Insurance

Insurance is one form of risk control is done by transfer / transfer risk from one party to the other party in this case is the insurance company.

The other explanation of insurance is a transfer of risk from the first party to another party. Controlled by the delegation of legal rules and the application of the principles and teachings that are universally adhered by the first party or other parties.
In terms of economics, insurance is a collection of funds that can be used to cover or pay compensation to people who suffered losses.

Insurance History

Insurance comes first from 4000-3000 BC Babylonian society known as Hammurabi agreement. Later in the year 1668 AD at the London Coffee House Lloyd's of London stands as a precursor to conventional insurance. Source of insurance law is positive law, natural law and the previous examples as culture.

Insurance brings social and economic missions with the premiums paid to insurance companies to guarantee the transfer of risk, namely the transfer (transfer) the risk of the insured to the insurer. Insurance as a risk transfer mechanism where the individual or business move some uncertainty in exchange for premium payments. The definition here is the uncertainty risk occurs or whether a loss (the uncertainty of loss).

Insurance in Indonesia started in the Dutch colonial period, associated with the success of the country's companies in the plantation sector and trade in Indonesia. To meet the insurance needs of business sustainability, of insurance required. The development of insurance industry in Indonesia had a vacuum during the Japanese colonial period.

What are the benefits of insurance?

Besides as a form of risk control (financially), insurance also has a variety of benefits that are classified into: the main function, secondary functions and additional functions. The main function is as a transfer of insurance risk, premium collection and fund balance. The secondary insurance function is to stimulate business growth, prevent loss, damage control, social benefits and the savings. While insurance is an additional function as an investment fund and invisible earnings.

Are all risks can be insured?

Not all risks can be insured. Risks that can be insured are: the risk that can be measured by money, the risk of homogeneous (the same risks and guaranteed by insurance), a pure risk (this risk is not profitable), particular risk (the risk of individual sources), the risk that occur suddenly (Accidental), insurable interest (the insured has an interest in the object insured) and the risks that are not contrary to law.

As we know one way of handling risk is to insure a risk to the insurance company. This method is considered as the most important methods in effort to cope with risk. Therefore many people who argue that the same risk management with insurance. Though the actual state is not the case.

Insurance coverage means the transaction, which involves two parties, the insured and the insurer. Where the insurer guarantees the insured party that he would get a replacement for a loss which may be suffered, as a result of an event which initially is not necessarily going to happen or who previously could not be determined when they occurred. The consideration of the transaction is that the insured is required to pay some money to the insurer, the amount of several percent of the insured value, usually called "premium".

The insurance has a goal and solution techniques vary, they are:

Risk Management

In human life, risk factor is something that would happen. Starting from the risk of loss of assets or property, the risk of illness, total disability until the risk of loss of life or death. The cause could be natural (due to illness) or due to accidents and ironically we never know when the risk will happen. However, people still can manage the risk by transferring risk to other parties (in this case the insurance company).

If we speak the risk of death we will immediately imagine life insurance. Yes every man must be experiencing, for those who have a family would want to give an assurance of protection that is relevant when called by his Maker so the family still run a decent life with food and clothing among other things continue to be fulfilled, the children still can go to school until they reach the highest level.

Life Insurance

Life Insurance is one instrument that can be used to transfer risk, where if there is a risk of death to a person then their heirs will get some funding so-called Sum Insured. In the life insurance industry in Indonesia today, the traditional type of insurance known as term life (term life); whole life (life insurance), endowment (traditional insurance with a combination of savings), as well as a life insurance policy or investment-linked unit-linked . Type of unit-linked insurance is very popular and almost all major insurance companies have these products and even some foreign insurance companies in Indonesia only sell unit-linked type products without traditional selling other insurance products. Unit-linked life insurance benefits in addition to providing life insurance protection, while also providing an opportunity to participate directly in investment, especially in mutual funds.

Unit Linked Life Insurance

These types of policies are favored by insurance companies and their policyholders (current), visible from the life insurance industry growth in the homeland of unit-linked premiums which are the largest contributor to many life insurance companies. This is a situation conducive to the insurance company because the product over the long term this will further accelerate the growth of RBC ratio (risk capital base) which is the ratio of capital to risk versus the minimum number required by the government through the Directorate General of insurance is 125%. Many insurance companies selling unit linked products will inevitably have a high RBC because insurance companies do not WARRANTIES cash value or investment value invested by the customer, the risk performance of investment funds into the customer's own responsibility.

This product is very practical because it allows customers and prospective customers. In these types of products customers need not have bothered to visit the company's two insurance companies and mutual funds investment management company that is an investment manager, because with this product and investment protection packed into a single unit. Customers are also relatively thin pockets can easily get the protection and investing as it can be done with the amount of the value of a relatively small investment. Many who accept the unit-linked investment value is only IDR 100 thousand per month and even less than that!. This product also has an investment of liquidity as adequate as far as can be taken by the customer at any time even after a certain period of investment value can be used to pay the basic premium, so the customer can leave the premium.

With the variety of the above facilities, a wise reader needs to know more in whether it was the best option? When compared with buying separate products (the insurance on one side with mutual fund investments on the other side), which can provide maximum benefit for us? Let us both further study.