Insurance is an agreement that occurs between customers and insurance companies. The contents of the agreement are that the insurance company is willing to bear a number of money losses due to a matter in the future after the customer agrees to pay money (premium). Insurance has several types and each of them has an insurance goal in general the same. These types of insurance include life insurance, accident insurance, loss insurance, and fire insurance.
Premiums or money paid by customers are usually much smaller when compared to natural losses that will be experienced by customers if certain events actually occur. Many insurers require customers to pay premiums once a month, but there are also insurance companies that accept varied premium payments. The amount of premium deposited also varies depending on the type of insurance and insurance company. But usually the size of the premium to be paid is calculated on the basis of a premium rate multiplied by the sum insured.
The following are the functions and goals of insurance that might increase your knowledge of insurance and further strengthen your intention to insure.
The following are the main functions of insurance:
This risk transfer means that the risk will be transferred to the insurance company as the guarantor. So the amount of uncertainty of losses suffered by customers due to an unexpected event will be replaced by the insurance in the form of compensation or compensation claims because the customer has paid the premium.
Funds sourced from customers will be collected and then by the insurance company the funds will be managed in such a way as to develop. The results of managing money from customers will be used to pay compensation if the customer experiences unexpected and adverse events.
The insurance company will arrange for premium payments to be balanced with the risks that will be borne by the insurance. Thus both parties will not feel disadvantaged by the agreement. In addition to life insurance, the premium amount will be determined based on the premium rate multiplied by the desired sum insured. For life insurance, usually the amount of premium is usually in accordance with the agreement or determination of the insurance company.
As for additional functions, it is a means for saving investment funds, preventing losses and minimizing losses. In addition, insurance is also useful to stimulate economic growth so that business will increase.
Insurance has several objectives, among others, namely as a provider of guarantees to customers to be protected from the risks that will be suffered if an unexpected event occurs. Insurance can also increase efficiency on a matter, customers do not need to make various security and supervision efforts because it will spend a lot of time and energy.
The purpose of insurance is equal distribution of costs, meaning that customers will only pay certain costs and do not have to pay for the losses suffered because the insurance company will bear it. This is certainly very beneficial for customers because the amount of losses suffered is not certain.
Life insurance has a very noble insurance goal, which is as a customer's savings. This is because the amount to be received will certainly be far greater than the amount of premium paid. But unfortunately this goal only applies to life insurance.