Currently, many insurance products in Indonesia offer a variety of products. The main purpose of insurance is protection, which is to protect your health, life, family, and vehicle. Choosing the right insurance is very important, to prepare for a better future. Therefore, in this discussion, we will discuss tips on choosing the right insurance and how to claim, and others related to the insurance guide.
Insurance has various types of products with their respective benefits for you. One of the many insurance products that are sought after and taken is health insurance. Buying a health insurance policy should be done while young. Why? One of the reasons why someone should have insurance while young is because the rate cost is relatively cheaper. You also need to understand the insurance guide about several factors that can affect the price of health insurance rate, including the age of the insured, medical history, smoking habits, and insurance features.
People with an age range of 20 or 30 years tend to have better health than those in the older age group. The low risk of disease makes the cost of insurance rate also cheaper. Furthermore, the disease history can be seen from the results of medical check-ups and the condition of the parent's medical history. If you have frequent treatment or have a hereditary disease, you will tend to get a higher insurance rate. Another thing that also needs to be considered is lifestyle such as smoking habits. Active smokers tend to be more at risk of developing diseases, such as lung disease that require large medical costs. So the insurance rate to be paid will be more expensive.
The last factor is the health insurance feature. In the insurance guide, the longer the term of the insurance contract, the rate to be paid are also more expensive, and the greater the cost of coverage guaranteed in the insurance policy, the rate to be paid will also be more expensive.
Then what if we already have health insurance from the office? Keep in mind that health insurance from the office is only obtained during work, if you stop working or retire, later you will still have to buy personal health insurance. Unfortunately buying a health insurance policy in old age will be relatively more expensive. For that, it would be better if you prepare health insurance while young and healthy.
What Is Insurance?
Before knowing the insurance guide further, you need to know what insurance is about. Insurance is an agreement between two or more people in which the insured party pays contributions or insurance rates to obtain compensation for the risk of loss, damage, or loss, which may occur due to unforeseen events.
Insurance cannot eliminate the risk of unexpected events, but insurance can reduce the impact of losses arising from these events, both on a small or large scale. Now insurance has become part of financial planning for some people for the long term.
Terms In Insurance That You Need to Know
The basic insurance guide that you need to know before choosing the right insurance product for you is that you need to know some terms that are often used in insurance. Knowing the important terms used in insurance will help you in finding the right insurance product according to your needs. Below, are some important terms that are often used in insurance.
- Insurance policy
The first term in the insurance guide is Insurance Policy. Insurance policy is a term to refer to a cooperation agreement contract that is written between the Insurance Provider Company (Insurance Insurer) and the customer of the Policy Holder. Whether it is Life Insurance, Loss Insurance to Health Insurance, All insurance contract are referred to as Insurance Policies.
The content of the cooperation agreement contained in the Insurance is an agreement that the Insurance Provider is willing to bear the risks owned by the Insured whose name is listed in the policy, within a certain time according to the agreement. To get insurance protection from the insurance provider, the policyholder is required to pay an agreed rate fee.
The Insurance Policy also contains the General Policy Terms, details of the rights and obligations of the Insurance Provider, Policy Holder, the range of Insurance Benefits provided, articles that mention protection exceptions, and articles that mention things that can cancel the Policy. In addition, the Insurance Policy is usually attached with a sheet of Coverage, Special Provisions, as well as a copy of the Insurance Application Letter (Claim Letter).
An insurance Policy includes important documents that have legal force. Therefore, you must store it in a special place that you can easily access when needed, for example when you want to claim insurance.
- Insurance rate
To get insurance protection, the policyholder is required to pay a rate to the insurance insurer. The insurance Rate is defined as the amount of payment determined as the cost of transferring risk from the Policy Holder to the Insurance Provider. The amount of the Rate is determined by the Insurance Provider and agreed upon by the Policy Holder. The size of the rate will be determined by many factors. Among other things, the coverage of protection provided by the Insurance Provider, the age of the Insured, the Insured's lifestyle or medical record, gender, to the Insured's occupation.
The more complete and broad the coverage of insurance, the rates are usually more expensive. Likewise, if the Insured is considered to have a high risk, the rate is automatically more expensive. Policyholders are usually given the choice of the rate payment period, Monthly Rate, Quarterly Rate, Semester, or Annual Rate Payment.
- Insured
The term "Insured" in the insurance guide of an Insurance Policy refers to the person or party who obtains indemnity coverage from the Insurance Provider when the risk referred to in the Policy occurs. In a Life Insurance Policy, the Insured is the head of the family or a family member who has economic value. In Health Insurance, the Insured can be anyone such as employees, children, wives, parents, and so on.
