It should be understood what insurance really is to get a more objective assessment and determine which is best for yourself.
An insurance coverage (policy) is an agreement between two or more parties with which the insurer binds themselves to the insured to receive the insurance premiums, to provide reimbursement to the insured for loss, damage or loss of expected benefits, or legal liability to third parties who may be suffered by the insured, arising from certain events, or to provide a payment based on the death or life of an insured person. In a sense, the insurance has basic principles, namely:
In this principle, the insurer is willing to pay no more than the actual value to be borne by the insured. This principle is made on the grounds that the insurance contract is to restore the same economic position when the loss has not yet occurred. Second, that he insured does not benefit from the loss, thus Third, reducing any moral hazard by eliminating the profit incentive.
- Insurable Interest
This principle says that the insured must be in a position to suffer financially when a loss occurs. This principle was made to avoid speculation, reducing moral hazard, and so as not to bear more of the financial needs of the insured (supports the principle of indemnity).
- Utmost Good Faith
Utmost good faith means honesty is very highly regarded in the insurance contract.
Subrogation means that the insurer is only obligated to pay in accordance with that stated in the policy.
If an insured object has previously been insured by a different insurance company, the new insurer will appley same principles.
- Proximate Cause
The main cause of a loss in an event. If the interests of the insured suffered natural disasters or accidents, then first of all we will look for the causes of such – could anything have been done to prevent such a disaster or accident.
The purpose of this insurance is:
– To provide a guarantee of protection from the risk of losses suffered by one party.
– To improve efficiency concerns because it does not need to specifically maintain security and surveillance.
– To provide protection that takes a lot of energy, time and cost.
– Equitable cost, which is enough to pay a certain amount and doos not need to replace / pay for their own losses incurred and the amount is not necessarily uncertain.
– The basis for the bank to extend credit because the bank requires a guarantee of protection of the collateral provided by the borrower.
– For savings, because the amount paid to the insurer will be returned in larger quantities – specifically for life insurance.
– Loss of earning power closes a person or business entity because they cannot work.
- Potential Problems In Insurance
The purpose of the person in terms of buying insurance is for protection while getting insured against risk. The insurance company will avoid those who buy insurance for the purpose of speculation or profit. Therefore, the insurance company must apply the basic principles.
Other potential problems faced by the insurance company are high risk approvals from customers and / or prospective customers. Usually the people who want to buy health insurance are those who already have a medical condition or suffer from chronic pain rather than those who were healthy.
In other words, those who most want to buy insurance are those who know that they are a risk. They could potentially behave as if healthy with good medical records to show. Therefore, the insurance company should be able to have a way to be able to resolve the issue. Among others, to provide a physical examination requirement with a hospital that has been designated.
In addition, health insurance companies can reduce the presence of adverse selection by selling insurance on a group whose members have the same relative medical condition.