Monday, July 1, 2019

The primary function of insurance that makes it to be used

Understanding the functions and benefits of insurance is important to do. Moreover, the literacy rate of insurance products in Indonesia is still low. This can be seen from the common assumption as well as the level of community participation in insurance products is still weak alias not so many interest. But insurance in general and special has a lot of functions and advantages. In fact, the main function of insurance if viewed financially is part of a form of risk control. In addition, it turns out that insurance also has several other primary functions, as follows:

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1. Participating in insurance means active in transfer of risk 
One of the primary functions of insurance as well as risk control, also serves as a transfer of possible risks. Therefore, the possibility of uncertainty about the occurrence of losses, resulting from unexpected events, can be confirmed or changed into a form of compensation or compensation claims from the insurance premiums that have been paid. The transfer of risk does not mean eliminating the possibility of loss from the insured or the insurance customer, but the transfer of risk is intended to provide a sense of quiet to the customer against the possibilities of events Adverse effects. If you look at the rewards that you will get, it may be the premium value that is paid very little rather than the risks that may occur.

Read Also : What is insurance ?

2. Insurance Investment as a means of fund-raising 
Insurance also serves to raise funds from customers or policyholders. The collected funds (from premiums paid) can be used and developed by insurance companies through a more profitable investment pathway. Because the duties of insurance companies one of them is to raise funds, then investment is a choice that is often taken so that the money raised can be more productive. Investment activities conducted by insurance companies can be done anywhere. And the result of such investment can also be used as a strategy in lowering the cost of premium. Anyway the premium will also be used together to address the risks suspended by the premium payers or customers.

3. Insurance guarantees the presence of balanced premiums
The purpose of the premium balanced function here is the insurance can be relied on as a guarantor institution for the loss of someone by paying a clear premium and the amount can be accounted for. Although the big small premium to be paid also depends on the premium rate that is valid after multiplied by the value of coverage. Premium fares are also known as rate of premium terms. In the end, the premium payment made by the customer or policyholder will be of reasonable value or balanced with the risks transferred to the handle (the insurance party). This kind of condition is named as premium Equitable.

4. Protection against possible bankruptcy risks
Often times if an entrepreneur wants to open a new venture or develop their wings always rely on insurance to get protection against the possible risk of bankruptcy. Because during this time we often see many entrepreneurs failing against their plans which in the end they undo the intention to continue development. When there is already investment in the entry then with the insurance entrepreneur can transfer the risk. Insurance will provide a sense of comfort and dependable in the slap of anxiety in pioneering business. Once again the premiums paid may not be as good as Iesiko bankrupt if it really happens failure.

5. Stimulating economic growth 
From macro scale, insurance is also a trigger for economic growth. Because the insurance of interested parties can focus itself on the development step and do not worry about the risks of adverse events. With the number of premiums accommodated by insurance companies, it automatically also provides a smooth flow of money in various sectors of investment. Where in the end the investment is also aimed at the interests of the wider community.

6. Can be used as investment media
Because insurance also has properties like savings, then there is a chance of profit that accumulates from paying the insurance premium. We see now that there is a unit link insurance program where customers can invest very securely by still getting insurance coverage opportunities. In addition, especially in relation to life insurance, the return value of the premiums paid can be a promising savings. Remember that the money we pay in the insurance will not be forfeited and can be claimed according to the agreed rules.


  1. Nice post!

    Thank you for sharing

  2. Without insurances things can't get done.

    1. yes 1 agree..
      thanks for visiting my blog :)

  3. Thank you for visiting my blog! Yes, insurance is very important in our life.

  4. Thank you for very interesting information. Have a sunny day.