lazy to read – Find out how insurance works, ranging from life, health, car insurance, to unit link and sharia insurance. Learn how to choose the right insurance for beginners.
Insurance is an important instrument in financial life that is often underestimated. In fact, having insurance can be a smart step to protect yourself from unexpected risks. For beginners who are just starting to be interested in insurance, understanding how insurance works is the first thing to do.
In this article, we will discuss various types of insurance, how insurance works in general, and what to consider before choosing the right insurance product.
Daftar Isi:
What is insurance and how does it work?
Simply put, insurance is an agreement in which one party (the insurer) promises to provide compensation for financial losses suffered by another party (the insured) due to an unexpected event. For example, fire, accident, or death. Policyholders will pay insurance premiums regularly as a form of protection against possible risks.
Insurance works on the principle of joint venture. Many people pay the premium simultaneously, and the funds will be used to provide benefits to people who are affected by the disaster. Thus, the financial risk borne by one individual can be shared by many people, making it lighter.
Prinsip Dasar Cara Kerja Asuransi
Basically, the way insurance works involves three main components:
- Insurance premium
Premium is the amount of money paid by the policyholder on a regular basis, usually every month or year. The amount of the premium is determined based on the type of insurance, the age of the policyholder, and the level of risk faced. - Insurance Policy
The policy is a contract that regulates the rights and obligations of both parties, namely the insurance company and the policyholder. This policy includes details such as the benefits provided, the premium to be paid, as well as the terms of the claim. - Insurance claim
Claims are a process carried out to get benefits from insurance when an accident occurs. For example, if the house is on fire or someone is sick and requires medical expenses.
types of insurance and how it works
Insurance can be divided into various types according to the purpose and benefits. Here are some common types of insurance and how it works.
1. How Life Insurance Works
Life insurance provides financial protection for families or heirs if the policyholder dies. This insurance aims to replace the loss of income due to the death of the breadwinner in the family. There are two main types of life insurance:
- Term Life Insurance: Provide protection within a certain period of time. If the policyholder dies during the policy period, the heirs will benefit.
- life insurance (whole life): Provides lifelong protection and often includes investment components.
2. How Health Insurance Works
Health insurance aims to help with medical expenses, such as hospital, doctor, or medicine costs. The policyholder pays a monthly premium and can claim medical costs that have been incurred in accordance with the provisions in the policy.
Several types of health insurance include:
- Traditional Health Insurance: bear medical costs directly based on the type of treatment.
- Health insurance with inpatient facilities: Provide benefits for hospitalization in hospital.
3. How Car Insurance Works
Car insurance provides protection against damage or loss of a car due to an accident, theft, or natural disaster. The policyholder pays the premium, and in the event of damage or loss, the insurance company will provide compensation in accordance with the provisions stated in the policy.
4. How Unit Link Insurance Works
Unit link insurance is a product that combines insurance protection with investment. Some of the premium paid will be allocated for investment, while the rest is used for insurance protection. The advantage of this investment can be used to increase protection benefits.
5. How Sharia Insurance Works
Sharia insurance works on the principle of mutual assistance, where insurance participants contribute to each other to help fellow participants who experience a disaster. All transactions in sharia insurance must be in accordance with Islamic law and do not contain elements of usury or gharar (unclearness).
advantages and disadvantages of life insurance
Like other financial instruments, life insurance also has advantages and disadvantages. Some of the advantages that can be obtained include:
- Provide financial protection for families or heirs.
- Provides a sense of security and calm for policyholders.
- Can be an investment instrument with unit link life insurance products.
However, life insurance also has some drawbacks, such as a fairly expensive premium and limitations on certain types of policies that are not in accordance with needs.
What to consider before choosing insurance?
For beginners, choosing the right insurance can be a challenge. Here are some tips that can help you in choosing the right insurance product:
1. Determine the purpose of protection
Understand what your main goal is to buy insurance, whether for life, health, or vehicle protection. Make sure the product you choose is in accordance with these needs.
2. Compare Insurance Policy
Before choosing, compare various insurance products from several companies to find out the benefits, premiums, and requirements.
3. Choose a Trusted Insurance Company
Make sure the insurance company you choose has a good reputation and is financially stable.
4. Consider family needs
If you buy life insurance, make sure the benefits provided are sufficient to meet your family’s needs if something happens to you.
how to claim life insurance
To claim life insurance, make sure you have the necessary documents, such as a death certificate, proof of premium payment, and other documents requested by the insurance company. The claim process usually takes time for verification and evaluation by the insurance company.