Insurance as a form of riskRisk Risk is a loss that occurs to the insured individual or object. Various bad possibilities could happen to someone. reduction allows you to minimize losses arising from an unwanted event. The many risk factors, in the end, make you also have to choose what kind of protection is suitable for you.
These various risks that can happen to anyone, anywhere, and at any time make many types and products issued by the insurance company. This is all to accommodate the needs of the community who need a sense of security and protection from the shadows of adverse risksRisk Risk is a loss that occurs to the insured individual or object. Various bad possibilities could happen to someone..
The types of insurance are very diverse and cannot only be seen from one aspect of the difference. There are different types of insurance in terms of management. There are also types of insurance that are distinguished based on their operational objectives. Finally, there are types of insurance that are differentiated according to the type of coverage.
The types of insurance will affect the various products produced. By knowing these two things, you can adjust the selection of insurance that feels most appropriate to your needs. The following is an explanation of the various types and insurance products.
Types of Insurance from Management
There are two types of insurance that can be recognized in terms of management. The first is conventional insurance, while the second is sharia insurance. Many people already understand conventional insurance because this type first appears to be a transfer of risks that may arise to the insuredInsured A person who is legally listed in the insurance policy to receive benefits from the policy. A person whose life/health is covered in accordance with an insurance agreement or contract..
Meanwhile, sharia insurance is made to accommodate the need for guaranteeing risks with more sharia values. According to the Sharia Council, sharia insurance means an effort to protect each other between a number of parties through investment fundsInvestment Fund The amount of funds obtained from the premium payment has been deducted by the acquisition cost and several other costs. in the form of assets that are agreed upon through contracts (stipulations) that are in accordance with Islamic sharia.
There are several things that distinguish it from ordinary conventional types of insurance, namely the concepts, provisions, legal sources, ownership of funds, investments, sources of claimClaim The demands are given by the insurance policyholder to get the right properly so that the insurer pays the conditions according to the existing procedure. payments, profits, cancellations, to the structure of the supervisory board as below.
| Difference | Conventional Insurance | Sharia Insurance |
|---|---|---|
| Concept | Transfer of risk from the insured to the insurerInsurer A person who is legally listed in the insurance policy to make premium payments for that policy.. | Sharing risk from one insurance participant to another. |
| Conditions (Agreement) | Buy and sell. | Mutual help. |
| Source of law | Derived from the human mind and culture, which is complemented into a positive and natural law. | Derived from the Koran, hadith, or other sources of Islamic law. |
| Fund Ownership | The premiumPremium The money that must be paid at a certain time is the obligation of the insurance policyholder. The amount of premium paid is determined by the policy and approval of the insurance company in accordance with the conditions of the insured. The nominal payment approved by policyholders and insurance companies. Premium payment will be made according to the agreement, it can be monthly, yearly, or according to the agreement. from the insured becomes the property of the insurer or the insurer. | Part of the premium from the participant will belong to the participant, the other part will be entrusted to the insurer to be managed. |
| Investation | InsurersInsurer A person who is legally listed in the insurance policy to make premium payments for that policy. are free to invest, not limited to halal or haram. | Investments are made in accordance with the provisions of the law and do not conflict with sharia principles. |
| Claim Payment Source | Derived from the insurer’s account as the risk of underwritingUnderwriting (Guarantee) The process of assessment/valuation and classifying the degree of risk associated with the prospective Insured, as well as making a decision to accept or reject the risk.. | Derived from the tabarru’ account which is the participant’s funds. |
| Advantage | It is entirely up to the insurer or the insurance parties. | There is a distribution between the insurer and the participant in the form of a bonus. |
| Insurance Cancellation | The insured will be fined. | Participants get a proportional refund. |
| Supervisory Board | Commissioner | Commissioner, Sharia Supervisory Board |
Even though it is managed according to sharia, sharia insurance is not limited to being accessible to Muslims only. Everyone can buy this insurance product as long as it meets the criteria of insurance risk applied and agrees to the insurance provisions according to sharia principles.
Types of Insurance from Operational Purpose
The types of insurance are also distinguished based on their operational objectives. Based on this, insurance is divided into two types, namely commercial purposes and social purposes.
Types of Insurance from Operational Purpose No.1
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Commercial Insurance
The purpose of this type of insurance is to make a profit. These profits will be intended for shareholders. Commercial insurance is a type that is very common because there are many insurance companies that provide such services, ranging from State-Owned Enterprises insurance to those managed by the private sector. From the application of insurance activities, the types of commercial insurance can be divided into two types, namely conventional or sharia.
