The Term of Insurance Contract
The term insurance is certainly well known in the community. However, the reputation of term insurance does not directly depend on literacy or people's understanding of what insurance is. Without full understanding, people can misunderstand insurance contracts and easily be swayed by negative insurance coverage in both the mainstream media and social media.
If this misconception is not straightened out, it will have a negative impact on the entire insurance industry because it can make people interested in buying insurance products. The National Financial Literacy and Participation Survey (SNLIK) conducted by the Financial Authority (OJK) in 2019 found that insurance literacy was only 19.4 percent or less, compared to the banking literacy level which reached 36.12 percent. This low insurance literacy is certainly a challenge for everyone involved in the insurance industry in Indonesia, because insurance is an important financial product for society because it aims to protect against the risk of financial loss when the insured or the insured meets. any conditions covered or covered by the policy. For example, insurance covers death, insurance covers medical expenses, or insurance covers damage or loss caused by certain events.
So what exactly is insurance? Insurance is a financial product based on a written contract. The contract in question is a risk transfer agreement between two parties, namely the insurance company acting as guarantor and the insured or more commonly, the insured. What is term insurance and how is it different from premium insurance?
Insurance itself is a sign of a written insurance contract that contains all the rights and obligations between the insured and the insured. Basically this policy is a reference between the insured and the insured during the contract period. Insurance is also a reference when there is a dispute between the insured and the insured. For example, the decision whether or not insurance will cover losses is related to or based on the provisions contained in the insurance. Therefore, the insurance company cannot refuse a claim if the insurance clause states that the claim made involves risks borne by the insurance.
So, the insurance contract is indeed very objective and transparent, and the prospective insured is also required to read and understand all the terms of insurance before signing it.
Meanwhile, the term insurance premium means money or payments that must be paid by policyholders to insurance companies on a regular basis, either monthly or yearly. The amount of the insurance premium and the payment period are agreed between the insurer and the insured and set forth in the policy. In general, there are two types of insurance policies, namely life insurance and general insurance. As the name suggests, life insurance is an insurance product that covers the risk of death. Death benefits from life insurance products are also usually combined with other benefits such as education and health.
Meanwhile, general insurance is an insurance product that covers property/property/vehicle risks, financial benefits, liability and personal insurance (accident insurance and health insurance).
|Illustration of Insurance Contract|
Before making an insurance contract, we must know how an insurance contract is made and what documents are known in the insurance contract process. The insurance policy or insurance contract must be taken out with the insurance policy. Third, mutual responsibilities or rights and obligations between the insurer and the insured begin after the end of the contract, even though the policy has not been signed.
As regards general insurance business practice, there are four stages in concluding an insurance contract: offer, acceptance, consideration and approval (consensus ad idem), ie. H. mutual agreement on terms and procedures for implementation.
The important thing that is often misunderstood by the public or insurers is that the prospectus provided by the insurance company is not a bidding document, but only an advertising tool or an announcement about insurance products and guarantees. Therefore, this offer brochure cannot be used as a reference in the process of submitting a claim or in a dispute situation. Therefore, insurance companies are advised to critically check whether the issues listed in the quote brochure are also included in the insurance documents.
In insurance, the bidding process begins with the insured applicant submitting an application by completing the SPPA document provided by the insurance company. This SPPA document must be filled in completely and correctly by the prospective insured directly. The SPPA must be completed and signed as a basis for obtaining an insurance policy, which will later become one of the supporting documents in the claim handling process. If the data entered is incorrect, it can eventually lead to rejection of insurance claims. Thus, the SPPA document that has been filled in by the prospective insured acts as an offer to the insured.
The insurer or insurance company analyzes the information provided by the prospective policyholder, which is then used to take out the insurance policy. The guarantor's approval of the insurer's SPPA proposal is the acceptance stage. After the policy has been approved, the prospective policyholder must carefully read the policy and all attachments. If there is a clause that is not in accordance with the submission of the broker or the offer brochure, the prospective policyholder is advised to notify the change without undue delay according to the inspection free period or the free period as long as the insurance can still be canceled or changed. Finished
The next process is the premium or consideration stage. After the coverage is received and the insurance premium is paid, the insurer and the insured carry out the contract in accordance with the conditions of coverage, namely. H. in ad idem agreement.
Therefore, the main documentation that must be included in the insurance contract is the SPPA filled out by the prospective insured. Second, the policy is complete with all the clauses or special requirements attached. Third, insurance receipts as a means of settlement of payments.
Fourth, the claim form (blank form for statements/statements and supporting documents needed as other supporting evidence). And fifth, the delivery receipt replaces the payment receipt. Because some companies do not issue insurance receipts, if the prospective customer does not pay in full for the insurance, they issue a delivery slip.
Understand the insurance contract
What does the insurance contract mean according to the contract above? If the insurance contract is an insurance policy, the insurance contract is a contract entered into between two parties, in this case between the insurance company and the insured.
The insurance contract itself is legally binding between the insurance company and the insured. So when does the insurance contract end? The insurance contract ends at the agreed point in time.
