What Is Insurance Policy? Knows Understanding, Types, And Functions

Illustration of insurance policy (Photo: Unsplash)

YOGYAKARTA What is an insurance policy? Insurance policy is a contract carried out by an insurance company (manager) with insurance customers (policeholders or beneficiaries).

Most people have some sort of insurance for their cars, homes, or even lives. The reason is, insurance policies can protect value against the risk of financial losses, both large and small, occurring in the future, according to a policy agreement.

In this article, VOI will discuss what insurance policies are and their types and functions.

The Insurance Policy is a written contract carried out by the insurance company with insurance customers, which explains all rights and obligations between the two parties.

The insurance policy can be valid written evidence in the agreement made by the person in charge and the responsible party.

With the insurance policy, policyholders and the person in charge who makes the insurance agreement will be bound and have each responsibility as agreed from the start.

Therefore, insurance policy is very important in insurance services because policies can protect every right and obligation of customers and insurance companies.

Type of Insurance Policy

Quoted from the Investopedia page, Wednesday, January 11, 2023, various types of insurance policies are available, and almost all individuals or businesses can find insurance companies that are willing to insure them at certain prices.

The most common types of personal insurance policies are cars, health, homes, and souls.

Business requires a special type of insurance policy that guarantees certain types of risks faced by certain businesses.

For example, fast food restaurants require policies that bear damage or injuries caused by cooking with deep fry.

While car dealers require protection for damage or injury that can occur during test drives.

In more detail, here are some types of insurance policies that insurance customers most commonly own:

1. Health Insurance Policy

Health insurance can guarantee the medical costs of policyholders, such as outpatients or hospitalizations.

Generally, health insurance policies estimate the cost of care that insurance companies can cover when participants undergo medical treatment.

2. Life Insurance Policy

Life insurance is a protection program for families if things happen that are not desirable, such as death, against insurance policyholders.

This type of insurance policy consists of a measure of the participant's soul. Later, the guarantee can be issued if the participant dies to be given to the heirs.

3. Travel Insurance Policy

Travel insurance is a guarantee of compensation as long as registered participants travel within a certain period of time. The form of guarantee is only valid when you start leaving until you return to your place of origin.

4. Home Insurance Policy

House insurance is a protection for the risk of damage to buildings and compensation for insured property.

This service allows you to claim the cost of losses incurred by natural disasters, fires, thefts and other things listed in the policy.

5. Vehicle Insurance Policy

The vehicle insurance policy is a contract made to cover the responsibility for the damage to motorized vehicles.

Insurance Policy Function

The function of the insurance policy for customers or policyholders is:

As for the person in charge, the insurance policy serves as:

That is information about what insurance policies are and their types and functions. May it be useful!