Having an insurance product has become part of today’s financial needs. Therefore, budgeting for buying insurance products needs to be calculated in order to anticipate future risks. The choice of various types of insurance is also increasingly diverse. The insurance that you want to choose will of course be adjusted to your financial needs and capabilities. Before choosing an insurance product to buy, it’s a good idea to learn some of the following basic insurance terms.
- Insurance Policy
Insurance Policy is a written contract between the Customer and the Insurance Company. The policy contract states the rights and obligations that both parties must fulfil. It is important for you to understand the contents of the insurance policy, including the basic understanding, the risks covered, regulations, conditions, exceptions, and others. You will use the insurance policy when you submit an insurance claim.
Risk is a bad possibility that can happen to you, your family, or even your assets. Insurance can protect you from financial risks due to uncertainties or events that may cost you. Risk will also determine the amount of premium you will pay for insurance coverage.
Premium is one of the Customer’s obligations, it is a payment by the Customer to the Insurance Company. By paying the insurance premium, you will get the benefits listed in the insurance policy. So, you have the right to file a claim when you experience a loss.
When you experience a loss, you can file an insurance claim. Claim is a Customer’s application to the Insurance Company for their rights, in the form of compensation, as stated in the Insurance policy. In submitting a claim, you can directly contact the Insurance branch office, call-centre, or be assisted by an Insurance Agent.
Insurance agent is a person or legal entity that acts to offer and market insurance products on behalf of the insurance company. In addition to providing product information, Insurance Agents can also help you when you experience problems. For example, when your insurance policy status becomes lapse.
- Grace Period
The grace period is after the expiration of the premium payment due period. During the grace period, the policy is still active and you still get insurance protection benefits. However, if you don’t pay until after the grace period, the policy will lapse and the policy will become inactive.
Lapse is a condition where you lose the benefit of the protection stated in the insurance policy. Lapse can be caused by Customer’s negligence in carrying out the obligation to pay premiums. Therefore, it is important for you to understand the rights and obligations stated in the policy, so that you get the maximum benefit from the insurance product that you have.
- Own Risk
Own risk (OR), also often referred to as a deductible, is the costs that must be borne by the customer when submitting a claim. The amount of the OR are varies, depending on the premium paid. OR only applies to losses of a physical damage. Own Risk does not apply to losses caused by lawsuits against third parties.
- Third Party Liabilities
In Motor Vehicle Insurance, there is an option to expand Legal Liability protection to Third Parties (TPL). TPL is a coverage due to losses caused by the Customer to the vehicle, property, or life, of a third party. All provisions regarding legal liability to third parties are stated in the Indonesian Motor Vehicle Insurance Standard Policy (PSAKBI), including the types of coverage and exceptions.
Underwriting is a risk identification and selection process by the insurance company for prospective customers. The underwriting process will determine the classification of risk levels, the applicable terms and conditions, and the amount of premium. One of the objectives of the underwriting process is for the customer to receive a premium that matches the risk.
Alright, are you more familiar with insurance terms? By understanding these basic terms, it will be easier for you to understand the rights and obligations, the risks protected, and the benefits that you can get by having an insurance product. If there are other terms that you do not understand, or you have other questions about insurance, we will be happy to explain them to you. Please contact us at (021) 280 90111 or via our WhatsApp Business at 0817 001 0022. What are you waiting for? Let’s insure!