Effective Tricks to Avoid Financial Crisis and Bankruptcy

    Friday, October 29, 2021

    Insurance has a very big role.  Not only for individuals (society), insurance also has an important role for companies, investment institutions, and the country's economy.

    It is a very big role but it seems that the community is not aware of it.  In fact, some people still underestimate the existence of insurance.  In fact, a person or company can experience a financial crisis if they do not have insurance.

     A short illustration like this.  Male A and Male B have $1000 for working capital.  Man A uses all his capital to turn the wheel of his business.  Meanwhile, Male B uses half of it to buy health insurance.  With a larger capital, the profit that Men A gets is $2000.  This figure is much higher than that of Male B, who only made a profit of $75.

     However, one time Male A and Male B suddenly became ill and needed intensive treatment at the hospital with a total cost of $250 .  Because he doesn't have insurance, Male A has to use all the profits from his business and add a loan from the bank to pay administrative fees.

     Meanwhile, Men B can get optimal treatment and don't have to worry about hospital costs.  Because, the cost of treatment has been borne by the health insurance company.  The profits that Man B gets from his business are still intact and can be reused to continue the business.

     The same illustration applies to a company.  In essence, insurance will cover the risk or loss resulting from a disaster experienced by a person or company.  With insurance, a person or company can live in peace and avoid debt or the threat of bankruptcy.

     The Role of Insurance in the Investment World
     Insurance can also act as a tool to improve the country's economy.  The trick is to collect funds from customers or policy holders of unit link insurance products.  Well, some of the funds or premiums paid by customers will be developed by insurance companies for more profitable investments.  The return on the investment will also be used as a strategy to subsidize the cost of insurance premiums.

     Broadly speaking, unit-linked insurance is a type of insurance that combines two financial products, namely insurance and investment.  So in practice, the premium paid by the customer will be allocated to two places for the cost of managing protection and investment management.  Usually, the investment used is mutual funds.