Definition and Function of Insurance Policy

Insurance is a fairly complex thing, where you will need understanding and also careful consideration before using it. Although insurance is no longer a foreign thing to our hearing, but in fact until now there are a lot of people who do not understand the ins and outs and various things about insurance. It is certain that such a lack of understanding will ultimately decrease the interest of most people to use it.

In Indonesia itself, the development of insurance is quite good and encouraging, this can be seen from the large number of insurance companies that provide services and can remain afloat until now. The number of insurance users shows an increase from year to year, public awareness of the importance of life protection and their assets is getting higher and making them choose to use insurance services. It is also certainly supported by the many types of insurance that can be chosen and adapted to the needs of many people, so that people can easily choose and use a certain type of insurance that is most appropriate for him.

Definition of Insurance Policy

As we know, insurance has many different terms than we usually hear. This can certainly lead to incorrect understanding and lead to a variety of incorrect assumptions. Before using insurance services, you should understand correctly the various terms used there, so that you do not misinterpret them in the future. Do not use insurance services without clearly understanding the various terms used in it

One of the terms we hear most often in insurance is insurance policy. There are many people who think that an insurance policy is a certain amount of funds that will be paid to the insurance company every month (premiums), this is certainly very inappropriate because there is a very far difference in meaning between insurance premiums and insurance policies.

Insurance policy is a proof of written agreement made by the insurance company (insurer) with customers who use insurance services (insured), which explains all rights and obligations between the two parties. The insurance policy will be a valid written proof in the agreement made by the insurer and the insured party.

With the insurance policy, both parties who make the insurance agreement will be bound and have each responsibility as agreed from the beginning. Insurance policy is very important in the insurance service itself, because the policy will protect every right and obligation of customers and insurance companies.

Insurance Policy Function

  • Given the importance of an insurance policy, it is natural if you have to understand the entire contents of the insurance policy owned. This will prevent you from a number of losses that may arise in the future due to your lack of understanding of all the details written in the insurance policy you use.
  • For both parties between the insured and the insurer, insurance policies have their respective functions, namely:
  • Policy function for insurance user customers (insured):
  • Become a written proof of insurance guarantee for various risks and reimbursement of losses that may occur to the insured, where the loss is written in the policy.
  • Become proof of premium payment given to the insurance company as the insurer.
  • Being the most authentic evidence to sue the insurer, if at any time negligent or does not meet the guarantees that are dependent

Policy function for insurance company (insurer):

  • Become a proof or receipt of insurance premiums paid by the insured party.
  • Become written evidence of the guarantee given to the insured to pay compensation that may be suffered by the insured.
  • Being the most authentic evidence to reject a claim for compensation or a claim filed by the insured, if the cause of the loss does not meet the requirements of the policy owned.