Definition of Life insurance is a transfer of risk (Risk Shifting) for financial losses (financial loss) by the Insured to the Insurer. Risks such delegated by the Insured to the Insurer is not the risk of losing one soul, but a financial loss as a result of the loss of one soul, or it reaches an old age that no longer productive.

Risk Concepts

Economic value of the life of a family head (the breadwinner) is equal to the capacity of its income. If the economic value of the life of a family head is lost or reduced, then that will suffer directly is the loss of his relatives. Risk of loss of income is to be borne by the family of the deceased.

To reduce this risk in modern times has taken one way to assign or delegate the risk to other parties, in this case Institute of Life Insurance business specializing in this field as a profession. The transference of risk is more popular known as buying a life insurance policy.

Types of Risks That May insured.

Throughout the human life is always faced with the possibility of events that can lead to be lost or reduced value of its economy. This resulted in losses for themselves and their families or other interested person. In other words, human beings always face events that will lead to the following risks:

  1. Death,  either natural (natural death) and died at a young age due to illness, accidents (accidental death) and others. . Breadwinner death will result in loss of income sources for the interested parties. Therefore, it required financial assurance in a specific period during which leave has not been able to adjust to new conditions.
  2. Handicapped body due to illness or accident. Because of illness or accident, someone is physically or mentally unable to work while thus affecting earnings. Whereas if a person suffers total and permanent disability, they cannot work at all.
  3. Critical Illness.  Critical illness can come at any time regardless of age, whether one is young or old. Critical illness cannot be unknown when the arrival and cannot be known with certainty.
  4. Old age  / Pension.  The old days of events will occur, but how long it lasts the life of the old days, could not be known with certainty.
  5. Education.  Parents should be able to anticipate the development of education very seriously, because the cost of education today and the next ten years would have been much different.

The types of life insurance policy

There are basically three types of life insurance available today:

1.  Term Life Insurance
Is a life insurance contract where the sum assured is payable only if death occurs within the insurance period is still valid? Term Insurance is the simplest form of insurance and the oldest. This type of insurance is sometimes referred to as temporary insurance, in accordance with the insurance. The premium on this insurance is also the cheapest compared with life insurance and intregated life insurance.

2. Whole Life Insurance
Life Insurance is designed to provide lifelong protection of the insured during his lifetime to maintain her policy remains active with her policy through premium payments.  In addition to death protection, policy ins also provides a savings element which is known as cash value that arises because a fixed premium.

3. Integrated Life Insurance
This insurance is comprised of two elements, namely protection of life and savings. Mental Protection provides death protection. Savings element of insurance is higher so that appropriate for the purposes of saving. Given the savings element is higher than the Insurance Futures and whole Life Insurance.