Understanding an Insurance Policy and How to Choose the Right Policy

Insurance is a fairly complex matter, where you will need careful understanding and consideration before using it. Although insurance is no longer a thing that sounds foreign to our hearing, in fact, until now there are many people who do not understand the ins and outs and various things about insurance.

It is certain that this lack of understanding will eventually reduce the interest of most people to use it. In Indonesia alone, the development of insurance is quite good and encouraging, this can be seen from the large number of insurance companies that provide services and have been able to survive today such as well  known life insurance service providers and health insurance services .

Well-known insurance companies such as Prudential , Allianz , Sinarmas , AXA Mandiri , and Cigna  are examples of the best insurance service providers in Indonesia The  number of insurance users in Indonesia also shows an increase from year to year, public awareness of the importance of protecting their lives and assets is getting higher and makes they choose to use insurance services.

This is of course also supported by the many types of insurance that can be selected and tailored to the needs of many people, so that people can easily choose and use certain types of insurance that are most appropriate for them.

Definition of an Insurance Policy

Insurance policy
Understanding the Insurance Policy via cloudfront.net

As we know, insurance has many different terms than what we are used to hearing. This of course can lead to wrong understanding and lead to various incorrect assumptions.

Before using insurance services, you should really understand the various terms used there, so that you don’t misinterpret these things in the future. Do not let you use insurance services without clearly understanding the various terms used in them

One of the terms we hear most often in insurance is an insurance policy. There are many people who think that an insurance policy  is an amount of funds that will be paid to the insurance company each month (premium), this is of course very inappropriate because there is a very large difference in meaning between an insurance premium and an insurance policy.

The insurance policy is evidence of a written agreement made by the insurance company (the insurer) with the customer who uses the insurance service (the insured), which explains all the rights and obligations between the two parties. The insurance policy will be a valid written evidence in the agreement made by the insurer and the insured party.

With the existence of an insurance policy, both parties who enter into the insurance agreement will be bound and have their respective responsibilities as agreed from the beginning. The insurance policy is very important in the insurance service itself, because the policy will protect every right and obligation of the customer and the insurance company.

Function of the Insurance Police

Given the importance of an insurance policy, it is only natural that you should understand the entire contents of your insurance policy. This will prevent you from a number of losses that could arise in the future due to your lack of understanding of all the details written in the insurance policy you are using.

For both parties between the insured and the insurer, the insurance policy has their respective functions, namely:

Policy functions for customers using insurance (the insured):

  • Being a written evidence of coverage for various risks and compensation for losses that may occur to the insured, where the loss is written in the policy
  • As proof of premium payment provided to the insurance company as the insurer
  • Be the most authentic proof to sue the insurer, if at any time negligent or does not meet the collateral

Policy function for insurance companies (insurers):

  • Become evidence or receipt of insurance premiums paid by the insured
  • It is written evidence of the guarantee given to the insured to pay compensation that may be suffered by the insured
  • Become the most authentic evidence to reject claims for compensation or claims submitted by the insured, if the cause of the loss does not meet the requirements of the policy.

How to Choose the Right Police

Choosing an Insurance Policy

There are many types of insurance offered by the insurance company, this is done with one goal, namely getting a larger number of customers and higher profits. With such a large number, you as a customer also have many choices that you can adjust to your needs.

Each insurance company  will certainly have their own policies that they apply in the insurance products they sell. All of these things you will find in the insurance policies they offer, this is what then becomes very important for you to look at from the start, because there are many cases where disputes occur due to incorrect understanding of the policy from insurance service users.

If you cannot understand every detail contained in the policy, then it’s a good idea to ask for an explanation from a third party, in this case usually the service used is an insurance broker. An insurance broker can explain and help you choose an insurance product that is the most appropriate and that you really need, so that you will not waste money buying an insurance policy that does not have the maximum benefit for you.

In practice, insurance companies will be very detailed in making the contents of the insurance policies they sell. However, the opposite actually happens to customers who will use the insurance, where there are lots of people who are lazy to read the insurance policies they are going to buy. If this is the case, then when and how will you understand the contents of the entire insurance policy?

It is very important to read and understand the contents of the policy properly, before you buy it. The following are some of the ways you can consider getting the right insurance policy:

1. Adjust to Your Needs

There are many types of insurance services issued by insurance companies, this is of course directly proportional to the number of policies they offer. As a potential customer, it will be very important for you to really understand the type of insurance you need. Don’t buy insurance that you don’t need at all, it’s a waste of money.

Example: you already have a pure health insurance, but because you are interested in unit-linked health insurance products, then you use it too. While these two insurances do not allow you to make double claims , the use of unit-linked health insurance is a waste of time. If you really want to invest, then you can do it separately from insurance services (pure investment).

2. Use the  Recipient Double Claim

When you use two health insurance services at once (for example one office facility and the other personal funds), then try to use double-claim health insurance services , where your personal insurance can be claimed only by using a photocopy of the receipt issued by the house sick. This will give you the maximum benefit from using the insurance.

3. One Police for One Family

There are insurance services that allow you to use one policy simultaneously with other family members. This is much more economical, where you only need to pay for one policy for the entire family.

4. Understand the Terms Determined

There are many things written in an insurance policy, one of the most important for you to pay attention to is the conditions for submitting a claim. Although every company has different conditions, the following are standard terms that you must understand from the start:

  • The premium calculation system that is applied and the amount of premium that you have to pay
  • Types of coverage that can be claimed, such as: hospitalization requirements, choice of hospital / clinic, types of hospital services that can be claimed (room fees, doctor services, medicines, and others).

Choose and Use the Most Appropriate


In choosing an insurance policy, you must understand the type of insurance you need. Choose insurance services from a credible and trustworthy insurance company, so you can get the best service from them.

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