Types of Insurance from Operational Purpose No.2
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Social Insurance
The task carried out by this insurance is not to seek profit in its activities, but to provide social services for the community in the form of guaranteesWarranty Statement A statement issued by a potential customer regarding the condition of the person or thing insured. or protection against risk. Usually, social model insurance is managed by the government for the benefit of the wider community. Some of the products of social insurance are as follows:
- Health insurance and old-age insurance from the State Social Security Administration.
- State-run pension and old-age savings programs for civil servants and armed forces.
- Road accident insurance issued by a state-owned company engaged in social insurance.
Types of Insurance from the Coverage
One more aspect that publishes various types of insurance, namely in terms of coverage. In general, there are two types of insurance in terms of who and what is covered. The first is life insurance and the second is general insurance.
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Types of Insurance from the Coverage No.1
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Life Insurance
This type of risk transfer mechanism has the aim of bearing financial losses from the risk of death that befalls the insured due to unexpected things. The provision of these dependents is usually left to the heirsHeir The name of the person listed in the insurance policy as the party receiving compensation in the event of death to the Insured. who are the descendants of the insured. With this insurance value, it is hoped that the family life of the insured who died suddenly will not be more difficult.
Life insurance also provides coverage to the insured who has reached old age, then is no longer able to carry out activities to earn income. The risk of not being able to make a living will be borne by the insurance company if the party has a life insurance policyInsurance policy An agreement between the policyholder and the insurance company to perform the obligations as agreed by both parties..
The many interests concerning a person’s life opportunities and quality of life make the insurer have a variety of life insurance products that can be selected according to their needs. The various products are as below.
Term Life Insurance
This life insurance product provides maximum protection with relatively low premiumsPremium The money that must be paid at a certain time is the obligation of the insurance policyholder. The amount of premium paid is determined by the policy and approval of the insurance company in accordance with the conditions of the insured. The nominal payment approved by policyholders and insurance companies. Premium payment will be made according to the agreement, it can be monthly, yearly, or according to the agreement.. Term life insurance is suitable for those who are pursuing a career or for parents who are preparing for the future of their children.
Whole Life Insurance
This permanent insurance provides protection that applies as long as the insured is still alive. Whole life insurance can be used as protection for the need for insurance against fixed income, for example for hospital expenses. In addition, whole life insurance can also function as savings whose funds can be used when there is an emergency need.
Endowment PolicyPolicy The policy is a binding agreement and is agreed upon by the insurance company and policyholder in writing. An agreement made by the policyholder with an insurance company.
As the name implies, there are two big benefits that you can get when you are insured in a dual-purpose life insurance product. First, your heirs will get the sum insuredSum insured The amount of money that must be paid by the insurance company in the event of a claim from the policyholder for the risks guaranteed in the insurance program. when you die as a form of reducing the family’s financial risk. Second, you can also choose to get the entire sum insured while you are still alive. This is what makes dual-purpose life insurance often used as a pension fund for future needs.
Types of Insurance from the Coverage No.2
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General Insurance
General insurance coverage is intended for a property that is at risk of loss or damage. This type of insurance can also provide legal liability guarantees to third parties who are harmed from the movement of the property. The products of general insurance, among others, are as follows.
Cargo Insurance (Marine Insurance)
This insurance product provides financial compensation as a form of coverage from conditions that may suffer from the shipowner or other parties concerned. The loss incurred must of course result from the insured transportation process.
Fire Insurance
Fire insurance will cover the risks arising from fires that befall the buildings and property of the insured. The fires that the insurance company can decide on are those originating from electrical short circuits, explosions, plane crashes, and smoke.
Motor Car Insurance
The insurance company will provide coverage for loss, damage, and loss of motorized vehicles in accordance with the policy held by the insured. Several risks are covered for motor vehicle insurance claimsInsurance claim A formal request made to the insurance company for compensation based on the terms of the insurance policy or agreement., including collisions, slipping, and theft.
Personal Accident Insurance
This insurance product provides protection against death, permanent disability, or temporary disability arising from an accident experienced by the insured.
Health Insurance
This insurance product is superior to others because no one can escape illness throughout his life. Health insurance provides coverage for the insured’s treatment, both inpatient and outpatient, with the limits stated in the policy.
Liability Insurance
This insurance has the responsibility to bear the risk of claimsClaim The demands are given by the insurance policyholder to get the right properly so that the insurer pays the conditions according to the existing procedure. from third parties due to negligence by the insured party.
The Conclusion
Insurance, A GuaranteeWarranty Statement A statement issued by a potential customer regarding the condition of the person or thing insured. Against Risk
The dynamic pattern of people’s lives will also bring changes to the types and products of insurance. As explained earlier, insurance is here to provide coverage against the risks faced by a person. If there are additional risk factors that are only known in the future, it is likely that there will also be additional types and insurance products that will be offered to you.
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