment;
• Insurance product’s loan forgiveness component offered substantial value, covering on average 23% of the various outstanding loans left by the insured deceased;
• Women who have lost their husbands or other higher-earning breadwinners often face a particularly great financial burden, and as such may experience the greatest value from insurance covering this loss.