Definition of Insurance Policy, Functions and Types

The insurance policy is an important part of an agreement between the customer and the company. Even though insurance in Indonesia is growing rapidly and is increasingly recognized by the whole community, it turns out that until now not many people understand the meaning of an insurance policy. Do you too? No problem, because we will discuss it in more detail below.

Insurance can be said to be something complex and requires careful consideration before using it. One of the factors why someone is not interested in insurance is a lack of understanding of the benefits and service model.

As a first step, let's study the meaning of an insurance policy, its functions, contents and types. Definitely very useful to understand insurance further.

Definition of Insurance Policy

An insurance policy is a legally binding document between the customer and the insurance company in a written agreement. The agreement contains all terms and conditions during the relationship between the two parties, including the rights and obligations of the customer and the company.

Insurance policy holders are customers who pay premiums. While the role of the insurer is the insurance company.

The existence of an insurance policy is certainly not without reason, but to ensure:

The insurer is obliged to provide insurance benefits when the risk incurred occurs, adhering to the terms agreed upon and written in the insurance policy.

The policyholder is required to attach correct and accurate personal data, as well as pay the premium according to the agreement in the insurance policy.

The contents of an insurance policy that uses legal language really make many people lazy to read it in its entirety. In fact, insurance policies are very important for insurance companies and customers.

What Are the Functions of an Insurance Policy?

Policy Functions For Insurance Companies

As proof of receipt of insurance premiums paid by the customer.

As written proof of the coverage that will be given to the customer.

As authentic and legal evidence to reject customer claims when they do not meet the conditions agreed upon in the policy

Policy Functions for Customers

As written evidence of what coverage is entitled to receive from the insurance company when experiencing the risk of loss according to the agreement in the policy.

As authentic proof of premium payment received by the insurance company.

As legal evidence to sue the insurance company if it commits negligence in fulfilling the guarantee of customer rights.

Types of Insurance Policies

1. Health Insurance Policy

This policy is used to regulate provisions for health insurance. Written coverage usually includes the customer's health care medical expenses. The guarantee can be in the form of outpatient and inpatient care.

Health insurance policies are divided into several categories, such as:

Family health.

Personal health.

Office health.

Elderly health, specifically for people over 60 years old.

Critical illness insurance, such as super strong.

Personal accident insurance, for example Super Safe.

Childbirth insurance.

2. Life Insurance Policy

A policy that protects a person's life in the form of cash compensation. That means, when the customer dies, the heirs receive cash compensation from the insurance company.

Several types of insurance policies are as follows:

For life (Whole Life)

Futures (Term Life)

Child life insurance

Link Units

Pension Insurance

3. Private Vehicle Policy

A policy that provides compensation for damage to your motorcycle or car. Risks borne such as theft, burglary, damage due to accidents and others.

4. Property Policy

This policy will indemnify when the house purchased is damaged. Insured risks such as natural disasters, fire, burglary and others.

5. Micro Insurance Policy

An insurance policy that covers a specific scope and the protection period is relatively short. It can be one year, one month and several days. An example is Covid-19 insurance.

6. Travel Insurance Policy

Policies that are generally only active when you travel and are one-time purchases.

7. Policy is appraised

Another name is a valued policy that provides a definite cash value to compensate for damage to the protected item. In general, this nominal has been estimated in advance according to the price of the goods.

8. Veem Police

A policy that covers damage or loss of an asset and stored goods in a place, such as a warehouse.

9. Floating Policy

Also commonly called a floating policy which is commonly used for stocks of goods stored in several different locations. Considering that each location has different risks, the premium value can change over time.

10. Open Policy

Usually called an unvalued policy or an open policy that compensates according to the bill, instead of setting a definite cash amount. Of course this uses a certain maximum coverage limit.

11. War Risk Policy

A policy to protect lives against risks for those of you who travel or live in war-affected areas.

12. Consequential Loss Policy

Policies that provide compensation for increased outcomes or decreased income from a business due to certain risks. In general, this policy is used by fire insurance products.

That's the definition of an insurance policy, its functions and types. Hope it is useful.