What Is Insurance? Benefits, advantages and disadvantages

What Is Insurance? Benefits, advantages and disadvantages
What Is Insurance? Benefits, advantages and disadvantages

Queenews.com – Insurance is an agreement between two parties, namely the party providing protection (the insurer) and the party receiving the protection (the insured), in which the insurer is willing to pay a certain amount of money (premium) to the insured in return for the risk of loss that may be experienced by the insured as a result of an event. which is uncertain.

Insurance aims to reduce the impact of financial losses caused by these risks, by spreading these risks to a number of parties involved in the insurance agreement.

Insurance can be divided into several types, such as life insurance, health insurance, vehicle insurance, property insurance, and others.

Each type of insurance has different terms and conditions, according to the characteristics of the risks faced by the insured.

Benefits, Pros and Cons of Insurance:

By paying insurance premiums regularly, customers can reduce the financial burden arising from these risks.

Insurance has several benefits, including:

  • Providing a sense of security and comfort for customers, because they don’t have to worry about facing unexpected risks.
  • Provide compensation or indemnity to customers in accordance with the agreed sum insured, so that customers can recover their financial condition.
  • Providing additional facilities or services to customers, such as legal assistance, medical consultation, emergency evacuation, and others.
  • Providing additional incentives or benefits to customers, such as discounts, cashback, bonuses, prizes, and others.

However, insurance also has some drawbacks, including:

  • Requires premium fees to be paid regularly by customers, which may be a burden for customers who have low or unstable income.
  • Requires a claim process that must be carried out by the customer in the event of a risk guaranteed by insurance, which may take time and effort.
  • Have terms and conditions that must be met by customers to get insurance protection, such as age, health, type of work, area of ​​residence, and others.
  • Have limitations or exceptions in providing insurance protection, such as risks that are intentional by the customer, risks resulting from war or riots, risks resulting from nuclear or radiation disasters, and others.

Therefore, before choosing insurance that suits their needs and financial capabilities, customers must pay attention to the benefits and drawbacks of this insurance.

The customer must also read and understand the insurance policy well to avoid misunderstandings or disputes in the future.

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