Various Kinds of Insurance – Sinaumed’s has certainly heard the term insurance which is said to protect your property. But what exactly is insurance? And what kinds of insurance? However, before discussing the various types of insurance, it is better if we discuss the meaning of insurance first.
Definition of Insurance
According to Wikipedia, insurance is coverage or an agreement between two parties, in which one party is obliged to pay dues/contributions/premiums. Meanwhile, the other party has the obligation to provide full guarantees to the contribution/premium payer if something happens to the first party or his property in accordance with the agreement that has been made.
The term insured usually refers to anything that is protected. Meanwhile, referring to the OJK website, insurance is an agreement between insurance service providers (as insurers) and the public (as policyholders).
Rights and obligations between insurance services and policyholders have been regulated. The policyholder has the right to receive protection for compensation for loss, damage and death from insurance service providers. However, all rights will be obtained when the policyholder performs the premium payment obligation to the insurance company.
Insurance companies also benefit from investment. This advantage is obtained from investment premiums received until they have to pay claims. This money is called a “float”. The insurer can gain or lose from the changing price of the float as well as interest rates or dividends on the float .
In the United States, property losses and deaths recorded by insurance companies amounted to US$142.3 billion in the five years ended 2003. However, the total gain in the same period was US$68.4 billion, as a result of floats.
Insurance Benefits
Insurance itself turns out to have a lot of benefits. Therefore, not a few people who want to make insurance. Here are some of the benefits of insurance.
- Protect income from sudden risks.
- Protects money saved to realize future plans.
- Protecting the future of the family when death comes.
- Protecting physical and mental health when there is a risk of an accident.
- Provides future protection of investment.
Insurance Principles
In the world of insurance there are 6 principles that must be met. Here is the full explanation.
1. Insurable interest
Insurable interest is the right to insure, arising from a financial relationship, between the insured and the insured and legally recognized.
2. Utmost good faith
Utmost good faith is the act of disclosing accurately and completely, all material facts regarding something to be insured, whether requested or not. The meaning is: the insurer must honestly explain everything clearly about the extent of the terms/conditions of the insurance and the insured must also provide a clear and correct description of the insured object or interest.
3. Proximate cause
Proximate cause is an active, efficient cause that creates a chain of events that gives rise to an effect without the intervention of something that starts and is active from a new and independent source.
4. Indemnity
Indemnity is a mechanism in which the insurer provides financial compensation in an effort to place the insured in the financial position he had just before the loss occurred (Commercial Code articles 252, 253 and emphasized in article 278).
5. Subrogation
Subrogation is the transfer of claim rights from the insured to the insurer after the claim has been paid. Contribution The right of the insurer to invite other insurers who are equally responsible, but does not have to have the same obligations towards the insured to participate in providing indemnity.
Various Kinds of Insurance
After discussing the meaning to the principles of insurance, the next discussion is the various types of insurance.
1. Life Insurance
Some people think that this type of life insurance is the same as health insurance. Life insurance is a type of insurance that provides guarantees for the death of an insured person by providing financial benefits.
There are several insurance companies that provide payments only after someone dies and there are also companies that provide payments before someone dies.
This type of insurance can be said to be insurance that can provide financial benefits in the event of death, sudden illness, or suffering from total or partial permanent disability due to an accident or illness. There are insurance provider services that apply a payment system after death. However, there are also those who allow Policyholders to claim funds before their death.
The following types of life insurance, namely:
a. Unit Link Life Insurance
Unit linked insurance combines investment with life insurance and health insurance. You just simply sit pretty and read the report every month about the value of the investment. Investment value will be managed by unit link.
However, the profit or loss of the investment is still borne by yourself. However, you also have to be patient if you want to enjoy the return on your investment, because it can only be enjoyed in the fifth year when there are no more premiums to pay.
b. Term Life Insurance
The most important thing you should know about term life insurance is a coverage system that has an expiration date. The length of time specified starts from 5 years, 10 years or 20 years, according to the offer given by the insurance company.
c. Lifetime Life Insurance
Whole life insurance provides protection to policyholders for life. The lifetime in question is 99 years or 100 years.
The advantage of this life insurance is in the insurance premium which will not be forfeited when there are no claims, so that it can be taken in its entirety when the contract period ends. However, to get all these advantages, the price to be paid is of course more. In other words, the premium money is much higher than term life insurance.
d. Dual Purpose Life Insurance
This life insurance offers two advantages. This is because there is a collaboration of benefits between term insurance and savings for children’s education and pension funds. What is profitable and different from term life insurance is the life benefit that the policyholder gets.
If the insured is still alive when the policy expires, then the sum insured will be given by the insurance company. The validity period for endowment life insurance varies widely, ranging from 10 years to a certain age, for example 60 years.
2. Loss Insurance ( General insurance)
General insurance is a type of insurance that will provide services to cover a risk of loss, loss of benefits, and legal liability to third parties from an uncertain event. This type of insurance is not permitted to do business outside of general insurance and reinsurance.
However, the thing that needs to be considered from this type of insurance is the compensation for this protection. The customer is required to pay the premium to the insurer based on the agreement in the policy. As for what is included in loss insurance, among others:
a. Fire insurance
Fire insurance covers fire, explosion, lightning, airplane crash, and others.
b. Freight Insurance
Insurance covers marine hull and marine cargo . Marine hull is insurance that provides protection against loss or damage or loss of the hull and its machinery and equipment. Meanwhile, marine cargo is insurance for cargo transportation at sea.
c. Miscellaneous Insurance
Insurance that is not included in fire and transportation insurance, such as motor vehicle insurance, theft, and so on. Some of these various insurance products include:
- Theft insurance that will cover compensation for assets registered in the policy when theft occurs.
