1. DEFINITION OF RISK
Risk (English: "Risk") is the center of insurance and therefore
studied in detail before insurance need first to understand the meaning of
risk.
Aside from the center of insurance, risk is also at the center of life
itself so that the notion that risk can be viewed from various aspects of life and
as a result many people put forward about the meaning or definition of risk.
However, in this lesson we define risk as uncertainty of
at a loss (uncertainty of loss).
This simple definition contains two elements, namely:
Uncertainty (uncertainty) and loss (loss).
The term risk (risk) may also in the sense objects or objects subject coverage
matter insured) and disaster / hazard (Perils). Ship, cargo, cars,
buildings and others are some examples of the objects insured.
Hurricanes, earthquakes, floods, theft are some examples of the perils or
disaster / hazard that can cause harm when it occurs.
2. CLASSIFICATION OF RISKS
In the world of insurance in question is the risk, if risk is defined
uncertainty as to incur losses (Uncertainty of loss), which
daIam sense here meant financial losses (financial risk), where losses
can be assessed in financial or monetary value.
Risks can be classified as follows:
2. 1 Speculative Risks (Speculative Risk)
Speculative risk is the risk that gives the possibility
profit (gain) or loss (loss) or no profit and no loss (break
event). Speculative risk is also called dynamic risk (dynamic risk).
Example:
- Risk in world trade (the possibility of profit or loss)
To be continued ...
Monday, October 3, 2011
DEFINITIONS AND CLASSIFICATION OF RISKS AND Hazard
1. DEFINITION OF RISK
Risk (English: "Risk") is the center of insurance and therefore
studied in detail before insurance need first to understand the meaning of
risk.
Aside from the center of insurance, risk is also at the center of life
itself so that the notion that risk can be viewed from various aspects of life and
as a result many people put forward about the meaning or definition of risk.
However, in this lesson we define risk as uncertainty of
at a loss (uncertainty of loss).
This simple definition contains two elements, namely:
Uncertainty (uncertainty) and loss (loss).
The term risk (risk) may also in the sense objects or objects subject coverage
matter insured) and disaster / hazard (Perils). Ship, cargo, cars,
buildings and others are some examples of the objects insured.
Hurricanes, earthquakes, floods, theft are some examples of the perils or
disaster / hazard that can cause harm when it occurs.
2. CLASSIFICATION OF RISKS
In the world of insurance in question is the risk, if risk is defined
uncertainty as to incur losses (Uncertainty of loss), which
daIam sense here meant financial losses (financial risk), where losses
can be assessed in financial or monetary value.
Risks can be classified as follows:
2. 1 Speculative Risks (Speculative Risk)
Speculative risk is the risk that gives the possibility
profit (gain) or loss (loss) or no profit and no loss (break
event). Speculative risk is also called dynamic risk (dynamic risk).
Example:
- Risk in world trade (the possibility of profit or loss)
To be continued ...
Risk (English: "Risk") is the center of insurance and therefore
studied in detail before insurance need first to understand the meaning of
risk.
Aside from the center of insurance, risk is also at the center of life
itself so that the notion that risk can be viewed from various aspects of life and
as a result many people put forward about the meaning or definition of risk.
However, in this lesson we define risk as uncertainty of
at a loss (uncertainty of loss).
This simple definition contains two elements, namely:
Uncertainty (uncertainty) and loss (loss).
The term risk (risk) may also in the sense objects or objects subject coverage
matter insured) and disaster / hazard (Perils). Ship, cargo, cars,
buildings and others are some examples of the objects insured.
Hurricanes, earthquakes, floods, theft are some examples of the perils or
disaster / hazard that can cause harm when it occurs.
2. CLASSIFICATION OF RISKS
In the world of insurance in question is the risk, if risk is defined
uncertainty as to incur losses (Uncertainty of loss), which
daIam sense here meant financial losses (financial risk), where losses
can be assessed in financial or monetary value.
Risks can be classified as follows:
2. 1 Speculative Risks (Speculative Risk)
Speculative risk is the risk that gives the possibility
profit (gain) or loss (loss) or no profit and no loss (break
event). Speculative risk is also called dynamic risk (dynamic risk).
Example:
- Risk in world trade (the possibility of profit or loss)
To be continued ...
