Understanding, Until Insurance Function That You Need to Know

 As one of the non-bank institutions, insurance is a good investment alternative and minimizes the risk of unexpected events.

Basically, insurance is divided into three major categories namely life insurance, psychiatric insurance, and loss insurance. But the division is still common, there is a division of types of derivative insurance from the three types of insurance.

This time let's look at the simplest understanding of insurance and the functions and benefits of insurance

Understanding, Purpose Until Insurance Function That You Need to Know

According to the language, insurance comes from the English language that is insurance which means coverage.

According to Law No. 2 of 1992, insurance is an agreement between two or more parties, in which the insurer binds itself to the insured, by receiving insurance premiums, to provide reimbursement to the insured for loss, damage or loss of expected profit or responsibility of a third legal party that may be suffered by the insured, arising from an uncertain event, or providing a payment based on the death or life of an insured person.

In general, insurance is an agreement between the insured (customer) and the insurer (insurance company). The insurance company is willing to cover a number of losses that may arise in the future.

The term insurance describes every action for protection against risk. Insurance users are given the obligation to pay a certain amount of money called premiums, which are paid to insurance companies.

Insurance Objectives

The purpose of insurance is basically just in case of a risk in an event.

The other purposes of insurance are as follows:

1. Provide guaranteed protection from the risks of losses experienced by one party.

2. As an equalization of costs, that is enough just to spend a certain amount of money and do not have to reimburse yourself for losses that occur with an un certain and uncertain amount.

3. Increase efficiency, because there is no need to specifically conduct supervision and security to provide protection that spends a lot of time, effort and cost.

4. As a savings account, because the amount paid to the insurance company will be refunded in a larger amount than before. (this is especially the case with life insurance).

5. The basis of the bank to provide credit, because the bank itself requires a guarantee or protection of the money given to the borrower's money.

6. Closing the loss of earning power of a person or a business entity at the time he does not work or does not function.

7. To switch the risk that originally existed on the part of the owner to the insurance party who is ready to accept the risk.

8. To compensate the parties for losses and benefit in addition to providing some guarantees to the insurance participants.

Insurance Function

In addition to controlling a risk that occurs, insurance also has several other functions, namely as follows:

1. Fund raiser

The task of insurance companies is to raise incoming funds. Good business management requires the incoming funds to be invested, so that the funds are more productive.

Investment activities carried out by insurance companies in addition to supporting national development, can also reduce the cost of insurance, where with the profit or profit obtained through investment funds, the element of profit presentation taken into account in the determination of premiums can be reduced.

2. Help for business companies

Insurance encourages the establishment of a business, an investor who plans to invest in a particular business, it is possible to cancel the plan, because it does not want to assume the risk in the event of a disaster.

With insurance, an entrepreneur will avoid anxiety in case of risk, so that more can focus on the efficiency of his business.

So if a person pays a small premium, he can take advantage of the capital that should be for the loss fund, thus he can expand and improve his business and if such risks occur, the continuity of his business will be more guaranteed.

3. Risk reduction

There are recommendations given by insurance companies after a risk survey is conducted to the insured through surveyors to correct a risk with the prevailing premium rate system. For example with its own risk burden, discounts, research and publications on the way and cause of loss, with certain efforts or actions.

Therefore, insurance companies make an important contribution to perkonomian by how to minimize the possibility of a risk.

4. Spread losses evenly

With the spread of losses evenly can be interpreted that the amount of dues or contributions paid by the insured for premium funds is balanced with a risk transferred.

Types of Insurance

The types of insurance are as follows:

1. Health insurance

Health insurance is an insurance that provides insurance against health problems caused by an illness or accident.

2. Life insurance

Life insurance is an insurance that guarantees the death of an insured person by providing financial benefits.

3. Vehicle insurance

Vehicle insurance is a type of insurance that provides insurance services to vehicles that experience loss, damage, and so on.

4. Education insurance

Education insurance is insurance that guarantees a good educational life. For example Prudential and BNI Life Insurance.

5. Business insurance

Business insurance is insurance that guarantees against the company in business activities covering considerable amounts of losses, damages, and losses.

6. Home and property ownership insurance

Home and property ownership insurance is an insurance that provides services to homeowners from risks such as residential damage or damage to personal belongings.

So that's the article above that discusses about [Understanding, Purpose, Function, Type] Insurance. Hopefully it can add insight and benefit you.

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