Not only commercial companies that issue insurance. The government has also issued many insurance products that aim to provide social security and protection to the community. The name of the insurance product from the government is social insurance.
What is the difference between social and commercial insurance?
Broadly speaking, social insurance refers to a protection program provided by the government, while commercial insurance is an insurance product sold by the private sector
The most common examples of social insurance products by the government are BPJS Health and BPJS Employment which are now used by almost all people, especially those who are already working.
BPJS Health and Employment itself has various social security programs in it that can be used according to their benefits and needs.
Definition of Social Insurance
Learn more about social insurance. According to the OJK (Financial Services Authority) social insurance has the meaning as a provider of social security for members of the public which is formed by the government based on regulations governing the relationship between the insurer and all groups of society.
The purpose of social insurance is to improve the welfare of the community, especially employees and retirees.
Social Insurance is held based on Law no. 2 of 1992 concerning the insurance business, social insurance is a program of the type of loss insurance or life insurance.
Social Insurance generally implements a risk collection and sharing system, implementing programs that refer to Law no. 2 of 1992 such as selection of prospective participants (underwriting), reinsurance, self-retention, while commercial loss insurance refers fully to Law no. 2 of 1992.
Social insurance often has equal protection and compensation for participants depending on the ability to manage the program, in contrast to commercial loss insurance, where the compensation for the insured has a large to unlimited value.
Nature and Characteristics of Social Insurance
Social insurance is usually divided into two types, namely loss and life insurance. Insurance is a loss in the form of insurance that provides compensation for losses to parties who feel aggrieved based on agreed provisions. For example, BPJS Employment can be claimed when you have an accident at work.
In addition, JWA insurance is a form of insurance that provides payment of a sum of money to a second party who receives compensation for old age or death. Examples of life insurance are pension plans and old-age savings for civil servants.
In addition to the nature, the following characteristics of social insurance that must be known are:
- It is mandatory for every individual.
- Built on the principle of gotong royong with the principle of togetherness.
- Premiums come from the community or workers and the company where the workers take shelter.
- Social in nature and not aiming for profit.
- Aims to provide welfare guarantees to the entire community.
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