Sunday, October 2, 2011
History of Insurance
The concept of insurance is already known from the days before BC which men at that time had saved his soul from various threats, including food shortages.
One of the stories about food shortages occurred in Ancient Egypt during the rule of King Pharaoh. One day the king had a dream which was interpreted by the Prophet Joseph during the seven years that Egypt will experience a bountiful harvest and then followed by times of scarcity during the next 7 years. To guard against famine is King Pharaoh followed the advice of the Prophet Joseph to give a part of the crop in the first 7 years as a reserve food during a famine.
Thus the period of 7 years of famine in Egypt people avoid the risk of severe famine that swept across the country.
In 2000 BC the merchants and actors in the Italian form collegia Tennirium, a kind of insurance agencies that aims to help the widows and orphans of members who died.
Similar associations are collegia Nititum, then stood with members of the slave who had been in the army of the Roman empire.
Each member collects a number of contributions and when one member had the misfortune (unfortunate) then the funeral expenses will be paid by members who fared well (Fortunate) using funds that had been collected previously.
Such association is one of the early emergence of the concept of insurance, namely those who are lucky or good fortune to help people who are not lucky.
Insurance Studies
Basic Insurance
Understanding Insurance Insurance sense when viewed from a legal perspective are:
"Insurance or coverage is an agreement between 2 (two) or more parties where the insured party binds himself to the insurer, by accepting the insurance premiums to reimburse the insured for loss, damage or loss of profits that is expected or legal liability to third parties which may be in pain the insured for an uncertain event, or to provide payments for life or death in pertanggungkan someone. "
Principle - Basic Principles of Insurance There are some basic principles of insurance is very important that must be fulfilled either by the insured and the insurer for a contract / agreement applicable insurance (not canceled). The principal prinsip2 Insurance is as follows:
* Principle of Good Faith (Utmost Good Faith)
* The principle of interest which might at Insure (Insurable Interest)
* Principle of Indemnity (Indemnity)
* The principle of Subrogation (Subrogation)
* Principle of Contribution (Contribution)
* Principle of Cause and Effect (Proximate Cause)
Insurance Products 1. Insurance Losses
Closing the coverage for loss due to damage or obliteration insured property due cause - cause or occurrence of an insured (cause - a cause or danger - the danger referred to in the contract or insurance policy).
In general insurance, the insurer receives premiums from the insured and the event of damage or obliteration of the insured property compensation will be paid to the insured.
2. Life insurance
Closing the insured to pay some compensation due to death or survival of a person within a period of coverage.
In life insurance, the insurer receives premiums from the insured and if the insured dies, the benefits (sum assured) is paid to the beneficiary or a person designated in the policy as a recipient of benefits.
Insurance Products
* Fire Insurance
* Insurance Marine Transportation
* Motor Vehicle Insurance
* Insurance Framework Ship
* Construction All Risk (CAR)
* Property / Industrial All Risk
* Customs Bond Insurance
* Surety Bond Insurance
* Personal Accident Insurance
* Health Insurance
* Etc.
Life Insurance Products
* Pure Life Insurance (Whole Life Insurance)
* Long Term Life Insurance
* Short Term Life Insurance (Term Insurance)
Product Insurance Program In Social Insurance
* Personal Accident Insurance issued by PT Jasa Raharja
* Health Insurance and Old Age Savings issued by PT JAMSOSTEK
Life Insurance in Social Insurance Programs
* Pensions and Savings Program Old for civil servants and armed forces organized by PT. TASPEN and PT ASABRI
Understanding Rates Insurance rates are:
* A unit price of a certain insurance contracts, coverage for certain objects, against specific risks, and in particular use for the future as well.
* Tools to measure the risk of a realistic (the reality of risk), the range and depends on the quality, the greater the likelihood of loss, the greater the charge.
Object Coverage Ie all objects (property and people) that can be pertanggungkan rules as it will likely experience a risk that could result in losses in the review of financial terms. Example:
* Home stay, buildings, factories, business premises, etc.
* Cars, boats, planes, etc.
* The soul of man, health, etc.
* Project development and installation of machinery
* Transport of goods
* Etc.
