insurance benefits, Health insurance, Life insurance, Old-age insurance, insurance quote, insurance quotes, cheap life insurance, low cost life insurance, Educational insurance, Property insurance, Travel insurance, auto insurance,3 Main elements of insurance, as well as their functions and types

3 Main elements of insurance, as well as their functions and types

The three main elements of insurance, as well as their functions and types | Insurance is a contract between two parties, the insurance company and the insured, which allows the insurance company to collect premiums in exchange for covering the risk.

In addition, insurance companies also provide payments based on the death of the insured.

Elements of insurance

1. The insurance premi

The insurance premi is a monetary amount determined by the insurance company with the consent of the policyholder or customer to be paid periodically.

This bonus money forms the basis of the benefits that the insured person must receive. In insurance, premiums are paid periodically, e.g., monthly, semi-annually, or annually.

2. Insurance policies

An insurance policy is a contract between the insurance company and the person who bought it.

This legal document clearly regulates the value of the benefits, the amount of the contribution, the risks involved, and the exceptions.

You need to know that insurance policies are legal and protected under the law. So, if one party is found to be breaking the written rules, the other party has the right to stop working together and even go to court.

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3. Insurance Claims

An insurance claim is the formal process of paying out money to customers who have been hurt by risks covered by their insurance policies.

If the claim is in line with the policy, the insurance company has to pay for the costs of insurance.

The insured has the right to submit a claim for the risk incurred to the insurance company. The policy status is still active with the note.

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General insurance function

insurance benefits, Health insurance, Life insurance, Old-age insurance, insurance quote, insurance quotes, cheap life insurance, low cost life insurance, Educational insurance, Property insurance, Travel insurance, auto insurance,General insurance function

The function of insurance, in its understanding, is the protection provided by the insurance company to its clients against all risks included in the policy.

Overall, the main purpose of insurance is to protect you from all possible risks in the future. However, looking specifically at insurance itself, many functions are obtained. Here are some of the insurance features for their clients:

1. The function of insurance as a risk reversal

One of the many functions of insurance is risk transfer. However, transferring the risk here does not mean eliminating the possibility of loss for the client.

But insurance gives the person who bought it peace of mind when bad things happen. This means that the client does not take the full loss of the risk and it is partially transferred to the insurance company.

2. The function of insurance as a means of raising funds

The role and function of insurance is not only the transfer of risk, but it can also be one of the investment vehicles. Then, insurance companies will use the money they get from customer premiums to invest in better ways.

With an insurance policy, you will get a guaranteed return on your investment at the end of the contract period. Since you will get the profit at the end of the contract, it works the same way as saving or investing.

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3. Insurance performs the function of protecting assets.

Insurance also helps protect assets so that they can be lost less when something unexpected happens.

Insurance can protect you from things like fire, illness, accidents, and other types of loss.

Well, the return of this insurance covers the payment obligations for the event at least partially or in full.

4. The Function of Regulatory and Financial Insurance

One of the policyholders’ obligations is to pay premiums regularly. This condition forces you, in a roundabout way, to save some of your money for your own safety or for your property.

So you can benefit from paying that premium later when you are at risk.

For example, you don’t have to pay the full cost of treatment at a clinic or hospital because your insurance company covers it.

5. The role of insurance in improving the country’s economy

Overall, insurance plays a role and functions in improving a country’s economy.

How did this happen? Because of the existence of insurance, customers or stakeholders are more focused on development and less worried about unfavorable risks.

Also, when insurance companies collect a lot of premiums, the money automatically flows smoothly between investment sectors, which is good for the whole community.

6. Insurance is an export product.

Insurance is not only for self-defense but also for indirect export. This is because insurance can protect products that are sold outside of the country.

For example, shipping goods overseas that are insured during the shipping process.

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Its function can be seen from the types of insurance.

After understanding the function of insurance and its related components, the next thing to know is the types of insurance.

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When talking about the function of insurance by type, it is also important to understand whether the risk of coverage varies by type. Well, here are the types of insurance that are commonly owned by the public.

1. Health insurance

Health insurance is provided by the health insurance policyholder. This insurance generally covers the costs of outpatient treatment, hospitalization, and surgery, up to a daily allowance.

2. Life insurance

The function of life insurance is to provide protection for the family in the event of the death of the policyholder. This protection is intended to ensure the financial security of the mourning family.

3. Insurance for the elderly

Old age insurance covers customers or policyholders who retire, experience a permanent disability, or die through cash insurance.

4. Educational insurance

Education Insurance will pay for your child’s education if the policyholder dies, is permanently disabled or can no longer work.

5. Automobile insurance

Motor insurance covers loss or damage to a motorcycle or car.

In addition, vehicle insurance also provides legal liability to third parties who are aggrieved by this risk.

6. Property insurance is a must.

Property insurance provides protection for property such as houses, apartments, and office buildings.

This protection is designed to anticipate losses due to the risks to property assets.

7. Travel insurance

The function of travel insurance or travel insurance is to protect policyholders while traveling.

This protection is very suitable for those of you who often travel far, whether on business trips or on vacation.

8. Business insurance

Business insurance covers losses incurred by the company as agreed.

The function of business insurance is to minimize the risk of loss due to fraud or business activity.