Purpose and Benefits of Insurance

Previously, we discussed travel insurance for travelers. Now we will discuss the goals and benefits of having insurance. We really understand that there are still many people who don’t know, let alone understand, insurance, that’s why we present this article to you.

Purpose of Having Insurance

Insurance is an agreement that occurs between a customer and an insurance company. The contents of the agreement are that the insurance company is willing to cover a certain amount of money for losses due to something in the future after the customer agrees to pay the money (premium). There are several types of insurance and each has the same general insurance objectives. These types of insurance include life insurance, accident insurance, loss insurance, and there is also fire insurance.

It’s not without reason that people have insurance. The reason is, insurance ownership aims for the three things below.

1. Protecting Life and Asset Protection

When a risk occurs, such as going to hospital, it is not uncommon for lives and assets to become victims. Insurance can protect the life and assets owned by customers when this happens. Customers do not need to sacrifice assets because the insurance company has covered the costs of this incident.

2. Premium Balancing

The insurance company will arrange for premium payments to be balanced with the risks borne by the insurer. In this way, both parties will not feel disadvantaged by the agreement. For other than life insurance, the premium amount will be determined based on the premium rate multiplied by the desired coverage value. For life insurance, usually the premium amount is usually in accordance with the agreement or provisions of the insurance company.

Meanwhile, the additional function is as a means for saving investment funds, preventing losses and minimizing losses. Apart from that, insurance is also useful for stimulating economic growth so that business increases.

3. Provides Long Term Financial Protection and Security

Many people think that the impact of insurance cannot be felt at this time. In fact, insurance aims to provide financial protection in the long term. Customers don’t need to worry because their finances will remain safe under any circumstances.

4. Fundraising

Funds sourced from customers will be collected and then the insurance company will manage these funds in such a way that they can grow. The proceeds from managing money from customers will later be used to pay compensation if the customer experiences an unexpected and detrimental event.

5. Reducing the Impact of Losses Due to Unexpected Events

Unexpected events always result in risks, especially from a financial perspective. Insurance can minimize these sudden impacts so that they do not become more serious. For example, a customer who dies even though he is the head of the family. The customer’s heirs will receive insurance money as their life support.

Insurance also functions to provide financial security for customers. Customers don’t need to feel anxious when difficult times occur because they already have insurance that is ready to cover them. Customers only focus on their obligations, namely paying premiums within the agreed period and amount.

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