SPPA (Insurance Closing Letter Request) SPPA is a form field must be filled in by the prospective insured in order closure of Insurance that will be used by the insurer to evaluate the risk level of coverage is the object. The SPPA data is filled in around the object insured, the condition surrounding the object insured, the insured data, details of the object insured, the level of danger, and others.
Understanding Insurance Insurance sense when viewed from a legal perspective are:
"Insurance or coverage is an agreement between 2 (two) or more parties where the insured party binds himself to the insurer, by accepting the insurance premiums to reimburse the insured for loss, damage or loss of profits that is expected or legal liability to third parties which may be in pain the insured for an uncertain event, or to provide payments for life or death in pertanggungkan someone. "
Principle - Basic Principles of Insurance There are some basic principles of insurance is very important that must be fulfilled either by the insured and the insurer for a contract / agreement applicable insurance (not canceled). The principal prinsip2 Insurance is as follows:
* Principle of Good Faith (Utmost Good Faith)
* The principle of interest which might at Insure (Insurable Interest)
* Principle of Indemnity (Indemnity)
* The principle of Subrogation (Subrogation)
* Principle of Contribution (Contribution)
* Principle of Cause and Effect (Proximate Cause)
Insurance Products 1. Insurance Losses
Closing the coverage for loss due to damage or obliteration insured property due cause - cause or occurrence of an insured (cause - a cause or danger - the danger referred to in the contract or insurance policy).
In general insurance, the insurer receives premiums from the insured and the event of damage or obliteration of the insured property compensation will be paid to the insured.
2. Life insurance
Closing the insured to pay some compensation due to death or survival of a person within a period of coverage.
In life insurance, the insurer receives premiums from the insured and if the insured dies, the benefits (sum assured) is paid to the beneficiary or a person designated in the policy as a recipient of benefits.
Insurance Products
* Fire Insurance
* Insurance Marine Transportation
* Motor Vehicle Insurance
* Insurance Framework Ship
* Construction All Risk (CAR)
* Property / Industrial All Risk
* Customs Bond Insurance
* Surety Bond Insurance
* Personal Accident Insurance
* Health Insurance
* Etc.
Life Insurance Products
* Pure Life Insurance (Whole Life Insurance)
* Long Term Life Insurance
* Short Term Life Insurance (Term Insurance)
Product Insurance Program In Social Insurance
* Personal Accident Insurance issued by PT Jasa Raharja
* Health Insurance and Old Age Savings issued by PT JAMSOSTEK
Life Insurance in Social Insurance Programs
* Pensions and Savings Program Old for civil servants and armed forces organized by PT. TASPEN and PT ASABRI
Understanding Rates Insurance rates are:
* A unit price of a certain insurance contracts, coverage for certain objects, against specific risks, and in particular use for the future as well.
* Tools to measure the risk of a realistic (the reality of risk), the range and depends on the quality, the greater the likelihood of loss, the greater the charge.
Object Coverage Ie all objects (property and people) that can be pertanggungkan rules as it will likely experience a risk that could result in losses in the review of financial terms. Example:
* Home stay, buildings, factories, business premises, etc.
* Cars, boats, planes, etc.
* The soul of man, health, etc.
* Project development and installation of machinery
* Transport of goods
* Etc.
SPPA (Insurance Closing Letter Request) SPPA is a form field must be filled in by the prospective insured in order closure of Insurance that will be used by the insurer to evaluate the risk level of coverage is the object. The SPPA data is filled in around the object insured, the condition surrounding the object insured, the insured data, details of the object insured, the level of danger, and others.
Saturday, October 1, 2011
Basic Types of Life Insurance
Life insurance lines and classified according to plan. Line of insurance (insurance line) refers to one of three different approaches to the provision of insurance cover, namely: ordinary individual insurance (ordinary), the insurance people (industrial) and group insurance (group insurance). Insurance Plan shows the type / kind of insurance policy that is; term insurance (term insurance), life insurance (whole life insurance) and endowment (endowment).
Ordinary insurance is for each person moved at the maximum amount of the premium is relatively limited and the lowest sum is determined by the company. Premiums can be paid at once (lump sum) or yearly, half yearly, quarterly or monthly.
Insurance is for people of every person but with a smaller number of maximal. Group insurance provides protection to a group of people who stated in one policy. The existence of the group itself must be for a specific purpose, not to obtain insurance protection. Usually the group consists of employees of a company.
