How to Transfer Risk with the Life Insurance

As explained earlier in the article "Understanding Life Insurance" that the Life Insurance Policy is an agreement that guarantees payment of a sum of money upon the death of the insured party (insured) to the recipient / beneficiary (beneficiary), or other circumstances mentioned in the contract agreement as total disability.
Regarding the rules in detail, eg regarding the condition or how and when circumstances dicover / covered are listed in the Letter of Agreement (Policy), depending on the products made by the respective Life Insurance Company. But in general the articles in it will set things like that mentioned above.
Transfer of Risk
From the above discussion, we can see that having life insurance, a person can move the risk of potential loss of revenue suffered by his family when he died or suffered a total physical disability caused by accident so he could not work for Insurance companies.
As an illustration, Mr. Bejo is the backbone for his family and he has a wife and 2 children are still small. Pak Bejo is realized if at any time he died then the economy will be disrupted due to his wife's family is not working / as housewives. Therefore, he made an agreement with insurance companies so that when he later died of his family will not have trouble in the economy (potential financial loss).
Then he paid a sum of money (premium) periodically to the Party Insurer / insurers (insurance companies) with an agreement (insurance contracts) if one day when he died (incidence dicover / covered) before the period of validity of the policy ends (for example , eg 30 years) then the family as the heirs will receive cash compensation or insurance money (compensation fund) in accordance with the agreement of a certain amount of life insurance companies. With this compensation money Pak Bejo family will get a little lightening the economic burden, because the funds Pak Bejo wife might be able to resume his life by opening a new business or the other, for example, to feed their children.
So from the above illustration clearly shows that the risk to be borne by Mr. Bejo and his family for the loss of income (due to Pak Bejo died) diverted / transferred the risk to the insurance company.
It is worth remembering that life insurance can not prevent the occurrence of accidents or death. And Life Insurance only compensate financial losses suffered by property owners or those who are dependents of the asset.