Insurance Terms You Need to Understand (Part 1)

Insurance is one of the important needs if you want to have stable and healthy personal finances. In addition to adequate emergency funds, ownership of protection is something that should not be delayed. By having insurance, personal finances can be protected from the risks of loss that may occur when dealing with a condition that requires large costs. For example, when you fall ill and need medical expenses or when the backbone of your family dies due to an accident, your family income stops.

The pandemic conditions make the need for insurance even more relevant. The risk of contracting infectious diseases and the risk of death that threatens to make insurance an important effort to maintain physical and financial health as well as peace of mind in addition to social distancing. Well, if you are currently considering buying insurance, you should first identify the important terms in insurance.

Understanding the terms in insurance will help you find the most appropriate insurance product according to your needs. What are the insurance terms that are important to understand? Listen below:

1. Insurance Policy

Insurance Policy is a term to refer to a written cooperation agreement contract between the Insurance Provider Company (Insurance Insurer) and the customer of the Policy Holder. whether it is Life Insurance, Health Insurance to Loss Insurance, it is called an Insurance Policy.

The content of the cooperation agreement contained in the Insurance is an agreement that the Insurance Provider is willing to bear the risks of the Insured whose name is stated in the policy, within a certain period of time according to the agreement. To get insurance protection from the insurance provider, the policyholder is required to pay an agreed premium 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, 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).

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.

2. Insurance Premium

To get insurance protection, the policyholder is required to pay a premium to the insurance insurer. Insurance Premium 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 Premium is determined by the Insurance Provider and agreed by the Policy Holder. The size of the premium 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 an insurance, the premiums are usually more expensive. Likewise, if the Insured is considered to have a high risk, the premium is automatically more expensive. Policyholders are usually given the choice of the premium payment period. Namely: Monthly Premium, Quarterly Premium, Semester or Annual Premium Payment.

3. Insured Insurance

The term "Insured" in an Insurance Policy refers to the person or party who obtains compensation 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 the insured in the life insurance policy dies, the sum insured for life insurance will be given by the insurance provider to the beneficiary who has been appointed 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 a health insurance, then you are called a policy holder and the insured. The children and wives you insure are also referred to as the Insured.

4. Insurance Benefits

Insurance Benefit means the protection obtained by the Insured Insurance and provided by the Insurance company. For example, a health insurance provides benefits for medical care costs, outpatient costs and surgical benefits.

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