Term insurance (term) is insurance that provides protection for a certain period. While whole life insurance provides permanent protection to the insured during his lifetime. Unlike term insurance, whole life insurance at no deadline for protection. Endowment insurance with term insurance, which is only valid for a specified period. But the endowment insurance which provides benefits equal to the sum insured if the insured lives until they run out of contract or the insured dies during the term of the contract.
Definition and History of Insurance
Understanding Insurance
Life is full of risks that might be expected or unexpected, that's why we need to understand about insurance. Some natural events that occurred in recent years and takes a lot of casualties, both fatalities and property, such as reminding us of the need for insurance. For every member of society including the business world, the risk for experiencing disadvantage (misfortune) are always there (Kamaluddin: 2003). In order to overcome the losses incurred, humans developed the mechanism which we now know as insurance.
The primary function of insurance is as a mechanism to transfer risk (risk transfer mechanism), the transfer risk from one party (the insured) to another party (the insurer). The transfer of risk is by no means eliminates the possibility of misfortune, but the insurer to provide financial security (financial security) as well as the tranquility (peace of mind) to the insured. In return, the insured pays the premium in a very small number when compared with the potential losses that may be suffered (Morton: 1999).
Basically, the insurance policy is a contract that is a legal agreement between the insurer (in this case the insurance company) with the insured, where the insurer was willing to bear some losses that may arise in the future in return for payment (premium) of a particular insured.
According to Law No. 2 of 1992, which referred to the insurance or coverage is an agreement between two or more parties, with which the insurer committed themselves to the insured, by accepting the insurance premiums to provide reimbursement to the insured for loss, damage or loss of expected benefits, or legal liability to third parties that may be suffered by the insured, arising out of an uncertain event, or to provide a payment based on life or death of an insured person.
In order for a loss of potential (which may occur) can be covered by insurance (insurable) then it should have the following characteristics: 1) the occurrence of loss contains uncertainty, 2) the loss must be restricted, 3) the loss must be significant, 4) the ratio of losses can be predictable and 5) the loss is not catastrophic (disaster) for the insurer.
The question arises, death is definitely something, why be insured? Even though it is something that contains a certainty, but the exact time of death when someone is outside the control of the TSB. So when the event of death that really contain the uncertainty is what causes it insurable.
There are two forms of agreement in determining the payment amount at maturity of insurance, namely: the contract value (valued contract) and the indemnity contract (contract of indemnity). The contract value is an agreement where the amount of payment has been determined in advance. For example, the sum assured (UP) on life insurance. Indemnity contract is an agreement that the number of santunannya based on the number of actual financial loss. For example, the cost of hospital care.
In the case of insurance companies sought to curb possible losses from a fatal / major, then it can shift risk to another insurance company. This is called reinsurance; companies accepting reinsurance called reinsurers.
In addition to the above five characteristics, before it can be insured, the insurance company should consider the insurable interest and anti-selection. Insurable interest relating to the relationship between the insured and the recipient of compensation / benefits - in terms of potential loss. Example, insurance companies will not sell fire insurance policy to a person other than the owner of the building is insured. Insurable interest within this example is the ownership of an eye something that is insured. Similarly, family relationships, financial linkages are reasonable, also a form of insurable interest. The definition of anti-selection (counter selection) refers to the existence of a greater tendency to take insurance because it has a level of risk above average. Example, people who have bad health records or the risk of dangerous jobs tend to buy insurance. To reduce anti-selection effect, insurance companies must be able to identify and classify potential risks or losses. The process of identification and classification of the level of risk is called underwriting or risk selection. But that does not mean anti-selection led to the filing of insurance is rejected, because the risk of loss to the insured by above average premium may be subject to sub-standard (special premium) because the risk is sub-standard (special risks) unless the possibility of loss is much higher, perhaps the insurance application was rejected.
History of Insurance
Insurance Babylonian society originated from 4000-3000 BC, known as Hammurabi agreement. Then in 1668 AD at the Coffee House Lloyd's of London London stands as a forerunner to conventional insurance. Sources of insurance law is positive law, natural law and pre-existing examples as culture.
