What is PAYDI? Unit link without the jargon, and 7 questions before you sign

PAYDI stands for Produk Asuransi yang Dikaitkan dengan Investasi, or investment-linked insurance product. In brochures and everyday talk it is called unit link. It combines two things in one policy: life cover (sometimes with health as an add-on), and investment in sub-funds you choose, such as money market, bonds or equities.

Because there is an investment part, the policy's value can rise and fall with the market. That is what sets it apart from term life insurance, which is pure protection with no cash value.

Unit link is not savings with an insurance bonus. It is insurance with investing inside, and fees for both.

After a few slow years, unit link sales are rising again. By May 2026, PAYDI premiums reached Rp18.79 trillion, up 13.71% on the year before, or about a quarter of all life insurance premiums. Chances are you, or someone close to you, is being offered one.

At the same time, OJK is drafting a new regulation for PAYDI, targeted for the end of 2026. Its focus is how these products are sold and preventing mis-selling, meaning products sold to people they don't really suit.

Every unit link premium is split three ways. First, the cost of insurance, which pays for your life cover and tends to rise with age. Second, other fees such as acquisition, administration and fund management. Third, what is left is invested and builds your cash value.

In the early years the fee share is usually larger, so cash value grows slowly. OJK rules set a minimum share of the premium that must go to the investment value, rising over time. That is why stopping payments in the early years often returns much less than the total premiums paid.

Unit link can make sense if you like one product that keeps you disciplined, plan to hold it for the long term, are confident you can keep paying, already have an emergency fund, and are ready for investment ups and downs.

Term life plus separate investing often makes more sense if your priority is the largest possible cover on a limited budget, your income is not yet stable, or you want to see and manage each cost separately. The key is that the investing part actually happens, not just in the plan.

1. What is the sum assured, and is it enough for my family? Compare it with your Celah Proteksi (protection gap). 2. What are all the fees, and how much is deducted each year, especially early on? 3. Which sub-fund is my premium invested in, and does it fit my risk profile? 4. If I stop paying in year 3 or year 5, what is the cash value? Ask for it in writing.

5. Is the illustration a promise or an assumption? Remember, returns cannot be guaranteed. 6. How long is the free-look period, and how do I cancel if I change my mind? 7. Can I take the product summary (Ringkasan Informasi Produk dan Layanan, RIPLAY) home to read first?

OJK rules also require the PAYDI explanation and your statement of understanding to be recorded, and a confirmation call (welcoming call) after the policy is issued. Use that call to check that everything promised during the sale is actually written in the policy.

General information, not financial or investment advice, and not a recommendation of any product. PYD is run by a licensed insurance advisor affiliated with Allianz Indonesia, which also sells unit link products. This content is product-neutral. Speak to a licensed adviser and read the product documents before deciding.