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The Benefits and Importance of Insurance

Insurance is an agreement between the Insured (the party whose life is insured) and the Insurer (usually the insurance company). The Insured Party is required to pay the insurance premium per month or year, meanwhile, the Insurer will pay the Sum Assured when the risk is borne occurs.

General insurance benefits

In general, all insurance products and types have the following three benefits.

 1. Risk transfer tool

Insurance can transfer the financial risk you have. With insurance, you can transfer the burden of existing financial risks. For example, with health insurance, you don't have to pay all or part of the hospital bill if you fall sick. The risk is transferred or borne by the insurance company.

2. Minimize losses

Because some or all of the risk has been transferred to the insurance company, you can minimize the losses.

You don't need to go into debt to cover financial risks or reach into savings that you have saved for other purposes, or even take from an emergency fund that you already have. You can use that money for other things, such as saving or investing.

3. Provide security for the future

With insurance, at least your finances will be more stable. In addition, if you already know that the risks in life can be transferred, you will feel more confident financially. It can also make you feel braver to invest or start a business.

So that's 3 insurance benefits in general and personally for you. However, there are also some benefits of other insurance functions.

Insurance benefits by type.

Here are the 7 most common types of insurance along with an explanation of their benefits.

1. Life insurance

As one of the most basic insurances, life insurance has the benefit of protecting your life from the risk of death. Many people also use this type of insurance as an inheritance to their children or wives when they die.

This type of insurance is very important, especially for those who are the sole breadwinner of the family.

2. Health insurance

If you have ever been sick, then maybe you will understand how useful this type of insurance is. The cost of medical bills that continue to soar can be covered if you have health insurance.

It is true, the benefits of health insurance are in the form of coverage for hospital health costs. Depending on the selected insurance product, the costs covered may vary. Some cover outpatient, inpatient, or ICU care. The nominal is also different, depending on the policy you choose. Therefore, make sure the health insurance you choose is the one that suits your needs.

3. Critical illness insurance

Similar to health insurance, critical illness insurance can also cover all or part of the hospital bill for certain diseases. Critical illness insurance is useful for the risk of 3 diseases that cause death, namely heart attack, stroke, and cancer.

Critical illness insurance benefits can be in the form of medical expenses or can be in the form of insurance money given immediately after being diagnosed with the disease.

4. Personal accident insurance

Personal accident insurance protects you from the risk of an accident happening. Usually, accident insurance benefits can be in the form of medical costs for accidents (such as fractures or surgery), and the sum insured in the event of a risk of death or Total and Permanent Disability caused by the accident.

5. Vehicle insurance

Vehicle insurance can compensate for damage to the vehicle you have in the event of risk (whether an accident, burglary, or other). This product can be purchased separately or together with the vehicle you have.

6. Travel insurance

Travel insurance can provide various types of compensation that occur while you are traveling. Depending on the type of product, here are some travel insurance benefits:

  1. Travel delays (delays);
  2. Loss or damage to baggage;
  3. Cost of treatment; or
  4. Accident risk.

Usually, travel insurance can be purchased together with the purchase of tickets (either plane, ships, or trains).

7. Education insurance

The last type of insurance, education insurance can be useful for those of you who have children who are going to school. Education insurance can provide insurance benefits in the form of guarantees for education costs up to the college level. However, of course, this all depends again on the education insurance product chosen.

In addition, education insurance also helps parents prepare for the inflation of education costs per year. Usually, education insurance also takes into account the increase in the cost of education.

When will the insurance benefits be felt?

You can feel the benefits of insurance when you experience the risks that are insured according to the insurance policy. If this happens, you can file a claim to receive insurance benefits.

However, your claim may be rejected. This can happen if the risk that occurs is included in the exclusion clause in your insurance policy. Therefore, after purchasing insurance, make sure you check the insurance policy that you have carefully!