Insurance brings social as well economic mission with the premiums paid to insurance companies to guarantee the transfer of risk, namely the transfer (transfer) the risk of the insured to the insurer. Insurance as a risk transfer mechanism where the individual or business move some uncertainty in exchange for premium payments. The definition of risk here is uncertain whether or not a loss (the uncertainty of loss).
Insurance in Indonesia started in the Dutch colonial period, associated with the success of companies of the country in the plantation sector and trade in Indonesia. To meet the security needs of business sustainability, certainly needed the insurance. The development of the insurance industry in Indonesia had a vacuum during the Japanese colonial period.
Security needs to filled by the Life Insurance
1) Personal Needs, including: the provision of the final living expenses such as costs associated with death, the cost of bill payment in the form of debt or loan must be repaid; family benefits; cost of education, and pensions. In addition, the life insurance policy that has cash value can be used as a savings and investment.
2) Business Needs, such as: insurance on key persons (insurance for key people within the company); insurance quotes on business owners (insurance for business owners); employee benefits (employee benefits) for example, a collection of life and health insurance.
source: Morton, G. (1999). Principles of Life and Health Insurance. LOMA.
Friday, September 30, 2011
Classification of Insurance Business
Individuals and groups or companies have different types of assets between one another. The need to protect the assets is also different. Just as a variety of assets, insurance policies also have different types as well. Below are some Business Insurance classification, namely:
1. Life Insurance (Life Insurance)
Coverage in Business Insurance (Life Insurance):
a. Life Insurance for Individuals
b. For Group Life Insurance (Collection)
c. Health Insurance
d. Accident Insurance
e. Pension fund
Term Life Insurance Policy:
Policy issued for a longer period for several years, or even a lifetime.
Risks are borne in Life Insurance:
a. Deaths due to illness or accident
b. Hospital (inpatient or outpatient)
c. Total and permanent disability
d. Pension fund
2. General Insurance / Loss (General Insuranse)
Business Insurance Coverage in the Public / Loss:
a. Motor Vehicle Insurance
b. Fire insurance
c. Natural Disaster Insurance
d. Travel Insurance (Business and tourism)
e. Marine Insurance
f. Terrorism Insurance
g. Insurance Professionals (Doctors, Lawyers) and others.
Term Insurance Policy General / Loss:
Policy is usually issued for a period of 12 months or even shorter.
Risks are borne in General Insurance / Loss:
a. Loss or damage to goods such as motor vehicles, ships, buildings and others.
b. Debt incurred through the sale of goods or products or processes that accompany it.
c. Building or a house fire.
d. Damage to buildings or homes due to floods or earthquakes.
e. Claims for compensation due to malpractice for physicians.
f. Lost or damaged cargo.
g. Theft.
h. Loan losses.
So clearly, the various types of insurance above are made to protect or protect the assets you have. You can determine which insurance that suits your current needs and future based on the assets you have.
Law of Large Numbers
Insurance companies have a way of working in insurance risk management. The workings of this life insurance company is to move the impact of loss / risk of an individual to a group and share / spread the losses / risks to the entire group. In this case life insurance can also be called as a tool to spread the risk. So the risk should be borne by an individual will be shared by all members of the group.
As a tool to spread the risk, Life Insurance can only work if the insurance company is able to bear the same risk in large numbers. When life insurance companies are able to bear the same risk in large numbers, then the law shall apply the Law of Large Numbers.
Then what is stipulated in the Law of Large Numbers?
In the Law of Large Numbers states if the amount of loss exposure increases, the predictions of loss will be real close to the amount of loss (actual loss).
By using the Law of Large Numbers would allow insurance companies to predict the amount of losses arising better.
The use of this law is very important for life insurance companies because they must determine the amount of premium to be paid by an individual (based on an estimate of loss) to the insurance company. This premium collection will be used by insurance companies to provide compensation for financial losses / assets arising from a risk / disaster suffered by the insured. In this case, of course life insurance is expected to be used to reduce the impact of risks arising from the occurrence or accident.
Protection Against Risks
Sure you all will not think that we live in the past will be like that now. Be it in education, career, the amount of our income is or how we deal with life in the economy. Maybe in the past each person wants his life will be successful and happy in the present and future. But sometimes what we wish were not in accordance with the plans we have prepared earlier. In fact we can not be sure what will happen in the future in life. We are all aware of the uncertainties in life. Every road we take to achieve a certain success has risks. Risk is something that can not be separated in life.
