Important Things in insurance policy, functions, and definition

Important Things in insurance policy, functions, and definition – Just bought insurance? Well done. This
means that you already understand the function of insurance and the importance
of insurance benefits for yourself or your family members. After you register
and buy insurance, you will get a document called an insurance policy.

What is an insurance policy?

The definition of an insurance policy is a
legal document that becomes a written contract between the Policyholder (in
this case you or anyone who pays the premium) and the Insurer (the insurance
company). All matters regarding the terms and conditions of the relationship
between the Policyholder and the Insurer are written therein, including the
rights and obligations of each party.

In general, the insurance policy ensures
that:

The Policyholder is required to provide
accurate and correct personal data information, as well as pay premiums as
written on the insurance policy.

The insurer is obliged to provide insurance
benefits when the covered risk occurs, following the provisions agreed in the
insurance policy.

Maybe we like to be lazy to read the whole
of this document because the language is “really legal language”, but
the insurance policy is very important for you as a customer and insurance
company.

What is the Function of an Insurance
Policy?

As we have discussed, an insurance policy
is a legal document that contains insurance terms and conditions. Here are the
functions of an insurance policy for you and the insurance company.

The Function of an Insurance Policy for You

An insurance policy can be a valid written
proof of a statement that:

  • You will get coverage for certain risks
    that occur in the form of cash compensation and/or compensation if risks occur.
  • You pay premiums regularly.
  • Evidence of filing a lawsuit if the
    insurance company does not fulfill its obligations.
  • Functions of Insurance Policy for Insurers
  • As for insurance companies, an insurance
    policy is a valid written proof of the statement that:
  • The company has received insurance premiums
    that you pay regularly.
  • The company will provide coverage according
    to the provisions of the policy.
  • Proof of refusal of insurance claims if the
    risks that occur do not meet the terms and conditions stated in the policy.
  • Types of Insurance Policies
  • There are various types of insurance
    policies that exist. The difference is often due to the type of insurance
    product chosen.

Here are 12 different types of insurance
policies:

1. Life Insurance Policy

This policy protects a person’s soul
through cash compensation. This means that if the customer experiences the risk
of death, the heirs will receive cash compensation from the insurance company.

Life insurance policies also have various
forms, for example:

  • Term Life
  • Whole Life
  • Unit Link
  • Children’s Life Insurance
  • Pension Insurance

2. Health Insurance Policy

This policy is used to regulate the terms
of health insurance. Usually, the coverage listed includes medical costs for
your health care. The guarantee can also be in the form of inpatient, or
outpatient.

In addition, health insurance policies have
further categories, including:

  • Personal health;
  • Family health;
  • Critical Illness Insurance, such as Super
    Strong;
  • Elderly health, which is devoted to people
    over the age of 60 years;
  • Office health;
  • Maternity insurance;
  • Personal Accident Insurance, such as Super
    Safe.

3. Property Policy

Property policies usually contain
provisions for compensation if the house we buy is damaged. The types of
benefits also vary, ranging from fires, natural disasters, break-ins, and other
risks that may be written in the property policy.

4. Private Vehicle Policy

Similar to a property policy, a vehicle
policy provides compensation for damage to your car or motorcycle. The risks
borne can be in the form of break-ins, theft, damage from accidents, and
others.

5. Travel Insurance Policy

This insurance policy is usually a one-time
purchase, which is only active when you travel. You can also buy it from a
traveling company or buy it directly from an insurance company.

6. Micro Insurance Policy

A micro-insurance policy is a type of insurance
policy that is “small in size”. Usually, the protection period is
also shorter, it can be several days, one month, up to one year only. The risks
covered also vary, depending on the type of microinsurance.

One of the most popular is micro-life insurance
where the benefits are much lower than life insurance in general. However, of
course, the amount of coverage is also smaller. There is many other
microinsurance that focuses on specific risks, for example, sports, certain
diseases that are currently spreading (such as COVID-19), and others.

7. Polis Veem

This type of policy bears the risk of loss
or damage to an asset or item stored in a warehouse or other storage area.

8. Policy Estimated 

Also called a valued
policy, this type of polis provides a definite cash value as a form of
compensation. Usually, this nominal has been pre-estimated based on the price
value of the protected goods.

9. Open Policy

Also called an open policy or unvalued
policy, an open policy does not actually set a definite cash nominal for an
item. Indemnification is usually carried out according to the bill, with a
certain maximum limit of coverage.

10. Floating Policy

Commonly referred to as a floating policy,
this type of policy is usually used for insurance for the stock of goods stored
in various locations. Because the risk is different for each location, the
premium value is floating or can change over time.

11. Consequential Loss Policy

This type of insurance policy pays
compensation costs for declining income or increasing the outcome of a business
caused by certain risks. Usually, this one policy is useful for fire insurance
products.

12. War Risk Policy

Finally, this type of war risk policy
provides life protection for those of you who live or travel to areas affected
by the war.

Health Insurance Policy Structure

There are usually three important points in
an insurance policy, namely the Policy Summary, General and Special Provisions,
and an Insurance Request Letter (SPA).

Policy Summary

The Policy Summary shows your personal
identity as the PolicyHolder and/or The Insured, as well as all matters related
to the details of the insurance product.

Here are the points listed in the policy
summary

  • Details of the insurance benefits you
    purchased;
  • Risk exclusions, namely special risks that
    cannot be covered by insurance products;
  • How to file a claim;
  • Policy number;
  • Identity of the Insured, including name and
    age;
  • The value of premiums to be paid per
    month/year;
  • The value of the Sum Insured (compensation
    provided) if any;
  • Identity of the Heir, including name and
    date of birth, if any.

General and Special Provisions

The General and Special Provisions describe
the definition of the benefits and risks borne by the Policy. Arguably, this
section constitutes the Terms and Conditions of 

In other respects, some general provisions
and specific provisions should be listed including:

Definition of covered risks, for example:

  • What is meant by “Injury” on
    Personal Accident Insurance; or
  • What conditions are included in the
    “Stroke” for Critical Illness Insurance;
  • Procedures for paying and deadlines for
    Premiums;
  • Procedures for submitting insurance claims,
    including:
  • What documents are required;
  • When is the deadline for filing a claim;
  • Terms of investment management if the
    insurance is a unit link;
  • Conditions that may lead to termination of
    coverage.

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