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Understand the Definition of Insurance, Benefits, and Types



My friends, it is necessary for you to understand the meaning of insurance, its benefits, and its types. Because, for some people, insurance is still underestimated and reluctant to join. Though the benefits are very large for the next life.

Moreover, the cost of living is increasing every year. Whether it's from hospital costs, education, and so forth. However, with insurance the burden can be reduced. This is because its function is to protect against all  risks  that could occur.

Definition of Insurance

Definition of Insurance

Insurance is a form of agreement between the insured and the insurer. The insured will have to pay dues to the insurer. The goal is to obtain compensation for financial risks that may occur.

The insurer is an insurance company. Meanwhile, the insured is the customer or the owner of the insurance. There are 3 main elements in it, namely  policies , premiums, and  insurance claims  .

The policy is a document that states the agreement between the two parties. The contents are in the form of benefits, premium amount, risks, and so on. Meanwhile, premiums are contributions that customers have to pay within the agreed period.

A claim is a formal submission to an insurance company when a risk occurs. The terms of any risk that can be covered have been written in the policy. So, if a disaster is included in the agreement, then you can rely on insurance to lighten the burden.

Insurance Benefits

Insurance Benefits

You need to know what insurance benefits are in general. That way, you will know more about how beneficial this is for yourself.

1. As a Savings and Investment

If you register as an insurance customer, at the end of the contract you will get a guaranteed return on investment. In addition, it also offers flexibility or leeway in choosing the coverage period.

In general, the options are around 5, 7, to 10 years. The amount of the premium also includes a single premium. Where the nominal is relatively affordable and the opportunity to get free administration fees.

2. Giving Calm

Insurance offers protection against risks that occur in the future. This can bring a sense of calm, because you don't have to worry anymore if something unexpected happens. Although the handling of losses is based on the type of insurance you choose. However, it can at least bear part of the burden of deferred costs.

3. Helps Manage Finances Better

Regular premium payments have indirectly taught how to manage finances. The trick is to set aside a portion of the existing income. People who are not able to  save  will certainly feel this way. Because spending money is not just for something temporary. However, also as a support for future life.

4. Minimize Losses

By having insurance, you can minimize the cost of losses if you experience an unexpected event. So, the need will still be met in a stable manner. Because, some of the costs have been borne by the insurance company to compensate for the losses you have experienced. If there is no insurance, you may be confused about where to get dependents.

Types of Insurance

Types of Insurance

Insurance is divided into various types. So, you can choose which insurance to join according to your needs. Here is the full explanation.

1. Health Insurance

This type is insurance that deals with health-related problems. For example, treatment, care, operating costs,  hospitalization costs , and so on. Therefore, you must know in detail about this insurance. The reason is, health insurance is further divided into various types which also affect the facilities obtained:

a. Outpatient

This type of health insurance deals with problems related to outpatient care. For example, lab checks, medical diagnoses, and others that don't require an overnight stay.

b. Inpatient

This insurance is beneficial in the cost of care during hospitalization. With this, you will get maximum care and supervision from doctors and the medical team. In addition, it is also useful regarding matters involving surgical operations. In general, the process will take a long time and the bill will add up to hospitalization.

c. Group

This insurance handles or provides group protection. For example, health insurance for one family. So, everyone from the family will get the same facilities.

d. Personal

This type is inversely related to group insurance. In a sense, only dealing with individuals or individuals. So, the insurance that is owned cannot facilitate other people.

e. Private

Usually, the manager of this insurance is a private entity. In private insurance, you have to pay the premium in full. The amount also depends on the service you get.

f. Government

This government health insurance is better known as BPJS (Health Social Security Administering Body). This insurance is managed by the government and includes the principle of mutual cooperation.

So, only certain people are entitled to it. The goal is to help people with middle to lower economies. The facilities also have limitations compared to private insurance.

2. Life Insurance

That is an insurance that handles the risk of death. You can buy this insurance for yourself or someone else. Life insurance also has several types as follows.

a. Term Life Insurance

As the name implies, this insurance only provides protection for a certain period. Usually, the time ranges from 5, 10, to 20 years with a fixed premium and relatively cheap. That way, this insurance is suitable for those of you who have a limited budget .

The benefit of this type is that you can determine the value of the premium to be paid yourself. In addition, the premium you have paid will not be forfeited even if there is no claim at all. Then, once the contract is completed, the money will be returned in full.

b. Whole Life Insurance

This type of insurance provides lifelong protection, although in general it is only limited to 100 years. This insurance is suitable for those of you who do not have dependents. In addition, they also want to obtain other benefits not only for death compensation. Because this insurance can be used as long-term savings. At the same time to support emergency needs, such as paying hospital fees and so on.

c. Endowment Insurance (Dwiguna Life Insurance)

This insurance has two functions at once, namely as  term life insurance and savings . So, you can withdraw the premium collection money before the contract period ends.

d. Unit Link

This type is a combination of insurance and investment benefits  . There are several additional insurances offered, such as  income replacement , health, and others.

3. Education Insurance

That is an insurance that provides protection against the future education costs of children. This insurance is a combination of investment and term life insurance products. So, it is not only the cost of children's education that is guaranteed. However, parents also get life protection as education insurance holders. You also need to know the types of this insurance. Among others are:

a. dual use

The benefits of this insurance are not only focused on children's education, but also for savings. Therefore, you can take the premium money that has been collected within a certain period of time.

Thus, a discussion of the meaning of insurance, its benefits, and its types. After reading this information, it is hoped that you will be able to understand more about insurance and realize how important insurance is for life. So, let's register yourself for the insurance program right now! 

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