In the midst of a life filled with uncertainty, whether there are other ways that we can take to protect our lives from the risk?
And what to do with life insurance, which is said to provide protection against these risks?
How is the actual mechanism or the workings of life insurance that can provide protection against these risks?
Insurance Mechanisms
Life insurance is actually very simple mechanism. The people who face the same risk agreed to raise some funds (premiums) to be stored. Then whenever among them or their dependents (families, for example) runs the risk, then they will be compensated from the savings earlier.
So here is clear to us that every moment in life is always at risk, would be severe if we face it alone. But it will be much lighter if there is a group of people who go through life with the same risk could both help each other in relief if there is a risk (accident, illness or death) in life. Beautiful is not it? Sure you agree, or at least can understand the mechanism of protection against risks to life insurance this way.
You can also read about other things here:
Asset Sale Value
Asset Damage
Most Valuable Asset - Human Life
We strive to provide testimony and information as possible, so you really understand and comprehend all matters relating to insurance
In the midst of a life filled with uncertainty, whether there are other ways that we can take to protect our lives from the risk?
And what to do with life insurance, which is said to provide protection against these risks?
How is the actual mechanism or the workings of life insurance that can provide protection against these risks?
Insurance Mechanisms
Life insurance is actually very simple mechanism. The people who face the same risk agreed to raise some funds (premiums) to be stored. Then whenever among them or their dependents (families, for example) runs the risk, then they will be compensated from the savings earlier.
So here is clear to us that every moment in life is always at risk, would be severe if we face it alone. But it will be much lighter if there is a group of people who go through life with the same risk could both help each other in relief if there is a risk (accident, illness or death) in life. Beautiful is not it? Sure you agree, or at least can understand the mechanism of protection against risks to life insurance this way.
You can also read about other things here:
Asset Sale Value
Asset Damage
Most Valuable Asset - Human Life
We strive to provide testimony and information as possible, so you really understand and comprehend all matters relating to insurance
Thursday, September 29, 2011
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.
Basic Idea How To Manage Risks In Life Insurance
As we know in human life there is a risk that we can not avoid. Absolute risk inherent in this man's life is old age, sickness, and death. Every person must have three things sooner or later. But man all his life a conscious attempt to overcome or at least minimize this risk in his life. Or it could be called a human being trying to manage this risk so that they can live better.
From the above discussion about whether you know the basic idea of how to manage risk?
How to manage risk or to minimize the risk can be done in several ways, namely:
1. Avoiding Risks
Avoiding risk can be done by eliminating the habit or activity that may pose risks.
Example: a man who worried about lung cancer due to smoking habit, can avoid it by stopping the habit.
2. Controlling Risk
Method of Controlling the Risks can be done by reducing the frequency and impact of the loss which may arise.
Example: A motorist must use a helmet and take care of his bike on a regular basis, to control losses that may arise. By using this bike helmets the riders hope will reduce the risk of serious injury when he fell. By taking care of his bike on a regular basis then the motorist is hoping to reduce the risk of accidents which may arise because the motor is not worth taking.
3. Accepting Risk
Accepting risk is done by maintaining the existing risks.
Example: A foreman at a chemical plant may not feel the need weeks to buy health insurance or because they think life can bear the losses that arise when an accident occurs.
4. Risk Shifting
Risk Shifting can be done by way of transfer or transfer the risk of an individual to a company.
Example: Worried if he loses the ability to generate revenue because of the death or accident, a head of the family would probably insure his soul (to transfer the risk to an insurance company) in order to save his family from suffering and poverty in later life.
Of the four ways to manage risk at the top, where among the best according to you?
In my opinion, almost every person must have known how to manage the risk no. 1 s / d no. 3. But many people still hesitate to decide or do not even know how to manage risk in a way to distract. Life Insurance attempts to reduce the impact of asset loss due to risks suffered by the owner or the parties to be borne by the owners of these assets, by providing compensation for losses. Compensation for loss is provided in the form of a sum of money to the beneficiary designated by the Insured.
