Insurance is a form of financial protection that is carried out by transferring risk from one party to another, in this case an insurance company that bears the risk from its customers. How insurance works includes several stages, from the beginning to the end.
The initial process in insurance is selecting an insurance company and the type of insurance product that suits your needs. Customers can choose insurance products based on the purpose and type of risk they want to cover. For example, if a customer wants to secure their family's financial future, they can choose a life insurance product.
After choosing an insurance company and product type, the insurance company will conduct an assessment. Risk assessment is carried out to determine the premium that must be paid by the customer. The assessment includes health risk assessment, type of work, lifestyle, and other risk factors associated with the selected insurance product.
After the risk assessment is completed, the customer must pay a premium according to the amount determined by the insurance company. Premium payments are made periodically, for example monthly, quarterly or annually. Premium payments will guarantee the insurance protection provided.
Claims are the last stage in insurance. If an event is guaranteed by the insurance product, the customer can submit a claim to the insurance company. The insurance company will make a judgment on the claim and pay compensation to the customer if the claim is declared valid.
In how insurance works, there are several terms that need to be understood, namely:
- Premium: The amount of money that must be paid by the customer to obtain insurance protection.
- Policy: An official document that contains information about the selected insurance product and the agreement between the customer and the insurance company.
- Insured: The insured party and entitled to receive compensation from the insurance company in the event of an event guaranteed by the insurance product.
- First Party: The insurance company that takes the risk from the customer and provides insurance protection.
- Second Party: The customer or the insured who pays the premium and receives insurance protection.
- Third Parties: Other parties involved in events covered by insurance products and receive compensation from insurance companies.
In carrying out how insurance works, insurance companies have the responsibility to process claims quickly and transparently, so that customers feel safe and protected from financial risk. Insurance companies must also carry out business activities ethically and in accordance with applicable rules and regulations, as well as provide clear and easy-to-understand information to customers regarding the insurance products offered.
In addition, customers also have the responsibility to pay premiums in a timely manner, provide accurate and complete information about the risks they wish to cover, and not commit fraudulent or fraudulent acts that could harm insurance companies and other customers.
In managing customer funds, insurance companies must maintain customer trust by making safe investments and generating reasonable profits, as well as reporting fund management in an open and transparent manner.
Insurance companies must also keep abreast of developments and changes that occur in the insurance market, as well as renew the insurance products offered to keep them in line with the needs and demands of customers.
In conclusion, the way insurance works includes insurance selection, risk assessment, premium payment, and claims. In carrying out how insurance works, insurance companies and customers have their respective responsibilities to maintain trust and obtain insurance protection according to their needs. Therefore, it is important for customers to choose a trusted insurance company and understand the insurance products offered before deciding to buy.