- Accident insurance.
- Travel insurance.
- Property insurance.
- Earthquake insurance.
- Liability insurance.
- Construction insurance.
- Machinery and equipment insurance which is usually used for large-scale projects, construction and production plants.
In addition, the benefits of loss insurance are as follows:
- Can provide a sense of security
- Help complete credit requirements
- Reducing capital costs
- Helps business stability
Help determine the cost of business risks
3. Education Insurance
Education insurance is insurance whose existence is considered very important at this time. This is because people think that education insurance is smart insurance that can guarantee better education.
There are two types of education insurance offered, namely endowment insurance and unit linked insurance. Endowment insurance, is a product of a combination of life protection combined with market instruments such as deposits.
This type of insurance will protect children’s education costs if a parent suddenly dies or becomes totally disabled so that they are no longer able to make a living. In addition, the endowment insurance product does not apply an investment system, so the profit for education funds obtained is clear.
Unit linked education insurance is a combination of life insurance and investment. Profits from the investment component are divided according to the child’s education level. The difference with unit linked insurance lies in the profit process. If you buy a unit link, usually the investment profit will be taken together with the disbursement of the sum insured. However, in unit linked education insurance, investment profits are taken according to the time to pay for education costs.
4. Health Insurance
This type of insurance is quite popular among the public. This is because health insurance is insurance that provides coverage for health problems caused by illness.
This health insurance company will provide care services to its insurance members which include: protecting and covering members who are sick, disabled, injured, and other things caused by illness or accidents.
To choose the type of policy to take, you should adjust your financial capabilities. For example, if you want to buy a health insurance product, you may choose a health insurance product that covers only inpatient care or only outpatient care.
Types of health insurance, namely:
- Term insurance
- Savings insurance
- Lifetime insurance
- Annuity contract insurance
5. Vehicle Insurance
Many people who have luxury vehicles or cars include their personal vehicles with vehicle insurance. Vehicle insurance is a type of insurance that provides insurance services for vehicles that experience damage, loss, and so on.
The benefit of buying a vehicle insurance premium is that it provides protection and a sense of financial peace if we are faced with the risk of vehicle damage. In addition, having vehicle insurance also makes the selling price of your car more competitive.
There are basic coverage conditions that can be guaranteed by insurance, including:
- Vehicle damage
- Liability, which consists of third party legal liability and passenger legal liability
The amount of the car insurance premium calculation is determined by the insurance company by taking into account the condition of your vehicle, including:
- Vehicle physical condition
- Vehicle type Vehicle age
- Location of use
- Functions and uses
- Experience of loss events that have been experienced
- Type of coverage
Apart from guaranteeing the main risks, motor vehicle insurance can also be expanded with additional guarantees, namely:
- Losses due to riots and riots
- Terrorist activities, and floods
- Personal accident of driver and passenger
- Legal responsibility (TJH) for third party losses
There are several risks that cannot be covered by vehicle insurance, including:
- Intentional act of the insured
- Violating traffic signs
- Conduct races, carnivals, campaigns and acts of crime
- Driven by someone who does not have a driver’s license (SIM) towing another vehicle
- Driven by someone who is under the influence of alcohol or drugs
- Driven by force even if the vehicle is damaged or not roadworthy
- This insurance also does not cover loss and damage to additional equipment that is not stated in the policy such as keys, vehicle registration certificate (STNK), and motorized vehicle owner’s book (BPKB).
- Theft of non-standard equipment
- Damage or loss due to embezzlement
- Overload
- Entering or passing through closed or forbidden roads
- Nuclear radiation, radioactive contamination, nuclear reactions
- Riot strikes or disturbance of public order
- Property loaded or unloaded
6. Business Insurance
Business insurance is an insurance service that guarantees the insured party with business activities. This type of service includes damage, loss and loss in a large enough amount, but according to the insurance company policy that has been agreed upon.
Business insurance is generally owned by companies such as manufacturing, service, trade, and so on, which carry risks in their business activities. Business insurance provides protection in the form of protection for life, health, accidents, and critical illness.
7. Old Age Insurance
Someone will usually prepare for their old age with insurance. Old age insurance is an insurance product that offers protection and guarantees to policyholders when they reach retirement age. In this case, retirement age is when you are no longer productive and can no longer make money.
By buying an old age insurance policy early on, it will help you prepare a retirement fund for old age. This insurance is very useful for those of you who do not get a pension from work. Old age insurance provides more benefits than regular savings. You can plan for retirement with old age insurance. For the amount of premium, you can also choose according to your financial capabilities.
8. Property Insurance
This type of insurance generally provides a service to protect homeowners from risks such as personal property, damage to the residence such as fire, and damage to personal belongings.
In addition, this insurance service includes protecting and providing relief if one day an accident occurs at the insured house or item such as a fire and so on.
The benefits of having property insurance are:
- Compensation for damages
- Compensation for loss
- Expansion benefits
Thus the discussion about the meaning of insurance to various types of insurance. So, has Sinaumed’s decided what type of insurance it will be?
To get more information about insurance, Sinaumed’s can read books available at sinaumedia.com .