Wednesday, September 28, 2011
How it Works Life Insurance
In my previous article How to Manage Basic Ideas Risks In Life Insurance, has been mentioned that the risk (the possibility of loss or damage caused by illness, old age or death) in human life can not be avoided but the impact of that risk can be minimized. Ways in which life insurance to minimize this risk by way of transfer of risk, namely by providing compensation for losses to property owners or parties to be borne by the owner of the asset.
Then how the workings of the risk management of Life Insurance?
Life Insurance to manage risk by:
1. Moving the impact the loss of an individual to a group (group), and
2. Divide the losses suffered by the individual to all members of the group (the group).
Let's illustrate how to work the Life Insurance with a simple example.
We assume there are 1000 people aged 50 years and in good health. But the estimates, 10 people will probably die this year. For example, the economic value of losses incurred by a family left behind is about Rp. 200 million. So the total losses of about Rp 10 families. 2 billion. For every person from that group (of 1000) accounted for Rp. 5 million / year for mutual funds, the funds collected Rp. 5 billion / year.
The amount is certainly sufficient to pay Rp. 200 million to each family who lost / abandoned by the party members who have contributed to it if there is a risk that befall them. That is, the risks faced by the 10 people had been distributed to 1000 people who joined in the group or groups.
Stages of Life Insurance Business
Insurance business (as practiced by the life insurance companies) has several stages. Let's see what are the different stages.
1. Unify
Together people with interests similar insurance, in order to share the same risk.
2. Collect
Collecting funds (premiums) from a group of people who have been united in a certain amount under the agreement that had been predetermined.
3. Pay
Pay compensation (claims) to those who have suffered losses in the event of a self-insured risk.
In this life insurance business, the risks faced by each individual was transferred to the insurer (insurance company), who agreed to indemnify certain amount mentioned in the policy contract.
Determinants of Number of Factors in Business Insurance Premiums
In the Life Insurance business, the risks faced by each individual (Insured Party) moved or transferred to the Party Insurer, in this case is the Life Insurance company, which agreed to indemnify certain amount mentioned in the policy contract if the risk is occurred on the insured party. Previously Insured Person will give some money in a certain amount to the Insurer on a regular basis (premiums) to cover the risks they face. Before determining the amount of premiums that must be paid by the Insured Person, Life Insurance companies must consider several factors.
Factors to consider in determining the amount of premiums in life insurance business, namely:
1. Possible losses
2. The value of any loss
3. Administrative costs required to run a business, such as collecting premiums from each member to measure losses and pay claims etc.
4. Threshold errors that may arise when predicting losses
5. And, other factors such as financial, health and social factors.
A life insurance company must consider all these factors, so avoid the disadvantages, such as: determining the premium amount is smaller than it should.
Not All Risks Can Insured
Life insurance business is nothing but share. It aims to spread the losses suffered by all members of the group who face the same risk.
Insurance companies act as a representative, to manage the funds collected on behalf of the community group. Insurance companies must also be set in such a way that neither party feels aggrieved.
Insurance companies here should know that not all risks can be insured. A risk can be insured if:
1. Allows for Insurance companies to calculate financial losses.
For example,
- Someone who has no income and can not afford the premiums can not buy life insurance.
- Not possible to insure something that has no economic value. In this case, Life Insurance companies will not likely be able to measure the financial risks. Or premium to be paid by one person in the group is very large, so it is too expensive.
2. There are several types of the same risk.
For example,
- In a country which has only small amounts of sea transportation, marine transportation insurance offerings will only cause financial difficulties for insurers.
In this case, there are not many people who have the same risk, so that the funds collected (premiums) will not suffice.
3. Economic value or life of the insured and the risks borne by insurers have an interest (insurable interest).
Insurable interest is a requirement contained in an insurance contract which states that a person will suffer losses as a result of the death of other members, and the amount of losses is adequate to be used as compensation.
For example,
- A husband and wife have insurable interest between them.
- Partner in the business has an insurable interest by the debtor.
In this example, means that a person will bear the loss arising from the death of another person.
Tuesday, September 27, 2011
Asset Sale Value
Of course we have been wondering what underlies the emergence of the concept About Life Insurance? And why do we bother to provide protection against the assets we have? Of course we know very well to achieve or accumulate assets as we milliki now is not easy. Take a long time even for years. Then it becomes a necessity to keep it easy to run out or lost.