Thus, when there is a risk covered in the Policy, the Insured will get compensation. For example, when the head of the family who is Insured in the Life Insurance Policy dies, the Life Insurance Sum Assured will be given by the Insurance provider to the benefit recipients who has been stated in the policy.
The Insured is not the same as the Policy Holder. An Insured is not necessarily a Policy Holder. For example, as the head of the family, you buy health insurance, then you are called a policyholder and the insured. The children and wives you insure are also referred to as the Insured.
- Claim
Insurance guide on the next important term that is often used, is Claim. The claim is a claim submitted by the Policy Holder to the Insurance company as the Insurance Insurer to fulfill the Policy Holder's rights as stated in the Policy. An easy example is if you have Health Insurance that covers typhus disease benefits. When one day you fall sick and have to be hospitalized because of typhus, then you can submit a benefits claim to the Insurance Provider. The Insurer will pay financial compensation in the form of hospitalization costs and other costs according to the definition of benefits stated in the Insurance Policy.
Insurance providers usually limit the period of insurance claims. For Health Insurance, for example, the Insurer gives a maximum claim time of 30 days after the Insured carries out the treatment.
- Acquisition Cost
This term refers to the fees that must be paid by the Policy Holder to obtain services as an Insurance customer. In addition to "acquisition costs", the same costs are usually referred to as policy issuance costs. The cost of issuing a policy includes the cost of paying the insurance agent fee and the operational costs of the insurance company.
- Lapse
The Policy Holder is required to pay a certain amount of Rate to the Insurance Provider according to the agreement in the Policy so that the Insurance Benefits can still be obtained during the contract. Now, if the Policy Holder does not pay the required Rate beyond the Grace Period (generally 45 days), then the Insurance Policy owned will automatically be canceled or lapse. Avoid policy cancellations by ensuring rate payments are on time according to the payment term you have chosen.
Lapse makes insurance protection impossible for you to get. When a risk occurs when the Insurance is in lapse status, the Insurance Provider is no longer obliged to bear the loss.
- Additional Insurance (Rider)
This is a term to describe the Additional Benefits that you can add to the Basic Insurance program. Riders usually have cheaper rates because they are complementary to the main insurance. For example, Life Insurance products are generally equipped with riders in the form of Health Insurance, Critical Illness Insurance, or waiver of premium.
You need to remember, in the insurance guide, the more riders you take, the wider the Insurance Benefits you enjoy. That brings consequences to the more expensive Rate Fees you have to pay.
Types of Insurance
After knowing the meaning and terms in the insurance guide, then you will be informed about the types of insurance that are commonly offered. Here are some types - types of insurance.
- Health Insurance
Health insurance protects health and treatment costs for the insured in the event of an accident or illness. This type of insurance is widely provided by the company or agency where a person works. Health insurance is a type of insurance that provides reimbursement for medical treatment costs due to illness or accident. The main benefits consist of inpatient and outpatient care. Then, there are also additional benefits in the form of treatment benefits for the birth process, eye care, and teeth.
- Life insurance
Life insurance covers the death of a person by providing financial benefits to the insured for his death. When the insured dies, the policyholder will receive the sum insured from the life insurance. Definition of life insurance is an insurance product that provides a sum assured to the heirs if the customer/insured dies. In addition to the risk of death, several life insurance products also provide coverage in the event of a risk of total permanent disability. But usually, the coverage is included in the rider (additional benefit), for which there is an additional rate for it.
- Education insurance
Education insurance can be said to save for the future to ensure the education of children from the policyholder (the insured). This insurance has become popular because of the increasing cost of education from year to year, so it is not uncommon for parents to now have education insurance. Education insurance is an insurance product that guarantees education funds for children if parents experience the risk of death or total permanent disability. In the insurance guide, the principle of this insurance is almost similar to life insurance but the funds are usually given in stages, namely according to the level of education of the child.
- Old Age Fund Insurance
Many old-age or pension fund insurance products are currently combined with life insurance products. In the insurance guide, the purpose of this insurance is to protect a person's financial adequacy when he is no longer productive. Simply put, this insurance helps us in collecting pension funds. When retirement comes, we can get a regular pension amount. In case of death, the insured's family can claim the sum insured.
- Insurance for small business
Insurance for small businesses is protection designed and developed specifically for the specific needs of Small and Medium Enterprises – or also known as SME (Small Medium Enterprise). The insurance guide for small businesses is specifically designed and developed to provide a variety of insurance coverage options that can be tailored to the specific needs of a business or business.
