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4 Insurance Functions, Provide the Best Protection for the Future

Insurance can be said as a form of future investment that will provide protection for various possibilities. In this case, people can use various types of insurance, ranging from health insurance, education insurance, vehicle insurance, and various other goods insurance.


Here, people can register themselves as participants and pay a number of contributions or bills regularly for future planning. For example in health insurance, someone who has registered as a participant pays bills every month or through a salary deduction from the company where he works. In this case, the insurance service will cover the cost of medical treatment and hospital care if at any time the participant falls ill or has an accident.

Likewise with vehicle insurance. Usually participants will also pay a number of bills on a regular basis as a backup fund if at any time the vehicle is damaged, for example damaged by a flood disaster. Some of these types of insurance can provide convenience benefits for each participant to plan for the future.

That way, it is necessary to know some of the insurance functions performed by each insurance company in providing benefits to each insurance policy holder. Some of the most important insurance functions include providing protection, providing certainty, evaluating risk, and distributing risk.

Reporting from the SRD Law Notes website, here we summarize several insurance functions in full for you.

Before knowing some of the functions of insurance, it is necessary to first understand what is meant by insurance. Insurance here can be interpreted as a contract made by an individual or a group of individuals with an insurance service provider company.

In this contract, the insurance policy or someone who has registered as an insurance holder pays a regular amount of money to the insurer, so that the insurance company can bear various risks that may occur in the future, either in the form of financing health services, paying tuition fees, to damaged vehicle financing.

Insurance Function

After understanding a brief understanding of insurance, then there are several insurance functions carried out by insurance providers.

The following insurance functions are the main functions carried out by the company in providing benefits to its participants. The following is an explanation of some of the functions of insurance that you need to know.

1. Provide protection

The first function of insurance is to provide protection to every participant or policy holder. It can be said, this is the most important function of insurance where the company will provide protection against risks, accidents, and uncertainties in the future. In the process, the insurance company will check the reality or conditions that occur.

Furthermore, the company will pay or bear the cost of damage or loss suffered by the policyholder. It can even be said, this is an obligation and responsibility that must be fulfilled by every insurance company to its participants.

2. Provide certainty

The next important function of insurance is to provide certainty. As is known, future life is full of uncertainty. The things that will happen in the future is something that is uncertain, it might happen and it might not. This is the reason the amount and timing of losses that will be received by someone in the future cannot be measured clearly and precisely.

Here, insurance can be used as a tool or means to help reduce the uncertainty that exists. In this case, insurance provides certainty of payment or coverage of losses received by someone. Both losses in the event of an accident, damage to goods, or other unexpected things. That way, insurance participants can be a little calmer because they already have a guarantor and protector in case something bad happens at any time.

3. Evaluating risk

The next function of assurance that needs to be known is evaluating risk. As explained earlier, that a person can suffer losses in the form of material or physical if something unexpected happens. The magnitude of the risk of this loss can not be predicted in advance. So if not prepared properly all the possibilities of handling will be more difficult.

In this case, insurance also provides a role to evaluate the risk of loss that may occur. By assessing and analyzing various factors, insurance companies can provide estimates of losses that can occur at any time.

That way, the insurance company will assist participants in dealing with any risk of problems that occur in the future. This is one of the important functions that insurance companies must perform to policyholders or their participants.

4. Distributing Risk or Sharing Financial Losses

The last function of insurance is to distribute risk or share financial losses. This is a form or effort of cooperation carried out, where the risk can be distributed or borne among a group of people or several parties.

That way, neither party will bear the losses themselves. So the burden will be much lighter. This is also an important factor to prepare and plan for the future a little more scalable.

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