When is the insurance contract terminated? The insurance contract takes effect when all the documents and conditions are fulfilled and the contract has been signed between the two contracting parties. politics is the deal where? A contract in which the insurance company, as the insured, and the policyholder, as the insured, agree on one policy.
The nature and principles of the legal aspects of insurance contracts
As an insurance agent, it is important to understand the nature and principles of the legal aspects contained in insurance contracts. The nature and aspects of insurance contracts are distinguished from other contracts. Insurance bears all rights and obligations that must be met by insurance companies and customers. Therefore, the insurance company must have the legal authority to regulate this.
From a legal point of view, a contract is a bond with various features or characteristics. In insurance law, an agreement is declared valid if it fulfills conditions such as legal ability, legal considerations and purposes.
Below are some of the characteristics and legal aspects of insurance contracts (including life insurance), namely:
First of all, it should be clear that insurance contracts are informal. Insurance does not require a particular form or method of taking insurance. However, informal agreements are preferred, meaning that each party agrees on the content and contents of the contract or the agreement itself. For example, in health insurance, the contract that applies is an indemnity contract or an indemnity contract, whereas in life insurance, a value contract is required.
Simply put, an informal agreement is the opposite of a formal agreement that regulates and imposes certain terms and conditions and regulates the nature, method and form. An example is a formal agreement, namely a title document.
2. One sided
The nature and second principle is unilateral, meaning that only one party can enter into a legally binding agreement. In this case the contract maker is the insurance company itself.
Life insurance is a unilateral contract. Because the insurance company promises to offer insurance protection to its customers, provided that the agreed premium is paid regularly and in accordance with the contract.
A unilateral contract is the opposite of a bilateral contract, which is an agreement between two parties with equal legal force. You understand that a bilateral contract is a contract between a contractor and a home owner who wants to build or renovate a house.
The following insurance contracts are conditional or contracts with conditions that limit rights under the contract. Each insurance contract has conditional features. As can be seen from many insurance contracts, the statement of claim must presuppose, inter alia, the availability of correct information. In this case, it means that if there is a loss, the conditions must be met before the contract becomes permanent and has legal force.
Types or characteristics of insurance contracts are conditional. One party gives to another party. Insurance contracts usually have a value and are a conditional promise. Therefore, this function allows other parties to receive something more than the value stated by that party.
The point is the insurer can get the sum insured and insurance benefits with a value that is much higher than the amount of premium paid previously. Therefore, the insurer may receive more cumulative insurance premiums than the liability paid by the customer.
Life insurance is an example of accident insurance because the life insurance company pays insurance benefits to the policyholder after his death. However, this is of course unpredictable. Because we never know when someone will die.
The nature or character of the aleatory itself is the opposite of a commutative contract, where the parties making the contract must first determine its value. For example contracts relating to buying and selling houses or buying and selling vehicles.
An insurance contract also has the characteristic of liability, namely an insurance contract made by only one party, namely the insurance company. At the same time, associates, e.g. potential clients, must openly accept the entire contents of the contract with open arms.
If the prospect is dissatisfied and refuses, they will not sign the contract. The reciprocal nature of these agreements is the opposite of negotiated agreements. In a negotiated agreement, the parties jointly set the conditions for reaching an agreement.
In addition to the types or characteristics of insurance contracts, there are also things that become the principles of insurance contracts and distinguish them from other contracts. The first principle is insurable interest, which gives someone the right to insure something because of family or financial ties.
This right arises when there is an insurance agreement, in this case the insurance itself, and insurance also has a strong legal basis. For example, if you are insuring someone, you must have a close relationship with that person, such as a father, mother, husband, wife or child.
Or another example, if you register your company with an insurance company, for example, and register people related to your company as employees, etc.
7. Highest Good Faith
In addition to the coverage rates, the principle of insurance also includes the principle of good faith or good faith. This principle requires every prospective customer and every insurance company represented by an insurance agent to provide all information honestly, in detail and transparently. There's nothing to cover up.
For example, if a prospect applies for insurance, they must provide truthful information as part of a risk assessment before signing the contract. Such as the risk of disease, smoking, hospital, etc.
Likewise, the insurer, in this case the insurance company represented by the insurance agent, must communicate all product details and may not hide any information. Any information that the prospect needs to know must be provided in good faith or to the best of our knowledge and belief.
The nature or characteristics of the latest policy are personal or private. The resulting contract is a personal contract between the insurance company and the customer as the policyholder. Since this is a personal insurance policy, it cannot be transferred to another person without the approval of the insurance company.
There are several types of insurance with the exception of these characteristics and principles, we provide examples such as life insurance and some shipping insurance. Based on its nature and principles, if the prospective customer buys home insurance and sells the house without notifying the insurance company about the transfer of the policy to the new owner, the insurance company is not obligated to pay for the new policy or provide any value to . the new owner assigned the owner when something happened. to the house
Simply put, the new owner doesn't get any coverage despite knowing that the house is insured. However, if the transfer is not made, the new owner will not receive the sum insured.