Many protection benefits at an affordable cost and can be adapted to the business risks faced in small industries can be selected. For example, insurance for retail businesses, food and beverages, offices, education, health services, and tourism.
- Homeowners Insurance
Homeowners' insurance provides a way to reduce this financial risk and ensures that no matter what happens to one's home, the policyholder will be able to pay for the damage or buy a new home without risking their finances.
The insurance guide for homeowners can also protect against other costs that the policyholder bears, such as if someone suffers a loss on their property.
- Car insurance
Car insurance is an insurance product that provides compensation in the event of damage/loss to the car due to an accident, either crashing or being hit. In addition, as stated in the insurance guide for car owners, this car owner also bears the risk of damage due to natural disasters such as floods or riots. With a note, there is an additional rate. Car insurance is generally divided into three types, namely all risk (comprehensive) car insurance, total loss only (TLO) insurance, and combined insurance (all risk and TLO).
- Motorcycle Insurance
Motorcycle insurance is an insurance product that provides compensation in the event of damage or loss of a motorcycle. However, slightly different from car insurance, most customers usually take only loss insurance products (TLO). Nevertheless, there are still all-risk motorcycle insurance products, although they are quite rare to choose from.
- Travel Insurance
Travel insurance is a type of insurance that covers the risks that occur when you travel for business or travel. The risk can be in the form of an accident, illness, or loss of goods.
- Money insurance
Money insurance is an insurance product that provides coverage for the risk of losing money (and sometimes in the form of securities). Both are lost during travel (shipping) and storage (in a safe or strong room). Policyholders can be individuals or business entities.
- Animal insurance
Animal insurance, as the name implies, provides insurance coverage for pets. The risks covered include accidents, theft, and third-party liability. Meanwhile, animals that can be insured are pets, such as dogs and cats.
- Marine insurance
Marine insurance or marine cargo is a type of insurance that covers risks associated with marine activities. As in the insurance guide, it is usually required when shipping logistics via ship. The insurance benefit is in the form of compensation for the risk of damage to the goods sent or even damage to the ship itself.
Insurance Benefits
The next insurance guide is about the function of insurance. In general, insurance has many functions that you can consider when choosing an insurance product. Below, are some of the insurance functions:
- Transfer risk
Insurance has a function as a risk diverter. If you are an insurance customer, then you have the right to transfer risk, so you can file a claim or get compensation if you are in a difficult condition or experience an adverse event. For example, when a family head dies, the family's financial condition is at risk of declining. If the head of the family has life insurance, then the family can receive insurance money that can be managed to meet the needs of life.
So, by having insurance, several risks that might befall you can be diverted to the guarantees in the insurance product. That is, losses that may arise due to something can be covered by the insurance you have.
- Insurance can be an investment
In addition to its function that can transfer risk, insurance can also be a means of investment. This is because the funds collected from customers will be developed by the insurance company. It is also because many insurances can be taken at a certain time because there has never been a claim at all before. As mentioned in the insurance guide, the funds developed by the insurance company can also save rate costs each month. So, in addition to feeling safe and comfortable because you feel protected, in the end, you can take the collected funds from the rate that is paid every month.
- Ensuring a balance between rate and protection
Another insurance function as in the insurance guide is to provide a balance between the rate paid and the protection that will be provided if the customer experiences an adverse event. This means that customers will be given compensation that is balanced or follows the rate you pay every month. All risks that occur will be calculated with the rate you pay. The liability of the insurance company will be different for each customer of course. This is because each customer also pays rates with different amounts according to their financial capabilities.
So, if you pay a lower rate, you cannot get the same coverage as customers who pay a higher rate every month. In addition, health conditions and age, or the condition and type of goods/property, also affect the price of insurance coverage rate.
- Insurance functions to protect bankruptcy risk
In the insurance guide, insurance is also available for business protection. That is, for you pioneering entrepreneurs (startup entrepreneurs), you can take insurance for this business.
In general, startup businesses will experience more ups and downs in running their business, and this is where the function of insurance will appear. This insurance can prevent the occurrence of bankruptcy for an entrepreneur, whether they are just starting their business or those who have been for a long time.
- Insurance can help improve the national economy
Insurance is also a contribution to the national economy. With improved economic growth, the standard of living of the people will also improve. In this case, insurance can create jobs through positions within the company. So that indirectly insurance can boost the country's economic growth.
That's an explanation of the insurance guide starting from what insurance means, terms in insurance, types of insurance, and insurance functions that you can understand so you can choose the right insurance according to your needs.
