Definition of Insurance, Elements, and Kinds

Definition of Insurance, Elements, and Kinds

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During the Covid-19 pandemic, insurance is increasingly in demand, especially health insurance . The goal is that when you fall sick, a person does not have to incur large costs because it has been borne by the insurance company .

But the question is, what is insurance, its elements and types?

Quoting Ruang Guru , Tuesday (21/9/2021) insurance is a two-party agreement between an insurance company and a customer. In the insurance sector, the customer is called the policyholder.

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In the insurance agreement, it usually contains a provision that the insurance company accepts insurance premiums to provide reimbursement to the policyholder due to loss, damage, illness, or loss.

Elements of insurance

Definition of Insurance, Elements, and Kinds
In insurance, there are three elements that serve as the main guidelines for the mechanism of reducing the insured’s risk, namely premiums, insurance policies, and claims

1. Premiums
Premiums are obligations that must be paid by the insured, which is included in the insurance to the insurance company. The obligation to pay this premium is a form of desired risk transfer service.

Usually premiums are paid within a certain period, such as per month, per year and so on.

2. Insurance
policy Meanwhile, an insurance policy is a contract or agreement issued by the insurance company to the insured.

Usually the insurance policy contains all the provisions that guarantee any losses borne by the insurance, until the insured data is clear.

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3. Claim
Claim is the process of submitting a request for compensation for the loss suffered.

For example, when a car accident occurs, the damage is covered 100 percent, including replacement of the engine, car body, and others.

How to get a replacement, namely by claiming because so far the insured has registered the car with insurance.

It is also necessary to see before a claim, whether the accident or risk is insured and listed in the policy or not.

This is because many insured parties do not read their insurance policies, when there is a loss they go to the insurance company and ask for a claim. However, his claim was rejected because it was not covered in the policy.

Types of insurance

1. Health
insurance Health insurance is insurance that covers the cost of health or care for insurance members if they are sick or have an accident. Usually, a child participates in health insurance owned by his father or mother.

2. Life insurance
Life insurance provides protection in the event of a risk of death to the policyholder.

For example, providing long-term protection to the heirs of the policyholder if they have died.

3. Education insurance Education
insurance is broadly defined as future savings that guarantee the education of the children of the policy holder or their parents.

Usually, insurance premiums are paid from the time the child is born until the grace period specified in the agreement.

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4. General insurance General
insurance is a form of risk coverage that provides compensation to policyholders for losses suffered.

An example of this general insurance is motor vehicle insurance. There is insurance that covers vehicle damage up to a few percent.

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