UNDERSTANDING AND TYPES OF INSURANCE

# 1. Understanding of Insurance

Actually, what is meant by insurance? Understanding Insurance is a form of risk control where one party transfers risks that may occur in the future to the other party, in this case, the insurance company.

The term "insurance" comes from English, namely "Insurance" which means insurance. So there are also those who say the notion of insurance is an agreement between the insured party (the customer) and the insurer (insurance company) where the insurance company is willing to replace the losses that may be experienced by the customer in the future.



In order to get insurance coverage for the risks that might occur, the insured party must pay a premium to the insurance company within a certain period of time.

* Understanding Insurance According to Experts

In order to better understand what insurance is, then we can refer to the opinions of the following experts:

1. Subekti
According to Subekti (2001), the notion of insurance is an agreement that is included in the type of chance agreement where this agreement is intentionally based on an event that does not necessarily occur in the future, which event will determine the profit and loss of one of the parties.

2. Emmy Pangaribuan
According to Emmy Pangaribuan (1992), the definition of insurance is an agreement where the insurer by enjoying a premium ties himself to the insured to free himself of losses due to loss, loss or absence of expected benefits that will be suffered by him because of an uncertain event.

3. Abbas Salim
According to Abbas Salim, the notion of insurance is a willingness to set small or little losses that are certain as a substitute (substitution) for large losses that have not yet occurred in the future. So it can be concluded that people are willing to pay a small loss for the present in order to be able to deal with large losses well.

4. KUHD article 246
According to KUHD article 246, the definition of insurance is an agreement by which an insurer ties himself to an insured, by receiving a premium, for reimbursement to him because of damage or loss of expected benefits that he might suffer because of an uncertain event.

#2. Insurance Purpose

As mentioned in the definition of insurance above, the main purpose of insurance is to guarantee compensation for risks that may occur in the future.

The insurance goals are as follows:

• To divert a number of risks that exist on a party to the insurance company.
• Guarantee for a party to get protection for all risks of losses that might occur.
• To minimize the potential for greater losses if you spend your own costs when there is a risk.
• Especially for certain life insurance (life insurance), insurance can be saved because some premium costs will be returned to the customer.
• For efficiency for a company because it reduces costs for supervision, security, and protection which costs a lot of time and time.
• To get compensation to the customer in accordance with the value of the insurance premium.
• To close a person's loss of earnings or a business entity when it is not working or no longer functioning.
• As a basis for the Bank in providing credit to a person or business entity because the Bank requires protection of funds lent to customers.

# 3. Insurance function

Then what is the function of insurance? Apart from being a form of risk management, insurance has several other important functions. The insurance functions are as follows:

1. Fund Collector
In this case, the insurance company acts as a fund collector from the community. The funds raised will then be invested in various other business fields to be more productive.

2. Helping Businessmen Focus on Business
Every business model must contain risks in it. For entrepreneurs, business insurance is something that is very important to help overcome anxiety if there is an unwanted risk.

With insurance in the company, entrepreneurs can focus more on operations and business development.

3. Reducing Risk Potential
Every insurance company always provides recommendations to its customers regarding risks that might occur. That way, then someone can minimize or even prevent potential risks.

4. Sharing the Risk of Losses
With insurance, the potential losses can be shared with other parties. In other words, premium payments made by customers are balanced with the risks transferred to insurance companies.

# 4. Types of Insurance

There are several types of insurance that are used for various purposes. The types of insurance are as follows:

Health insurance, which is a type of insurance that provides coverage for health problems caused by accidents or diseases.

1. Life Insurance, which is a type of insurance that provides coverage for the death of a customer who has financial value.
2. Educational insurance, which is insurance that provides education guarantees to the insured.
3. Business insurance, which is insurance that provides a guarantee to the company if there is a risk that causes losses, such as loss, damage, and others.
4. Home and Property Ownership Insurance, namely insurance that guarantees the owner of the house or property in the event of damage to the property.
5. Vehicle insurance, which is insurance that provides coverage to the vehicle in the event of risks such as accidental damage, loss, and others.

Thus a brief explanation of the definition of insurance, goals, functions, and types of insurance in general. Hopefully, this article is useful and adds to your insight.