You surely know that the currency has economic value. But if the only currencies that have economic value? Assets also appeared thus, also have economic value. So what exactly is meant by an asset?
An asset is anything that has economic value. Suppose a rancher who has cattle, someone who has a car, house or other property. Skills of a mechanic, a doctor or engineer expertise, skill an entrepreneur or a painter can be called as well as assets.
Assets we have can be classified into two groups, namely: Tangible Assets and Intangible Assets. Tangible Assets are something that we can see (eg cars, houses, livestock, etc.) and intangible asset is something that we can not see (eg talents, abilities and experience of a person). Intangible assets In this context, human life is also an asset. From the examples above of course now we know and can classify assets we have, which are classified as Tangible Assets and Intangible Assets.
Assets we have all have economic value. Will we will still try to keep our assets? Or because of our lack of knowledge so that the assets that we have will run out just like that without us knowing it? Business Insurance aims to protect the economic value of such assets.
Start from now we calculate the assets we have and find ways to make what we've achieved so far does not disappear just like that and we can give to our future generations. One way is with insurance.
You surely know that the currency has economic value. But if the only currencies that have economic value? Assets also appeared thus, also have economic value. So what exactly is meant by an asset?
An asset is anything that has economic value. Suppose a rancher who has cattle, someone who has a car, house or other property. Skills of a mechanic, a doctor or engineer expertise, skill an entrepreneur or a painter can be called as well as assets.
Assets we have can be classified into two groups, namely: Tangible Assets and Intangible Assets. Tangible Assets are something that we can see (eg cars, houses, livestock, etc.) and intangible asset is something that we can not see (eg talents, abilities and experience of a person). Intangible assets In this context, human life is also an asset. From the examples above of course now we know and can classify assets we have, which are classified as Tangible Assets and Intangible Assets.
Assets we have all have economic value. Will we will still try to keep our assets? Or because of our lack of knowledge so that the assets that we have will run out just like that without us knowing it? Business Insurance aims to protect the economic value of such assets.
Start from now we calculate the assets we have and find ways to make what we've achieved so far does not disappear just like that and we can give to our future generations. One way is with insurance.
Asset damage
As I've discussed previously on assets (Tangible Assets and Intangible Assets), this time I will discuss about anything that could cause damage to assets.
Assets we have, whether it Tangible Assets and Intangible Assets does not live forever. But these assets may be damaged or destroyed so it can not be used anymore because of an accident or an unintentional incident. Accidental or unintentional incident can be referred to as a disaster. This calamity can vary such as fire, natural disasters, disease, accidents, death and others.
So somehow we have fixed assets have a risk of damage and destruction caused by certain disasters. Risk here means the possibility of loss or destruction or uncertainty faced by the asset.
Then when the assets we have no eternal, how can we protect these assets? Has it occurred to us to find a way out? Does Insurance can provide answers to these questions above? Keep abreast of my next articles. I will try to explore more deeply about how to protect our assets from risk.
Monday, September 26, 2011
Most Valuable Asset - Human Life
In humans, especially in their daily work we are already trying to make ends meet. In an effort to meet the needs of this life we are trying to gather assets, whether in the form of material or imateriil (expertise, skill, talent). But of all the assets we have, of course we have the most valuable asset of Human Life.
Why Human Life considered the most valuable asset?
Human life is an asset that can bring in revenue. Assets of human life also has risks such as illness, disability or death caused by a disaster, accident or illness.
Risks such as disability and death make a person has the potential to not earn an income. This makes the family or parties who rely to her difficulties.
Suppose there is a father who worked in a company. He has a wife who does not work profession as a housewife, and has 2 children are still small and still at school. His family was economically dependent to him as the sole breadwinner. Suddenly one when there is an unwanted accident occurred. The father of a fatal accident on the road so that the total disability can not work anymore for a living. If this family does not have sufficient assets, how they will live their lives one day? Of course it will bring sorrow and suffering that long for the family.
With Life Insurance has at least a little of this family can ease the burden of his life. From the proceeds of insurance claims may be the wife that does not work it could provide adequate treatment for her husband or maybe it could be money used to meet new business needs of daily life. So obviously, life insurance provides protection against the risks above.