What is Insurance

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• Here are the advantages of having insurance:
• # Insurance Function

What is Insurance

 

Insurance is a contract between the policyholder, who pays the premium, and the insurance company, which provides full insurance to the person paying the premium in the event of an accident. Insurance is important in case something happens. Insurance is in the Insurance Act (UU) No. 40 of 2014.

 

Based on the Big Indonesian Dictionary (KBBI), insurance is an insurance or agreement between two parties in which one party is obliged to pay contributions and the other party is obliged to provide full guarantees to the contributors if something happens to the first party or his property in accordance with the agreement. made.

 

The definition of insurance based on the Commercial Code (KUHD), "Insurance or coverage is an agreement, where an insurer binds himself to an insured, by receiving a premium to compensate him for a loss, damage, or loss of expected profit, which may occur due to or unspecified events.”

 

The insured object is goods and services, body and soul, human health, obligations and other interests that can be lost, damaged, lost or harmed. The main purpose of insurance is to protect your finances from being affected in the event of a risk of loss.

 

Here are the advantages of having insurance:

• Indemnify the insured or the policyholder for possible losses, damages, costs, lost profits or liabilities to third parties as a result of the occurrence of uncertain events; .

• Benefits based on the death of the insured or benefits based on a fixed amount of benefits based on the survival of the insured and/or benefits based on the results of fund management.

 

# Insurance Function

There are two functions of insurance, which include primary and secondary functions.

• The primary function is a risk transfer mechanism. This function is a means or mechanism for transferring risk from the insured to the insurer for possible loss or damage suffered by the insured as a result of premium payments. The premium paid by the insured must be fair and balanced in relation to the risk accepted by the insurer (fair premium). This allows the insurer to have sufficient funds to meet its obligations to customers who experience losses.

• The secondary function of insurance is to stimulate economic and business growth, prevent losses, control losses, generate social benefits, and function as savings or investments.