We know that insurance is a form of financial protection against unexpected things, but how do you understand the concept of life insurance ? Many people follow the trend by buying a life insurance policy, but do not understand the concept behind it so that they are often confused when they need a financial burden when something unwanted happens. This confusion can also lead to difficulties when choosing the form of insurance needed, as well as the claim process when death occurs. Although consumers may be assisted by agents, personal understanding is also needed so as not to confuse and understand each step taken.
Basic Concepts of Life Insurance to be Understood
Buying a policy for the first time can be a challenge, especially if you don't understand the concept of insurance. If you are a prospective buyer who has never bought an insurance policy before, or is not aware of how insurance works, here are some general life insurance concepts that must be understood:
- In insurance, there are 6 main elements involved, namely the transfer of financial risk from the insured to the insurer (basic insurance function), the party burdened by the risk (the insured), the party who takes over financial risk when death occurs (insurer, aka insurance company), the money the insured must pay regularly according to the agreement (premium), and the money paid by the insurance company to the insured when death occurs (insurance money).
- Policyholders and insured cannot be equated, even though the insured and the policy holder can be the same person. This is because, in insurance, the person holding the policy does not necessarily insure himself. For example, when a father insures his child, the child is called the insured, while the father is called the policy holder. These two things must be stated in detail and specifically.
- Policyholders are parties who make transactions and agreements with the insurer. The insured is the insured party in the policy. This means that policyholders are also responsible for paying insurance premiums according to the agreement stated, unless the policy holder and the insured are the same person.
- The concept of life insurance bears financial losses resulting from the death or old age of the insured. However, the details of this service will depend on the policy package offered by the insurance company. For example, at present, life insurance provides insurance money for financial losses resulting from an accident or serious illness or disability that befell the insured.
- If the policy holder and the insured are different people, the policy holder can be replaced if necessary. However, the insured cannot be replaced, because the risk borne by the insurance company is the insured. In this case, protection can only be modified or deleted according to the agreed written conditions.
- What about Islamic life insurance? The concept of Islamic life insurance is basically the same as ordinary life insurance, although it has differences in the system. Sharia life insurance is now also in great demand by the general public, so there are no significant differences in basic concepts and quite understandable. Islamic insurance also follows the laws and legal basis of insurance in Indonesia, so the above concept applies.
In conclusion, life insurance is a service and system that has features in terms of financial risk transfer, so there must be a detailed explanation in the concept. If you are buying a life insurance policy for the first time, make sure you know the important details in the concept of life insurance , so you do not experience confusion or confusion when trying to understand the system.
